Product management is arguably the most important aspect of running a small business. It plays a key role in attracting, satisfying and retaining customers, ultimately driving profitability.
In this article, you’ll learn what effective product management looks like, why it’s so crucial to your business and how to build products that consistently generate revenue.
What is product management?
Product management involves guiding products from conception to launch and improving them based on customer feedback and market trends.
It also involves learning from product performance data to achieve better outcomes with every new idea.
Product management aims to ensure products meet customers’ needs, align with company goals and maximize revenue.
For example, Google’s Pixel 9 smartphone results from years of effective product management that ensures it meets consumers’ needs.
The Pixel’s carefully managed development and promotion are key to its popularity (i.e., the reason it generates lots of revenue for Google).
Like with many other connected devices, Google upgrades its Pixel products post-sale using over-the-air (OTA) updates.
How does product management work?
Some businesses have dedicated product manager roles and even product teams. However, it’s common for small business owners to oversee the product management lifecycle in small organizations.
Product management workflows in these small organizations vary in detail, but most have the following stages.
Idea generation. Identifying a market opportunity or customer problem and brainstorming potential solutions.
Market research. Learning about customer needs, competitors and market trends to validate the product idea.
Product development. Working with designers and engineers to build product prototypes and the final version.
Testing. Testing the product with real users to get feedback and make adjustments for launch.
Launch. Introducing the product to the market with a targeted marketing campaign.
Evaluation. Tracking the product’s performance and refining based on user feedback.
Owners can also delegate some tasks to team members or specialists. For example, a salesperson could do market research in the field. Delegation ensures the business owner isn’t overloaded and that people with relevant skills handle tasks.
A simple product management example
Here’s a basic product management process in action:
A tech startup owner finds that many target customers struggle to manage multiple social media accounts.
The owner brainstorms a solution and validates it with market research. Then, they work with a small team to build an intuitive app that simplifies social media management.
After testing and refining the app based on user feedback, they launch it with a targeted advertising campaign.
The owner then monitors user reviews and app performance. Based on customer needs, they work with the development team to launch updates that improve features.
Finally, the owner uses what they’ve learned to make better products. Then, the process repeats.
Product management vs. project management: what’s the difference?
It’s easy to confuse product and project management, but they serve different purposes within a business.
Product management definition
Product management focuses on the “what” and “why” of a product. It’s about defining your product’s vision, strategy and goals. Ultimately, product managers are responsible for understanding and addressing customer needs.
Project management definition
Project management focuses on the “how” and “when” of executing projects. It could mean a new product development (i.e., product management) or any other business initiative. Project managers ensure projects finish on time, within budget and to the required standards.
3 ways you’ll benefit from effective product management
A thoughtful product process ensures you stay relevant to your target audience. Get it right, and you’ll improve your company’s goal-setting, efficiency and customer retention rates.
In contrast, poor product management can be costly, pulling money away from other areas of your operation.
ProductPlan found that the second most common reason small businesses’ product investments don’t meet expectations is the lack of a sound go-to-market strategy.
Here are the outcomes of effective product management in more detail.
1. More meaningful goals
Product management requires you to pay close attention to customer needs and market trends.
By following those needs and trends, you’ll ensure that your product and business goals align with customers’ needs.
This alignment is a form of customer centricity and increases the chances of your products succeeding – just like Google’s Pixel device in our earlier example.
You can also use what you learn about your audience to make your marketing messaging more relevant, increasing sales. For example, customer feedback may uncover new pain points to address in your sales copy, making it more engaging.
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2. Improved efficiency
A product management strategy acts as a repeatable roadmap for generating, validating and executing ideas.
A regimented process eliminates guesswork. You and your team will know at every stage what must happen to reach launch day and in which order.
As a result, team members can focus on completing tasks instead of organizing them. They achieve more in less time, and your business can launch products and new features sooner.
3. Increased customer satisfaction
Consistently meeting or exceeding customers’ expectations (i.e., the purpose of product management) is the best way to keep them happy – and happy customers are more valuable to your business.
