This guide to portfolio product management and marketing answers common questions about what it is, how it’s different and why you should consider adopting it. It’s specific to B2B and B2B2C products and services.
What is Portfolio Product Management?
Portfolio product management is a customer outcome approach to product management and product marketing that eliminates silos and competing priorities and fosters collaboration across product teams. It aligns product, marketing, sales and customer success teams around outcomes that have the greatest strategic value to customers – things that make them better at their business.
How Does It Differ From Traditional Product Management?
In a traditional product management model, everything starts with a product. It can limit your view of the customer to the users of the product. It can also limit your requirements to user problems, many of which have no strategic or quantifiable value to the customer organization.
Traditional product management also reinforces silos and competing priorities as every team fights for resources to improve each product versus a holistic approach of using multiple products to quantifiably improve how customers run their business.
In B2B, what’s best for each product isn’t always the most valuable thing for the customer. Portfolio product management always starts with what’s most valuable strategically for the customer and then backs into one or more products/services that best deliver outcomes.
What are the Core Principles of Portfolio Product Management?
There are seven core principles of portfolio product management.
- Structure product management/marketing so that their market knowledge is stronger than all other disciplines combined. That way, they’re always leading from a position of strength.
- Understand your customers through the lens of their business, as if your products didn’t exist. In other words, see them the same way they see themselves. It makes everything easier.
- Develop business requirements that are a true representation of your customers’ business goals and priorities from the top down before introducing product requirements.
- Develop a portfolio strategy that mirrors the target customers’ business priorities with supporting product releases that collectively deliver the outcomes via new features and products.
- Use customer outcomes as the catalyst for product development and launch to keep everyone focused on value throughout the customer journey.
- Develop value propositions that mirror those customer priorities so that you’re communicating “their version” of your value story.
- Mobilize the customer’s version of your value story to build higher quality pipelines and improve win rates.
The single most difficult thing for every product company is to see your target customers the same way they see themselves. Once it becomes ingrained in your culture, building, marketing, selling and delivering strategic value is relatively straight forward.
What are the Best Practices?
There are five key best practices that are instrumental in adopting portfolio product management.
1. Vertical Market Segmentation
Imagine that you have 20 products, each of them with strong growth potential in five market segments. Let’s say all 20 products have three market segments in common. Your organization now has 43 total market segments to serve. As a native New Yorker would say, “fuhgeddaboudit.”
Most companies can’t serve that many markets and do it well. Furthermore, it dilutes the strategic value of your portfolio to the three common markets that use all products together the way you intended.
2. “Product-Free-” Market & Business Requirements
Number two is BIG! Consider for just a moment that your company and its products don’t exist, but the customer organizations that you serve do. If that were the case, would it change anything about their business priorities and the things they’re doing to be successful? Of course not. Stay in that mindset for another minute.
The purist form of market/business requirements are a true representation of how your target customers see themselves and the things they’re doing to be successful from top to bottom.
Now, huddle up with your fellow product managers and start discussing the top-down business priorities of your target customers that you can “collectively” impact the most.
Big or small, the end-game for product management is investing in things that have the biggest quantifiable impact on the success of the customer organization. The assumption is that you can take them to market in a manner that supports your organization’s strategic goals.
If product management is going to grow its strategic value, it has to cast a wider requirements net beyond users and become more in tune with priorities higher in the customer organization. One set of market and business requirements from the customer’s perspective to drive all products in the portfolio accelerates that maturation process.
3. Customer-Facing Vision & Strategy
Many product management teams struggle with this one because number one, they have a lot of products, and number two, it’s more difficult when your thought process starts with the product.
Let’s go back to the analogy in item 1 above, Market Segmentation. If you have 20 products, that equates to 20 product visions and 20 product strategies. It’s just not manageable let alone practical!
Here’s the simple alternative. Create one customer-facing vision for the portfolio, something that’s strategic to every customer, and then create a tactical business goal for each product that supports the portfolio vision. For example,
Portfolio Vision: “Help our customers hire and retain the best people.”
