Structuring Your B2C Product Team Part 1
How to structure B2C product teams for E-commerce, Subscription, and P2P Marketplaces
I’ve been asked a fair amount, how should product management be structured at my organization or startup? This post will be divided into two parts. In part 1, I will cover guiding principles and the structure I’ve used at different types of companies. In Part 2, I will cover setting up the organization at a high level and the differences between product as it’s own organization vs other models like a growth organization.
There's not a perfect answer, but there are some principles.
Any good product management structure should have the following characteristics:
There's a singular person (a CPO, VP of Product, CEO, Head of Product) leading the organization responsible for setting direction, vision, customer focus, and metric focus
Each of the product owners should have tightly focused areas of interconnected responsibility. In the majority of cases, it's easiest if each PM has 1 or 2 key metrics that they are focused on.
When combined together, moving these metrics advances the company towards the product vision and increases the success of the company. If you move all your metrics up and the right and you aren't improving as a business, it's time to pick new metrics.
It should be obvious and apparent what area each product owner runs, what metrics they are responsible for, and how it impacts the business. If you have a PM working on special projects that don't advance your startup, it's time to question the purpose of the role (and you might need to fire the person if they can't be repurposed).
Product organizations are adaptable. As the business evolves, they need to grow and evolve with it, either to tackle new areas of the business or to fix problems in existing areas.
What follows are different examples of how you can think about structuring your product organization.
Using an E-Commerce company as an example, here’s a funnel that represents the company.
There are a number of key components to this business (and I'm intentionally leaving out fulfillment and shipping for simplicity):
Acquisition of new customers through offsite channels like SEM, SEO, social, blogs, and other
Getting the user acquainted with the site and trying to get them to register or at least search for or click on a product
Helping the user find their first product
Getting the user to make a purchase through the cart and checkout experience
Bringing a user back through retention and re-engagement tactics
Getting a user to become a repeat purchaser
Let's pretend we are tasked with building the product team for this company. At a most basic level, it might look something like:
A PM focusing on bringing new users to the site by focusing on SEO, social, SEM optimization with a key metric of new users brought to site
A PM focused on funnel conversion from top to bottom of the funnel. Once a user visits a site for a first time or a repeat time, this product manager is deep in thinking through how to recommend the right products for the person, driving adds to cart, and then endless optimization of the cart and checkout funnel to ensure minimal dropoff along the way.
A PM that is focused on retention and re-engagement. They will be focused on optimizing retention channels such as email, push notifications, loyalty programs, offers and offers. Their goal will be to drive users back to site who eventually convert through the funnel. Most of the time, they will be focused on measuring areas like email performance (measured through visits, OR, CTR), Push Performance (measured through push views and app opens from push), effectiveness of loyalty programs, and other areas
This structure provides a clear way for the entire company to understand the structure of the product team, what the different teams are focusing on, where resources are being deployed, and what metrics each team is accountable for.
As this theoretical E-commerce company grows, each of these areas can start to justify individual PMs who focus on retention, growth, new user experience, the homepage, the product pages, or the cart. Amazon, for example, has people focused on incredibly minute details for each part of their experience, to ensure that the proper products are displayed.
Subscription Business (Video on Demand)
Showmax, which is a subscription Video on Demand offering, had a slightly different structure when I managed the product team. At the core, we had product team focused on the most critical parts of the customer lifecycle and then a few teams responsible for building out the essential backend components to run our service:
A PM/team focused at the top of the funnel. The goal of this team was to convert users to our 14 day trial period by getting them through our initial signup funnel. This team was most similar to an onboarding growth team, with a lot of focus on optimizing conversion, adding new payment options, and improving our signup funnel
A PM/team focused on our web product. Most users first experience would be using the web product and the goal was to get them to their first viewing experience or to help them download the mobile or TV products. If users were on multiple platforms or in the middle of viewing a series, they were much more likely to convert from the trial period into a paid subscription
A PM that focused on building out great mobile experiences and another focused on the TV/leanback experiences. Given how important the mobile and living room experience are for this sort of a product, it was critical to make continued and specific investments in these types of platforms to ensure that the LTV of our customers would be consistent.
A PM that focused on the underlying content management system. This is underrated but incredibly important. We needed the ability to make sure the right content was shown in the right markets and also that we could properly merchandise the product easily and efficiently as we got new content and made it available to customers.
A product manager focused on billing and other critical subscription elements. Given the volume and amount of billing (and need for additional billing options), it was absolutely key to have a billing product expert who understood all the nuances of this area of the business and who could look at key fraud, billing, and other important metrics.
A team focused on the recommendation algorithm. Critically important for streaming content is the ability to recommend the right content to the right user. The better the product is at showing the user a series or movie, (or in the case of a service like Tiktok, getting them to the right UGC videos quickly) the more likely a user will find something they want to keep watching and be a retained customer.
With this sort of focus, we were consistently optimizing the number of users who we were converting at the top of the funnel. Then we were moving them from trial to month 1 and then to month 2+. Beyond month 2+, we had a very steady retention rate where we could start to have stackable revenue. We structured the product teams this way in order to ensure coverage across the critical elements of the business.
A two sided marketplace or P2P marketplace could be very different, with specific teams and PMs focused on both sides of the marketplace and driving up the metrics for buyers and sellers.
Oftentimes, the real challenge with a P2P marketplace model is about being able to shift from one side of your market to the other as supply and demand ebbs and flows to make sure that each side can get what they need. If you have an incredibly strong amount of interested buyers coming to your site with no actual supply of product, then you need to adjust the structure and metrics that your product organization is focused on.
Let's think about Airbnb as a case study (used here as an illustrative example, no one from Airbnb actually was involved in this post). The reason that much of their focus has been on growing the number of hosts (or at least it was for quite a while) is that they have a lot of inbound demand for rooms, but need to grow inventory in both existing and new cities to satisfy that demand.
Therefore, the challenge for their growth is not about bringing in more demand, but instead about how to create the supply side of their market. If you were to take this as a case study for how to structure product management or growth, you’d likely have a variety of PMs and teams focused on metrics like:
Organic growth of new hosts (through both marketing channels and viral channels)
Getting new hosts successfully through the process of setting up their home for listing on Airbnb (including adding house rules, getting the photographer to your home, and making the listing look successful)
Getting a new host through the process of hosting their first guest (finding them a good guest, getting them their payment, setting them up for success)
Getting the host to be a repeat host and retaining them and training them to have regular guests (lots of email, push, sending more users their way if they are a good host, getting them to keep their calendar up to date, etc)
As they scale up supply, they can then shift focus back to the demand side to ensure that there’s enough interest in all these new properties they’re bringing online. The focus here can be on:
Creation of new guests who want to use Airbnb from offsite channels
Getting a guest to find and book their first Airbnb
Ensure that the guest has a great experience
Getting the guest to come back and re-book with Airbnb for their next trip
After reading through this, you should have an idea of the type of business and metrics you have. In the next post, I will go through how to apply it to your team and organization.