Category Archives: Pricing

Product Management Metrics (part 2a)

My  conference call on PM Metrics with Tom Grant went quite well yesterday. It was a round table discussion with good points made by several participants.

While we did talk about a number of topics, the metrics discussion dominated the first 1/2 of the call.

One of the questions  — What metrics should be used to measure the effectiveness of Product Managers? — got me thinking a bit.

My answer on the call was that first the focus should be on metrics for the Product Management organization, and then a breakdown from there on metrics for individuals based on objectives and tasks that support the goals of the organization.

To me that seems like a logical approach, because all other organizations in a company, includes sales, marketing, technical support etc. have metrics defined and measured that way.

So what’s the problem?

So why is it so hard to come up with metrics for the Product Management organization? Well,  it goes to the heart of the major issue with hi-tech Product Management today.

And that is that most companies don’t look at Product Management as a holistic function within the company, but rather as a set of individuals or small teams working on a variety of product related tasks.

Look around and see how the focus of Product Management is different in different companies.

Look at how widely the reporting and organizational structures are for Product Management. It is part of Marketing in some companies, part of Engineering in others, a standalone department in others.

Look at the ongoing debates related to when Product Management roles should be defined and introduced in a company.

If you’ve worked in or have been exposed to Product Management in different companies, compare and contrast the tool sets (or lack of them) used by Product Management organizations versus the tools used by other departments to do their jobs.

And if people don’t look at Product Management and it’s objectives in any holistic and standard way, how can they set about defining and measuring key metrics for the Product Management organization?

Metrics should focus on measuring intended outcomes

For Sales organizations, the key metrics  (product sales/bookings etc.) are directly tied to the intended outcome of the function: generating sales and revenue.  There are numerous secondary metrics that are tracked such as  sales breakdown by product/product family, by deal size, by geography, by new vs. existing customer etc.

And don’t forget all the sales funnel metrics that are used to track progress and success, such as average time to close, win/loss ratio etc. The important metrics are clearly tied to the intended outcomes of the activity of the sales organization.

For marketers it’s a bit more complicated because there are different roles in marketing and different intended outcomes. The two primary outcomes that can be applied to marketing are related to lead generation and market/industry awareness.

And from there numerous metrics can be identified related to number of leads, cost per lead, lead quality, lead to prospect conversion ratio etc.

Metrics for awareness are numerous, but basic metrics focus on “mentions” by press, analysts and other influencers in publications, reports, blogs, and via social media such as Facebook and Twitter.

And what of Product Management?

What is the primary objective of Product Management? In a previous article on this blog entitled Product Management Metrics (part 1), I defined the mandate of Product Management as:

To optimize the business at a product, product line or product portfolio level over the product lifecycle.

Don Vendetti of Product Arts, wrote a series of guest posts, entitled Measuring Product Management. In part 3 of his series, he provided his definition of the Product Management mandate:

To deliver measurable business results through product solutions that meet both market needs and company goals.

I like Don’s definition.  Both definitions share the same spirit about business focus,  but Don’s phrasing is clearer and more explicit than mine. But I do think that mention of the product lifecycle is needed because that has a huge impact on the objectives and the required focus of Product Management.

Don’s use of the words “measurable business results” is crucial to this discussion.

So what are those business results? Well it depends on the business and the company goals. 🙂

Those goals depend on the many things. Some companies care about revenue. Others care about market share. Others care about profitability. Others only care about getting acquired. And those goals can change with time.

Some choose to be technology focused, while others are sales, marketing or market focused. Some companies have a single product, while others have portfolios of products.

Depending on the company’s goals, size and level of maturity, the market conditions, it’s financial status and it’s overall strategy, Product Management’s objectives will change and so the metrics to measure Product Management will also change.

I’ll stop here, but I’ll pick up this discussion in an upcoming, and long overdue post that will be entitled Product Management Metrics (part 3).

Make sure you read Part 1 and Part 2. 🙂

Saeed

The Origins of Product Management (part 1)

One of the common problems when discussing the subject of technology Product Management is that there is no common definition of Product Management that all people agree on.

To better understand what Product Management is, it’s important to understand where it came from.

The origins of Product Management go back to the 1930s at Procter and Gamble. Back then, a manager at P&G named Neil McElroy wrote what is now referred to as the “McElroy Memo”.  P&G was famous for their culture of writing memos on important topics.

