Updated: January 24, 2024- 6 min read
If 2020 to 2022 was the era of Product-Led Growth (PLG), then 2023 may herald the start of the age of Product-Led Efficiency. It doesn’t have quite the snap to it as PLG (and we aren’t even going to dare to try and coin another three-letter acronym to describe it), but it’s a trend that’s worth paying attention to. Here's why:
The world in 2023 is very different from the one we found ourselves in 2019. The economy is slowing down, while a Product Mindset is more deeply ingrained in more and more companies. Companies that thrive will be those who adapt their strategy rather than relying on now out-of-date models of thinking.
How we got here: Product Strategy from 2020 to 2022
In 2020, companies adapted to a new reality by using their product to onboard new clients or customers, often bypassing the need for a conversation with a sales representative or a visit, say, to an in-person store. People could complete the entire customer journey within the product experience itself. Enter Product-Led Growth.
Now, as the global economy slows, companies adapt by finding opportunities to reduce costs. This, too, will be done largely within the product experience because there’s where companies can define their competitive edge in the most cost-effective ways. All companies are and remain customer experience companies. Or, as McKinsey put it, software isn’t merely eating the world, it is the world.
“Nearly 70 percent of the top economic performers, compared with just half of their peers, are using their own software to differentiate themselves from their competitors.”
“You can’t build world-class software capabilities without world-class software product managers.”
Product Managers will play a central role in this strategic shift as efficiency becomes an organizational priority. We will see Product Strategy and the Product Leaders, Product Managers and Product Teams tasks with implementing it:
Evolve their priorities to emphasize efficiency and cost-reduction as well as growth
Continue to make user experience their central priority
Have an outsize impact on cross-functional teams as Product becomes central to decision-making across the organization
Let’s dive into each of these points…
Product Strategy will Evolve to Focus on Efficiency as well as Growth
To increase revenue, you onboard new clients/customers, and decrease the cost it takes to do so. Product has a role in both functions. While the growth function has been emphasized in recent years, the efficiency function will now climb the priority ladder. Product teams used to optimizing for customer acquisition may now be asked to optimize for cost reduction. The same creativity and problem-solving
In the era of Product-Led Efficiency, companies will be focusing on finding ways to reduce costs while still delivering a high-quality customer experience. This will require product teams to be creative and innovative in their approach to problem-solving, as they will need to find ways to streamline processes and increase efficiency within the product itself.
No doubt a whole range of tactics will be deployed to realize this strategic goal. One tactic we’re likely to see more of is the use of artificial intelligence. By leveraging this technology Product Teams will be able to drive better decision-making and streamline processes, leading to cost savings and increased efficiency.
Product Strategy will Continue to Emphasize User Experience
The software has eaten the world, and all companies are customer-experience companies. While cost reduction and efficiency are important considerations in the era of Product-Led Efficiency, they should not come at the expense of the user experience. In fact, maintaining a high level of user satisfaction is critical to driving efficiency in the long run.
Customers who are happy with the product are more likely to continue using it, which means less effort and cost will be required to onboard new customers. They are also more likely to recommend the product to others, which can help to drive organic growth.
Therefore, it will be important for Product teams to find a symbiotic relationship between optimizing for efficiency and improving user experience. When actions can be taken that achieve both goals simultaneously, for example by removing unwanted features and smoothing pathways to solve customer Jobs To Be Done, companies can drive efficiency and Product-Led Growth at the same time.
Data analytics will have a central role here. By collecting and analyzing data on customer behavior and usage patterns, companies can identify areas where the product can be improved to better meet the needs of their customers. This could involve making changes to the user interface, adding new features, or streamlining existing ones.
Product Will Continue to Impact All Areas of an Organization
Economic downturns can be challenging for businesses of all sizes. However, these challenges present opportunities for organizations to focus on efficiency, cost-cutting, and driving value for customers. In such times, Product Management teams can play a critical role in helping companies make better decisions and navigate the challenges of an economic slowdown.
Product Managers will be expected to work hand-in-hand with sales, marketing and, of course, development teams to look across the broad spectrum of the business and find out what opportunities for efficiency may be available.
When driving better decision-making on a cross-functional level, Product Managers will be required to bring their strategic mindset to bear across the entire customer journey, and will include looking at areas like:
Reevaluating pricing models
Identifying new market segments or channels to target
Developing new product offerings that meet the evolving needs of customers
Analyzing data on customer usage patterns
Identifying underperforming products or features
Teaser: More Companies are Product-Led Than Ever!
Our team is currently crunching the data from over 7,000 survey respondents to put together the 2023 Future of Product Management report. Among the trends we will reveal, one point stands out: More companies are Product-Led than ever before. When traditional growth methods were taken off the table in 2020, Product stepped in as the solution.
Now that 2023, these Product-Led companies are in prime position to use their advantages to become more lean and streamlined, as they reduce costs where necessary while still providing a best-in-class customer experience. Because whether or not you’re focusing on Product-Led Growth or Product-Led Efficiency (still wondering if this term will catch on…) Product always comes first!
Updated: January 24, 2024
