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4 ways to define product team ROI

By Jodie Hopperton

INMA

Los Angeles, California, United States

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A few weeks ago, I wrote about the challenges of showing value as a product department, particularly showing the direct revenue results. In a follow up conversation to this interview with CJ Jacobs this week, she told me that she’s recently spent some time doing exactly this to coincide with their fiscal year planning. She told me that overall, “it’s about value delivered: supporting the needs of the business and being responsive … . but I found that this is a useful mechanism to bridge the gap and prove that value creation in the language of finance.” 

CJ Jacobs, head of product and technology at MediaNews Group, shares four ways to define ROI on a product team's work.
CJ Jacobs, head of product and technology at MediaNews Group, shares four ways to define ROI on a product team's work.

Specifically, here are four ways they attributed dollar amounts to the work CJ and her team have been doing over the past year.

  1. Revenue from advertising and subscriptions: “I worked with business owners to talk about strategic initiatives that my team delivered and the revenue that was generated as a result. And we tried to do some sort of fair accounting … of the initiatives that my team delivered, how much of the revenue should be attributed and oriented back to product development, versus marketing activities or things on the side of the teams of the business owners.” Ultimately they agreed a percentage or portion of revenue that could directly be tracked back to product. 

  2. Revenue from pre-agreed metrics and outcomes: At the beginning of the year they had set up “a certain set of metrics and a certain set of outcomes associated to those metrics. Page load speed was a big one, for example, [and] we always have our set of engagement metrics, we always have our set of metrics that trace back to the revenue streams as well.” As this was already in process, being able to show outcomes against these benchmark is part of normal monthly reporting.  

  3. Directly attributable costs savings: These are straightforward to calculate as everything is owned within the product team. For example, if the product team built something in-house that the company was previously paying a vendor for, the difference in cost is easily calculable.

  4. Evaluating time saved: It’s also possible to evaluate time saved by certain activities. For example, a CMS system may save journalist time or having fewer systems to work across means engineers save time developing coding variations. These can then be equated to a dollar value by using a blended hourly rate. These improvements can also have the benefit of improving time to market, but is often more qualitative than quantitative. However there is a challenge on this point: Time saved and becoming more efficient can also be an opportunity to reduce resource if those resources aren’t required for new development and growth initiatives . 

In this example, we don’t see a full P&L, but it’s certainly a big step closer and the start of a methodology that can be built on to show the dollar value of product work. As CJ puts it: “It’s meeting people at their level, being flexible, and being highly business literate to explain value in terms of the language they are most comfortable in, which is often the language of finance.” 

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About Jodie Hopperton

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