Barry Lemmon, former global head of retail and shopper at Kantar, wrote in a report on buyer behavior:
You can track changes to customer satisfaction using CSAT tools and surveys, which we’ll look at shortly. Other helpful metrics are customer lifetime value (CLV) and retention rate, which you can monitor in Pipedrive.
What does a product manager do?
A product manager oversees the entire product lifecycle, which comprises all the stages we covered earlier:
Idea generation
Market research
Product development
Testing
Launch
Evaluation
Also known as product owners, these specialists often work with engineering and marketing teams to develop and launch successful products. They can work in-house for one company at a time or as contractors with multiple clients.
Here’s an example of a product manager job ad for a security solutions company:
Other common product management job titles include:
Product strategy manager
Associate product manager
Chief product officer (CPO)
Naturally, senior product management positions typically demand more experience and include additional responsibilities, like in this CPO job posting:
Regardless of seniority or even industry, the role of a product manager is multifaceted. Whatever the product, it requires strategic and critical thinking, organization, collaboration and leadership.
Honing these product management skills can be lucrative. According to Glassdoor, the average salary for a product manager in the US is $123,274.
How to build a product management strategy: 6 best practices
Breaking product management into important actions, such as investing in tools and setting the right goals, can make the concept much less daunting.
Here are six best practices for building an effective product management strategy.
1. Invest in great product management tools
Product management software organizes your tasks and data to make planning and development more efficient. There are a few types to consider.
A comprehensive product management toolkit comprises:
Customer relationship management (CRM) systems like Pipedrive help you monitor customer interactions, leads and sales performance to guide product development.
Project management tools like Trello and Asana let you organize tasks, set deadlines and collaborate with product teams and stakeholders.
Customer satisfaction (CSAT) platforms like SurveyMonkey and Trustmary allow you to gauge customer sentiment and get feedback, ensuring products address users’ needs.
For example, Pipedrive’s sales insights, like revenue forecast and average deal value, show how your product management strategy translates into revenue.
Building a product management toolkit doesn’t need to be expensive. Most cloud-based applications (i.e., software-as-a-service or SaaS) are sold with flexible pricing plans and require little or no upfront investment.
2. Understand your market and customers
Understanding your market and customers is how you’ll ensure products meet audience expectations.
For example, Clockwise markets its Prism calendar management tool by highlighting artificial intelligence (AI) credentials.
It aligns with consumers’ growing excitement about AI and its potential to improve their daily lives.
Clockwise also understands that its potential users are concerned about data security, so it covers safety in its marketing copy, too:
You’ll learn a lot about your audience by listening carefully in support and sales conversations.
Dig into those buyers’ challenges whenever you have the chance. Ask probing questions to determine what’s stopping them from achieving their goals.
Monitoring social media for brand mentions and other relevant conversations will help, too. You can use tools such as Hootsuite, Sprout Social and Meltwater to “listen in” on buyers discussing pain points. What recommendations do they look for and receive?
3. Prioritize features based on customer insights
Use what you learn about customers’ needs to prioritize features for development and promotion.
For example, our State of Sales and Marketing report shows that salespeople and marketers value AI and automation technologies to help them save time.
In your opinion, the adoption of which technology by your company could have the biggest positive impact on your work?
As AI and automation are critical to Pipedrive’s user experience, they feature heavily in its product roadmap and development process.
The technologies are also vital to Pipedrive’s product marketing. For example, placing them on Pipedrive’s homepage makes the product more appealing to its target audience.
Feature prioritization frameworks can keep you focused on what matters to your audience. Use them as roadmaps to guide your decision-making.
One of the most popular frameworks is the MoSCoW method, which categorizes features into four distinct groups:
Must have. Essential features that the product can’t function without (e.g., a secure payment gateway for an e-commerce app).
Should have. Important features that aren’t critical for the product’s basic functionality but are still highly desirable (e.g., offering multiple payment methods).
Could have. Features that may enhance the customer experience but aren’t essential (e.g., a product wish list).
