Sir Alec Issigonis, visionary designer behind the BMC mini, once quipped, “A camel is a horse designed by a committee.” His criticism of competing visions for a single product was likely in reference to engineering automobiles—but it’s applicable in the SaaS space as well.
There are countless ways to approach the design, execution, and marketing of a single product. However, attempting to incorporate every possible path forward will likely net you a spitting llama instead of the majestic stallion you envisioned.
You’ll need more than a terrific product concept to make your mark in the SaaS world. A product strategy provides a clear, single plan for your product team to follow as you research, build, and test your product before releasing it to the world. Teams bent on making a prize pony of a product must be intentional and united in their actions—which is why you must prioritize crafting your product strategy before placing a foot in the saddle.
What is a product strategy?
A product strategy is the outline a company creates to identify its vision for its product and how it plans to achieve that vision. It’s a preliminary agreement on a specific approach to building and maintaining a product between the various teams responsible for bringing it to life. The goal of a product strategy is to end up with a product that aligns with your company’s values, brand, and desired long-term outcomes.
Great concepts don’t magically become great products overnight.
Your product strategy outlines the processes required to take your idea from killer concept to profitable product, while enabling you to chart out the individual development phases needed to get there. Ultimately, your strategy balances the needs of your prospective users with the needs of your company to create a product that benefits all parties.
Product vision vs. product strategy
Product strategy is often confused with product vision. Both focus on creating the best possible product in the long run (and to keep things confusing, both terms are often used in conjunction with each other. 😢)
But to speak in horse metaphors: your product strategy is how you plan to train your horse, and your product vision is what you eventually want your horse to actually do. Your product vision is what you want to achieve with your product down the line. It’s how you want your product to impact its users and the general market after release, and what you envision it becoming over time.
Meanwhile, product strategy is all about approach.
“The product strategy is how you get to the product vision,” says Michaela Sleeth, senior product manager at Appcues. “It’s a bit more technical. It weighs what your users are looking for and what competitors are offering against your current tool stack and processes.”
Why is a product strategy important?
A product strategy unifies your entire organization around a single plan for your product. Challenges will almost certainly arise during research, development, and testing. Companies that adhere to a product strategy ensure that necessary changes made during product development still align with their original goals for their product.
Product strategy is necessary for 3 reasons:
1. It codifies a single way forward
“If you didn’t have a product strategy, you’d have tons of cooks in the kitchen,” says Sleeth. The decision-makers in your company might agree on a concept for your product, but they may all have different ideas on the best way to get it there. A product strategy effectively serves as a pact between stakeholders to follow a single high-level approach to success.
2. It informs the product roadmap
This pact is necessary because it allows for the creation of a product roadmap that results in a product aligned with your ultimate business goals. A product roadmap serves as the zoomed-in blueprint for your product development and release process. It breaks down each phase of the process into individual tasks and deadlines to keep the many teams working on your product on track. The product strategy serves as the North Star while stakeholders map out the more minute details of the product roadmap like feature development and testing. When questions arise about the best way forward, the strategy guides them to a solution that’s in line with the original goals and vision for the product.
Read more: How to create a product roadmap in 6 steps
3. It serves as a point of reference for teams as the product comes together
Widespread awareness and adherence to your product strategy across your company are essential to your product’s success. It’s not just bigwig decision-makers who risk running off-course as the product gets off the ground. Every member of every team, from engineering to marketing, will have to make in-the-moment decisions at some point during development and release that impact your product’s future. Without a product strategy, these decisions may add up to miscommunication, mistakes, and unnecessary expenditures. Individuals within your organization can use your strategy as a reference for choosing solutions to daily challenges that are aligned with your overall goals.
Types of product strategies
You wouldn’t train a camel to barrel race, and you wouldn’t use the same product strategy for wildly different products. Even similar products have a number of strategies to choose from. The type of strategy you should pick for your product will depend on an evaluation of your product vision, market research, your existing tech tools, and your internal collaborative processes.
Prominent examples of product strategies include:
A company that adopts a cost strategy tries to release a product that’s similar to those already out on the market but at a lower price. (Think: off-brand products at your local grocery store.) You might pay a premium for a tasty can of Coke. However, if a brand comes close in taste but at a lower price, you may opt for the less-expensive option.
