Episode 131: Answering Questions About Product ROI, Metrics, and Market Analysis
August 9, 2023
In this Dear Melissa segment, Melissa Perri answers subscribers’ questions about product ROI techniques, how we relate our product metrics to our financial metrics, buying versus building a product, and how you can get realistic market size estimates for your team.
In this Dear Melissa segment, Melissa Perri answers subscribers’ questions about product ROI techniques, how we relate our product metrics to our financial metrics, buying versus building a product, and how you can get realistic market size estimates for your team.
Have a product question for Melissa? Submit one here, and Melissa may answer it in a future episode.
Q&A:
- Q: Dear Melissa, what are some decision points in a buy or integrate vs. build situation? I'm working on a product that wants to incorporate asset management features. There are many good solutions out there already ready to go. So what are the steps to assess this?
- A: Building versus buying is a critical decision for product managers, so I'm thrilled you asked this. Now, when you're thinking about building versus buying, the first and most important question that you want to think about is, will this new feature set or the thing that you're buying be delivering on the core value proposition for your product?
- Dear Melissa, I want to help my organization make product tradeoff decisions on financial analysis rather than what the founder feels is the right thing to invest in. What are typical ROI analysis frameworks that are appropriate for a SaaS product?
- A: So, as we're deciding how to make product tradeoffs, you may have seen some of the different frameworks for prioritization that come back to the effort, including time and cost, all these different things. I don't love those. I think you should look at cost because you want to know how much it will cost to build things. You should also look at timing, but you need to do it through a lens that combines it back to the financial metrics, just like this person is talking about.
- Q: Dear Melissa, how do we get market size estimates to convince executive leadership about the market worth in the modern product management world? Research reports from various sources seem unauthentic and unrealistic because of inflated growth projections.
- A: Well, that's true. Some market research reports are definitely like pie in the sky. We recommend using these reports as general guidelines, not decision-making criteria. When we do market research estimates, especially market sizing estimates, I start to calculate things out a little bit more in detail, and when I had analysts on my team, this is what they would do as well.
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Previous guests include:
Tanya Johnson Chief Product Officer at Auror, Tom Eisenmann, Professor of Business Administration at Harvard Business School, Stephanie Leue, Chief Product Officer at Doodle, Jason Fried, Co-founder and CEO of 37signals, Hubert Palan, Founder and CEO of Productboard, Blake Samic, Former Global Head of Product Operations at Stripe and Uber, Colin Anawaty, Chief Product Officer of First Dollar, Quincy Hunte, Global Transformation Product Leader at Amazon Web Services, Ellen Chisa, Partner at boldstart ventures, and Leon Barnard, Education Team Lead at Balsamiq
Check out our Top 3 episodes:
- Episode 128: Scaling Product Operations with Blake Samic, Former Global Head of Product Operations at Stripe and Uber
- Episode 132: Simplicity by Design for Product Development with Jason Fried, Co-founder and CEO of 37signals
- Episode 153: Decoding the DNA of Successful Product Management with Quincy Hunte, Global Transformation Product Leader at Amazon Web Services