Setting up Product Operations to reduce churn and grow revenue

This blog post was written by Joshua McLaughlin

Josh’s passion for the craft of Product Management has led him to hold roles in Product Manager and Product Operations. His experience spans from small-scale startups to Fortune 500 companies. Whether it’s external users or internal co-workers, understanding his customer needs is what fuels his drive to build and deliver experiences that people will love while also achieving business objectives. He frequently writes about Product Operations and shares his experiences to help others on their own journey. Outside the workplace, Josh and his wife have three kids. He coaches flag football and he’s an active volunteer at their school and sporting activities.

If you haven’t heard by now, Product-led growth is on the rise. As a search term, its popularity grew +200% from 2021 to 2022.

If you’re still new to the concept of the Product-led business model, it’s simply a growth strategy where the product itself serves as the main driver for acquiring and retaining customers. This model is in contrast to more traditional models like sales-led which uses a sales team to get customers to purchase your product or service.

But in a product-led structure, customer loyalty, referrals, and sales are all driven by the product because of the value it creates for the user. The product is the centerpiece of the business, and as a result, the focus is creating a great product experience that will ultimately drive growth and customer engagement.

The product becomes the primary marketing tool and source of adoption & revenue. Go-to-market and customer-facing teams such as Marketing, Sales, and Customer Support all leverage the product experience itself to perform tasks like new feature announcements, upselling, and support that typically happen outside of the product experience in the more traditional sales-led model.

The importance of customer retention and loyalty in driving product success

Customer retention and customer loyalty are two of the most important pieces of success in a product-led model.

Retention is important because it reduces the costs of acquiring new customers, provides a stable source of revenue, and builds your competitive moat. Higher retention signals your product is meeting customer needs and delivering value to them. This is critical in a product-led model and increases the possibility for customer referrals and positive word of mouth.

And because loyal customers are more likely to stay with a product over time, they are less likely to switch to a competitor, reducing the impact of churn on the business. The result is a more stable and sustainable source of revenue.

The product-led approach to customer retention and loyalty

Essentially, being product-led means your company’s product can sell (and upsell) itself. But it doesn’t replace Marketing and Sales, it simply provides those teams with automation, scalability, and added efficiency.

The product-led approach is based on the idea that a great product experience will drive customer retention and loyalty, instead of more traditional marketing and sales tactics such as discounts, promotions, and costly advertising. The product meets and exceeds the customer’s needs by providing a seamless, enjoyable experience. As a result, customer satisfaction and loyalty increase over time.

By analyzing data and listening to customer feedback, the Product development teams continuously improve the product. This ensures that the product stays relevant and provides value over time, which leads to increased customer retention and loyalty.

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Leveraging customer feedback and insights to reduce churn and drive innovation

In the product-led business model, customer feedback and insights are valuable tools for identifying possible causes of churn and lost deals.

Here are 4 methods for using customer feedback:

1. Analyzing customer complaints: Customer complaints and feedback can be analyzed to identify areas where the product is falling short of customer expectations. This information can then be used to prioritize improvements and reduce the risk of churn.

2. Monitoring customer behavior: Customer behavior data, such as usage patterns and feature adoption, can be used to identify potential causes of churn. For example, if a customer is not using a feature, it may indicate a problem with the feature or a lack of understanding of its value.

3. Conducting customer surveys: Conducting regular customer surveys to gather feedback and identify areas for improvement can be used to identify trends in customer sentiment and track changes over time.

4. Reviewing lost deals: Teams can review lost deals to understand why the customer chose not to purchase, upgrade, or renew. This information can be used to identify areas for improvement and address any objections or concerns that customers may have.

But the value of customer feedback and insights doesn’t end there. They’re also valuable evidence for driving innovation by informing product development and gaining stakeholder buy-in.

Method	Informing product development	Gaining stakeholder buy-in
Analyzing customer complaints	A customer complaint reveals where the product falls short of customer expectations, allowing the team to prioritize improvements and reduce churn.	Customer complaints can demonstrate the impact of customer feedback on the product design and the importance of customer-centered development
Monitoring customer behavior	Customer behavior data can reveal potential causes of churn and provide insight into customer needs and preferences	Data on usage patterns and feature adoption can be used to show the impact of product decisions and make a compelling case for product improvements
Conducting customer surveys	Customer surveys can provide valuable qualitative and comprehensive feedback on the product and identify areas for improvement	Surveys can illustrate the fact customers are willing to share their thoughts and the importance of listening to the customer to show how the product is evolving based on their feedback
Reviewing lost deals	Lost deals can provide valuable insight into why customers are choosing not to purchase, upgrade, or renew, allowing the team to address objections and concerns	Information from lost deals can be used to show where feedback can be applied later in the funnel and demonstrate the importance of understanding customer needs at all stages of their experience

The role of Product Ops in a product-led business model

For companies embracing the product-led approach, with the product at the center of the business model, the role of Product Operations has emerged as a key function within the business.

