Practical Steps for Product Managers to Prioritize Requirements Using ROI

In our last post on this blog, we talked about how ROI Metric can be very helpful to product managers in prioritizing requirements and feature requests.

In this post, we’d like to outline some practical steps that PMs can use to get started with this practice…

Practical Steps

1. Create a list of all the major benefits to your organization that implementing new requirements and features can produce. Examples, as mentioned in our last post, include:

• Build customer loyalty
• Create competitive advantage
• Further business strategy
• …
• And, of course, financial benefits: Increase revenue & profits

2. Give each of these benefits an appropriate weighting.
3. For each requirement/feature under consideration, assign a value to each benefit on a scale of 1-10.
4. Calculate the weighted sum of all the benefits. This is the “Total Return” of a given requirement.
5. Assign a value to the “Investment” needed to implement the requirement, again on a scale of 1-10.
6. Divide “Total Return” by “Investment” to calculate ROI Metric for the requirement.

Once you normalize this ROI metric, you can then use it to prioritize your requirements and features in your next MRD (Market Requirements Document) or PRD (Product Requirements Document). This will help you implement a structured method to prioritize your requirements.

We believe that this type of a structured methodology is much more repeatable and defensible than ad-hoc judgments often used to prioritize requirements and features.

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