McElroy was the manager responsible for Camay soap — a lesser brand to the company’s leading Ivory soap brand. Camay was not selling well and he decided that a dedicated “brand man” (and supporting team) was needed to ensure that sales of the brand were being maximized.  Here’s an excerpt from that memo describing some of the issues that the “brand man” would need to address.

  1. Study carefully shipments of his brands by units.
  2. Where brand development is heavy and where it is progressive, examine carefully the combination of effort that seems to be clicking and try to apply this same treatment to other territories that are comparable.
  3. Where brand development is light:
    1. Keep whatever records are necessary, and make whatever field studies are necessary to determine whether the plan has produced the expected results.
    2. Study past advertising and promotional history of the brand: study the territory personality at first hand–both dealers and consumers–in order to find out the trouble.
    3. After uncovering our weakness, develop a plan that can be applied to this local sore spot. It is necessary, of course not simply to work out the plan but also to be sure that the amount of money proposed can be expected to produce results at a reasonable cost per case.
    4. Outline this plan in detail to the Division Manager under whose jurisdiction the weak territory is, Obtain his authority and support for the corrective action.
    5. Prepare sales help and all other necessary material for carrying out the plan. Pass it on to the districts. Work with salesmen while they are getting started. Follow through to the very finish to be sure that there is no letdown in sales operation of the plan.
  4. Take full responsibility, not simply for criticizing individual pieces of printed word copy, but also for the general printed word plans for his brands.
  5. Take full responsibility for all other advertising expenditures on his brands (author’s note – in-store displays and promotions).
  6. Experiment with and recommend wrapper (author’s note – packaging) revisions.
  7. See each District Manager a number of times a year to discuss with him any possible faults in our promotion plans for that territory.”

Putting aside the lack of gender neutral language (i.e. Study carefully shipments of his brands by units), here’s a summary of the 7 points:

  1. Understand the regions and volumes of product being shipped.
  2. For regions where sales are good or growing, understand why and try to apply those principles to other similar regions
  3. Where sales are light, investigate the situation to understand the problems. Devise a plan to address the problems and work with internal parties to ensure the plan is successful.
  4. Take charge for all messaging and advertising copy for the brands
  5. Oversee advertising and marketing expenditures for the brands
  6. Try new things, particularly with packaging of the brands
  7. Work with local sales managers to understand their perspective on what is and isn’t working in their region

It’s an interesting list. In essence, the “brand man” is responsible for the business success of the brand (product or product family).

The role of “brand man” or “brand team” was very successful at P&G and was emulated throughout the consumer packaged good industry.  And, after almost 80 years, Brand Management is well defined and is a pure marketing and business function within Consumer Packaged Goods (CPG) companies.

The story doesn’t end here, but it’s clear that the principles of brand management had a significant role to play in the formation of technology product management.

Saeed

Related articles:

An ecologically unsustainable business model

Given the Copenhagen Summit this week (I have low expectations of that BTW), I thought I’d present my own ecologically themed piece.

Computer hardware is getting cheaper and cheaper all the time. It’s almost unbelievable how much computing power and utility we can purchase today, compared to just 3 or 5 years ago. This is true for servers, storage, printers, monitors, networking equipment etc.

But, as our needs grow, or hardware fails, and new equipment arrives, what do we do with the old equipment? One area of personal frustration with computer hardware is with low end home/office printers. Printers can be bought new (or refurbished) for less than the cost of the replace ink/toner for those very same printers.

I wrote about the crazy pricing model of computer printers here. It’s been a couple of years since I wrote that and unfortunately the time has come to replace one of my printers (again)!

Canon, can you spare a print head

This time, it’s a Canon MP 610 printer. It’s actually a nice printer. It does all the usual stuff — scanning, printing, copying etc. It has independent ink cartridges for every colour so you only need to refill what you use. In fact, it has 2 black ink cartridges. One is used for text and is large capacity. The other is used for images and is “normal” size.

So what happened? To make a long story short. The printer won’t print black text through the large capacity black text cartridge. Apparently, we don’t use the printer “enough” and the print head got clogged. And apparently, this clogging is a common problem when ink-jet printers are not used regularly.  Given the price I pay for ink-jet ink, why would I use it for printing text. I use my laser printer for that!

I tried to remedy the problem, but no amount of self cleaning via the printer’s maintenance program would fix the problem. So I took it to a printer repair store. The guy there said the print head was blocked and he’d try to clean it. After cleaning, he put it back in the printer and the printer refused to accept it. A message was displayed on the screen indicating the print head was not installed.