Product Ops has historically been established within the product development teams to help Product teams manage their tools, processes, and rituals. But in a product-led model, Product Ops is positioned to deliver value beyond the product development teams and begin to support the business at large.

Within a product-led model, Product Ops can work cross-functionally to help development teams ensure their product roadmap satisfies the needs of all teams. It works to identify areas for improvement, coordinate stakeholder collaboration with the development teams, and ultimately to ensure customer expectations are met and the product is delivering value.

For the modern Product Management team, a product-led model means there are more customers to manage than just the end user. All of the cross-functional teams are also dependent on the product for their success. And when managing all of these customers together becomes unwieldy, Product Ops can step in and manage the interlocks between the Product teams and cross-functional stakeholders. This allows Product Managers to stay focused on their core competencies.

How Product Ops can help drive customer retention and loyalty to deliver value

We’ve already established the use of product usage data and customer feedback is a critical ingredient in successfully driving retention and loyalty. And for product-led to be effective, you need to eliminate any misalignment that exists between what your customers actually want from your product and what you think they want.

In a product-led model, usage data and customer feedback is the lifeblood of not just the product teams, but the organization at large. It’s the fuel that keeps the engine running.

But with so many cross-functional stakeholders wanting to pull insights from usage data and customer feedback for their own teams, and multiple voices with strong opinions flowing back to the development teams, Product teams can quickly find themselves overwhelmed. This is where Product Ops can step in to apply leverage.

With the help of modern product analytics software and customer insights tools, Product Ops can work with the product development teams to operationalize the wide-spread sharing of critical data to the cross-functional teams. Democratizing this information keeps the development teams focused on their tasks without creating blockers that impede the rest of the organization.

Product Ops can also facilitate the inbound flow of ideas and requests into the development teams when non-product teams uncover new needs based on the usage data and insights being shared with them.

Finally, when all of the customer insights and cross-functional requirements have been synthesized into a development roadmap, Product Ops is positioned to help the development teams share the plan throughout the company.

4 ways Product Ops can be used to help the business optimize the customer journey

Depending on your organizational structure, the Product Ops team could be tapped to help in a few different ways:

1. Data analysis

Product Ops can help the development teams gather and analyze customer data to identify pain points in the customer journey. This way the teams can make improvements to the product to remove any friction in the customer experience.

It’s important to point out I would never advocate for Product Ops absolving the Product teams from conducting customer interviews, doing their own discovery work, or taking over core responsibilities of the roles within a modern product team.

But Product Ops can help to augment the discovery process by helping development teams streamline the customer interview process, collaborate with UXR and customer-facing teams, or coordinate with Data Science teams to synthesize the data they gather into a compelling narrative.

2. Streamlining processes and workflows

Product Ops can be deployed to ensure efficiency within development cycles and effective coordination with cross-functional teams.

This can include adding automation into customer interview scheduling, optimizing workflows to ensure development teams collaborate with Data Science and UXR teams to remove bias from their findings, and create avenues to share insights with any non-product teams who are impacted by their discoveries.

3. Monitoring feedback

Product Ops can help establish tools like feedback rivers, feedback systems of record, and feedback analytics platforms. These types of tools ensure all teams have a view into the customer needs and can work with the insights at the appropriate level of granularity. This helps all teams ensure the product experience is meeting customer needs and delivering the value that drives retention and loyalty.

4. Collaboration between Product and Customer Success teams

You could probably argue that every team is invested in customer success in a product-led business. Product Ops can work cross-functionally to organize conversations to make sure customer feedback is heard and integrated into new product development as well as initiatives for Customer Support, Marketing, and Sales teams. By facilitating the flow of information between each of these teams, Product Ops establishes a healthy partnership between Product and the rest of the business.

Conclusion

To recap the points we’ve discussed in this article…

1. Customer retention and loyalty are centerpieces of a successful product-led approach. But this is only possible when teams have access to customer feedback and product usage data.

2. Product Ops can be a key function working to support cross-functional access to customer feedback and usage data.

3. By using Product Ops to operationalize access to these elements, development teams are free to focus on building and delivering the best experience without being a bottleneck that blocks other teams from optimizing their own efforts to streamline the customer satisfaction.

Hopefully by now, you’re more familiar with the concept of the product-led approach, you understand the importance of customer feedback and insights, and you see the value the Product Ops function can provide to ensure these elements are able to flow freely throughout a product-led organization.