SaaS companies only make money on this “same, but cheaper” strategy if they find ways to bring down production costs. This often involves streamlining a more popular product concept down to its essential features for users uninterested in flashy but ultimately unimportant bells and whistles. However, people purchase the more expensive product for a reason, so cost strategy must still preserve the core value of the pricier option at the end of the day. People may pay less for a product that’s not quite as pretty aesthetically, but they won’t shell out a dime for a product that performs poorly.
Cost strategy–led companies must also beware of devaluing their product. If users see that competitors charge substantially more for their product than you charge for yours, they may unfairly determine that your product isn’t worth purchasing due to its perceived low quality.
The opposite approach to cost strategy involves building a premium product that commands a premium price. Quality-focused products offer impressive features that perform reliably every time. They also require an easy-to-maneuver UI and dazzling UX to provide the best possible customer experience to as many users as possible.
Quality strategies rely heavily on the reputation of both the product and the brand. You know when someone rides a Harley Davidson motorcycle or drives a Jeep because they won’t stop telling you about it. This enthusiasm extends into the product space, where companies like Apple deliver high-quality products at lofty prices because they know brand loyalists will scoop them up.
This strategy works best if you’ve had time to develop a reputation for your product line. Start-ups or companies without name recognition may want to consider another product strategy initially until they build the necessary reputation for quality.
Sleeth points out that while some high-level plans can be combined to create unique hybrid strategies, this can’t be done with cost and quality approaches: “Let’s say you want to get something out the door that’s cheaper and you want to keep resources and costs low, so you can sell low. That’s going to impact the quality of the product.”
Cost is one way to stand out in a market filled with similar products, but you could also focus on what makes your product different from what’s available.
Differentiation strategy focuses on creating a product that contains a unique angle or feature that makes it more attractive than competitive offerings. For example, when bagless vacuum cleaners hit the market for the first time, people found that their old bag-saddled models sucked.
All SaaS products are bagless, but don’t fret: there are several other ways to differentiate your app from others, including:
- Focusing on ease of use. If what’s out there currently isn’t particularly user friendly, you could build a product that does the same thing, just easier.
- Creating a novel feature. The easiest way to stand out? “We do this—and our competitors can’t!”
- Saturating your product with features. Make a Swiss Army Knife product that doesn’t just solve one problem—it solves 10! This saves users from needing to invest in multiple solutions, adding value to your product that your competitors don’t have.
A time-based strategy involves getting your product off the ground ahead of other comparable products to gain a competitive advantage. A well-received “first of its kind” product enters the public consciousness and sticks there even as other similar products eventually flood the market. People commonly call any box of facial tissues Kleenex regardless of the actual brand because Kleenex came first. It’s a massive branding advantage that, as Kleenex shows, could potentially last decades.
There are other key advantages to being first:
- Market share. Users interested in your tool won’t have anything else to choose from, allowing you to lock down the market. Once competitors do show up, they’ll have to compete with your formidable presence.
- Customer loyalty. If you impress your new customers from “go,” you’ll stand a chance of retaining a large percentage of your original user base. This makes it easier to eventually pivot to a quality strategy as your product matures and your product line expands.
- Early data. You can use customers’ behavioral data to see what’s working and what’s not within your app as soon as they start using it. This will let you proactively iron out friction in your UX, identify your app’s stickiest features, and even inform new features or products down the line. This puts your product miles ahead of the competition by the time they come to market.
Not every product has a massive target demographic. A product may appeal to enterprise businesses in a niche vertical or may only be useful for a unique audience like start-up founders. A focus strategy enables companies to build a product whose features serve audiences who share:
- Geographic proximity. PropTech companies like Homeward currently serve specific cities and regions. It wouldn’t make sense for their product and marketing to address locations they don’t currently serve.
- A specific persona. You’re bound to have better luck with your “SaaS-focused recruiting product” if you build it for SaaS-based recruiters and literally no one else.
- Demographics. Your product may specifically serve a certain age, gender, income level, or education. For instance, if your product is a mental wellness app for senior citizens, you should factor age into the decisions you make about your UI and UX.
Top features of an effective product strategy
The different types of product strategies will each have their own unique aspects, but the most successful product strategies all share several universal features. Your product strategy should be:
You can’t evaluate the success of your product strategy without first identifying what that success will look like. One of the key features of a strategy is its ability to convert the high-level hopes of the product vision into measurable goals. Choose trackable KPIs and establish benchmarks by which you’ll evaluate your product’s success before you hash out the individual details of how you’re going to build your product.
