How to Prioritize the Product Backlog to Maximize Customer Value

Because a well-managed backlog maximizes the value delivered to customers and ensures that the development team focuses on the features and enhancements that matter, prioritizing the product backlog is one of the most important tasks for any Product Owner.

But how do you ensure that the right decisions are being made?

In this article, I offer a practical, Agile-based approach to prioritizing the backlog based on customer value.

1. Understand Customer Value

Understanding your customers enables you to prioritize the Backlog Items that solve their most important problems or significantly improve their experience.

The starting point for effective prioritization is what is valuable to your customer. To do this, you need to be clear on several fundamental questions:

• What are the end users' needs? What problems are they trying to solve with your product?
• What are their expectation? Understand the experience they want from your product and how they want to interact with it.
• What are their current pain points and frustrations? Identify barriers that impact their satisfaction or ability to use the product effectively.

For deeper insights, you can use a combination of customer experience metrics and predictive techniques, such as:

• Net Promoter Score (NPS) to measure loyalty, is a widely used metric to measure customer loyalty and willingness to recommend your product or service. It is based on a simple question:

‘On a scale of 0 to 10, how likely are you to recommend our product to a friend or colleague?’

Respondents are divided into three categories:

• Promoters (9-10): Delighted and loyal customers will likely recommend your product actively.
• Passives (7-8): Satisfied customers, but not enthusiastic enough to recommend the product.
• Detractors (0-6): Dissatisfied customers, with a high probability of criticizing the product or service.

The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. The final score ranges from -100 to 100, where a positive number indicates that you have more promoters than detractors.

This metric is useful in backlog prioritization because it allows you to identify areas where you may be losing loyal customers due to specific problems, which helps you prioritize improvements that impact customer loyalty.

• Customer Satisfaction (CSAT) to know how satisfied they are after specific interactions:

It measures the immediate satisfaction of customers after a specific interaction or transaction. Typically, a direct question is used:

‘How satisfied are you with the product or service you received?’

A scale of 1 to 5 (or 1 to 10) is typically used, where customers rate their level of satisfaction, with 1 being ‘very dissatisfied’ and 5 being ‘very satisfied’. The CSAT is calculated as the percentage of customers who respond with a positive score (usually 4 or 5).

The CSAT is useful for assessing the impact of specific improvements or newly launched features. If you notice an increase in satisfaction after implementing a new feature, this will indicate that the priority was a good one. Similarly, it can alert you to features or areas of your product that generate frustration, allowing you to adjust the prioritization in your backlog.

• Customer Effort Score (CES): measures how easy or difficult it is for customers to complete a task or solve a problem when interacting with your product or service. It is formulated with questions such as:

‘How easy was it for you to solve your problem with our product?’

Customers score on a scale of 1 (very difficult) to 7 (very easy). The lower the perceived effort, the higher the satisfaction and likelihood that customers will remain loyal. This metric is key to prioritizing improvements that reduce friction in the user experience, resulting in a smoother and more satisfying experience.

• Voice of the Customer (VoC): quantitative metrics such as NPS, CSAT and CES mentioned before, provide a clear picture of customer loyalty and satisfaction, but it is also critical to capture and analyze qualitative insights to gain a deeper understanding of what customers need and want. This is where VoC comes in.

VoC is a structured process to collect direct feedback from customers through different channels such as surveys, interviews, and analysis of social media comments, among others. This approach allows you to understand what customers expect, what their main frustrations are, and what solutions they value most. Integrating VoC into your prioritization process will enable you to identify recurring patterns in customer feedback, helping align features with business objectives and customer expectations.

Hack: Predictive analytics can enhance these insights by analyzing historical data to anticipate future customer behavior and needs. For example, identifying segments of customers likely to churn can help prioritize features that target retention efforts.

2. Establish Prioritization Criteria

Once you understand the value to the customer, it is important to define clear and objective criteria to guide prioritization. Some key criteria you should consider include:

• Customer impact: How significant is the improvement in the customer experience? This measures the benefit a feature or enhancement will bring to the end user.
• Cost of implementation: What resources and time will this task require? Prioritizing low-effort, high-impact items can yield quick wins.
• Risk or technical debt: Delaying certain features can create future technical debt or instability. Consider prioritizing features that prevent these risks.
• Business value: does this functionality or enhancement impact business objectives, such as revenue growth, customer retention, or acquisition?

