Emerging Product Strategy
Product Management Strategies: Stopgaps & Scaled Retention
Product Management in the Time of COVID Part I
What are we going to do next? one of our developers asked. I sat staring blankly at the screen waiting for someone else on the video call to speak up. But nobody could answer. That was the moment I realized everything about our company, our products, and the way we do business had already changed.
Moments of harsh realizations are etched into many of our memories. This one came from a VP of Product in the US. It was a video call in March, and her company was announcing a work-from-home policy for the foreseeable future. Each of us has experienced a startling realization like hers. COVID-19 impacts how we live, work, and relate to each other and the world. What are we going to do next?
In March I set out to help product leaders answer this question. Through interviews, case studies, and community dialogue I continue to identify emerging product management best practices, product strategy pivots, and delivery practice trends that will impact our profession for years to come. The “Product Management in the Time of COVID” series presents these insights in hopes of deepening the product community’s dialogue to help all of us adapt and thrive as a new normal emerges.
This article highlights customer retention strategies for products adapting to changes in customer behavior.
The Stopgap
“What can we offer customers to get them to stick with us right now without exceeding their value to the company? We need to meet customers where they are without overextending ourselves and then hold on tight.” According to a savvy Product Director who survived the Great Recession this approach underwrites every product team that successfully navigates massive fluctuations in user behavior. COVID-19 induced behavior changes bring this approach to the forefront of many product strategies.
At first glance this seems like a simple stopgap. It involves product managers, customer success, and marketing teams working together to retain customers for a few months with pricing solutions and product add-ons. In the wake of COVID-19 products in retail, financial services, travel, mobile application, and digital experience spaces turned to time-bound solutions like free delivery, price cuts, postponed debt collection, and add-ons to retain existing customers. Each of these solutions requires little-to-no product development and the product itself remains unchanged.
But what happens next? In theory these short-term solutions lead to long term stabilization. Retaining customers through volatility and change preserves some cashflow and market share while building customer loyalty. Together that stabilizes the product enabling us to pursue long-term strategy goals.
Scaling Retention
In our new COVID-19 induced reality freebies and add-ons were a great stopgap. If long-term customer behavior remains unchanged we did enough to pivot back to existing strategy. But, most of us face a world where customer behavior has changed forever so our previous strategy needs adaptation or overhaul. This starts with scaled retention.
Scaled retention involves a blend of value delivery and product marketing targeting segments of your current customers. It assumes that existing customers are your most important asset because they underwrite cashflow and power growth with referrals. Scaled retention leverages this relationship as the foundation of successful products.
Many companies pursue scaled retention strategies in the face of shifting customer behaviors that undermine existing product market fit. Permanent product market fit evades most products. Markets change over time as emerging competition and alternative solutions influence consumer behavior. But destroying product market fit over night takes a perfect storm like a pandemic, new regulatory limitations, and economic crisis. Very few products see a comfortable fit between pre-COVID-19 offerings and the emerging market. For this reason, product managers have begun adapting.
Tactics to Implement a Scaled Retention Strategy
Adaptation begins with research including interviews with existing customers and surveys to identify emerging opportunities. Surveys and research among loyal customers increase the likelihood of a meaningful and timely response. As product managers identify emerging opportunities, we develop hypotheses of how to satisfy customer needs. Scaled retention occurs when we quickly test these hypotheses by leveraging components of existing products in new ways.
Fitness products that previously relied on in-person experiences are leading today’s scaled retention charge. For example, CycleBar, a US-based spin studio franchise, experimented with renting bikes to existing members in April. The hypothesis was that some customers paying for in-person spin classes would pay the same price to stream classes from home. Members who continued paying monthly fees took bikes home to participate in spin classes broadcast online and for personal use. This effectively created a small experiment leveraging existing equipment and instructors with a narrow segment of customers.
At face value the April experiment may not seem like a major shift. But, CycleBar’s brand heavily leverages the feeling of community created through in-person sessions and staff interaction. Franchises had to evolve their core product, a community experience, through unique mixes of digital messaging and new techniques for remote instruction. Starting small with loyal customers who would engage and provide feedback was critical to amassing insights and perfecting the new remote experience.
As CycleBar honed remote classes and began seeing positive feedback some studios expanded by opening remote classes to members who have their own spin equipment. This approach tested a new hypothesis: customers do not need the exact same equipment to be part of a remote fitness community.
The franchise model was a major advantage to CycleBar’s experimentation. Many small franchises experimenting with different platforms and approaches to customer engagement simultaneously identified best practices at scale. As the best solutions were discovered corporate could implement them at scale across franchises. The opposite was true of bad solutions which could be identified by one franchise so corporate could warn others and limit impact. CycleBar effectively practiced rapid controlled experimentation.
Rapid controlled experimentation creates a safe space for discovery by limiting the impact of negative outcomes and quickly scaling positive ones across an existing user base
Rapid controlled experimentation at small scale already takes place in companies and products that do not have franchise business models. A/B testing and other digital or mobile product practices exemplify this approach. Additionally, most product managers already segment the customer bases through personas during research and analysis. An emerging product management best practice for rapid controlled experimentation involves identifying a potential solution for one customer persona, generating a test scaled to just that persona, and then adapting the solution to extend what works to other customer segments. Along the way we deliver value to an increasingly large base of our customer which results in scaled retention.
Emerging Trend
As the impact of COVID-19 grew many products took immediate steps to stabilize with stopgaps. Now we turn to long-term strategy. Scaled retention requires flexibility to adapt a product to changing markets by developing solutions customers suddenly need. Scaled retention hinges on shared discovery between customers and the product as we identify problems and solutions together. Rapid controlled experimentation creates a safe space for discovery by limiting the impact of negative outcomes and quickly scaling positive ones across an existing user base. Product managers across industries can benefit from scaled retention strategies by leveraging rapid controlled experimentation in today’s turbulent world.
The second article in this series gets tactical by examining the wide-scale emergence of lean roadmapping.
What does success for your product look like? What adaptive strategy best practices are we missing? Share this article with comments that answer those questions so the entire community can benefit from your experience. Reach out to me on LinkedIn for product mentoring and coaching if you need help answering these questions or addressing anything else product.
