How to measure success in a B2B company

A few days ago I wrote about how to measure success in a B2C company.

There’s a reason I wrote that post first. It’s a lot easier.

Measuring success in B2B is difficult as the people using your product are often multiple degrees of separation from the people paying for it. It’s like trying to predict if your girlfriend will stay with you based on how much her family likes you.

It’s hard. But not impossible.

Before you read on, make sure you know what NOT to measure in B2B.

Actions attributable to retention

“It’s tough to make predictions, especially about the future.” — Yogi Berra

Instead of guessing how to keep customers, we can retrospectively look at what makes them leave. We can run an analysis on churned customers to see whether there are particular actions on the platform that they over or under-index in.

Here’s an example…

Pretend you work for a company that specialises in Product Roadmapping software. You run an analysis and discover there is a statistically significant difference in the number of times a roadmap is shared when comparing churned versus non-churned customers.

An analysis of actions that may correlate with churn

You figure that if Product Managers aren’t sharing the roadmaps they create, it’s less likely that other people in the business depend on the roadmaps for information. This lake of dependence makes it easy for customers to move onto another tool.

Armed with this data, you can prioritise product initiatives by their ability to increase the number of times the roadmap is shared. You propose adding a pop-up reminder to share the roadmap anytime someone edits it.

You target an “increase of roadmap sharing by 50%” for this particular feature. If you don’t release anything else that could impact report sharing, you can be fairly confident that an increase is a result of your change. But if you need more confidence, you can always A/B test it just to be sure.

With a sufficient number of customers, you can predict how increased report sharing will reduce churn and increase revenue. A financial breakdown of this project would look something like this…

Predicting and measuring the ROI for a new initiative aimed at increasing roadmap sharing (assumes average ARR per customer stays constant and total number of customers increases as churn rate decreases.)

Measuring actions attributable to retention is one method for objectively measuring success in a B2B company. However, a downfall of this method is that it assumes there is a detectable difference in behaviour between churned and non-churned customers. But that’s not always the case.

Let’s discuss another way we can measure success for a B2B product.

Sentiment that influences the buyer

Instead of considering the behaviour of the individual users, let’s zoom out and consider the needs of the buyer.

We often use software products to make our jobs easier. Maybe it’s a communication tool to improve global collaboration or a cloud storage service to store our organisation’s files. At some stage, someone in our company decided that the problem was worth spending money on and procured a product to do it.

They are the buyer.

And since they’re a human being, they probably experience the same underlying desires outlined in Maslow’s Hierarchy of Needs.

Maslow’s Hierarchy of Needs

Second from the top is the need to be recognised.

The buyer yearns to be recognised by their peers and respected by their superiors. The last thing they want is someone criticising a tool that they chose to implement.

On the flip side, they’ll feel an inflated sense of achievement when someone compliments it. In their mind, your perceptions of the product and your perceptions of them is closely coupled.

So how can we understand how people perceive our products?

Simple. We can ask them.

We ask them to rate their satisfaction with the product on a scale of 1–5. If they give us a 5, their perception of us is positive. The buyer will be feeling good. If they give us a 1…you can imagine the buyer is bearing the brunt of this feedback internally and will want to save face. This measurement is known as Customer Satisfaction, or CSAT for short.

Gathering CSAT data before and after a product release allows us to measure the success of the project and predict whether customers are less likely to churn.

So how do you measure CSAT?

Measuring CSAT seems simple…and it mostly is. But there are a few pitfalls to be aware of.

I’ll write about that soon. But for now, just Google it.

Senior Product Manager — Culture Amp