What is product optimization? Is it the same as product discovery? How should product managers go about optimizing their products? What are the best product optimization practices?

If you’re after answers to these questions, we’ve got you covered!

Let’s dive right in!

What is product optimization in product management?

Product optimization is the process of continually introducing incremental improvements and tweaks to the product so that it delivers more value to the users, increases their satisfaction, and drives business goals.

The goal of product optimization in SaaS is to create a product that effectively addresses customer pain points and provides a smooth user experience, translating into increased adoption, customer loyalty, and overall product success.

Product optimization normally becomes the priority of PMs after they’ve achieved product-market fit. At this stage, they’ve already got the product figured out and they simply need to make it better.

Product optimization framework vs product discovery framework

Product optimization and product discovery are often confused. There’s a bit of overlap between the two, so it’s understandable.

For example, they’re both iterative processes whose purpose is to enable product teams to develop successful products that drive organizational goals.

However, that’s where the similarities between the two frameworks end.

For starters, product discovery is about identifying and prioritizing user problems to solve and finding solutions that the customers would be happy to pay for. That’s the chunky stuff that lets you achieve your PMF.

Product optimization builds on the foundation set up by product discovery. Its goal is to enhance the user experience through small changes and adaptations.

To realize their goals, the two frameworks use different methods. Product and customer discovery relies mostly on qualitative data collected through interviews or focus groups.

Product optimization also uses qualitative data to understand the nature of the user’s pain points. However, when it comes to the evaluation of the changes, it depends on quantitative insights from experimentation.

Getting started with product optimization

How do we set up your experiments for product optimization?

Let’s walk through the process, step by step.

Define your goal by identifying obstacles in the user journey

To give your product optimization processes a clear focus, decide what you want to achieve. Ask yourself the following questing before deciding on possible goals:

• Do we want to improve product usability?
• Do we want to add value to the product?
• Do we want to outperform rival products?
• Do we want to make the product easier to maintain?
• Do we want to identify new ways to generate revenue?

Set your success metrics and timeline

Once you set the goal, you need to choose the right metrics that will guide the work of your team and help you evaluate the effectiveness of your efforts.

For example, if you’re looking at improving usability, you can look at the time needed to complete a task. If it’s adding value to the product, you could measure it with customer satisfaction metrics like CSAT or NPS, or the retention rate.

Apart from the metrics, set a specific timeframe for your experiment. If you don’t, you’ll never be able to finish and ship the update. There’s always something you can change or tweak, long after you’ve achieved your goals.

The timeframe that you choose will very much depend on the metrics you’re optimizing for. For example, if your goal is maximizing the customer lifetime value (CLV), you will need longer to verify the impact of the changes.

Plan your product optimization experiment

With the goals, metrics, and timelines in place, it’s time to plan the experiment.

This is mostly about choosing the right testing methods and sorting out the logistics.

Some questions to answer at this stage include:

• What testing techniques are you going to use?
• How exactly are you going to use them?
• What tools are you going to use?
• Can you run the experiments from the company premises or do you need to make any external arrangements?
• Who is going to take part?

Build vs buy: do you need a tool?

No matter what testing method you decide to use, you will most likely need tools to carry out the experiments. Are you going to build it yourself or perhaps buy a third-party solution?

If you need simple functionality that doesn’t require a lot of coding, go ahead and build it in-house. The same is the case if you need a proprietary tool that is specific to your use case only, especially if you’re planning to use it over years.

However, in most other cases you’re almost always better off buying a third-party solution. It’s cheaper and takes less time which your devs could spend working on actual product improvements.

Analyze results and make decision

To obtain statistically significant results, you need enough data. How much depends on what optimization you are testing.

As the experiment is in progress, monitor if you have what you need to make informed decisions and extend the experiment if necessary.

That’s if there’s a chance you’ll get it. You may as well realize that you’re barking up the wrong tree, so pull the plug and look for other areas to optimize or change your testing protocols.

Product optimization best practices

How can you make sure that your product experimentation brings the desired results? Let’s look at a few best practices.

Prioritize goals based on data

When choosing your areas for optimization, don’t rely on assumptions or anecdotal evidence. Instead, use product usage data to identify the areas where users experience barriers.

