Re-Inventing Product Management with LOVE
The critical role of the product manager is in the process of changing significantly, and both companies and product managers need to adapt. While product management is among the most critical roles in any company, it’s a role whose importance is under-heralded in most organizations. The extent and nature of the changes to the role mean that those that fail to re-invent themselves—or don’t try—are likely to find themselves displaced.
Change or die
Two major forces are driving the need for change in product management. First, the nature of the competitive landscape is changing with the emergence over the past 15 years of low-cost, off-shore manufacturing that quickly clones successful products. Merely manufacturing a quality product that people want has become a profit-challenged commodity business. Earning the types of profits investors expect from American technology firms now requires rapid and continuous innovation and a move toward difficult-to-copy solutions rather than products. Apple’s success with the iPod and iTunes represents near perfect execution. Often a solution may span companies or involve active partnering with users. Crowdsourcing and mash-ups are examples.
The key to success is being open to new forms of value. Some of the new forms of value may be unfamiliar: consumer products companies offering their “products” as components to third-parties building unique solutions or even entirely new products. Turning one’s customers loose is an excellent way to drive lots of innovation. iRobot allowed its Roomba robot vacuum cleaner to become an open platform resulting in a nearly limitless variety of upgrades and modifications available from third-parties. Many of the resulting devices are not even vacuums.
With so many more inputs, the role of the product manager is becoming less about coming up with great ideas and more about enabling, gathering, and coordinating inputs as a sort of “traffic manager” or hub.
The second force is the manner in which companies interact with their customers. Gone are the days when companies could broadcast a controlled message to consumers. Two-way media such as blogs, user reviews, and social media mean consumers can talk back—and to each other—without the company having any say in the matter. Don’t fool yourself into thinking focus groups or even direct customer meetings create a truly bi-directional relationship of the type that is needed going forward. These transactional type activities are controlled and shaped by the company. Non-transactional interactions occur between peers. The need for interactions rather than transactions changes the methods employed by the product manager (the “how”) every bit as much as the need to accelerate innovation and introduce solutions (the “what”).
To date, nearly all attention has focused on the “what,” although the “how” is no less a challenge. Since customer interaction is growing in importance, a big part of the “how” is the manner in which your company interacts with consumers. This is a huge and visible change for the marketing function. To non-product managers, the change is less visible for product management, but no less important for success.
Technology makes it easier than ever for product managers to listen in or interact directly with customers, adding new tools to the product manager’s kit such as crowdsourcing and co-creation. Technology is an enabler, but doesn’t tell the product manager when and how to engage customers, or to understand how customers vary in their relationship needs.
We need a new model
To deal with the changes in how customers interact with companies, a new model for customer relationships is needed. Product management (and marketing) needs to lead the way in understanding how to engage and leverage customer relationships in the age of two-way media.
Most organizations—probably yours, too—define customer relationships in terms of a linear path that allows deterministic modeling, such as the buying funnel process: awareness, consideration, and purchase. The buying funnel is predicated on your company controlling the message, but this no longer works in an environment dominated by two-way and unstructured communications.
The key in the new environment is interacting with consumers rather than transacting with them. Product managers and marketers currently lack a model for understanding how to interact with consumers as the company-customer relationship evolves through different stages. (Newsflash: not all consumers are the same.) This represents a huge change for marketing managers as they must stop trying to bribe and manipulate people to get consumers to do what they want. This is transactional behavior that doesn’t encourage your company—or the consumer—to seek new forms of value.
Product managers have a lot at stake as well. More than marketers (perhaps), product managers understand that customer relationships evolve. However, most lack any sort of model to understand this evolution and use it to their benefit. Even fewer use—or even recognize the enormous power of—a model that is shared across all parts of your company.
Why the world needs LOVE
The Lifetime Opportunity Value Equation (LOVE model) departs from the buying funnel by viewing consumer relationships as an evolving set of bi-directional interactions. These relationships grow from an introductory stage where neither party knows much about the other all the way to co-creation. In a co-creative relationship, you and your customers share a common vision and align interests. The benefits of co-creation are huge, and reach into every corner of your company and are reflected in both top line revenue and bottom line costs. Deeply engaged customers buy from your company not merely because they like the product or service, but because they genuinely want your business to be successful.