Each of these criteria can be scored (e.g., 1 to 5) to generate a priority score to help you make objective prioritization decisions. A weighted scoring model can further refine this approach, giving more importance to certain criteria based on the product’s current goals.

3. Prioritization Frameworks

There are several tools and frameworks that you can apply to prioritize your backlog in a structured and customer value-focused way.

a. MoSCoW (Must Have, Should Have, Could Have, Won't Have)

This technique allows you to classify functionalities or tasks into four categories:

• Must-Have: Essential functionalities for the product to meet minimum requirements.
• Should Have: Important but not critical; enhances customer experience.
• Could Have: Nice-to-have items with lower impact.
• Nice to Have: Features that can be re-evaluated later.

b. RICE model (Reach, Impact, Confidence, Effort)

The RICE model is ideal when you want to evaluate the relative impact of each task:

• Reach: Number of users affected.
• Impact: Level of impact on each user.
• Confidence: Certainty about reach and impact estimates.
• Effort: Resources required.
• The combined score reflects the relative value of each backlog item, making it easier to prioritize based on customer reach and impact.

c. Impact Mapping

Impact Mapping helps you link business objectives to product functionality, ensuring that each task has a clear purpose with the business strategy. Key questions include:

• What is the business objective?
• Who are the actors (users, stakeholders) that impact this objective?
• How should their behaviours change to achieve this objective?
• What features or initiatives will bring about this behavioural change?

This ensures you prioritize features that align product development with the organization's strategic goals.

Hack: Consider blending frameworks or using them selectively based on the complexity or scope of each sprint. For example, RICE might be best for evaluating impactful features, while MoSCoW works well for planning high-level releases.

4. Continuous Iteration: The Backlog is Dynamic

It is important to remember that the backlog is not static. Changes in business priorities, customer feedback, or the discovery of new needs may cause the prioritization to change. Regular backlog refinement meetings are essential to ensure the backlog is always up-to-date and aligned with current priorities.

Hack: Embrace real-time customer data (e.g., session analytics, in-app feedback) for micro-prioritization between sprints. Prioritizing based on real-time insights allows rapid response to customer needs, enhancing agility and customer alignment.

5. Communication with the Team and Stakeholders

A common mistake in backlog prioritization is the lack of clear communication about why certain features are being prioritized over others. As Product Owner and Product Manager, it is your responsibility:

• Aligning Expectations: Ensure that all stakeholders understand the prioritization rationale.
• Data-Driven Decisions: Present data to justify prioritization, illustrating how backlog items contribute to customer value.
• Transparency: Share prioritization criteria and be open about potential changes. This builds trust and keeps stakeholders invested in the process.

Hack: Hold periodic “backlog showcase” sessions to walk through priority changes with the team, fostering cross-functional alignment and surfacing any misalignments early.

6. Measure Success

To know if your prioritization has been effective, it is key to measure results once the features have been released. Use customer experience metrics (NPS, CSAT) and business metrics (retention, conversion) to assess whether prioritization decisions are maximizing customer value as expected.

Hack: Segment feedback by customer lifecycle stage (e.g., onboarding, activation, retention) to ensure that prioritization decisions address specific stages of the customer journey. This approach can help enhance customer experience across the entire lifecycle.

Conclusion

Maximizing customer value through backlog prioritization requires a balance of customer insights, clear prioritization criteria, and strategic frameworks like MoSCoW or RICE. Remember, this process is iterative: continuously refine the backlog, adapt to emerging needs, and maintain open communication with stakeholders. With these practices, your team will stay focused on what matters most, and your product will deliver maximum value to customers.

Thank you for taking the time to read this article.

I am Elena Marcelle , I specialize in creating and executing?digital?&?#omnichannel?strategies aimed at enhancing the?#customerexperience (#CX).