What if a spark plug cost $1000?

The remedy? Get a new print head. I called Canon Canada. They passed me to a parts supplier. The parts supplier quoted me a price of $119 for the print head!

The entire printer (with ink!) is available online for about $150 and they’re charging me $119 for a print head. Oh yeah, and all sales are final, so if the new print head doesn’t remedy the problem, I’m out $120. Would people stand for this price gouging if it were applied to car parts?

So now I have a useless printer. And this is not the first time this happened. I had the exact same problem occur with an all-in-one Epson printer (shown at right).

Can I send my junk into the Sun?

The Epson printer is in a box in my basement. I didn’t want to take it and dump it at the landfill. Now I have 2 printers that are useless to me.

And in case you are wondering, whether I’m getting another printer. The answer is yes.  My kids do use the colour printer for school projects. So what’s my solution?

I was tempted to buy a Canon MP 640. It’s a really nice printer. It’s like my 610 but has wireless and Ethernet networking support and a few other bonuses. Price would be about $200. But I decided against that.

For $39 — less than the cost of ink cartridges – I bought a Canon MP150. Actually I bought 2 of them! Why? Free shipping for orders over $50. Not quite as “nice” as the 640, but at 20% of the price of a replacement printer, and 33% of the price of the print head, it’s more than going to meet my kids’ needs. It also won’t dent my wallet too much either. And when the first one goes belly up, which it definitely will,  I’ll have a full second printer to replace it.

Am I proud of this conspicuous consumption? No.

Do I like all this technojunk I’m accumulating? Absolutely not.

But this is the result of ridiculous pricing policies and poor product design from printer manufacturers. Whether Epson, Canon, HP or anyone else; they’re all guilty of driving people to this behaviour.

  • If the replacement print head were $50 and there was an option to return it, I’d have bought that without question. I’m sure that price still gives Canon a healthy profit margin.
  • If these printers weren’t made with built-in obsolescence — why do the print heads constantly get blocked?? — I wouldn’t have to keep buying printers.
  • If these companies sold original printer ink at reasonable prices, I’d actually use more of it, continue to buy their inks and continue to give them a revenue stream.
  • If there were easy to access recycling and recovery programs SPONSORED by these manufacturers, most of this technojunk wouldn’t end up in landfill. And I’d be more inclined to purchase from those manufacturers.

I’m one person, and in a span of a few years, I’ve purchased 4 ink jet printers. Now multiply that by the millions of people who, like me, have similar problems and you see the scope of the problem.  Is this an ecologically sustainable system? Absolutely not.

If there is anyone reading this who works in the printer industry and would like to respond, I really want to hear from  you.

Saeed

P.S.

As mentioned at the top of the article, this technojunk problem is rampant within technology and not just with printers.  I have a couple of wired routers, a Wireless B router, a old cable modem, computer speakers, keyboards, old desktop PC cases, several burnt out motherboards and hard drives (internal and external) all collecting dust in my basement. I’m not a pack rat, but I loathe just taking this to the landfill.

I also have a 19 inch ViewSonic LCD monitor that stopped working 18 months after I bought it. Reparing it would cost more than the monitor’s purchase price.  It’s also in my basement collecting dust as I don’t want to take that to the dump either. Any suggestions on what to do with that? I’m sure it’s simply a circuity problem and the LCD is fully intact. Anyone know how I can use it to create a digital picture frame?

8 lessons we can learn from Infomercials

pitchmenYou know you’re a Products Geek, when you find a show like Pitchmen appealing.

Pitchmen, on the Discovery Channel, is a behind the scenes docudrama about infomerical marketers and how they  identify products to promote, develop the pitch and then take the products to market.

The show stars the late Billy Mays and Anthony Sullivan, two very successful and well known television direct marketers.

While it’s very easy to brush these guys off as selling gimmicky items to uninformed consumers, there are lessons to be learned from watching these guys operate.

And that’s what I like about the show. It presents some of the discipline and process they follow for the products they market and sell. Here’s a list of some of the behind the scenes work they do.

1. They look for problems that a lot of people have.

  • Stain or smell remover: Yes
  • An acoustic shark repellent: No

2. They test out the products and validate they actually live up to their claims.

  • Can the odor remover get rid of foul smells from hockey equipment?
  • Can a vertical grill actually cook as well as a traditional horizontal grill?