- Product 1 Goal: “Create and maintain the highest levels of employee engagement.”
- Product 2 Goal: “Create a culture where people love coming to work.”
- Product 3 Goal: etc.
How simple is that? The better each product supports its business goal, the closer you are as an organization to making your portfolio vision a reality. Here’s the best part. Customers and prospects love you even more when your product goals mirror their business goals!
On to product strategy.
Now that you have a customer-facing vision for the portfolio with supporting (customer-facing) business goals for each product, product strategies are just as straight forward.
For example, the strategy for Product 1 over the next 12 months is to…
- Help customers measure employee engagement with more granularity,
- React quicker to areas of concern, and
- Measure the effectiveness of their actions.
Add product features and release dates accordingly to support the above goals.
Here’s the moral of the story. When vision and strategy start at the portfolio level and lead with customer value, the downstream execution is easier because the common value targets are clear to everyone, which makes them easier to hit.
4. Aspirational Market Positioning
This is where portfolio product management pays exponentially bigger dividends because most of the work is already done. Product marketing loves this!
If you have a customer-facing vision for the portfolio and supporting business goals for each product, the foundation of your market positioning is complete.
Portfolio Value Theme
Your portfolio vision, “help our customers hire and retain the best people,” is your headline value theme. You may choose to articulate it more creatively but you’re essentially telling your target customers that your organization exists to help them succeed by hiring and retaining the best people.
Supporting (Product) Proof Points
The proof points that support your portfolio value theme are the business goals of each product, e.g., “create a culture where people love coming to work, maintain high levels of employee engagement, etc.” In other words, you’re telling the market that your products eliminate critical obstacles that stand in the way of their ultimate goal – hiring and retaining the best people.
The collective features across the products speak to HOW those obstacles are eliminated. Here’s the great part. With every new release of features, you’re simply adding to the list of business obstacles you remove. Each release further reinforces the product goals, and by default, the portfolio vision.
5. Sales Training on Customers vs. Products
Keep running with the market positioning and mobilize your value story via the salesforce. The goal is to make sure sales dialogues lead with a strong vision and a differentiating value story that’s supported by all products.
Without the overarching portfolio vision and market positioning, sales has little more than a bunch of fragmented tactical product messages that don’t tell a compelling value story, making the wins harder to come by.
What salespeople need more than anything is a simple way to facilitate prospect/customer business conversations and recognize situations where your solutions have value so they can position and discuss them at a business level.
If you agree with that synopsis, then sales training should be 80% focused on techniques and content that help your sales team understand their prospects/customers better from a pure business perspective first, then they can connect the dots to situations where your solutions have value.
How Does It Change the Structure of the Product Organization?
Structuring product management for customer success versus product success boils down to one key difference. If you’re structured for product success, you’re doing product management more from the inside out. If you’re structured for customer success, you’re doing product management more from the outside in.
View this short video to learn more.
Are There New Roles in a Portfolio Product Management Model?
If something’s going to succeed, it needs an owner. The product management profession was born for that very reason, to ensure products are successful.
In a portfolio management model though, successful products are NOT the goal, they’re the result. Quantifiable customer success is the goal, and the impact goes several layers above your users.
If You Target Specific Vertical Markets
Enter the market owner role. For an organization to succeed with its vertical market strategy, product, marketing and sales teams have to see each industry segment through the same lens. In other words, everyone has to see the same markets the same way instead of seeing them through the lens of each product or worse yet, the sales pipeline. The market owner role is the lynchpin to establishing a common market view that becomes the foundation for all product, marketing and sales decisions.
The market owner role is pure and simple. Think of it this way. If your organization didn’t exist, the dynamics in healthcare, energy, banking, utilities, etc. wouldn’t change. They are what they are, regardless of whether your organization exists or not.
It’s then up to product, marketing and sales teams to align with those markets to maximize short-term revenue from existing solutions, and fuel longer term growth with new solutions.
Let’s say that you sell marketing automation solutions. Your portfolio of products and services has value to any organization that does marketing. A vertical market strategy would shift your focus from “any organization that does marketing” to consumer product companies, retailers and banks, for example.
