How to manage your product roadmap during economic uncertainty
Nobody’s life is easy when the world is in economic turmoil. Especially in tech, the combination of heady investments, runaway investor expectations, the aftermath of COVID-19, geopolitical factors, and a recession have created incredible challenges for businesses to grow into their valuations.
Founders and CEOs get a lot of advice on how they should react when conditions change: hiring, downsizing, budget adjustments, and pricing to name a few. But what if you’re a Product Manager? Afterall, you’re responsible for product development, quality, and usage…all of which directly impact revenue growth and business performance.
But let’s back up.
The role of a product manager wasn’t very well-defined or prevalent in tech during The Great Recession from late 2007 to 2009, never mind in the .com crash of 2000. That means there are few (if any) playbooks for product managers regarding how - and whether - they can change the course of their company, specifically in a downturn.
This begs the question: Should PMs, who are laser focused on user experience and product functionality, put their head above the parapet and pivot their roadmap in reaction to the macroeconomic climate?
In this article, we answer that question (spoiler alert: the answer is YES) and discuss how PMs can help steer businesses into a better position to survive - and even thrive - during difficult times.
1. Understand where your business stands
Don’t run before you can walk, and don’t try to “future-proof” your product roadmap without first understanding your company’s position.
While it shouldn’t be difficult to understand how your business is currently faring, and what’s projected for the next 12-24 months, some founders in some startups have sung the growth narrative for so long that they have a hard time sharing the full picture with their teams.
As a PM, your job is to figure out what is really achievable in the next few quarters…not just the vision that helps the founders fundraise, sell, and rally employees. Here are some questions to ask:
- How many months’ runway do we have right now, not assuming any new investment or any growth in revenue?
- What’s in the growth pipeline right now? If we grew just as much as we did in the last quarter for the next few quarters, how does that affect the runway?
- What does growth need to look like for us to raise the next round in this market, or become profitable (whichever is faster)?
The answers to these questions should help you understand if you’re in a lucky position, or an unlucky one.
The lucky position
You’ve raised a bunch of cash at great terms in the last 3 years when there was plenty of it, and you’ve either a.) not spent it b.) have adapted quickly so that there’s ample runway c.) are already an established success story in your market, or d.) are profitable.
In these cases, the downturn may slow growth, but it’ll also weed out a lot of competition and prompt clients to reconsider expensive incumbents. Trying to land-grab with some product, packaging, and pricing moves might be a good idea. More on this below.
The unlucky position
Funding was hard or mistimed, and money may have even been mis-used. This likely means you’re going through some compression, trying to ride out a shorter runway, with a smaller team, and less growth. It’s hard enough to get a startup to success in the best of times, and being in “survival mode” makes it even harder.
But, if the company acknowledges this is the situation it faces, there might be things you as a PM can concretely change in the product strategy to get the business to safe ground faster.
2. Find out why customers are churning
A lot of ink has been spilled explaining what inflation, recession, and lower valuations in tech investments will do to the market broadly. There are three things we know for sure.
- Businesses will decrease headcount. There have been over 170,000 tech layoffs in the first 3 months of 2023…which is more than we saw all of last year.
- Businesses will be more careful about how they spend money. Nearly half (48%) of Chief Financial Officers want to reduce costs over the next 12 months.
- Smaller, more fragile businesses with less runway, less revenue, and less operational flexibility will shut down. Even without economic uncertainty, 2 out of 10 new businesses fail in their first year.
Because of all of the above, you’re likely to see increased logo churn, and increased seat churn. Importantly, our dashboards reflect the truth… but not the reasons behind it. That’s why it’s essential you differentiate the inevitable churn (the business shut down or the company downsized) from the churn that actually relates to your product.
Spending extra time surveying or tracking a sample of recent churners and asking “why” will help you understand what part of churn is natural, and what is actually induced by the product not satisfying the market.
Fun fact: Shopify reports as much as 20% churn in “regular times” because, as a business that skews heavily to the small, rapidly spinning ecommerce industry, it sees a bigger proportion of businesses fail, regardless of how much they benefited from Shopify’s product.
The point? Even though it might look like regression in the current market circumstance, churn doesn’t necessarily mean that your last experiment wasn’t a success, or that there’s no appetite for your new feature.
3. Focus on customer retention
The cost of acquiring new customers can be five times or higher than the cost of retaining existing customers. And when you’re down to your last dime, the right place to spend it isn’t the slot machine. That means you should prioritize your teams’ work based on what you know will drive renewals and upsells. Not what will catch the attention of your competitors. And not one-off builds for pie-in-the-sky prospects.
The name of the game? Product quality.
If your users run into glitches, experience regular service issues, or have to do extra work because of a missing, basic functionality…you couldn’t blame them if they churned to save money or were tempted by a competitor or incumbent.
But, if your product delights users instead of irritates them, and improves their quality of (work) life instead of slowing them down, you’ll almost certainly keep them on board. This is the time to go to clients and show them their feature requests are being prioritized and shipped, that you value their input, and really want to give them what they need.
4. Lean into use case expansion
If you’re in a lucky position (see above) and still have the resources and appetite to spend on growth and product development, you may want to consider more than just new features…
As some of your B2B SaaS competitors fold, and as some of your customers look to consolidate spend into one tool, you could expand your product offering by looking at the adjacent steps, use cases, and jobs to be done that attract customers to your tool in the first place.
It certainly worked for monday.com. After realizing that their existing customers - who love and regularly use monday.com - were also paying for a whiteboard solution, they decided to develop an integrated solution that did both: a Miro-like, whiteboard capability called WorkCanvas.
Bonus: Check out how we worked with monday.com to enable collaboration in WorkCanvas 👇🏽
monday.com of course isn’t the only example of this. There’s also Canva’s expansion. And those of familiar Unicorns like Uber and AirBnB. What’s stopping you from doing the same?
5. Buy vs. build
So you understand where your business stands, have a good understanding of why customers have churned and what will keep them around, and have shortlisted new features, products, and even use cases that will help you ride out the storm. There’s just one problem: you’ve downsized your development, product, and design teams.
Fear not! There are plenty of solutions you can buy instead of building yourself.
Need to introduce integrations to just a small subset of users? Use Paragon.
Do your B2B admin users really want an analytics dashboard, a simple SQL and Cumul can add it in.
And if you want to increase the number of users who are active in your product, while also driving efficiency for your customers, you can do what monday.com, Trumpet, Walnut, Riskified, and others have done: add collaboration functionality quickly and easily with Cord.
So, to wrap things up…there’s no fool-proof prescription that can save every business in the best of times, and certainly not when the market is challenging for even the biggest companies in the world. But, as a product manager, you and your team can react to what’s happening, change your approach, and effect positive change for your business. And maybe just maybe, this article helps put you on a path to success.