3. They listen to others carefully, getting feedback from potential users of the product.

  • For a self-rotating pool side lounge chair, aimed at removing the need to manually rotate a chair to get optimal exposure of the sun, they enlisted some swimsuit models to test them out. After the trial, they not only asked what they thought of the product, but asked how could the chair be improved. One of the testers suggested cup holders.  Not a bad suggestion.

4. The benefits of the product have to be clearly demonstrable with a number of use cases.

  • For a food grater, they grate garlic, chocolate, cheese, citrus zest and other foods. The objective is to present a broad number of real use cases  to show utility and value. This is clearly an area where technology companies need to improve when thinking about how they demo their own products.

5. They always try to find at least one “Wow!” aspect for each product.

  • For a shoe insert product that claims to eliminate impact from running or other sports, they put their hand under a pad made of the same material as the insert, and then hit the pad with a hammer. Then they took their hand out and wiggled all their fingers to show they were undamaged. Can you say “Wow!”?

6. They craft the messaging and the pitch, being very particular to the words they choose.

  • Whether via rhymes or alliterations or carefully crafted wording, the right word at the right time can make a big difference in how a product is perceived.  For example, with a product for grating food, the lines “grate cheese with ease” and “for zest it’s the best” are used. Don’t think these stick in people’s memories? Remember that line from the OJ Simpson trial? “If the glove doesn’t fit, you must…”

7. They ensure price points that will be appealing for their audience.

  • With a vertical grill product (think of a big single slice toaster that grills burgers, steaks etc. vertically) they went to one of their partner companies who tried to source a manufacturing partner that could build product cost-effectively enough that they could sell it for $50.  The partner couldn’t bring the price point low enough and so they said “No” to the product, even though it met all their other criteria.

8. They are data driven business people.

  • While they may come across as shady marketers, they are clearly rather sophisticated (and successful) in what they do. They test out their pitches in local markets, measure the results, adjust their pitch, and test again. When they go national, they are very confident that they have something with mass appeal that people will buy.
  • This is probably the most important lesson that Product Managers should remember. They definitely follow the “Nail it, then scale it” mantra.

Overall, I find Pitchmen to be a bit of a guilty pleasure. I’ve got it scheduled for recording on my PVR. Even so, it is educational and every episode reminds me of basic marketing principles that have broad applicability and value.

Saeed

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$20,480 per Gigabyte!!!

Here’s a great example of where cost vs. pricing is completely out of control.

I have a BlackBerry for work. I travel quite a bit in my job. My travel is primarily within Canada and the United States. Living in Canada, I needed a phone plan that included North American long distance and roaming, as well as data access throughout North America.

Clearly with a BlackBerry, data access is critical.  I do try to minimize the data I access with it where possible. I don’t open big email attachments with it, and I have turned off image download when browsing websites.

I spent a few weeks this summer in the US. I got my bill and was surprised to see data overage charges amounting to about $40. I have a data plan with a 1 GB limit and I know I don’t even come close to that amount in a given month.

When I called my service provider to ask about the overage charges, the CSR said that my data plan only applies to Canada and that when in the US, there is a charge of about $1 per MB of data usage.

This was surprising for two reasons:

  1. I have a fairly expensive plan that I thought covered all my my North American dialing and data
  2. $1 per MB is $1024 per GB of data!!!

Think about that one a minute.  About $1000 to wirelessly download 1 GB of data when I’m in the US. I didn’t realize electrons and radio waves were that expensive! Thank goodness I turned off the image download when browsing the Web.

When I expressed my surprise to the CSR about the extreme cost of this, he said that I was actually getting a discount on my US data access because of an option I had purchased with my data plan.

Without that option, the cost would be $20 per MB. Yes, that is twenty dollars per megabyte, or over $20,000 per gigabyte of data! WTF??

I said in shock, “Are you kidding me? That’s completely ridiculous!”

He started a sentence where he was going to tell me how expensive it is for them to provide the service. In mid sentence, I asked him to stop because I really didn’t want to hear whatever excuse he was going to give.

I know this cost of $20 per MB is artificially high because the companies want to extort incent people into getting additional service options, and (at least in Canada), the lack of any effective competition and incentive makes Canada one of the most expensive countries in the world for cell phone rates.

honda accordBut really? $20,000 per Gigabyte??? I could buy this car for about that much money?

So, if you’ve got about $20,000 burning a hole in your pocket, give it to me(!), or go to your nearest Honda dealer and get a new set of wheels.

Or, make sure you DON’T have a US data plan with a Canadian cell phone provider, go across the border with your Blackberry or iPhone, and then click this link, login, download and look forward to your next phone bill.

