4 min read

The story of long term product health vs. short term sales profit

You’ve been there before, sales comes in with a unique customer request, sometimes across a handful of customers. “We’d close $1M if only…

You’ve been there before, sales comes in with a unique customer request, sometimes across a handful of customers. “We’d close $1M if only the product can be tweaked just so,” they would say. Turns out “just so” gives you a big-ol snowflake with technical debt for years to come. Meanwhile the company is 6 months from dry-well. What’s the right call?

Let’s do the math on an example.

In a previous article I defined Blocker Personas who live in customer organizations and are the ones who block multi-million dollar contracts. There was an example of a Software Test Automation company where the Product Owner identified the following personas at the customer organization:

  1. Development Managers — Buyer
  2. QA Managers — Buyer
  3. Developers — User
  4. Test Automaters under the age of 35 — Blocker
  5. Test Automaters over the age of 35 — User
  6. Manual Testers — User

Even though everyone else gave the product the go-ahead, the #4 group of Test Automaters under age 35 was blocking product sale. This is because the product made their jobs faster, but was a visual “drag and drop” rather than traditional coding. The under-35s wanted to learn to code, that’s why they took the test job. The “drag and drop” tool took away this part of their role. So they were rallying against its adoption.

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The Fork in the Road

The Product Owner and team now has two choices, either to

A. Convert the #4s into users by understanding their use case and adding snowflake features catered to them, or

B. Declare companies with a high number of #4s as poor-fits and stop going after these accounts.

This a tough choice because choosing (A) means investing in winning the currently blocked accounts. But it means adding features that cater to #4s which likely look more command-line-esque, and thus go against the ethos of the current product. Choosing (B) has obvious revenue and market sizing impacts. Plus an investment was already made to do sales discovery on those blocked accounts. So what’s right?

This is an exercise in Focus.

Option (B) = Focus.

It is always more economical to refine the sales strategy than add product features that goes against the product ethos.

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The company in this example is a startup. And for startups, Focus is king. Assuming the feature indeed goes against the product ethos, meaning the product will effectively take on two identifies going forward, then (B) would be much more favorable. Before committing to (B) one would ask whether (B) would shut the company out of an out-sized market opportunity, one that is larger than the market it serves without (B). If not, and if the company can otherwise survive, then (B) is the favored path. Here’s the math. Let’s make the trade-off even harder by assuming that of the 100% available market, just 60% of the market would take your product without the snowflake feature. And let’s say you have 15 blocked accounts and your sales and marketing team converts 2 accounts per month.

At first blush, Option (A) seems like a better choice. It has a high cost, but that’s offset by a 25–30% boost in sales from converting the blocked accounts, and the company continues to target 100% of the original available market. But this is at the expense of creating and maintaining a feature that begins to bifurcate the product, when the company is young and the product is not yet ready for this bifurcation. Furthermore, the messaging and resulting sales path for the product can also become muddied and bifurcated. Meanwhile in (B) the focus allowed sales and marketing to get much better faster, streamlining the message and converting accounts at a faster rate. Customers also become die-hard fans because the solution fits them like a glove, so they tell their friends.

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Of course, in Option (B), the team is selling only to 60% of the originally defined market. But for a startup with a limited sales force, this does not present a handicap. By the time this limitation becomes a problem, the company would be much larger and have the ability to invest in multiple product tracks.

What do you think is the right call here?

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