Marketing and sales teams position existing solutions around those market dynamics to maximize short-term revenue while product teams use the exact same information to determine portfolio strategies and tactical product roadmaps to drive longer-term revenue.
DON’T PANIC! You may not need a market owner for each market segment depending on their similarities…and other roles still have to/need to talk to customers. The market owner role isn’t making decisions for anyone. It’s giving other disciplines a customer-centric value target for making smarter business decisions.
If You’re More Horizontally Focused
Enter the solution manager role. The solutions manager role in its purest form mirrors one or more customer business functions like HR, finance or IT, and has no intended alignment to any products
Its mission is to deliver pure, unbiased customer business requirements to all customer-facing functions, especially product management, product marketing and sales.
Think of the solutions manager role as the chief business requirements gatherer. It provides the richest possible voice of the customer to product management, product marketing, sales and customer success teams so that your organization is aligned to a common set of customer business priorities and success metrics.
Here’s perhaps the most important part of the job. The solutions manager is gathering customer business requirements as if your company and its products didn’t exist, albeit with a focus on business functions that are most relevant to your solutions. Pure customer!
If your solutions target the HR department, you’d have solutions managers for personnel, talent management, etc. If your solutions target the IT department, you’d have solutions managers for help desk, application support, etc.
REALLY IMPORTANT POINT HERE! You don’t need one solution manager for each customer function…and other roles still have to/need to talk to customers. The solution manager role isn’t making decisions for anyone. It’s giving other disciplines a customer-value target for making smarter business decisions.
How Does It Impact Product Marketing?
Portfolio product management transforms traditional product marketing into a solutions marketing function.
A lot of people think solutions marketing is just a fancy term for product marketing, especially since the term solution has been so overused. But there is one huge difference in real-world practice.
In a product marketing model, products are the star. Problems, features and benefits are co-stars. In a solutions marketing model, the star is the buyer’s vision for success. Products, features and benefits round out the cast, but further down the food chain in supporting roles.
What Is Solutions Marketing?
Think of solutions marketing as the more encompassing, higher-impact version of product marketing. It aims at needs much higher in the customer organization that go far beyond user problems and products, even though both still have a critical role.
Here’s the deal. The end game for both product and solutions marketing is to help sales sell more. But the tactics for getting there are very different.
Here are three scenarios that contrast the two approaches. Determine which one is more conducive to growing revenue for your organization based on your products, buyers and business model.
Product positioning in one form or another is problems, features and benefits with a narrative that targets users more than any other audience.
Solution positioning is the buyer’s (decision-maker/influencer) version of a value story, their vision for success. Industry context makes solution positioning even more credible. Products play the role of proof points that speak to HOW you’ll help buyers make their vision a reality.
There’s even better news. Bringing the buyer’s vision to life almost always requires more than one product to form the “solution.” It’s easy money for sales!
Both approaches ultimately focus on convincing buyers you can solve their problems. The difference is the magnitude of the problem addressed with product positioning only, versus solution positioning.
Solutions marketing still requires product positioning, but more in the context of how you’re improving something in the trenches that directly impacts the buyer’s vision.
2. Sales Enablement
Product marketing focuses on making salespeople knowledgeable about products and the problems they solve.
Solutions marketing focuses on making salespeople knowledgeable about the business dynamics of the buyer in their industry and how they’re going to navigate those dynamics to be successful going forward.
The solutions narrative helps salespeople engage with a more consultative approach. That makes it easier to paint the buyer’s picture of success starting at the top of their organization with strategic priorities and connecting the dots to user value in the trenches, via products.
3. Demand Generation
Demand generation in a product marketing model usually forces you to be generic in your messaging because your products target buyers across multiple market segments.
That generic messaging can often come across as white noise…streamline workflows, improve efficiency, grow revenue, make smarter business decisions, cut costs, etc.
In a solutions marketing model, you’re speaking to the aspirations of your buyers at a much higher business level – where they need to go strategically, why it’s critical for success or survival, key changes that have to occur, consequences of getting left behind, etc.