Read more: 12 product management metrics & KPIs for data-driven PMs
Consistent but flexible
“Appcues has 4 main engineering teams,” Sleeth says. “As much as we follow the same general processes and same goals, what we need out of iterations day to day is very different per team.” A product strategy needs to establish a foundation for your product development efforts, but it shouldn’t be so rigid that it impedes day-to-day flexibility.
For example, your engineering team uses its own unique tools and has its own particular internal flow. Your product strategy should accommodate these existing resources and methods while leaving room for individual teams to innovate, collaborate, and breathe. An unnecessarily restrictive strategy can unintentionally lead to inefficiencies, frustrations, and bottlenecks at various stages of development and release.
Remember: you’re not building a product for yourself. But if you want to build a profitable, impactful product, you need to focus on building a product for the people who will use it every day.
The first step to building a customer-focused strategy is identifying exactly who those customers are. Sometimes the answer is obvious: “I want to build an ecommerce site for musicians.” But even obvious cases will require extensive follow-up research to identify the viability of your audience. Do musicians even have a need for your service? Should you cater to musicians of a certain genre? Of a certain age? What competitors exist in this space, if any?
Once you’ve figured out your target audience, their needs should serve as the foundation of your development and subsequent release processes. As you plan on delivering a minimum viable product (MVP), your strategy will need to prioritize your product’s stickiest and most valuable features. These features will entice users to try out your product and engage them enough to get them to stay even as you work on building out the rest of your app’s components.
4 steps to create a successful product strategy
It’s a straight line from a product strategy that’s haphazardly slapped together and the resulting haphazard product. Since your entire development and release process will be built from your product strategy, it pays to take the time to carefully piece it together.
There are 4 main steps to creating a high-quality product strategy:
1. Establish your product vision
At the risk of sounding like a Von Trapp: the beginning is a very good place to start. You have a concept of what your product will do, and now it’s time to transform that into an official statement of intent. Your product vision should express your ultimate high-level goal for your product in a simple value-laden statement.
If you’re having a hard time articulating your own product vision, just fill in the blanks on this formula and use the resulting sentence as a starting point:
“[Product name] aims to [product description] that [ultimate goal] through [high-level summary of strategy].”
This formula would result in the following vision for Chewy: “Chewy aims to create a customer-focused ecommerce site for pets that fosters brand loyalty through stellar customer service.”
Read more: Product planning: Definition, benefits, & how-to guide
2. Research the market and establish goals
Great ideas often crumble in the face of empirical data, so it’s important to use research to identify potential flaws in your hypothetical product. Research also helps uncover potential opportunities in prospective markets or with particular features that you may not have otherwise known about.
This stage is referred to as “product discovery,” which is fitting. You’re effectively discovering whether there’s actually a market for your great idea. Good product discovery focuses research on:
- Your customer base. The best way to find out how your customers behave and what they want from your product is to ask them directly. Use customer interviews, surveys, and focus groups liberally to get the information you need.
- Your competitors. Sign up for demos, read customer reviews, and visit the blogs and social media accounts of your competitors to discover what customers love about their products and what they want improved. Study how they went to market and what obstacles they’ve encountered to inform your own strategy.
- Macro-economic trends. You can’t predict how the economy’s going to look at the time of your release, but you can prepare for all outcomes. A quality strategy that might work well in sunnier economic climates might not fare well in market downturns.
This research should inform your initial measurable objectives. Your user conversion goals would be higher if you were releasing a brand-new concept during a healthy market and with zero competition. Meanwhile, a quality-oriented product facing stiffer competition may want to focus more on user retention metrics as an indicator of overall success.
Read more: The case for product discovery: A 4-step guide to saving time and money
3. Build your product roadmap
Once research backs up your grand designs for your product, it’s time to create your action plan. Product roadmaps serve as the instruction booklet for your product and set expectations, tasks, and deadlines for every team that has a hand in building or releasing your product. The roadmap keeps everything on track and allows teams to anticipate future bottlenecks or obstacles in development.
