How to Define Customers and Prioritize Features with Zuora’s former Director of PM

This week our #AskMeAnything session welcomed Alex Prokhorenko, former Director of PM at Zuora, to talk about how to define customers, how to prioritize features and to give us some advice on how to break into Product Management.

Alex Prokhorenko is the co-founder and CEO of Rapidus, a 24/7 package/freight courier delivery for businesses. With over 15 years of experience in the technology field, strong engineering & IT background, he held various roles in project management, helping companies with the “product to platform” transition. Thanks to his entrepreneurial mindset, he has founded and run several startups, one of which was awarded the Top 50 Web Tools of 2008.

As a Director of Product Management at Zuora, his responsibilities included focusing on the Platform, including Pricing, Rating, and creating new initiatives to drive product to platform transition. Prior to this, he has created a strategic product plan at Splunk while working with and managing cross-functional organizations that include Product Management and software development teams, both local and offshore.

Define Customers

How do you define targets for metrics? If conversion is 3%, how do I know if 3% is the best or should I strive for 6%?

Doing market research on similar businesses to establish a goal. You may choose an incremental path while pushing the bottom line further and further until you hit your point of resistance.

You should always consider the impact of your efforts, as going from 3% bounce to 2% bounce, while the conversion is yielding barely $100 in MRR across the user base. Also, have your north star metric well defined, as it captures the value of your product to customers.

What are your thoughts about growing number of 2 sided market places such as Uber, Fiverr, Amazon, and platforms helping these market places grow? What are the important things to consider in the early evolution of such marketplaces?

Andrew Chen went into a tweet-storm on the topic of two sided marketplaces about a year ago. He most likely summarized it into an essay. These marketplaces are redefining job markets by shaping the service into the form of product.

Think about it – DoorDash is matching restaurants with customers and closes the gap with delivery. However, product-wise, it’s redefining the service into a product – do you want a pizza, or sandwich, or sushi plate? The restaurant is nothing by the label, and the delivery driver is out of the picture.

We do something similar with Rapidus – even though we provide a certain type of delivery with certain requirements, in reality, our product is the business process of management across organizations.

It’s likely the number of two-sided marketplaces will continue to grow, as it will take on putting a different type of offline services into a product form, and then offering an online/offline convergence.

How would you suggest measuring user experience? How are success metrics defined for the same?

There is some work you can do pre-product (user studies, observations, analysis, testing), and then post-product (find looped workflows, repeat actions, estimated vs actual time to operation, etc). And I still believe in intuition and gut feeling.

What is your approach to refining the customer segment? In SaaS and sales-driven organizations, there are some features that would unlock a certain group of users, but adding new segments clutters experiences and increases complexity. How do you balance this? What was your decision framework?

I already mentioned some of the scoring metrics in my prioritization framework. Both revenue and strategic importance are part of that prioritization. Your sales organization (hopefully) has it’s pipeline and knows the target persona that will take the company to the results you want to achieve. With the existing customer base, you always have additional prioritization elements, like likelihood to churn, NPS, and so on.

I would question in the first place the purpose of introducing a new customer segment and how is it aligned with the company direction. This question is also specific to the particular scenario, and I do not think that you can generalize.

Prioritize Features

What’s your approach to adding new features for a product?

Great question and the answer varies between the phase of the product. Early-stage phases are typically “cheating” on the process of feature validation as heavily customer-driven (in product-market-fit pursuit). Later stages are becoming more formal, avoiding the customization over productization burden.

How do you prioritize incremental improvements to existing offerings (taking something from V1 to V2 ) versus building a net new feature (an MVP of something that doesn’t exist yet)?

I do not believe it is either-or. Incremental improvements are tremendously important as they are not only the “maintenance” mode, they help shape your product, they are also a tiny form of “net new features” that can be ignored very often for the sake of going for the larger feature. However, they are critical in building a package of “competitive advantage functionality” that is much harder to understand and copy from a competitive perspective.

High level I’d go with every feature through the matrix-type evaluation of understanding the customer value and risks/threats/uncertainty to the market. Innovation wise, I always allocate some time in the backlog for the “move the needle” feature that can actually make improvements, not 1-2x better, but 10-20x better.

