Misaligned incentives (company vs. customer)

As a reminder, I read this article1 a short while ago, and am sharing my thoughts in individual blog posts.

Here is my 3rd: Employee incentives are often misaligned with customer incentives.

This is where things get specifically related to Product Management.

As mentioned in the article, senior executives and managers often look at a lot of data, and decide one metric or another needs to be improved. From there, they offer employees incentives (or require compliance) to focus their efforts on improving the selected metrics.

As an example, the metric might be engagement (or time spent on a specific website). If the product or service is a restaurant search engine, average time spent might be 6 minutes, and the goal is to drive it up to 10 minutes, with each incremental minute worth some # of additional advertising revenue from those pages. This all seems well and good until you apply some customer discovery to the situation. What the research is likely to reveal is that customers are often looking for somewhere to eat at the last minute with a small group of friends or family, and they want to find something in 3 minutes or less. The fact that the current time is 6 minutes not only reveals that this is 200% longer than customers want, but driving it up to 10 minutes would make it 333% longer! At this point, it is highly likely that customers will abandon this web site to find an alternative that takes less time…

Performing regular, consistent, and meaningful Customer Discovery is important to the product management role, and critical to business outcomes. Aligning product behavior & product outcomes with business outcomes maximizes the return on investment, and avoids achieving metrics goals that harm the business in the long run.

Note: this alignment of business outcomes (and KPIs) with customer outcomes (aka goals) is important for all roles in a company, but has really high leverage in the product roles. Sales often sells to a customer once, Customer Support often supports a customer only a few times (ideally), but customers are (hopefully) using your product regularly (daily?). That creates a lot of surface area for “customer experience” driven by the product itself.

These misalignments might surface quickly — in the example above, the company may see a steep decline in monthly usage when the new “increased time spent” changes are deployed, and be able to take corrective action quickly. In other cases, the misalignment might stew in the background as quiet dissatisfaction for a while, until suddenly, the business is negatively impacted. The longer it takes for this to happen, the harder it is to attribute the problem to the “time-spent” product change. Whatever other recent change — a new marketing campaign, a recent earnings release, or some other completely unrelated event — happened proximate to the business decline will get blamed, and incorrect “corrective actions” will be taken, and the problem won’t get better.

The key point here is that customers goals (and incentives) need to be at the forefront of product & service (and business outcome) discussions. Not tying them together here makes for a long, arduous road to follow.

Other posts in this series:

• Post 1: Overwhelming details for employees

• Post 2: Overwhelming details for customers

• Post 3: Misaligned incentives

• Post 4: KPI’s at scale

• Post 5: Everything is connected

• Post 6: Empowered guidelines

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1. I originally read this article in Apple News+ which doesn’t provide direct links to articles outside of the News app. I tried to find the article on Entrepreneur Magazine’s website, but found 0 search results for the title of the article as well as the author’s name. (Both seem like bad user experience choices to me, by the way.) I ended up finding the article on the website I linked to above as a last resort.  ↩︎