30/30/30 rule of product management — balancing growth, retention, and debt goals

30/30/30 rule of product management — balancing growth, retention, and debt goals

Prioritization is one of the biggest challenges product managers face. And effective prioritization balances concerns related to growth, retention, and debt. 

Growth involves activities that lead to new customers (this often corresponds to the requests you receive from sales). Retention involves activities to keep existing customers (such as the requests you receive from customer success or directly from customers). And debt involves any internal issues that have been accumulating over time that have yet to be addressed. This can include technical, design, process, or even culture debt. With COVID and remote work, many teams haven’t met in person and have yet to establish working norms, so culture debt has become a growing issue.

As you create your roadmap, you’re constantly balancing growth, retention, and debt. You’re likely negotiating with stakeholders from different parts of your organization (and maybe a dangerous animal or two). 

So how do you ensure you don’t go too far in any single direction? This is where having a framework like the 30/30/30 rule can help.

The 30/30/30 rule of product management

The 30/30/30 rule states that you should invest 30% of your EPD (engineering, product management, and design) resources on existing customers, 30% on growth, and 30% on debt.

As product managers, we certainly want to take requests from our existing customers into consideration. Keeping customers happy and retaining them are often tied in with our business’s success and the metrics by which we measure our work.

At the same time, the requests we get from existing customers tend to be focused on making incremental changes to our product. Customers may not know everything that’s technically possible within our product and they tend to be focused on their own specific use case. So we need to be careful that we don’t over-index on retention to the point where we neglect growth. 

Growth is about looking at the bigger picture and tapping into entirely new areas of business. This involves looking beyond existing customers to adjacent teams or people. Who else could buy your product? If product managers are your main customers, could you make a compelling use case for product marketing managers? 

Or you might look at expanding to other countries and languages. If your customers are mostly English-speaking or based in North America, could you localize your product to other languages or geographical regions?

Finally, let’s not forget about debt. The more progress you make on any retention or growth project, the more debt you accumulate along the way. And the consequences of neglecting debt are serious: In one infamous example, technical debt cost a company $460 million.

This is why the 30/30/30 rule is so helpful with prioritization: Allocating your resources this way helps you focus on both growth and retention while also taking care of any debt you acquire along the way. 

There are a few ways to make sure you’re following the 30/30/30 rule. In your quarterly reviews and planning meetings, product managers can consider how their projects fit into each category. You might find it helpful to set up a color-coding system for your roadmaps so you can see at a glance what the distribution is between categories. Or you might ask each team to come up with a certain number of growth-focused projects per year.

It’s more of a philosophy than a rule

The important point to keep in mind about the 30/30/30 rule is that you don’t have to treat it like it’s set in stone. If you have a team of 100 product managers, you don’t need to assign 30 of them to focus solely on growth-generating projects at all times, for example. But if you see that none of them are working on growth projects, that’s a problem.

You can also adjust the percentages based on the maturity of your product and organization. Early-stage companies that haven’t yet established product/market fit are more focused on acquiring new customers than addressing debt. A later-stage company may over-index on growth one quarter then spend the next quarter focusing on retention. You can see how you might dial up or down in one area according to your circumstances.

One good rule of thumb is looking at your churn rate. If it’s high, you’ll want to focus on customer-retaining measures. But when your churn is low, this means customers are relatively happy (though this doesn’t necessarily mean they’ll have fewer asks). This is the time when you can run with your growth ideas and think bigger.

It’s all about checks and balances 

We all know that prioritization is one of the hardest parts of being a product manager. The 30/30/30 rule is a way to help you stay aware of how you’re investing your resources and create a system of checks and balances. Give it a try and let me know how it goes!

 

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