A winning product strategy is neither the brainchild of one individual nor a talented team casting bets regarding what would make a great product.
Creating an effective product strategy framework consists of a cross-department effort that leverages the user behavior data of existing products and the voice of customer data (specific needs and pain points) to set a direction for product growth.
Doing so allows you to create or refine a SaaS product strategy that’s successful at both the user and business levels.
Not sure how to build a product strategy that’s user-centered? We’ve got an 8-step framework for you complete with a rundown of the tools and templates you’ll need. Throughout this guide, we’ll cover:
- What is a product strategy?
- Why is a product strategy important?
- The 4 elements of a winning product strategy
- Product strategy vs. product plan vs. product vision
- How to create a product strategy in 8 steps
What is a product strategy?
A product strategy is a high-level plan for product development, growth, and marketing. Essentially, a product strategy is used to identify who a product is for, its benefits, and how it’s different from competing products in the target market.
This master scheme also consists of an action plan that explains how a product will benefit its parent company by maximizing user satisfaction, product market share, and profitability.
Why is a product strategy important?
A product strategy enables you to refine your focus and acts as a guide when it comes to strategic planning, product development, and marketing activities.
However, a data-informed strategy gives you “a comprehensive plan for the development of your product, [which] ensures [your product] meets user needs, solves problems, and keeps your users engaged over time,” TailoredPay’s Director, Daniel Kroytor says.
With that, let’s dive deeper into just how important a SaaS product development strategy is:
- It gives you an action plan for the product building phase
It also informs your product roadmap and timeline while giving you a baseline to measure progress.
- It hones your product’s focus, keeping it user-centered
A SaaS product strategy outlines the problem your tool solves and explains how it’s different from similar or competing products. It also guides your marketing and sales team efforts by pointing out your tools’ target users and valuable proposition.
Essentially, it guides product decisions. As Franzen puts it, “While prioritization and deciding whether or not to build a feature is never a perfect science, a clear product strategy helps with those decisions.”
- It aligns your team’s product vision
A strategy ensures all teams remain on the same page and that everyone is working toward the same high-level product and business goals.
The 4 elements of a winning product strategy
Now that you know what a product strategy is and why you need it, let’s look at the elements that make a successful product strategy.
These elements include:
Instead of standing on a mountain of assumptions, a successful product strategy is built on data. This includes quantitative and qualitative data that sheds light on user needs, preferences, and market trends.
A good product strategy is comprehensive enough to justify a product’s viability, feasibility, and desirability. These are the three main components that every product strategy should cover according to Intercom’s Co-Founder and Chief Strategy Officer, Des Traynor.
Winning product strategies aren’t set in stone. Instead, they change to meet the requirements of your SaaS tool’s users, including prevailing economic conditions.
4. A product of cross-collaboration
With each team bringing different user insights to the table, an ROI-positive product strategy is born from cross-team collaboration — even though the product manager owns the strategy.
For instance, the CEO defines the overall company vision, direction, and goals. The CTO ensures the product vision aligns with the company vision and strategic goals. The marketing team, on the other hand, sheds light on brand messaging that is meant to resonate with the target audience.
Product strategy vs. product plan vs. product vision
Before we dive any deeper into the creation of a product strategy, let’s first clarify the difference between a product strategy, plan, and vision to avoid confusion.
A product strategy is like a master plan that outlines who a product is for and how it benefits users while giving a direction for its development.
In contrast, a product plan or roadmap is a blueprint laying out the product development plan alongside a timeline. It answers questions like which product features you should work on first (and when) according to the direction set by the product strategy.
Lastly, a product vision is an inspirational one-line vision statement capturing a product’s long-term goals. For instance, Amazon’s product vision reads: To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online. Essentially, it guides the development of your product strategy.
How to create a product strategy in 8 steps
Now for the meaty part — how to create an effective product strategy for your SaaS tool. Follow these steps:
1. Research your target users
Since a tool’s users ultimately drive its growth and success, the first step to developing a product strategy is understanding your target users.
A clear customer understanding will inform your product decisions, including helping you determine its desirability and differentiation.