Saeed

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ProductCamp Toronto – Oct 4, 2009

In just about 3 weeks, we’ll be hosting the 2nd ProductCamp in Toronto. Last year, at the first event, over 100 people came out to participate in a day of very engaging discussions and talks about topics on product development, product management, marketing, innovation and more. Some of the presentations and notes can be found here.

Pre-register today!

There are already about 150 pre-registrations for the this year’s event!

If  you want to attend, click here to add your name to the list.

It’s free to attend, and lunch is included(!),  so come out and spend a day of engaging thought and discussion with others like you.

Suggest a Session (or Vote for your Favourites)

In the spirit of BarCamp, the day’s sessions will be voted on at the start of the ProductCamp on Oct 4. But if you want to suggest a session, or want to present one yourself, you can do so in advance.

Click here to see the sessions and vote on them, or to suggest new ones of your own.

Become a Sponsor!

A number of companies have already agreed to sponsor the event, including:

  • The Ted Rogers School of Management (providing the venue)
  • Pragmatic Marketing
  • SevenL Networks
  • Greenscroll
  • MI6 Agency

Also, our own Alan Armstrong and his jazz band will play live at the end of day reception.

Thank you to all of these organizations. But we’re looking for more sponsors. Sponsorships are used to pay for lunch and t-shirts for all the participants, as well as materials, signage and other expenses that are incurred.

Your organization’s name and logo will be prominently displayed on the ProductCamp website, on the day’s materials, on the t-shirts, and significant mention will be made of the sponsor’s during the day.

If you’d like to become a sponsor and gain visibility with innovators in the Toronto area, contact us:

  • productcamptoronto at gmail dot com

Volunteer

We’re looking for volunteers to help with some of the logistics during the day. If you’re interested in volunteering,  you can indicate that when you register and someone will contact you.

Twitter – #pct2

Finally, look for the #pct2 hash tag on Twitter. We’ll post announcements via Twitter ahead of the Camp and hope to have some live updates on Oct 4.

Looking forward to seeing you there.

Tr.im should have figured out their revenue model first!

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Not to sound like a broken record, but here’s a great example of what I was talking about in my recent post entitled “5 benefits in thinking about revenue models right from the start“.

A couple of weeks ago, Nambu, the parent company of the URL shortening service tr.im, announced that they will be shutting the service down. You should read their entire post because it is very well written and makes some very good points that should serve as lessons to virtually any aspiring business out there.

trim-ripI’ve also captured a jpeg image of the page in case they take down the original. Click the image on the right to read the entire text.

Here’s a synopsis of that post.

  • tr.im is being shut down.
  • It is good at what it does and is a popular service, but that is not sufficient.
  • tr.im’s costs are real, both in terms of development effort and operational costs.
  • Those costs need to be recouped.
  • But there is no way to monetize URL shortening and the quest to find an acquirer failed. [SK – probably because there is no way to monetize it].
  • Users will not pay for URL shortening. [SK – URL shortening is a commodity; a cheap one at that.]
  • The data that tr.im collects – what URLs people are shortening and clicking on – is of little value to outsiders because “everyone has that data” as it is harvested by bots. [SK – the collected data is also a commodity.]
  • An 800lb gorilla named Twitter has anointed a tr.im competitor (bit.ly) as the URL shortener of choice. [SK – if your success is dependent on a single larger entity, be the clown fish to their anemone!]
  • This effectively blocks growth prospects for tr.im (and by inference, other competitors to bit.ly)

I use tr.im. I like it. It’s simple to use and gives me some good analytic data about click-throughs on shortened URLs I post around the web.

But I always wondered how they made money. For as long as I’ve used the web, tinyurl.com was the only URL shortener that I knew. Then with Twitter, others jumped in, providing extra services, like accounts, click-through stats and simple analytics. Here’s a chart of monthly visitor statistics.tinyurl-bitly-trim

Clearly, it was a losing battle for tr.im in terms of traffic. Even the venerable tinyurl, long the king of URL shortening is falling in traffic, with bit.ly continuing to climb.

So the question is: how will bit.ly cover it’s costs? The server and operational costs  must be significantly more than that of tr.im.

How is (or will) bit.ly generate revenue? Can they sell their data? If so, to whom?

Does anyone have any insight into how bit.ly does or will create a sustainable revenue stream? And what has Tinyurl been doing all these years to pay it’s bills? I’m genuinely curious.

Saeed