B2B Product Management

    For several years in the IT labor market, hype has continued regarding product managers. Many experts in this area have appeared, their evangelists and gurus are already broadcasting in the corresponding party, reputable training centers offer special courses and educational programs, various events are held. This direction has many controversial and interesting aspects for discussion, but in this post I will touch on only one of them: how product management depends on its orientation to the B2B segment.

    Why do you need to disclose this topic? The fact is that, depending on the type of customers, the work of a product manager can be very different from the work of his colleague who is engaged in a product for another segment. It so happened that most of the relevant literature, courses and other materials describe methods that are mainly relevant for the B2C market, while working with B2B products in some cases requires radically different experience. At the same time, the profession for both segments is called the same, in vacancies there is generally confusion, and even the term Product Owner introduces confusion.

    In general, about the role of the product


    Of course, approaches to product management depend not only on the status of the client (“physicist” or “lawyer”), but also, for example, on the specifics of a particular field to which the product belongs. Aviasales and Skyskanner have the same features, Avito and Yula - others, but nevertheless, the approach to creating and developing a product in some key aspects can be generalized for different areas and different customers.

    The creation of each new product or, which happens much more often, new functionality or changes to an existing product, is preceded by a rather serious analytical work:
    1. The need (problem, pain) that needs to be solved is determined. There are a bunch of tools for this:
      • Search query analytics;
      • Interviews with individual users;
      • Polls
      • Appeals in support;
      • Independent research;
      • Etc;
    2. The root cause of this problem is determined;
    3. A list of ways to solve it is determined;
    4. Of all the possible methods, the optimal one is selected (or in some cases no one is selected):
      • Which way is cheaper;
      • Which way is faster;
      • How all these decisions can affect product metrics, and whether the game is worth the candle at all.


    At the output of this set of activities, a hypothesis is formed that is desirable to verify. In some cases, this can be done before the full development, sometimes they resort to testing using focus groups, here, as usual, everything depends on the specific situation.

    After that, the corresponding development tasks are added to the backlog, sprint plan, or formulated to the developers in some other way adopted in a particular organization, and their readiness for metrics is evaluated as soon as possible. If the declared product indicators have improved, but others have not worsened, the product manager and the team go to take pies from the shelf. If something went wrong, then at one stage a mistake was made that needs to be found and corrected. After that, the cycle starts again.

    A significant part of these tasks is either supervised by the product or solved independently (in large companies, for example, interviews with users are conducted by specially trained people). His role does not end there, but in different companies the additions to what is described can be very different. And the devil is in the details.

    What is the peculiarity of products for B2B?


    The trick question. First of all, it is necessary to clarify that inside B2B there is also a segmentation of customers according to various criteria, and approaches to it can seriously differ. Here we will consider the difference between different customers depending on the size of their organization, so we will divide them into SME (or SMB, small and medium-sized businesses, they also include individual entrepreneurs), large business and public sector (B2G). In different interpretations, the number, names and criteria for organizations to belong to these groups may differ, but from the point of view of features that are important in this context, such a division will be enough.


    There is a specificity that is characteristic of all B2B customers, but there are things that are peculiar only to individual segments. Of the common determinants are the following:
    1. As a rule, a decision to use a product (yours or a competitor) is made by a person (the so-called decision-maker, the person making the decision), who will not subsequently be its user. For him, theoretically, the key factor in making a decision is efficiency, the ideas about which each decision maker has his own;
    2. End users of B2B products are people who usually do not participate in the decision to choose a product. It is important to remember that they use the product while at work, that is, they have a much more serious motivation to understand the product, even if something does not work out, compared to an individual. Therefore, the attractiveness of the product, UX and design are not its most important features;
    3. Transactions between legal entities are somewhat more complicated than when interacting in B2C. From segment to segment, their features may differ, but CJM in B2B will always be more difficult;
    4. For businesses, the most important thing is to buy cheaper and sell less expensive, spend less and earn more. If your product solves this problem better than others, there will be a demand for it. At the same time, interruptions in the provision of services in B2B usually mean a direct loss by the business of the customer of money in one form or another. Therefore, product support for B2B should always be as effective as possible, and the product itself should be reliable.

    SMB


    This is the most massive segment among legal entities, which in some details is little different from B2C. The key word here is massive. For a product manager, this means that the process of generating and testing hypotheses and evaluating metrics will be about the same as in the case of B2C.


    It is also very important for mass markets to provide a universal service, which could be connected as quickly as possible and without any additional actions on the part of the client, except for paying the bill. Clients quickly and sometimes imperceptibly connect, and also quickly and imperceptibly leave. The manager can only follow the metrics, communicate with focus groups and build hypotheses, perceiving the mass of customers for the most part as mass, and not as specific people.

    The promotion of some products for this segment also often resembles B2C: remember the advertising of banking products for small businesses. The same channels are used as for individuals: outdoor, contextual and targeted advertising, TV commercials and much more.

    Large companies


    The main feature of this segment is a very long sales cycle, most often possible only offline. There are two components:
    1. To select a specific product or supplier, such companies usually conduct various tenders, tenders and other procurement activities. These processes are very bureaucratic, time consuming, and their results are often unpredictable;
    2. Many products for such companies are rather complex (CRM, for example), require long-term implementation, staff training, and are finalized in the process to the needs of a particular client.



