Prioritizing Backlog Using ROI


The product manager’s job in the Design and Development phase is to objectively, sometimes ruthlessly, prioritize this list (a.k.a the backlog) so your team knows which features to build in the right sequence.

There are many different models to help prioritize the work that needs to be done, but the one I use is the Customer Impact vs. Effort matrix.

Customer Impact is how much value the feature you’re building has for your customer, and Effort is the amount of time it will take to deliver this feature. In other words, you’re prioritizing the “quick wins” that delight the customers. And I call this my ROI (Return on Investment).


Value vs. Effort (ROI) chart example


So, for each user story in the backlog, you need to work with your designers and developers to provide an estimate of the effort involved so that you can calculate your ROI.

As an example, here is my ROI to decide what features to build first for PayPal’s enterprise content management system,


Screenshot of ROI calculation

Most of the time, you can prioritize your work by calculating the ROI of the work and simply rank them that way.

But there are times where your priorities can also be impacted by factors other than impact and effort.

Time Constraint

Time constraint is when you need to complete the work within a specific time frame. For example, a regulation like GDPR requires you to develop a consent banner by a given date. The feature may not indicate high customer value but regulation and due date force you to prioritize the work over others.


Dependency

Sometimes your work may be dependent on the completion of another work which requires you to give it a lower priority. You just can’t do anything about it yet. Other times, downstream work may be dependent on your work which may require you to give it a high priority.


Company Objective

The outcome of your work prioritization should always map back to your company’s overall objectives and goals, so keep those in mind when prioritizing.

Conclusion

Prioritization is both art and science. Effectively communicating why you prioritized the work a certain way is key in being a successful product manager. Calculating the ROI, and keeping these other factors in mind, will enable you to guide your team in delivering products customers love using.