Product Managers: The One Number You Should Know While Prioritizing Requirements

A couple of excellent posts in the blogosphere this week emphasized why you should consider customer problems solved and value added to customers while deciding which requirements/features to implement in your next release.

Scott Sehlhorst wrote:

You won’t go wrong by focusing your company, your strategy, and your products on solving valuable problems.

Jeff Lash said:

Rather than simply counting the number of features or the amount of enhancements, product managers should evaluate the ratio of value to effort and focus on obtaining the most value for the customer with a given amount of effort.

We agree with both Scott and Jeff. When it comes to prioritizing requirements, we believe there is one metric that helps you more than any other metric. Wondering what it is?

The One Number

This one metric is ROI (Return-on-Investment) – but we don’t mean it in the normal sense of this acronym.

ROI is most commonly used as a purely financial metric:

ROI = Financial Return / Financial Investment

We mean it in a much broader sense. Think of all the benefits that a feature/requirement will provide you. For example:

  • Build customer loyalty
  • Create competitive advantage
  • Further business strategy
  • And, of course, financial benefits: Increase revenue & profits

Give each factor an appropriate weighting (based on your company and product) and calculate the total return. Then divide it by the financial investment to get an ROI Metric. Once you normalize this (not-purely-financial) ROI metric, you can then use it to prioritize your features/requirements.

We believe that this one metric is a much better guide for prioritizing requirements and feature requests than any other single metric.

Editor’s Note:
Interested in an affordable, enterprise-quality software to help you manage requirements in a better way? Check out FREE 30-Day trial of Accompa or Sign Up for a Demo.

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