If you’re working on a software product—regardless of where you're at in the product lifecycle—chances are your most important goals revolve around improving user experience, increasing the growth of your product, and boosting revenue.
In order to push those goals forward, product managers need a lot of knowledge coming from multiple sources. And if PMs are anything, it’s massive knowledge bases of information about their product, their industry, and their customers.
The success of the product depends a lot on how much time the PM spends in that analytical space; how well they can tap into the information that contributes to the success of the product and then use it to effectively inform the decisions that will drive the product goals forward.
For most software products—the ones that see customer-centricity as the key to product success—that research must include a strategy for extracting insights from customer feedback.
Why is customer feedback important?
Customer feedback is a pivotal source of information that, when approached strategically, can have an immense effect on those goals we mentioned earlier: improving user experiences, as well as pushing growth and revenue up and to the right.
When you get an accurate picture of the needs, wants and problems faced by your most important customers—meaning the ones who bring the most revenue, the champions who consistently and deeply use your product as its meant to be used—you can then create a strategic plan for measuring and improving the satisfaction of these highly valuable, high-converting customers.
The best way to find the most profitable problems to solve is by listening to what that customer feedback is saying.
Customer feedback can answer these questions:
- What are the common issues stopping highly valuable customers from becoming long-term users?
- How much is it costing me to ignore these problems?
- Why do some users quit after a certain amount of time or after completing a specific sequence of actions and behaviours?
- Is there anything I can do to reduce that churn/quitting rate?
You might be thinking: “But I already spend too much time going through customer feedback and trying to make sense of it. I know it’s important; that’s why it takes up so much of my time. But I still feel like I could be extracting better insights from this information in a way that doesn’t keep me from everything else I have to do.”
So, what do PMs need to do before taking on the task of collecting, organizing and categorizing the feedback they receive every day? More importantly, how can PMs analyze all this customer feedback without wasting precious resources (time, effort, money) that could be used elsewhere?
It’s all about establishing a solid segmentation strategy with clear goals and priorities derived from data understood by all the relevant stakeholders.
What customer feedback should you be listening to?
If product management had commandments, “Not all customer feedback is actionable feedback” would make the list.
But what’s the best way to slice, dice and consume the valuable customer feedback? By "valuable", we mean the type of customer feedback that can be used to power strategies that target all the relevant metrics—the type of feedback that helps teams build customer-centric products that solve the unique problems faced by a specific group of users.
The key is to define who those users are using user research data. These are the users that product teams observe and listen to when it’s time to update parts of the product or launch new features. Teams building products can trust that these segments are samples of the greater target audience.
Start by understanding what your users are doing with your product. Use observable, quantitative feedback like on-page behaviour to see these flows. Find the categories and themes they fall under and create groups around those commonalities. Then, you can further break down those behavioural segments by observing if they have and descriptive or functional characteristics in common.
Then, dig into the descriptive categories they might have in common to find a group of users to interview and carry deeper problem exploration interviews.
When you dive deep into all of these dimensions, you’re armed with information that’s relevant not just to your development team but also marketing, sales and customer success.
By having a deep, empathetic understanding of who your users are, how they use your product, and what problems they hope your product will solve, you can then create a strategy you and your team can feel confident in.
Prioritize. You can prioritize those segments based on how much they contribute to your AARRR metrics (acquisition, activation, retention, referral, revenue) or any set of metrics that determines if success is on track. Another way you can further “prioritize” these segments is by their average customer lifetime value score.
A simple three category segmentation model is enough in most cases (although keep in mind that there isn’t really a standardized segmentation strategy that applies to ALL products. Each product is unique, especially when it’s time to define those ideal users):
- Power users: They enjoy using the app (this is measured using customer satisfaction scores like NPS or CSAT), and they use often and deeply (meaning they find all, or most, of the features useful). The problems faced by this segment are mostly solved by the product and they’re the group that’s most likely to advocate your product to like-minded users.
- Intermittent users: This segment needs a bit of help to become a power user. By asking, “What can I do to transform these users into power users?” the answers to that question can result in massive product growth.
- Weak users: “Likely to churn”, “least engaged users”—it’s all the same label for a group that won’t become power users. You can afford to deprioritize the feedback coming from this segment.
Gather information into why these segments behave the way they do. This is where interviews with customers that represent each segment are useful.
Once you’ve found those users, make sure to ask four important basic questions beofre you dive into their specific pain points and use cases:
- What problem(s) are you facing?
- What are you trying to achieve?/What would success look like if the solution existed?
- How urgent is it that we solve this problem? (and if they report more than one issue, ask them to prioritize which one is the most pressing that needs to be solved using a scoring method)
- What’s the current workaround you’re using to complete the task this problem is preventing you from achieving?
Refine those segments. Use the information you found during the qualitative research to further define those segments and trim them down to the most relevant users. When you have a set of users whose feedback you know you can trust, you create a two-way street of value. For the product manager, it saves him the time and effort that it takes to sift through unstructured, unprompted feedback. For the users (and the CS/Sales team), it creates an ecosystem (also known as a feedback loop) that makes them feel like their feedback is valuable and that their needs matter to the business.
There isn’t a one-size-fits-all customer segmentation strategy. Segments are usually unique to each product; they emerge when specific user groups, user types or personas perform certain actions and behaviours. And not all segments are the same across products.
The only way to pick a segmentation strategy that works for your product is to start by asking specific questions that are relevant to your product. And those ‘relevant questions’ can only emerge from observing the relevant customers who use your product.
The questions also vary wildly from product to product according to the industry, size of the company and lifecycle stage.
Once you...
- Benchmark those observed, prioritized segments against how well they each push your metrics and goals forward,
- Figure out their worth in CLV and split them into prioritized categories,
- Carry the interviews designed to answer the question of why your users behave the way they do,
...you can then start to prioritize the ideas and features that emerged from the common themes. (Prioritization frameworks are outside of the scope of this article, which is why we built a separate guide here).