Zoom’s CEO and Founder, Eric Yuan advises, “You need to take a step back to really understand the customer’s problem and then invest your engineer time into the product.”
Reach out and have one-on-one chats with folks who align with your ideal user profile. Learn about:
- Their pain points and struggles related to the problem you’re trying to solve
- The tools they’re currently using to solve their struggles in question
- Their buying power (pricing they’re willing to pay) and what they’re looking for in a tool
Also, be sure to conduct surveys to source more customer data. Fortunately, Smarlook integrates with Survicate, allowing you to study product analytics (more on this in a bit) while surveying user preferences.
By the end of this research, you should have enough data to create target user personas for your product.
2. Analyze competitors
This step is crucial for understanding the tools that are already in your users’ hands, including how your tool will be different.
Data from surveys and user interviews will give you a list of tools that your target customers are already using. Find out more about these tools by Googling your niche and tools. Here’s how:
Once you have a list of competing tools, analyze their strengths and weaknesses (including their customer base) to understand the unique opportunities available to you. Some ways to do this include:
- Reading competitor tool reviews on sites like Capterra and TrustRadius
- Listening to what their users are saying about them on social media and community forums like Reddit
- Testing tools yourself. Review their UX and onboarding sequences, as well as what steps their teams take to retain users.
At the end of this product strategy development phase, you’ll have a good understanding of the competition’s strengths and weaknesses, which will help you create a SWOT analysis. Use this template:
3. Analyze market trends
In addition to understanding your users and competitors, it’s essential that you study prevailing market trends, including how they emerge, to understand their impact on your product and business growth.
There’s a lot you can learn about the market from listening to your target users and studying competitors. More ways to analyze market trends include:
- Keeping tabs on industry publications and thought leaders
- Studying up-to-date industry research and trend reports
- Using tools like Google Trends and SimilarWeb to identify trends
Your in-depth study of the market should leave you with enough information to create a market trends cheat sheet that teams can refer to for making product decisions and forecasting growth:
4. Create your product vision
Now use what you’ve learned in your market and user research and competitor analysis to create a product vision that summarizes what you want to achieve with your product.
This big-picture statement will guide product development and ensure that decision-making throughout the product lifecycle aligns with your strategic plan.
Remember: the product vision should align with your business goals. So make sure your product team sits down with your CEO to ensure everyone understands the overall business vision before creating a product vision.
5. Determine your product’s value proposition
Product differentiation is the key to standing out from the market noise. It also helps you attract and retain loyal users.
Zoom’s value proposition or unique selling point (USP), for example, makes it stand out from other video messaging tools. It’s USP? A simple, hassle-free connection that’s built to scale.
To create your product’s USP, TailoredPay’s, Daniel Kroytor recommends you determine your SaaS tool’s
To do this, go back to the insights you’ve gathered from your competitors, customer surveys, and interviews. The aim? “To uncover unmet needs and areas for improvement,” says Kroytor.
Make sure your value proposition is “clear, defined, and validated prior to even building the product,” adds Josh Franzen from ArborXR.
By the end of this step, you should have a one-line USP ready alongside internal content and resources that will help you communicate your USP with other teams.
That said, it’s important to keep in mind that like your product strategy, the product USP isn’t set in stone. Franzen notes that there are cases in which teams built software with one purpose in mind but pivoted based on customer feedback and/or market conditions.
To make sure your product’s USP is always aligned with your users’ understanding of your product, Franzen advises you “talk to your customers early and often and keep an open mind to them defining your product’s value proposition differently than what you originally had in mind.”
6. Set goals
With the legwork complete, it’s time to set goals for product development and growth.
Ensure your goals are:
- Realistic and time-bound, so your team is aligned regarding what to work on and when
- Aligned with your overall product vision and address the specific needs of your customers
Set product development goals
Setting product development goals involves determining which features you need to prioritize.
To this end, the most effective solution is to create a minimum valuable product (MVP) and get it into the hands of your target customers.
Study these users’ in-app activity using product analytics tools like Smartlook to identify which features your beta users are using the most.