How do you determine that “one feature” is going to give you 10-20x or 1-2x improvement? Is it differentiation? Or problem solved? Or ease of use?

Well, you define your hypothesis here. I never know for sure whether it truly going to send me there. In fact, I’ve seen more failures with going after “move the needle” goals, than successes. However, going after the target of 10-20x has been a helpful exercise to think outside the box, as you can’t realistically get there fast with incremental work you’re doing every single day.

1. How do you prioritize tasks? Any prioritization model you follow?
2. If you have a lot of bugs/issues to be fixed but can’t measure their impact because data isn’t available, how do prioritize in this case?

I like Moscow for simplicity. Must Have, Should Have, Could Have, Wouldn’t Have. Breaking into details, I’d use all or some of the indicators for scoring, like:
– Ease of implementation (efforts required)
– Customer importance (value)
– Solutions (alternatives, workarounds) available
– Duration of implementation (time to value)
– Revenue impact – Strategic importance
– Engineering availability
– Level of uncertainty (how likely might change)

How do you convince the team on what to build/focus on first when you were starting out at Rapidus?

It was actually quite simple – whatever could bring us as quickly as possible to $$. We initially had no sales as everything was self-service, so bearing in mind it’s B2B, the key was to have a very clean and obvious value proposition that would leave nothing to doubt.

What would you say are the most important parts of making an MVP for a new product if you’re on a tight schedule? Have you ever pushed back on timelines if they’re too aggressive and if so, how do you justify the decision?

I believe Reid Hoffman said that if you are not embarrassed with your product, you are late with the MVP. Part of me wants to disagree, as it might be a fine line between embarrassed and ashamed that’s too easy to cross.

However, I had a lot of success with “Reverse Trojan Horses” – by planting functionality as it is built – however, with a gazzilion manual efforts on the back-end just to fake it. I would say “building things that do not scale” is a great way to test the hypothesis. What is most important though is to have a good understanding of the problem that you are trying to solve and for whom.

How do you approach emerging technology like AR, VR, ML, and Voice? How do you stay up to date, how do you prioritize pilots, etc?

Because I’m also an angel investor, and generally passionate about the technology, I try to allocate a little time for exploring “moonshots” with emerging technologies within the scope of my company.

For example, we’ve privately launched the NLP voice-based integration of Rapidus delivery features with virtual assistants. Have I seen much usage? Not really, however, just a bare minimum of attention to it helps me better understand the patterns and applicability of the tech on a larger scale. In fact, by doing an API integration with NLP voice processing, we’ve extended Rapidus capabilities and added a non-traditional customer integration that actually results in usage and revenue.

What is the SaaS pricing strategy (monthly, yearly, per person, per seat)?

It is very situational. In fact, I believe subscription models will continue moving to the hybrid structure, taking elements of perpetual and recurring pricing, with a strong usage component.

Transition into Product Management

What is for you Product Management? Is this about monetization or about customer experience?

It’s observing and identifying inefficiencies, analyzing opportunity (given efforts to put in, impact and rewards) and offering a solution that customers would love.

How did the mindset and approach to Product Management change when moving from product to platform?

It is more about who you build the product for. For example, at Splunk, when I was building Splunkbase (app marketplace), I not only had to consider capabilities of the Splunk core product to be extended by developers, but also the distribution aspect of those extensions, and who would be the end-users of those.

How should one price a software product?

There are a number of pricing strategies. Value-based, cost-plus, competitor-based, experimental, etc. You may jeopardize your long term goal by choosing the wrong short-term pricing. In the example given, it’s not only development costs, but it’s also more business development efforts with businesses to provide offers, infrastructure, etc.

If you could go back into past, what would had you told your younger self?

Observe more. Focus. Meet more smart people. Focus. Keep doing, failing, learning, re-doing. Focus. Do not generalize too early. (and yes, focus 3 times said is intentional)

Do you have any advice for aspiring Product Managers?

Everything in PM requires 3 things:

1. What is the problem? You can’t sell a solution to a problem that nobody understands and you didn’t sell.
2. Keep asking questions. More.
3. Work on perfecting your value presentation, pitch, solution. Then you will iterate, develop, launch, and else, but you will always come back to the 3 points above.

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