Your roadmap should always be customer focused, but it’s equally important to factor in your existing human resources and technical infrastructure. “Every team is different,” says Sleeth. “What works for one organization won’t necessarily work for another organization. Tailor your roadmap to how your team works best.” If your company is built to pursue a cost strategy, don’t suddenly pivot to a quality strategy without making substantial changes to your internal structures and processes.
Since it’s your chief reference document, your roadmap should exist as a digital document accessible to everyone involved in development. Dozens of products like TeamGantt and Wrike make for excellent, easy-to-use product roadmap tools that enable collaboration between teams. Research the tools at your disposal and choose the one that best fits your team size, budget, and overall planning needs.
Read more: The 15 best product roadmap tools to keep your plans on track
4. Use customer data to iterate and evaluate throughout the product life cycle
Once your product is out in the world, you’ll finally be able to determine the success of your efforts. You can scrutinize those KPIs as users sign up and dive into your app.
Release doesn’t mean the end for your product strategy. You still have plenty of new features and patches to churn out to support and grow your product. However, the data your users create every time they use your app should be used to determine the way forward. You can take advantage of these insights to improve your product strategy as long as you have the right product management tools to do so.
Read more: 15 best product management tools to use in 2022
Once users show you exactly how they want to use your app, you may need to shift priorities. Perhaps users indicate the desire for a new feature you didn’t initially plan for. Maybe a feature you thought was important isn’t being used as much as you thought it would. You could instead allocate time and money to the features that users are actually, well, using.
And remember: if your product is a success, the odds are it won’t be the last one you build and release. Evaluate your existing strategy ahead of releasing more products to identify what worked and what didn’t and back your analysis with your user, sales, and marketing data. This evaluation will help to tighten up the product strategy for your next release and make for a more efficient development and release process.
Real-life product strategy examples
Product strategies aren’t just hypothetical constructs. The most successful SaaS companies are built on the foundations of a good product strategy, including some of the biggest names in the tech space:
HubSpot: The all-in-one differentiation strategy
You may use HubSpot as your business’ CMS. Or your sales team may use it to track leads. Or you may use it to post your company’s social media content. Or you may use it to track customer service issues. Or you might …
You get the point: HubSpot does a bit of everything. It leans hard into differentiation strategy by asking a deceptively simple question: What if you had one tool that covered all of your sales and marketing needs? The company launched its CMS in 2006, but it has since expanded its suite of tools to include sales, marketing, and service hubs. Just last year, it launched Operations Hub, a product aimed at wrangling customer data as businesses scale.
This “everything” strategy serves HubSpot well. The more features and tools in HubSpot’s arsenal that customers use, the less likely they are to churn because they’d have to buy multiple products to get the same services HubSpot offers in one platform. The company has used this strategy to eclipse 100,000 customers in 2021 and make more than $1 billion in annual recurring revenue.
Slack: The “doing one thing really, really well” quality strategy
Slack found success as a business messaging app that positioned itself as a unique solution to a common problem. People were already flooded with emails every day, many of which simply contained questions that only required a quick answer. Meanwhile, existing messaging apps weren’t geared for commercial usage and weren’t particularly robust.
Slack had already netted 8 million daily users in 2018, but the pandemic sent its popularity soaring. Some 18 million people used the app daily in 2020 alone. Slack is still largely viewed as the most user-friendly commercial messaging app on the market. Its hundreds of integrations with popular apps and unlimited messaging plans speak well to companies who need more out of their product than just “type and send” functionality.
This focus on its core offering has made it especially popular amongst enterprise-sized businesses due to its emphasis on organization, scalability, and data security. The company’s decision to focus on building a product focused on one key value proposition paid off, as Salesforce acquired Slack for $27.7 billion in 2021.
Turn insights into actions with Appcues
Your user data will prove invaluable in guiding continued development as your product matures. A proper behavioral analytics tool will show you the friction points in your UX—but you’ll also need a way to turn those insights into actions.
Appcues covers both bases, serving as a powerful analytics tool and a premier UX platform. Create user-friendly release announcements to highlight your newest data-guided features. Identify user frustration in your onboarding processes and then build a no-code product tour all from the same app. Best of all: Appcues’ various UI/UX patterns like tooltips, modal windows, and slideouts don’t require code to implement, allowing you to focus your energy on other challenges.
The long-term success of your product requires a solid product strategy, and every good product strategy needs a product manager to hold it all together. As a product manager, you juggle a lot of balls—but tools like Appcues will help you from dropping them.