The LOVE model explained
The LOVE model can be applied to any online relationship, not just to customer acquisition and purchase. Likewise, the benefits of the LOVE model extend far beyond social media and marketing campaigns, making it of particular value to product managers seeking to drive change throughout their organizations. The LOVE model drives long-term value in areas as diverse as customer support, product development, and thought leadership.
Product managers will experience an epiphany as they realize how to engage customers at each phase of an evolving relationship. By understanding more about how to interact with customers, you can tailor your interactions to be more productive. Because the interactions are vibrantly bi-directional, your company and consumers grow in alignment as the relationship grows deeper.
While a company’s relationship with individual consumers falls into a specific phase, the company can be at different relationship phases with different consumers, so a company is not limited to a single relationship phase. The descriptions below include companies that do a particularly good job at understanding specific types of relationships. The phase names are both descriptive and instructive.
"Romance" Getting introduced
You can’t build a relationship with someone you don’t know, so the initial phase of the consumer–company relationship is Romance. Romance is about introductions and learning and trying things. People don’t want to think about big commitments when they’re still trying to decide if they even want to get to know you better.
There are serious pitfalls in skipping the romance phase and moving too quickly from social to transactional interactions. Once the parties to a relationship define it in terms of an exchange it is very difficult to redefine it as something broader. A properly developed romance defines the long term relationship as something other than primarily a monetary exchange or a transaction.
By contrast, too many companies today insist on a kiss at the beginning of the first date.
Twitter and other social networking applications are good at letting people explore and set their own pace of discovery and use.
"Power Struggle" Maintaining interest
Where Romance is about generating interest and opening the door to exciting possibilities, the second phase, Power Struggle, is about spending time together and getting to know each other. In the world of commerce, this is about working to maintain the consumer’s attention. The power struggle isn’t adversarial, but is a mutual effort to learn how both parties in the relationship are going to fit together. After all, there needs to be balance if a relationship is going to last for the long term.
If you don’t provide an engaging experience that fulfills the consumer’s need for credible information, you will struggle to keep them from clicking somewhere else. You lose the consumer’s attention and, with it, your ability to drive the relationship narrative.
Dell’s IdeaStorm allows Dell “to gauge which ideas are most important and most relevant” by engaging the public in online discussion. Users are able to add articles, promote them, demote them and comment on them. By giving users the power to drive what is discussed, Dell maintains engagement while accomplishing its own goals of understanding what people care about and want to see.
"Stability" Finding balance
At the point where no major mis-match of status between the parties exists, a relationship enters the third phase, Stability. A stable relationship is one where you provide a reasonable value proposition for filling latent consumer needs. You have stability when both of the following are true:
- The consumer is willing to go through the process of sorting through the criteria for making a decision, and
- You are willing to transparently make available the information needed to satisfy the consumer’s criteria.
Amazon.com is a company that understands this extremely well. The Amazon site is a virtual cornucopia of information on all manner of consumer products. Not only are there user reviews, but the reviews gain additional credibility because users can comment on the reviewers. Amazon provides an enormous quantity and variety of information with the implicit expectation that, if and when the consumer makes a purchase decision, Amazon is most likely to be the purchase vehicle.
Amazon benefits from a stable relationship because consumers have little reason to leave the Amazon site to gather additional information. Both parties feel their needs are being met in a balanced way. As a consumer, you are always free to leave the Amazon site, but why would you?
"Commitment" Discovering shared outcomes
Commitment comes when the relationship advances from stability to a shared outcome. While loyalty in a predominantly one-way, transactional exchange is fragile, commitment in a stable, bi-directional relationship is far more robust and makes consumers more likely to stay in the relationship through the ups and downs the market inevitably deals.
There are lots of ways to show commitment. Preferred customer programs are one form of commitment, although many such programs are based on a transactional quid pro quo rather than true commitment.