    For the product manager, additional features lie in this:
    • Market analysis for a new product is sometimes comparable to fortune-telling: very many of the usual tools cannot be used, because all clients are offline;
    • Offline sales affect promotion. As a rule, procurement specialists who decide on the choice of your product carefully examine the market upon prior request from the business. Therefore, even if you suddenly somehow find them and show them targeted advertising, they are unlikely to suddenly want to buy your product. The sales funnel here is completely different;
      Example
      An interesting example of promoting your product in B2B is the Cisco education system. This is one of the world leaders in the production of telecommunications equipment, the dissemination of which was greatly facilitated by the training and certification of engineers who work with this equipment.
      Firstly, in the technical environment, high-quality documentation is always appreciated, and Cisco themselves have published many training materials that describe both the operation of their equipment and network protocols, both open and proprietary.
      Secondly, a system of certification of specialists was proposed, which was in demand on the market, and now these certificates for many companies working in telecom are more common indicators of specialist qualification than the traditional junior-middle-senior IT system, even if the specialist is work with equipment of other vendors.
      Thirdly, for companies that employ a certain number of certified specialists, a discount on Cisco equipment and services is available.
      As a result, the chain lined up:
      • It is convenient for novice engineers (high-quality materials, training centers) and profitable (a certificate gives weight when looking for work) to study in the Cisco system;
      • it’s profitable for companies to hire Cisco certified professionals, as in addition to confidence in their qualifications, they receive a discount on equipment and an advantage over competitors in competitions (sometimes this factor plays a role as a requirement for participants);
      • as a result, all of them are most comfortable working with Cisco, whose sales are growing.

      Well, in addition, Cisco still makes good money on certification: one attempt to pass the exam costs about 200 USD or more, and the certificate is valid for 3 years.
    • Due to the long sales cycle, and, as a result, payments, hypothesis testing is much more complicated, and the introduction of new functionality may either not affect the basic metrics or begin to affect only six months to a year after development;
    • Hypotheses in most cases do not arise as a result of some research, especially UX research, but as a result of collecting information from sales and support staff who often interact with customers;
    • When working with a segment of large customers, the product manager often interacts with them himself, usually together with the sales manager at a certain stage of negotiations: the number of customers who reach this stage is not so large, and sales employees may not understand all the intricacies of the product ;
    • Depending on the business model of the product, the manager may skip the hypothesis stage altogether: the client simply orders the development of some additional functionality of the product that he has introduced, and this functionality can then be reused for other clients. In this case, the manager will only need to evaluate the feasibility of such a request from the point of view of technology (maybe or not) and business (profitable or not) and make a detailed description of this functionality for developers;
    • Continuing the theme of business models, unique ways of product monetization are available for this segment, for example, revenue sharing. This approach is very popular for products that somehow influence important customer metrics;
    • Some products are made on the principle of so-called “verticals,” when the same product has several aspects according to global tasks being solved. In the same example with CRM: such a system for different retailer customers will be approximately the same, but for bank customers it will already be noticeably different;
      One more example
      There is such a complex product - IoT platform. This is usually a SaaS solution that deals with device management, data collection from them, processing of these data and so on, these are all pictures with dashboards from a brighter future. It seems to be quite universal, but if you compare the zoo of devices and the data from them, for example, for agriculture and logistics, it turns out that the output is generally different products. And within the same sphere, there can also be variations: for different cultures in different regions, different data are needed, but somewhere, hydroponics is generally used. To sell such a product “on a turn-key basis”, even sharpened to the vertical appropriate for the client, is a rather troublesome business.
    • In this segment, the concept of MVP is also far from always applicable; more often resort to the so-called. piloting: a very limited version of the product is introduced to the client, which demonstrates the basic functionality. Sometimes this "pilot" version is developed from scratch specifically for a specific client - this is part of a sales funnel;
    • Some products for large B2B customers are so specific that sometimes you wonder how anyone could even think of this, much less make and start making money. Nevertheless, specialists who have worked in a particular field sometimes see such opportunities and, using their industry knowledge or networking, create something that is relevant only for a few units of customers, which nevertheless brings a steady income. This is often done by product managers.

    There are many more such features, more or less common.

    But there is still B2G!


    This is a segment quite widely represented in the post-Soviet space, which can be considered something like Mordor in the world of product management. With many of its properties, it resembles a large business, but has its own characteristics:
    • An even longer sales cycle;
    • Increased entry requirements;
    • High risks in case of default (“Register of unfair suppliers”, for example);
    • Often a formal approach;

    As a rule, working with B2G is a custom development or serious processing of an existing product for its needs, so the work of the product manager here is more like the work of an analyst.

    Finally


    There are exceptions to all of the above points. This is due to the fact that each product is unique, always and everywhere has its own characteristics. In the field of communications, for example, there is no difference which customers use basic products: they work the same for everyone, only the tariff policy is different (and tariffs, by the way, are a separate product). A similar situation with various “material” products: laptops, cars, furniture - both individuals and legal entities buy them. But these exceptions more likely confirm the statements described.

    Based on the result, we can conclude that the main difference in the work of the B2B and B2C product manager is as follows:
    • In B2B, differently than in B2C, customer needs are identified;
    • In B2B, metrics other than B2C are at the forefront, although in the end, everything always rests on the goal of the business;
    • In B2B time-to-market is noticeably greater than in B2C;
    • In B2B, product communicates more with customers.

    In the “big” B2B, it is important to remember that cooperation with any client, including with government participation, always comes down to the interaction of small groups of people from the customer’s company and the contractor’s company, and a lot depends on how and which people work on both sides. . There may be different goals, conditions, restrictions, but if you manage to establish contact between these people - the product usually works better.

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