Won’t have. Features that aren’t part of the immediate plans but that you could revisit in future iterations (e.g., social media integrations for sharing product content).
Whatever your priorities, sharing a completed framework will ensure that all members of your product management team focus their energy on the same areas.
Note: KANO is another prioritization framework that groups features by their impact on customer satisfaction. Its groups are basic needs, performance needs, excitement needs, indifferent and reverse.
4. Set clear goals and key performance indicators
Clear goals help align your team’s efforts with your business objectives, while key performance indicators (KPIs) provide measurable outcomes to track progress.
Start by defining what success looks like for your product. It could mean specific revenue targets, market share, adoption rates or CSAT scores. For example, to increase user adoption, you might target 1,000 new users within three months of the product launch.
Next, choose KPIs that will help you monitor progress toward those objectives. You’ll know what matters most to your business, but common product KPIs include:
Customer acquisition cost (CAC). The cost associated with acquiring a new customer. This metric helps you understand the efficiency of your marketing and sales efforts.
Customer lifetime value (CLTV). The total revenue a business can expect from a single customer’s relationship with your company. A high CLTV indicates strong customer retention and satisfaction.
Net promoter score (NPS). A measure of customer satisfaction and loyalty gauged by how likely customers are to recommend your product to others.
Feature adoption rate. Tracks how often new features are used by customers, helping you understand which features add the most value.
You’ll need the right tools to track these metrics. For instance, Pipedrive lets you dig into CAC, CLTV and other helpful data points. The software also has integrations for running CSAT and NPS surveys, such as NiceReply and Simplesat.
5. Practice agile product management
If you work in tech, you’ll already be familiar with agile product development, but its principles are valuable in any sector.
Agile product management methodology emphasizes flexibility and collaboration. It involves continuously improving products based on customer feedback and performance KPIs.
For example, an agile software development team might first release a basic product version with only the most important features. They collect early users’ thoughts and quickly make changes or add new features to create a better product, then repeat the process.
A company making office furniture could take a similar approach, launching a line of ergonomic chairs with only the most essential features. It then gathers feedback from office managers and quickly makes adjustments, like adding adjustable armrests or lumbar support.
Whatever the industry, agile product management helps teams:
Create products that better suit what customers want (i.e., a better product-market fit)
Respond to evolving market trends (e.g., adding new technologies to existing products)
To make agile product management work, let early users know that the first version is just the beginning and that more features are coming. Transparency sets realistic expectations to prevent negative reviews.
Next, collect feedback using surveys, in-app forms and regular check-ins (e.g., sales conversations). Look for common themes in the data you collect.
Lots of brands practice agile product management using beta schemes, including the smartphone manufacturer Nothing:
An iterative approach allows the company’s engineering team and UX designers to collect real customer data before finalizing their product design.
6. Embrace continuous improvement
Every product lifecycle is an opportunity to improve your product management skills. Learning from what goes well and what doesn’t will help you and your team to become more efficient and effective.
To practice continuous improvement in your product management process, take the following steps:
Learn from mistakes. If something doesn’t go as expected, figure out why. For example, if a feature didn’t appeal to users, consider whether it was because it didn’t meet their needs or if there was a miscommunication during development.
Adapt and change. Use what you learn from each product cycle to improve your management of the next one. This might mean changing how you decide on features, improving team communication or finding new ways to gather customer feedback.
Set improvement goals. Just like you set goals for your product, set goals for improving how you manage it. For example, aim to shorten development times, ensure customer feedback contributes to decisions or improve teamwork.
You create a habit of learning and growing by working on your product management process. This approach doesn’t just lead to better products. It also makes your team more adaptable and prepared for future challenges.
Final thoughts
A solid product management strategy has no downside. It helps you understand your target market, create products that captivate buyers, and stay ahead of your competition.
Even if product development and promotion haven’t been a focus before, you can use the tools and tips in this guide to get organized and generate more revenue.
Track KPIs like retention rates, customer feedback, and acquisition costs to measure your success. Chances are you’ll see positive results across the board.