McAfee formed a strong bond of commitment with the hundreds of “McAfee Maniacs” that handle much of McAfee’s technical support via the Web. Some post thousands of responses in McAfee forums—as of this writing the top contributor has made more than 31,000 posts. Except for some modest peer recognition, the Maniacs are uncompensated, and yet the shared outcome of helping people navigate McAfee’s software motivates some amazing commitment.
"Co-Creation" Co-owning a vision
The final and ultimate phase is Co-Creation. At this level the relationship is about co-creating value and co-ownership of a common vision rather than merely sharing in the outcome. With this type of relationship, the consumer is no longer merely making a purchase, but is supporting a preferred business. The benefits of co-creation are huge, and reach into every corner of a business and are reflected in both top line revenue and bottom line costs.
As mentioned on page 17, iRobot, makers of the Roomba robot vacuum cleaner, support an entire ecosystem of customers and partners. Many have hacked Roombas to add capabilities or create entirely new devices, in effect, turning the Roomba into a platform. By listening to its customers and recognizing them as trusted partners, iRobot is able to embrace a class of user that exceeds what we typically think of as a customer. As a result, the Roomba has become more than just a vacuum and its users are much more valuable to iRobot than merely customers on the other end of a monetary exchange.
LOVE for the entire company
Each of the five phases—Romance, Power Struggle, Stability, Commitment, and Co-Creation—represents a different flavor of relationship and a different way of thinking for product managers. Some consumers will want to align their interests with your company’s because it makes their lives easier, such as frequent customers who want the sales process to run smoother.
The motivation of other consumers may be less direct—perhaps visionary customers who see a better way or an interesting combination of products or services. The Co-Creation process manifests itself in four distinct types of value:
- New products and services are the most visible way you can engage with and learn from your customers. A genuine dialog with the consumer always makes the development process better, but in many cases it also makes it simpler as feature sets can be better validated and it is easier to identify components that add little value.
- Process improvements are an area where many consumers have strong feelings, but few companies bother to ask. Still far fewer take the view that consumers should be empowered to help design the processes. The key is interests that are aligned in a deep and holistic way.
- New ways to message and market become apparent as soon as you start engaging with consumers in a genuine dialog. They’ll help you sell their bosses and they teach you how to market more effectively to their neighbors. If your new product name is an undesirable slang term in a foreign language, they’ll tell you rather than letting you blast it to the world.
- Business co-creation is the Holy Grail of relationship. It happens when your customers are emotionally invested in the success of your business. They make referrals to friends, family, and colleagues because it creates intrinsic joy for them. Having a customer who wants you to be successful is much more powerful than a customer you’ve bought with a loyalty program. It is important to remember that co-creators may exist in forms and places that are invisible to companies. You need to support these advocates, even when you don’t know exactly who they are.
To a limited degree, the LOVE model can be implemented by a single discipline within a company, but as the above examples point out, the real value is in infusing its effects throughout the organization. The LOVE model thus provides product managers (and marketing) a vehicle for offering leadership to the entire company.
How LOVE changes product management
The LOVE model gives product managers a relevant and actionable framework for generating valuable interaction with consumers. These bi-directional interactions provide a source of product, process, and business improvement and innovation that enables your company to co-create new forms of value with customers.
Both forces discussed in this article require significant changes in product management. First, the need for greater innovation and new types of solutions means that product managers are less makers and more organizers. The second force—the need to find a more workable model of consumer—company relationships, pushes product managers to interact with consumers in a truly bi-directional manner where consumers are peers rather than objects to the company.
With changes to both the “what” and the “how,” the C-suite needs to re-think what they expect from product management. Instead of being product champions, product managers need to be customer or market champions with a broad view of how their company’s expertise and technology can contribute to customer solutions. They need to understand ecosystems rather than just product applications. They need to enable customers to help co-create all aspects of their business (not just the products) as this is how they will create sustainable differentiation. This will likely lead to changes in how the product management function is organized and managed.
For the first time, companies have a holistic model to guide them in developing more valuable and actionable relationships with customers across all parts of the company. Embracing the
LOVE model embarks an organization on a journey of discovery which leads to quantifiable results, long-term value, and enhanced competitiveness.
Note: The LOVE model is built on concepts originally developed by Harry Max at Rubicon Consulting. Harry also came up with the LOVE model name.
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