Prioritizing customer needs and product features

When it comes to developing a product for target customers, it is important to uncover underserved user needs and identify product features to satisfy those needs. However, all needs are not the same and a product manager must take care to prioritize user needs upon which to develop features and allocate resources.

In ‘The Lean Product Playbook’, Dan Olsen talks about a very useful Importance vs Satisfaction Framework defined as below:

Importance vs satisfaction framework

The trick in achieving the product-market fit is to identify the underserved user needs which lie in the top left section of the above graph. A successful solution delivery in this quadrant means creating disruptive innovation. The bottom half of the graph where user needs are not important enough is not worth going after.

As a general rule of thumb, disruptive innovation of the present will move on to the top right section of the graph as more players enter the market (for example touchscreen in smartphones was a disruptive innovation when Apple launched iPhone in 2007, however, every smartphone manufacturer now provides this feature).

However, to classify and place user needs into each quadrant of the above graph, it is important to measure importance and satisfaction with the current solution of each user need through customer surveys. The measurement scales as optimized through research are generally defined as follows:

1. Importance: Unipolar 5-point scale
2. Satisfaction: Bipolar 7-point scale

In general, unipolar scales use 5-point measurements and bipolar scales use 7-point measurements in order to extract the most useful information from the user.

Capitalizing on the above framework, other frameworks to prioritize user needs have been developed as discussed below:

1. Gap analysis:
   Gap = Importance — Satisfaction
   However, there is a flaw in this framework as it doesn’t attribute value to the importance and only focuses on the difference which might lead to focussing on less important user needs.
2. Jobs to be done (outcome-driven approach):
   This framework overcomes limitations of the previous framework by determining opportunity score of each user need as:
   Opportunity score = Importance + Maximum(Importance — Satisfaction,0)
   In general,
   Opportunity score > 15 — Attractive opportunity
   Opportunity score < 10 — Unattractive opportunity
3. Customer-value (to be generated if user need is met):
   Customer value = Importance * Satisfaction (to be generated if user need is met)

4. Opportunity to add value: This framework identifies the gap to be filled over satisfaction from current solutions to a user need.
Value-added: Importance*(1- Satisfaction from current solution)

Opportunity to add value

5. Customer value delivered by product improvement: This framework is unique to the problems pertaining to improving an existing product or solution. It calculates additional value generated by product improvement for a user need as follows:

Customer value created = Importance*(Satisfaction after product improvement — Satisfaction before product improvement)

So far we have been talking about how to prioritize user needs on which to allocate resources. However, once the key underserved needs are identified and prioritized, the next step involves brainstorming solutions for the needs and identifying features pertaining to each user-need. Once features have been identified, it is important to consider the fact that not all features can be built at least in the initial version of the product owing to resource limitations and return value of each feature (measured through the importance of user need or scores from any of the frameworks mentioned above). Thus key lies in identifying the ROI of each feature and prioritizing features in decreasing order of ROI.

The formula to calculate ROI is very simple as shown below:

ROI = (Final value — Investment)/Investment

When it comes to technical products, investment generally means developer hours or weeks and final value pertains to the importance of user need or scores as calculated from any of the above frameworks. Sometimes, user stories are assigned points in terms of developer effort and are called story points. This discussion will come handy when we discuss agile methods for product management.

However, in many cases, it might not be possible to attribute numerical value to return and investments and hence it is alright to classify them as high, medium, low values as shown in the following framework:

ROI analysis of product features

Thus the above framework is highly useful in prioritizing product features and when combined with Kano model as I have discussed earlier in another article, it can be used as a powerful tool to identify feature chunks in MVP candidate across various versions as follows:

Thus, in this article, I have discussed frameworks on how to prioritize user needs, brainstorm feature sets and prioritize features for the MVP candidate. It is, however, important to keep the product-market fit pyramid in mind which Olsen discusses extensively in his book.