Linking Product Intiatives to Revenue

Do you know the revenue value of the features and product improvements you shipped last year?

Most CEO's could tell you exactly what their sales team billed in any given quarter, how much the team cost, and the annual quota required for a rep to keep their seat.

Nothing unusual in that - it's how sales teams expect to be managed.

However, they probably couldn't tell you how much revenue their product and engineering team brought in over the same period.

And yet a squad consisting of a Product Manager, a Product Designer and 3 engineers will cost upwards of £350,000 in annual salaries.

Working in 2 weeks sprints, that's a burn rate of around £13,500 per sprint.

It seems fair to ask "so what am I getting for that spend"?

Clearly we shouldn't measure in terms of lines of code / features shipped. The measure should be what quantifiable value was created.

Too many roadmaps though are made up of opinion led feature ideas and guessed priorities, with little connection to company or product strategy, let alone to revenue growth.

In the current climate it's more important than ever to make sure teams are working on the most valuable things possible.

Prioritisation frameworks like MOSCOW are useless comfort blankets without sound product strategy and financials.

So what to do about it?

1. Do the data analysis
   How are competitors winning in your market? Which way is the technology going? What challenges are cohorts of your customers facing? What reasons are prospects giving for not converting (work with your sales and CS teams to help them ask the right questions and record the data in a useful way). Segment your market and review existing customers to identify your best prospects.

2. Understand what represents 'value' for your customers in the context of the problem you are solving for them, and figure out how to measure it. This is your north star.

3. Develop a product strategy (if you don't already have one)
   A product strategy is a response to the commercial strategy. It defines the direction and high level initiatives the product needs in order to realise the commercial strategy. It is not a roadmap or a list of features! If the commercial strategy is to move to enterprise, how does the product need to change to enable that?

4. Align the whole company around sales and acquisition targets so teams work together to realise them. Get sales and product working hand in hand to reach these goals.

5. Clearly understand and communicate the financial value of every stage of your funnel.
   For optimisations make sure you back out the numbers. What does a 5% increase in trial signups deliver in terms of realised revenue down stream? Where can a team have the most impact in that funnel (there will be quick wins that bring incremental improvements, and longer term efforts that bring in larger gains).

Review the numbers regularly as a team so everyone understands the goal and this level of focus becomes part of the culture.