Understanding and Addressing Revenue Decline: A Guide for Product Managers
Introduction
This post is dedicated to aspiring and current product managers looking to refine their interview skills, particularly for FAANG companies. Product management interviews often involve complex scenarios that test your problem-solving abilities and strategic thinking. One such scenario we’ll explore today is understanding and addressing a decline in company revenues. We’ll examine the prompt: “Thumbtack’s revenues are down 5% in the last week. Find out what happened.”
Using structured frameworks is fundamental to deconstructing and answering interview questions effectively. Let’s delve into how to navigate this situation using a methodical approach.
Detailed Guide on Framework Application
Choosing the Right Framework
To dissect why Thumbtack’s revenues decreased, we can use the CIRCLES Method™, a comprehensive approach to tackling product-centric problems systematically. The acronym stands for Comprehend, Identify, Report, Cut, List, Evaluate, and Summarize.
Step-by-Step Framework Application
- Comprehend: Start by understanding the context. Was the 5% revenue drop sudden or part of a trend? Is it affecting all services or specific areas?
- Identify: Pinpoint potential causes. Could it be due to seasonality, increased competition, reputation issues, or internal changes?
- Report: Gather data to support or refute each cause, such as user metrics, market trends, and service performance records.
- Cut: Eliminate less likely causes. If the drop is company-wide and sudden, it’s likely not due to seasonality.
- List: Establish remaining possible reasons: for instance, a recent price hike or a platform outage.
- Evaluate: Analyze the impact of identified reasons and back it up with data – how much revenue could a price increase cost?
- Summarize: Conclude with the most probable reasons and propose steps to validate or counteract them.
Hypothetical Example
Imagine a spike in customer complaints coincides with the revenue drop. Further investigation reveals a recent app update caused usability issues. Addressing the app’s glitches could potentially resolve the dip in revenues.
Facts Check and Assumptions
It’s important to base your analysis on verifiable data. If exact figures aren’t available, use industry standards or logical assumptions to guide your reasoning. For instance, you may not know Thumbtack’s retention rate, but you can approximate based on industry benchmarks.
Effective Communication Tips
- Be concise and structure your response.
- Use data to back your analysis.
- Articulate your reasoning process.
- Remain objective and consider multiple viewpoints.
Conclusion
Interview questions like the one about Thumbtack’s revenue drop are an opportunity to showcase your analytical prowess and your ability to deploy structured frameworks like CIRCLES in problem-solving. Implement these frameworks consistently in your interview practice, and you’ll be well on your way to delivering compelling and cogent answers that impress your interviewers.