What is a Product Strategy?
A product strategy is a high-level plan describing what a business hopes to accomplish with its product and how it plans to do so. This strategy should answer key questions such as who the product will serve (personas), how it will benefit those personas and the company’s goals for the product throughout its lifecycle.
Why is Product Strategy Important?
It serves three main valuable business purposes.
1. A product strategy provides clarity for your company.
Your team will be in a better position to deliver their best work when you draft and communicate a clear and well-thought-out strategy to your organization.
Your developers will understand how the parts of the product they’re working on contributing to the larger companywide strategic goals. Developers can sometimes feel caught amongst all the details and lose sight of the overarching purpose behind all of their work, and a product strategy clarifies that for them.
Your marketing and sales teams will be able to articulate the product’s benefits and unique selling proposition. However, without a defined strategy behind a product—generating anticipation and sales becomes difficult.
Additionally, your customer success team will better understand your product’s use cases and provide better support for your users’ frustrations.
2. It helps you prioritize your product roadmap.
After you’ve earned stakeholder agreement for your proposal, it will be time to translate that strategy into a high-level action plan. This means building an effective product roadmap.
Unfortunately, many product teams skip the strategy-drafting stage and jump right into listing themes and epics on their roadmap. Without a product strategy to guide these decisions, the team is more likely to prioritize the wrong items and find itself misusing its limited time and resources. But when you start with a strategy, you have a clearer picture of what you hope to accomplish with your product, translating into a more strategically sound product roadmap.
3. A product strategy improves your team’s tactical decisions.
No organization delivers a product to the market following the exact plan drafted in the initial roadmap. Things change along the way, and product managers need to be prepared to adjust their plans and priorities to deal with those changes.
When you and your team have a clear product strategy to refer back to, you can make smarter strategic decisions about adjusting your plans if you lose resources or have to change your estimated timetables.
What are the 3 Key Components of a Product Strategy?
Product management expert Roman Pilcher suggests a strategy should contain three key elements:
- The market for the product and the specific needs it will address.
- The product’s key differentiators or unique selling proposition.
- The company’s business goals for the product.
What Comprises an Effective Product Strategy?
An effective product strategy should include the following:
1. Product vision
A product vision (written as a product vision statement) describes the long-term mission of your product. These are typically written as concise, aspirational statements to articulate what the company hopes the product will achieve. For this reason, a product vision should remain static.
For example, Google’s early vision statement for its search engine was, “Organize the world’s information and make it universally accessible and useful.”
A product vision should lead to high-level strategic goals. These goals will, in turn, influence what the team prioritizes on its product roadmap. Examples of product goals include:
- Increase free-trial downloads by 50% in the next 6 months
- Improve our average customer rating by one star on the major product-review sites
- Generate $3MM in revenue within 12 months
Using SMART goals is the best approach to utilize when setting goals for your product strategy. Like product roadmaps, goals should be Specific, Measurable, Attainable, Relevant, and Time-bound.
Initiatives are the strategic themes you derive from your product goals and then place on your roadmap. They are large, complex objectives your team must break down into actionable tasks. (The product roadmap is, after all, only the high-level blueprint.) Examples of product initiatives include:
- Improve customer satisfaction
- Increase lifetime customer value
- Upsell new services
- Reduce churn
- Add customer delight
- Break into new industries or geographical areas
- Sustain product features
- Increase mobile adoption
A Product Strategy Template
After working with thousands of product managers across many industries over the years, we at ProductPlan have found the following 5 steps represent a best practice for developing an effective product strategy. You can use this template:
Create a Product Strategy in 5 Steps:
- Talk with your prospects and customers.
- Develop a high-level vision that has a long-term view.
- Define the product’s SMART goals.
- Use those goals to guide the roadmap’s themes.
- Continuously review the product vision and strategy and iterate.
For more on developing and communicating your strategy, watch our webinar: