What is Product Strategy? All Questions Answered
When you think of amazing SaaS companies like Slack or Hubspot, there is a lot behind their success. Being there early enough, hiring great people, having an amazing product market fit, collecting and acting on customer feedback, and so much more. But there is one more aspect where they won compared to the competition - having an amazing product strategy.
If you have a small team and no product managers, you may be wondering if it even makes sense to talk about product strategy at all. However, product strategy is something that you can build too, no matter how lean or young your SaaS is.
Now, we’ll show you everything you need about product strategy.
What is product strategy?
A product strategy is a set of guidelines for your product. It includes details such as:
- Who is your target audience is
- Which pain points do they have
- How will you address those pain points
- How you stand out from the competition
- What you need in terms of resources to get to that point
A good product strategy is a key document that product managers, developers, and business leaders can rely on when making important product and business decisions. As your product develops and you get a better product-market fit, you can expect your product strategy to change over time. And if you don’t know if you already have a product-market fit, using a survey is a good idea to get started.
You don’t need a product team to create a product strategy. If you’ve set out to create a new product, you don’t need to be a seasoned product manager or marketer to be able to create one. All it takes is heavy customer experience research and a solid knowledge of your target audience and competition.
Why is a product strategy important?
Theoretically, you could just set out to solve a certain pain point for a target audience and call it a day. Yet, there are many reasons why you’d want to think of your product strategy early on. Here are some of the main benefits of creating an official product strategy:
- Solving actual pain points for a specific target audience and target market
- An easier way to prioritize product features and guide your product development
- Defining your unique selling point more easily and quickly
- Determining how you position yourself against your competitors in the industry and niche
- Having an easier way to convince investors and stakeholders about the value of your product
- Creating a product roadmap for product development and strategic planning
In short, it’s a great idea to think about your product strategy outlines early on as it will do you good in the long run.
Different types of product strategy
When building a SaaS product, there are countless paths to take and potential pitfalls. If you know what problem you want to solve and for which target audience, you’re already halfway to a great product strategy. However, you don’t have to decide on just one path with a product strategy. There are three different types of product strategies that you can opt for, depending on what you want to achieve with your product initiatives.
Comparative product strategy
If you’re just starting and have no idea which direction to take, comparing yourself to someone else with a product strategy is the easiest path to take. This can be someone bigger, more successful, has more customers, or simply broke ground and became the first in their niche for a certain product.
For example, if you want to become successful in design/prototyping software, you may want to compare yourself against Figma. This means you’d try to cover their flaws, all the while creating something different and better with your product strategy based on actionable data from sources such as product surveys.
A good example is Chanty, a software that was practically built as an alternative to Slack. Instead of thinking of a unique angle for their customer base, they created an app that solves Slack’s problems and customer complaints, such as:
- The 10,000 message limit to free plans
- The slow loading times
- The poorly functioning search feature
And others. They broke out with this product strategy and became successful because of their article on Slack alternatives, gaining followers and a customer base that wanted something comparable to Slack but better or different.
You can also create a comparative product strategy on pricing, which is quite common. As you’re new to the market, you have smaller costs of operation and can afford to sell at a lower price compared to the “bigger” brand, provided that you offer the same or similar features. This is also known as a cost strategy, and it can be one of the easier paths to take as you already have a reference point in a particular market.
This is a product strategy that HelpCrunch uses, as they offer a cheaper Intercom alternative. While Intercom is known as the best Messenger software out there, it is also known as incredibly expensive. HelpCrunch tackles the problem with a cost strategy. They offer a similar product at a fraction of the cost compared to Intercom.
However, the best comparative product strategy is by far to compete on solving a customer’s pain point in a better way.
Differentiation product strategy
Sometimes, you have an idea so different from the competition that it almost feels like you’re in an entirely different category. You still offer a similar product, but everything about your core approach and product strategy differs. This doesn’t always mean better, but being unique does carry a certain appeal to potential customers.
In short, a product strategy based on differentiation means looking at the existing offer in your industry or niche and figuring out a way to do things completely differently. Objectively speaking, this product strategy is much more difficult than simply copying a competitor and trying to create a better or cheaper offer. However, if you solve an actual pain point for a certain audience, it can be an incredibly effective product strategy.
A great example is Hey.com, which launched in June 2020. There was already buzz around the project as the people behind it are 37signals, the same ones who created Basecamp, one of the most popular project management tools.
Hey.com takes an entirely different look at email and goes straight at traditional email tools such as Gmail. Instead of giving you a place to receive emails, it puts you in control of the entire experience.
Hey.com lets you choose who you want to receive emails from. The first time someone sends you something, you can decide whether or not you want to get emails from them and in which bucket you want them to be sorted. This consent-based product strategy got them a lot of great press in 2020, which was extremely difficult in a year when you had to compete with the pandemic to get the headlines.
This, combined with a reply-later folder, a different way to search for your attachments, and an innovative way to label and tag your emails, made Hey a hit in a short time with a successful product strategy - they simply knew who their target customers were as they've done proper market research and competitive analysis. Hint: you can do this too with a competitor survey.
This is a superb example of a differentiation strategy done right. The product solves a major pain point (consent-based emails which are easy to manage), and it does so in a way that is completely different from the competition.
Segmentation product strategy
Sometimes, you build a product only to figure out that focusing on one main category will not cut it. You start working on a product and then, somewhere along the way, figure out that you could build different aspects of it for different, specialized audiences. This actually happens quite often and it’s a natural transition as your product matures and you get more customers.
Let’s take a well-known example from the SaaS world. DocuSign is the oldest electronic signature software in the market, launched all the way back in 2003. This is what the product was designed to do from the start - create a platform for signing documents securely and legally online rather than going through the hassle of paperwork.
Then the product started evolving, and as more business and documentation moved online, they realized a whole different set of pain points that they could solve. And not with a completely new product - they just needed to complement their existing offer.
At the moment of writing, DocuSign offers electronic signatures, contract lifecycle management, document generation, contract analytics, and much more. They even have specialized solutions for different industries, from sales teams and financial services to government.
Your product strategy can be guided the other way around, starting from a smaller target audience and branching out into a product built for wider use. The most important part about segmentation as a strategy is being aware that you can go both ways at any point if it’s more profitable for your business.
Product strategy vs. product vision
You’ll often hear the terms “product strategy” and “product vision” mentioned, but there are considerable practical differences between the two. However, a good SaaS product should aim to have both of them in place.
A quality product strategy is a specific set of goals and guidelines for your entire team. It includes actionable steps and a plan for what you intend to achieve, who you want to sell to, and how your plans will come from ideas to life.
On the other hand, product vision is more of an abstract, long-term plan for your product. It’s a mission and vision statement and can be summed up in a sentence or two.
The bottom line is that you should have both a product vision and a product strategy to clearly articulate the direction you want to take. You need a great product vision to formulate a product strategy, and one of the best ways to do so is with customer feedback.
The most important thing about a product strategy is finding a customer pain point and solving it. There are different paths that you can take, but once you have that first part all figured out, winning new customers and retaining your existing ones becomes much easier with a great product strategy as your baseline.
And if you’re looking to collect customer feedback to determine if you’re going in the right direction, you’ll need a reliable tool. Try out Survicate today for free to easily collect feedback and guide your product decisions based on customer insights and not your gut feeling. Sign up today to get started!