As a product manager, you will probably be asked to define the strategy for the product you’re managing. This can sound like a nebulous task at first. That’s why we created this practical product strategy template including 7 essential steps that help you structure your thoughts and wow your stakeholders!
Table of Contents
- What Even is a Product Strategy?
- Why a Product Strategy is Important
- Key Elements of a Product Strategy
- Great Product Strategy Template – Step-by-Step Guide
- Next Up – Create a Product Roadmap
- Avoid These Mistakes
What Even is a Product Strategy?
A great product strategy should ideally answer these 4 key questions:
- What are your objectives?
- What are the opportunities for your product?
- How will you measure whether you are successful in achieving your objectives?
- What product work do you plan to do in order to seize the opportunity and achieve your objectives?
Why a Product Strategy is Important
A product strategy is needed because it outlines the plan for how to achieve the product vision. It is a roadmap that outlines the features and functions that will be included in each version of the product. Without a product strategy, it’s not easy to know what to build and when to release new versions of the product.
A great product strategy document is clear, concise, and easy to understand. It should be based on research and data, and it should be aligned with the overall business strategy. The document should also be reviewed and updated on a regular basis.
In contrast, the product vision is the long-term goal for the product, while the product strategy is the plan for how to achieve that goal. The product strategy outlines the features and functions that will be included in each version of the product, while the product vision is the overall goal for the product.
Key Elements of a Product Strategy
To come up with a good product strategy you should be able to define the following key elements:
A clear understanding of the target market
Identifying the needs of your target market and understanding what they are looking for in a product, based on their pain points.
A unique value proposition
Defining a unique value proposition that sets your product apart from the competition.
A product roadmap
Developing a product roadmap that outlines the sequence of how you will release features and capabilities.
There are different mental models or frameworks that help you develop a product strategy. For example, the jobs-to-be-done framework, the lean startup methodology, the business model canvas, or the product canvas. Check them out to see if they are helpful.
Great Product Strategy Template – Step-by-Step Guide
Here are the 7 steps that will help you structure your thinking and create an excellent product strategy.
1. Clarify Goals
In the first step, you need to clarify what you are trying to achieve. Your goals should be tied back to your vision for your product.
It’s important to take into account the overall company strategy. Then, identify how your product area can contribute. The following 2 questions help you frame that:
- What impact does the company strategy have on my product strategy?
- How does my work tie back to the main company goal?
2. Define Your Target Customers
The target market is the group of people who are most likely to buy your product or service. To define the target market, you need to understand who your product is for, what their needs are, and what they are looking for in a product.
Here is what you should do to get a better understanding:
- Talk to your current customers and find out who they are, what their needs are, and what they think of your product
- Look at your competitor’s products and see who their target markets are
- Conduct market research to understand the demographics, psychographics, technographics, and needs of your target market
- Use data from your marketing and sales efforts to identify patterns and trends among your best customers
3. Decide Which Pains to Tackle
Almost everything you do should solve pains for your customers and users. But how do you identify their pain points? Here are a few ways to identify the pain points your customers have:
- Talk to your customers directly and ask them what their biggest challenges are
- Look at customer support data to see what issues are being raised most often
- Review feedback from beta testers or early adopters of your product
- Use analytics tools to see where users are dropping off or having difficulty using your product
- Talk to your internal stakeholders who might have many touchpoints with customers such as Sales, Customer Service, or Customer Success
After you have identified the pains, you should decide which ones are worth focusing on first. This is done best through prioritisation. Here are some of the most popular ones: The Eisenhower matrix, the MoSCoW method, and the Kano model.
You can of course also create your own prioritisation model. We recommend thinking about the following question when doing this exercise: How many people experience the pain, how often it occurs, the revenue potential or impact on your top metric, and how much that pain is solved by your product today?
4. Define the Value Proposition
The next step is all about defining the competitive edge of your product versus the competition. How does it stand out?
The unique selling point (USP) is the differentiator of your product that is most valuable to your target market. It is what sets your product apart from the competition and is the reason why someone would choose your product over another. To identify your product’s USP, you need to refer back to the needs of your target market and what they are looking for in a product.
You also need to understand the features and benefits of your product and how they compare to the competition. Once you have this information, you can define the differentiators of your product.
Common differentiators are:
- User experience
5. Decide What to Build
The product strategy’s purpose is to ultimately answer this question – What to do in order to achieve your vision and goals? This next step is about deciding what product functionalities to build to achieve those goals.
Create a list of potential initiatives that tie back into the pains that you’ve identified beforehand. It can be helpful to categorize items on the list into:
- New features – Building new capabilities
- Scaling – Work required to be able to continue building effectively
- Expansion – When tackling new markets or customer segments
- Growth – Improving existing capabilities to drive impact
- Big bets – Large initiatives based on hypotheses
Then, it’s time to prioritise (again). Every single item on the list needs to be challenged in terms of how much impact it will have on your goals. You can also consider other criteria such as the effort to build or the level of innovation.
Feel free to use the prioritisation models from the previous exercise or the popular RICE framework.
6. Define Metrics
How will you measure if you have been successful once you have launched one of those initiatives? Define metrics that will be used to track progress towards your objectives and how well your product strategy is delivering on its promise
It can be helpful to think about metrics in stages, e.g. for launch, initial growth and later on business as usual (BAU). Another aspect is to consider metrics that might be impacted by your product work. While you might be driving results, your initiatives might have a negative effect on other key company metrics. Make sure to define and track adjacent metrics.
Make sure to check out our article on metrics – Why You Need To Track These 10 Product Growth Metrics.
7. Communicate the Product Strategy
Lastly, it’s absolutely critical that you share your product strategy and get input from relevant people. They should be kept in the loop so they know how it impacts their teams.
What’s an effective way to communicate the product strategy to stakeholders? There are a few different ways to do this effectively:
- Create a shared product strategy document
- Present the strategy in a meeting (company-wide or within your organisation)
- Use a tool for documentation that your stakeholders can access
Next Up – Create a Product Roadmap
Once you have defined the product strategy, the next step is to flesh out the product roadmap. The product roadmap is a high-level overview of the planned product work. It outlines the features and capabilities that will be built into the product over time and is a useful means to communicate and align the product strategy with stakeholders.
The roadmap should be created with input from all stakeholders, including the engineering team, design, sales, marketing, and support. The roadmap is a living document which should be reviewed and updated on a regular basis to ensure that it remains accurate and relevant.
Avoid These Mistakes
When creating your product strategy, try to avoid the following pitfalls:
- Not tieing the product strategy back to the overall business strategy
- Not clearly defining the target market
- Not spending enough time researching your target audience and their needs
- Not clearly defining the value proposition of your product
- Not considering how you will proposition and market the product
- Not prioritising the items on the roadmap
- Not aligning the roadmap with relevant teams
- Not revisiting the product strategy on a regular basis to ensure that it is still relevant and accurate
The biggest mistake product managers make in our opinion, is they don’t spend enough time with other stakeholders while creating the product strategy. It’s important to gather input from all relevant people. Your strategy might impact their work or their own strategy can have severe implications on the work you’re planning to do.
An absolute life hack when creating the strategy is to always have an ear to the ground with the target market. This means that you constantly get feedback about what their pain points are, what their goals are, what they like and what they don’t like. This will help you validate or invalidate your product strategy faster.
In order to get in touch with the target market, you can use various research methods such as surveys, interviews, focus groups, and social media.