Death & Taxes in B2B
In the B2B domain, between buying into a vision of your product and actually fulfilling that vision / achieving real value, there are a slew of hurdles that your prospects and customers face, and these add up to a total cost of ownership (TCO) that you should be focused on minimizing as a company and product team.
Evaluating a tool and doing a pilot is work - there is an appraisal tax
Using a tool means procuring software - there is a licensing cost
Initial setup and deployment is work - there is a configuration cost
Ongoing GRC management is work - there is an administration tax
Getting teams to utilize the tool is work - there is an adoption cost
Upskilling users to leverage the tool is work - there is a literacy tax
Integrating a new tool operationally is work - there is a toolchain tax
(GRC = Governance, Risk, Compliance, basically enterprise concerns)
But why the delineation between costs vs taxes?
Costs are easy to explain but hard to reduce - you should do your best to manage
Taxes are easy to forget and painful to pay - you should do your best to eliminate
By the way, you can sometimes trade off up-front costs (e.g. structured setup as part of configuration) for future taxes (e.g. ongoing clean-up as part of administration) - there successful B2B products on both ends of the spectrum (although the trend seems to be reducing time / effort for the user to get up and running while tagging the lead / admin with more clean-up down the road).
And why should I care about this TCO framing?
Your job as a company is to reduce TCO from a prospect / customer perspective - you’re the better solution if and only if you can show that you’re lower TCO (if not immediately then over a reasonable time horizon so the ROI makes sense)
You need to think carefully about who eats costs / taxes as you reduce TCO - you can use a combination of R&D teams building products, GTM teams executing playbooks, and external players providing support to solve for this
tl;dr you either deal with taxes or your product faces death…
As always, I’d also love to hear from readers on their attempts reduce TCO - please chime in via comments👇. And if you enjoyed this post, please consider subscribing.
further reading / references
I’ve written extensively about B2B products before, including Enterprise SaaS Truisms, Skip Step SaaS, Enterprise Consumerization Entry, Add-On Features vs New Product Lines, Consumerizing Enterprise == Loop Sequencing, Discerning Differentiators, Span (vs Split) Personas, Onboarding Artifacts, and Why Buy?
childish drawing / interpretation