The solutions that address these higher-level needs almost always involve more than a single product due to the magnitude of the issues you’re addressing. More products on every sales order! Who doesn’t love that?
Here’s the bottom line. Solutions marketing in B2B gives you two benefits that product marketing doesn’t.
First and foremost, it makes your value story much more powerful because you’re targeting needs much higher in the buyer’s organization where the pain points have a more severe ripple effect. In other words, you’re solving much bigger problems with greater strategic impact.
Second, the average sale amount is higher because more products are required to form the solutions to those bigger problems.
If you’re not sure which approach is better for your organization, put yourself in the shoes of your typical buyer/decision-maker/influencer. What are you more interested in, your own agenda for success or the problems, features and benefits of a product? There’s your answer.
What are the Most Common Misconceptions?
The notion of portfolio product management often brings perceptions that may not be entirely accurate. Here are the seven most common misconceptions and why they aren’t issues after all.
1. Portfolio product management requires more people.
It might seem that way because most people interpret a market segment focus to mean an additional layer of people above and beyond your current structure. That’s not the case at all. Portfolio product management eliminates many of the redundant practices that occur at a product level, so in reality you’re reallocating current budgeted headcount to support new business practices that have no dedicated resources in the current structure.
2. Portfolio product management forces us to focus on vertical markets.
Nothing could be further from the truth. There’s a tradeoff with portfolio product management because you’re establishing greater focus on the company’s performance in key market segments and less on the success of each product. The biggest impact of that tradeoff is in the business practices that use customer outcomes as the driver to product, marketing and sales activities.
Bottom line: portfolio product management is little more than a workflow change and a mindset that bridges the gap between quantifiable customer outcomes and your product, marketing and sales practices.
3. Portfolio product management limits our sales efforts to specific vertical markets.
Replace the term “limit” with “focus” and your revenue potential grows significantly, especially if you’re in a market that’s crowded with competition and your products are in the “commodity zone.” For most B2B organizations, 80% of revenue and profitability comes from a handful of vertical markets. If product teams, marketing and sales focus on solving bigger problems for those markets and communicate differentiating value in plain simple English, the revenue opportunities would far exceed those in the other 20% they’re not focused on.
4. Portfolio product management ignores small improvements to individual products.
As long as customer retention is important, small product improvements will be a top priority. The difference in a portfolio model is that small product improvements are always part of the bigger picture of helping customers achieve outcomes that are strategic to them. What it means is this – what’s best for every product may not always be the best or most valuable thing for the customer, or your organization for that matter. The highest priority customer outcomes are the driver for small product enhancements collectively across the portfolio.
5. I can’t track the performance of my product.
Nothing changes from how product performance is tracked or reported today. What changes is the fact that individual product performance isn’t all that important in a portfolio management model. The most critical metric in a portfolio management model is the performance of your organization (revenue, market share, wallet share, customer retention, etc.) in your chosen market segments. To that end, certain products play a leading role while others play more of a supporting role at any point in time.
6. Portfolio product management diminishes my strategic value as the CEO of my product.
As a B2B product manager, your strategic value is far greater to the organization when you’re a major shareholder of a product portfolio that’s constantly growing in market value versus the owner of a single product business that can only offer tactical value due to its limited scope. It boils down to the value of a well-integrated portfolio aimed at helping customers achieve outcomes with greater strategic value versus the limited value of individual products for users.
7. Product Marketing’s value is weakened.
It’s the exact opposite. Product Marketing’s stock goes way up in a portfolio product management model because they possess market knowledge that’s complementary to product management instead of attempting replicate their product knowledge.
Industry knowledge becomes a much greater focus in product marketing and complements product knowledge in the form of value propositions and sales tools that communicate the customer’s version of your value story in the context of each market. Furthermore, anything product marketing does to improve the credibility of sales is highly valuable to every organization.
Want to learn how to do portfolio product management and product marketing for your products and your markets? Contact us about a personalized onsite training workshop or learn it at your own convenience with a subscription to Product Management University On-Demand.