Should Product Management Leaders own Revenue?
Should a Product Leader own revenue? Here's what I learnt based on my experience as a Product Management Leader across startups and Fortune 500 companies.
Quarterly Revenue targets compromise long term product investment
Building a Product is a long game (especially for early stage and growth stage products). Short term revenue targets take the focus away from long term investment and incentivize short term “Growth hacks”. Some of these hacks (like pricing changes) can compromise customer satisfaction even if quarterly revenue targets are achieved. Focus should be on long term (1 year or more) revenue targets rather than short term (quarterly).
Sales-Led Companies
In a predominantly sales-led organization in the Enterprise SAAS world, PMs need to prioritize the roadmap for major deal-wins. In this case, PMs play a supporting role to Sales, and the Sales team is the revenue owner.
Product-Led Companies
In a predominantly product-led organization, Marketing team is responsible for lead generation and product team is responsible for the Freemium/Trial experience and Free/Trial to Paid conversion. Here, it makes sense for the Product Leader to own revenue. But revenue can be impacted by lead generation (owned by Marketing) as well, hence it makes more sense for Product Leaders to own the conversion metric rather than revenue itself.
Product-Led Expansion
If your Product has multiple Pricing Tiers like Basic, Premium, Enterprise, etc., then it makes sense for the Product Leader to be responsible for customer expansion from a lower tier to a higher tier (called Expansion Revenue). PMs can expose premium features in the User Experience and generate upgrades. Here’s an example from Spotify:
Product-Led Acquisition
Many self-serve products have viral loops or referral loops for customer acquisition. For example, Survey Monkey asks users who fill out Surveys to create their own surveys, thereby making people sign up for the product. This is called Product-led Acquisition through viral loops, which can absolutely be owned by Product Managers. Here PMs are responsible for the revenue generated from in-product referrals.
Conclusion
In a Product-led SAAS company, PMs should own parts of the Revenue (especially related to expansion and viral acquisition). But the focus should be on long term revenue rather than quarterly. There are several other metrics (like Conversion metrics, retention and engagement metrics) that are better for Product Leaders to own to ensure long term sustainable growth of the product.
Let me know what you think and share your perspective in the comments below.
About the Author
Teja Vepakomma is a Product Strategy and Growth consultant to companies. He has many years of experience working in Product Management leadership roles in Global SAAS companies. He’s currently based in Bangalore, India. You can follow or reach out to him on LinkedIn.