Head or Tail: What PMs Should Be After

Problem

In the world of enterprise software, companies tend to focus on a group of large and often vocal customers. Unlike in consumer applications, it is much harder to instrument product metrics to track and measure usage patterns and engagement, and the diversity of business customers is more pronounced. As a PM with a finite amount of time to engage with customers, you might find yourself forced to focus solely on these large enterprise customers, especially if your company is strongly sales-driven. That said, similar to customer segmentation in the consumer space, enterprise segmentation differentiates between the head and tail (and often, shoulders).

Actions taken

One of my products was designed to help enterprise customers learn about their customers from the unstructured text data from surveys, reviews, and other feedback channels. It was extracting themes, sentiment, and emotions for further analysis along with core business metrics. I quickly learned that what my customers wanted to accomplish and specific requirements varied based on multiple factors, such as customer industry, staffing levels, company culture, to name a few. However, from the business perspective, customers with the most considerable spending (head segment) are naturally receiving a lot of attention as they impact the immediate revenue streams. Consequently, their needs are quickly channeled to the product organization by the account teams.

If your product is complex, you will likely limit the number of customers you will preview and validate the product with. Over time, you are likely to continue utilizing the dozen or so customers as your informal advisory board. However, that dozen will start asking for specific features in exact details; at times, they will even describe what the feature should look like. In contrast, thousands of emerging tail customers are likely to tell you about their problems instead of asking for features. In a nutshell, the tail is problem-driven, the head is solution-driven.

In enterprise software applications, I like working on products that scale to thousands of customers. While it is easy to fall into the trap of addressing the asks of the biggest or known customers, I find it more exciting to discover opportunities that apply more broadly.

For example, small at-the-tail customers can quickly become your largest accounts, and influencing their process early on will bring long-term customer retention and renewals. Smaller customers are less likely to create alternative internal solutions to what you are solving. Finally, product improvements developed for thousands of customers could increase your addressable market and bring even more customers.

In my case, I defined a product strategy that focused on creating product experiences and out of box content that would democratize the analysis of unstructured data for thousands of customers. Their use cases were generic and relatively simple, allowing the team to innovate and deliver meaningful product investments at a higher pace. Our forecast also suggested that the tail-informed and driven strategy will support the rapidly accelerating growth of the business.

Lessons learned

• To generate sustainable growth for the business and product, you must develop a product that supports your company vision and strategically solves customer problems, and supports opportunities at scale.
• Start by focusing on core use cases and sprinkle the product with delightful experiences rather than directly and blindly building a specific feature just because your biggest customers asked for them.
• It is often said that a customer doesn't know what they need. Your customers will tell you what they want, but they wouldn't know what they need. Your tail customer will often say -- I don't know what I need. Please help me solve my problem.
• It takes determination from a PM to create an intentional tension between needs and wants of the head and those of the tail and -- regardless of the strategy -- to recognize different interests and possibilities between the head and tail.