Why B2B Is Awesome (and why B2C sucks) From A PM
It always used to incense me reading articles on Product Management online. Almost always, you could tell they were from the perspective of a tech elite product manager where data, resources and free sushi abounded aplenty.
The reality for most B2B PMs is very different. In many ways.
At many B2C companies, the ratio of PM to Engineer is quite high. 1:20/25 even.*
At many B2B companies, the ratio of PM to Engineers is lower. 1:10/15.*
Why is this?
Why do B2B companies require so many more Product Managers?
Well, this is something I wondered long and hard about.
And I came up with three hypotheses:
- The Buyer is not the User
- The Metric is the Use Case
- Positioning is Everything
The Buyer is not the User:
It’s almost a trite statement that the buyer is not your user in B2B software. Even a first year Associate PM can state that.
What is less clear are the implications. What does it all mean?
Firstly, there’s an impact on the user experience and user design. Ever notice that all the interesting frontend technologies in the last 5–10 years came out of B2C companies?
Facebook. React.
Google. Angular.
I certainly didn’t see SAP innovating on a next generation frontend technology.
It also means product design tends to be a luxury, not a necessity at a B2B company. You can get by for a _very_ long time without a formal product design function (and, in my opinion, a PM function, but that’s a post for another time).
This is why having even just basic product design skills (hello Balsamiq!) serves a B2B PM extremely well in the early days. The ability to have some sense for common B2B design patterns, efficiency of data entry and overall user experience design can get you a long way.
And to be frank, why make the user experience better when they ultimately will not be the ones who pay? You just need to make it “efficient enough” for them to use, to complete the use case. That’s what you are being paid to do.
See that? Does it make your stomach churn? Well, that’s the UI of a 24 Billion dollar revenue company. With a B. All those dollars should settle your upset stomach.
Secondly, the key to many B2B SaaS products is process standardization. It’s the ability to find the horizontally scalable process in amongst a sea of vertically differentiated use cases. It’s how SAP scaled by doing things “the SAP way”. It’s how Siebel scaled by saying CRM was done “this way”. And it’s how most B2B products scale.
But the problem is, while the buyer may sign up for that, the user very often does not. And they will say, “but WE do it this way”. And they will be right. They do, do it that way. Sometimes you might be able to convince them to change, but often you cannot. Which means you, as the B2B PM, have to find a way to let them do it their way (sometimes against your better judgement).
This means customization becomes a first order concern. Custom fields are almost always the first request. Then comes custom objects. Then custom scripting. Custom layouts. This doesn’t mean every industry requires it (some are actually averse to allowing customization due to the risk it creates), but it does mean you have conversations that may not occur in a B2C context.
When was the last time you asked to have a custom layout added to your Netflix account?
Thirdly, the ROI of a product has to be proven to the buyer in a way that a B2C product does not (not to say a B2C product doesn’t have to prove its value, but it’s a very different value to prove compared to a B2B product). While reporting on product usage is important for both B2B and B2C, for B2B it is essential to have a customer touch point post implementation.
While B2C products will fall over themselves to define MAU, DAU etc, in a B2B product, you can get very far with just using record creation as a proxy for usage, at least in the early days.
This is also why Customer Success (CS) was born as a function, particularly with the birth of SaaS. Once you have an ongoing relationship with a customer, you need a way to constantly prove value. A person, whose sole job is to help you get the most out of the software you were sold, can do precisely that.
CS teams (and in particular Support, one of the most neglected areas by Product Managers in my opinion, compared to the value of the work they do) are incredible areas for product feedback. Stay close and use their feedback to give you that pulse of the customer.
Finally, the cycles in B2B companies are much, much longer. Selling an Enterprise deal to the buyer alone can take years of work, as can implementing for users.
When you add up timescales to:
sell into Enterprises…
deploy products…
prepare customers for change (which they don’t like, want to guess how many IBM AS/400s are still around?) and
ongoing prove value…
you are already into years, if not decades.
The fact that it does take so long, means your way has to be so, so much better, in an order of magnitude of 9–10x:
And be prepared to wait.
The Metric is the Use Case:
B2C companies obsess over metrics. DAU, MAU etc. But in B2C companies, use cases merely inform the metrics…in B2B the metric IS the use case.
Why?
It is very rare that a business process change comes along. These are in the order of decades.
And more often than not, it is not the use cases that change, it’s only the technology that changes. From Excel spreadsheets to databases. From paper signatures to electronic.
Or from Partner Portals
To Partner Portals
And the key metric for a B2B use case, is the completion of that use case.
But what about A/B testing? I hear you ask.
Well let me let in you on a dirty, little secret….
Are you ready for it?
Are you sure?
I have never, ever in my entire career, run an A/B test.
I know, I should be ashamed as a PM.
But the fact is, you cannot A/B test a process change. You cannot:
a) boil down the complexity of a change on how someone completes their business workflow, often to a single metric or
b) make an adjustment to that workflow easily, to measure the outcome and
c) you often simply don’t have the volumes of data to even be statistically significant even if you could do a) and b)!
Simply put, changing behavior is complex, and changing business behavior an order of complexity higher than that. Maybe the user couldn’t find your feature. Maybe they needed to be trained. Maybe your feature simply wasn’t compelling enough to do it the new way.
Now, of course you will do testing in B2B. But the form it takes usually bears much more on the qualitative. And it is about hearing what is not said as much as what is said, or the one offhand sentence that’s the key to unlocking a whole customer segment.
The empathy for a customer’s problems required in B2B software, ironically, can sometimes exceed that of B2C, despite the lack of focus on design.
Positioning is Everything:
Another interesting point, why do B2B companies spend so much on Sales and Marketing compared to their B2C counterparts?
Here are Box and Salesforce, Sales is 3–4x R&D:
Here are Google and FB, Sales is ~1:1 with R&D:
That alone shows you how Sales becomes its own power center in a B2B company, in a way that it does not in a B2C. For Product, being close to Sales, being on Sales calls and understanding how they position your Product in the market (or training them on how to position your Product) becomes so, so vital.
In the old days, when dinosaurs roamed the earth, there was a saying I believe…“Sell the Vision, Buy the General Ledger”.
It meant while you can elucidate on the grand aims of your end to end re-design of their entire business, at the end of the day people only buy the GL.
So why bother with your hour long pitch on your company’s grand product vision?
Because it’s the difference between getting a customer’s attention versus blending in with the sheep. Customers listen to positioning. To how you might seem different from the 10 other vendors they had to listen to that week. And most buyers won’t have the time, inclination or patience to sit through how you do their 100 use cases different or better from the other vendor.
But they will listen to your positioning.
Which would you buy?
A Billing System
OR
The Engine of the Subscription Economy
I know which one I would give an hour of my time to.
So the next time you read a Product Management article ask yourself this. Was it written by the tech elite enraptured by the shining, glimmering lights of Facebook and Google?
Or was it written by an actual Product Manager creating business value, for companies, that pay for software?
I know who I would pay more attention to these days.
*From a highly unscientific survey of me and some friends :-)
**If you’d like to hear this (and other amusing B2B anecdotes) delivered in person, it’s free if you get a ticket in advance!
