By Marty Cagan · svpg.com · LinkedIn
Cagan argues that many product managers, especially those coming from engineering, have only a shallow grasp of how their product and company make money. He recommends cultivating a relationship with someone in the finance department, who can help product managers understand the economics of their product, learn about customers from transaction and payment data, and build a credible business case. Finance staff are often willing to help but rarely approach product people, so the product manager usually has to make the first move. Building this alliance makes product decisions more financially grounded and more persuasive to senior leadership.
01Key takeaways
- Learn your product's revenue model, cost structure, CAC, and lifetime value before making big bets.
- Ask your CFO or finance team to connect you with someone who can answer financial questions about your product.
- Read the partnership contracts and licensing agreements that shape your product's economics.
- Use finance's customer transaction and payment data to complement behavioral analytics and find opportunities.
- Partner with finance to build business cases, since an economist's input makes proposals more credible to executives.
- Go to finance people proactively; they rarely come to product teams, and they usually want to help.
02Key sections
- The economics gap
- Many product managers cannot answer basic questions about revenue, costs, customer acquisition cost, or lifetime value. Engineers-turned-PMs are especially prone to this blind spot.
- Understanding your product
- A finance partner can help evaluate whether a product pays its way, reviewing contracts and licensing terms and spotting trends that show where the product is heading.
- Understanding your customers
- Finance holds transaction histories, payment records, and management reports that complement web analytics and can reveal surprising opportunities.
- Preparing the business case
- The product manager supplies most inputs while the finance partner structures the case, which carries more weight with senior management.
- Approaching finance
- Finance people are busy, deadline-driven, and quiet, so the product manager should go to them and treat them as allies.
03From the post
“A partnership dedicated to teaching best practices to product teams and product leaders”
Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.