For the team at ArborXR, Franzen shares, “Getting an MVP into the hands of our target users and receiving overwhelmingly positive feedback early on gave us the confidence to make the pivot from our previous venture and commit to building a fully featured SaaS platform.”
With your MVP in your target users’ hands, use Smartlook to study behavioral analytics. Here’s how:
- Watch session recordings to identify the most-used features and find out where users are struggling
- Study heatmaps to determine the most clicked elements, including how users navigate your product to create a user-friendly experience
- Analyze funnels to identify where users are dropping off (not taking the path you intended)
Ultimately, tools like Smartlook will tell you which product features are popular among your users. This way, you can focus your time and energy on designing and building features that are actually useful to your customers.
Continue using these features down the line to study your users’ in-app behavior to understand how well your set product goals are performing.
Start recording user sessions and reviewing heatmaps today Watch how beta and exiting users interact with your SaaS tool, identify what they’re struggling with, and pinpoint which features they use the most. Use this data to create a product that’s bug-free and easy to use. Schedule a Smartlook demo or start your free, full-featured 30-day trial today.
Set product growth goals
Next, set goals for product growth — complete with a list of metrics to track each goal’s progress. These product goal examples include:
|Goal||Metric to track|
Increase customer acquisition
|Free trial conversion rateCustomer Lifetime Value (CLTV)Customer acquisition cost (CAC)|
|Grow user retention||Monthly churn rate Customer retention rate Daily/weekly/monthly active users% of new users who subscribe|
|Increase customer satisfaction/experience||Net promoter score (NPS)Customer satisfaction score (CSAT)|
|Get more people to use your tool beyond the initial onboarding phase||Activation rateTime to valueCustomer effort score|
Once complete, identify your north star metric and key performance indicators (KPIs) to measure the progress of each of your goals.
As you select these metrics, be sure to pick the ones that will have the greatest impact. For instance, choose metrics that are guaranteed to drive user engagement and satisfaction. These metrics deliver business outcomes, telling you what customers value.
At Smartlook, our north star metric consists of the number of people from a given company who are actively cooperating within Smartlook according to our CTO, Ondrej Machek. This metric is vital because we know that the more people from a company that use our B2B SaaS tool, the better our chances are of significantly increasing retention.
Use this chart to create your goals:
7. Create a product plan and roadmap
Next up, set objectives or initiatives based on the goals you set in the previous step. Examples of these objectives include: reducing churn, increasing customer satisfaction, increasing customer lifetime value (CLTV), and so on.
When you’re done, break the product initiatives down into phases that are further divided into actionable tasks, complete with a timeline to stick by.
Use this template to organize your product planning:
When done, put your plan into a roadmap. Use tools like Miro to create an interactive product roadmap. Alternatively, use your product management software to create a product plan. Buffer, a social media marketing tool, used Trello to create its roadmap.
8. Set guidelines for evaluating your product strategy
If you recall, an important element of an effective product strategy is its flexibility.
Zoom’s product strategy, for instance, pivoted during the Covid-19 pandemic to include more target user personas such as teachers and small businesses (it originally targeted enterprise customers).
It’s important that you set guidelines for revisiting your product strategy to determine if it needs to be revised. Determine when you’ll reevaluate it, who will be involved in the process, and what their responsibilities will be.
As for how to determine your product strategy’s viability, Intercom’ Des Traynor advises that you ask yourself, “are we tackling a significant problem for a growing market?” This will guide sustainable product development.
Create a user-centered product strategy today.
Remember that the best product strategies come from collaboration between stakeholders and teams involved in a product’s growth.
Most of all, a results-driving product strategy framework is customer-focused — relying on insights from user research and existing/beta user in-app behavior.
Whereas surveys and customer interviews will provide you with data relating to user pain points, preferences, and specific needs, Smartlook shows you how users interact with your tool. This way, you can quickly identify popular features, create a user-friendly product design, and remove bugs and unnecessary elements.
So what are you waiting for? Schedule a Smartlook demo or start your free, full-featured 30-day trial today.