For example, if you hear from your sales or customer success teams that users struggle with a certain task, look at the product usage data to verify if that’s the case. If it is, that’s a green light. However, you might discover that there are more significant problems somewhere else.

Likewise, if you see that your customers drop off at a certain stage of their journey, this may be for a number of reasons. Instead of guessing what exactly could be causing the friction, why not run a usability testing session to understand the issues and set a baseline?

Based on that, you will be able to make informed choices on what optimizations are necessary to make your product more user-friendly, and which of them you should prioritize.

Choose optimizations that directly impact business goals too

Apart from product and customer goals, align your optimization efforts with business goals, too.

Let’s imagine your SaaS business is trying to increase revenue while cutting customer acquisition costs.

How can you achieve this?

There may be different ways. For example, you may want to prioritize optimizations that will help you boost your freemium and trial conversion rates.

Also, it is important to note that not everything needs to be optimized. Don’t test just for the sake of it – make sure what you optimize is linked to a bigger picture and helps achieve business goals.

Test one thing at a time

To determine if your optimizations are effective, test one variable at a time.

For example, let’s say you’re trying to optimize your landing page UI to boost the conversion rate. You have two ideas on how to do it: change the position of the CTA button and tweak the website copy. The odds are that the best results will come from the combination of the two.

But to know which placement of the button and which version of the copy works best, you need to test them separately. Otherwise, you won’t be able to tell which change moved the needle.

Run your product optimization experiments with the right customers

When planning your experiments, make sure to involve the right customers.

On one hand, you want to make sure that your users are engaged enough, so inviting the power users of the feature you’re optimizing is a safe bet.

On the other, to get unbiased results, you need to test the changes with a representative sample of your user population, and not only the most active users.

Whatever your criteria, use a user segmentation tool to choose your participants.

If you’re running a beta or usability test, you can easily target them with in-app messages inviting them to participate.

Product optimization never ends, it should be an ongoing process

Just like product discovery, product optimization should never end.

The opportunities to improve your product and add value for customers are endless, so don’t rest on your laurels and keep optimizing.

How Userpilot can help product managers run continuous product optimizations

Userpilot is a digital adoption platform with a range of tools that enable product managers to optimize their products through experiments, user feedback collection, and in-app behavior tracking.

A/B test in-app product communication

With the A/B testing functionality, you can easily test how effective various in-app messages and experiences are at driving your goals.

Let’s imagine you want to improve product adoption. You think that an onboarding checklist might help you achieve this goal but it’s just a hypothesis. To test, you trigger the checklist for 50% of your new users and watch if it makes any difference.

If it does, you tweak its format or copy and run the test again to see if the changes bring any better results. This continues until the gains are so small that they aren’t worth further effort.

Track product usage to determine where optimizations are needed

Tracking product usage is the most reliable way to identify the areas for optimization.

For example, if you see that users don’t engage with a certain feature that is relevant to their use case or drop off at a certain point in their customer journey, it’s a clear sign that they face friction. And that’s not exactly great for your product success, so you’d want to optimize all the kinks out.

Userpilot allows you to easily tag features and UI elements and track how users engage with them. And by interact, we don’t mean just clicks, but also text inputs and hovers.

If you’re not sure where to look exactly, why not use the heatmap functionality?

It enables you to visualize how users interact with different parts of your UI across different pages. In this way, you can easily identify which UI elements need optimization.

When it comes to user journeys, Userpilot supports goal tagging and tracking. Thanks to this functionality, you can figure out where users may be experiencing barriers.

Collect user feedback data to understand where customer satisfaction is low

While user behavior data will help you figure out what needs optimizing, it won’t tell you why or how to do it.

For that, you’ll need qualitative user insights and Userpilot has all the functionality you need to gather them.

For starters, you can easily target specific user segments with user surveys customized to your research questions. In this way, you can collect feedback from those users that are experiencing issues you want to address.

What if you don’t have product usage data indicating that users are experiencing issues? No problem. You can easily use surveys to unearth problems and diagnose their causes.

To do so, you simply need to follow up your quantitative questions with qualitative ones and watch out for hints where your customers might drop.

With NPS surveys, it’s super easy because you can tag and analyze the qualitative answers.

Conclusion

Product optimization may involve small changes, but ultimately, this is what makes a difference between good products and amazing ones.

If you’d like to see how Userpilot can help you develop data-driven product optimization processes, book the demo!