Business Goal Fundamentals for Product Managers

A social media company is likely to base its main revenues on advertising; a gaming studio can insert ads or sell in-app purchases; a hotel listing platform may charge based on transactions or a spot among the top results. For them, user retention, in-app revenue, Cost per Mill (CPM), LTV (Life Time Value), and ROAS (Return on Ad Spends) all are at the core of their business models and goals.

How does it work for a B2B software company that monitors machine arms, so that the customers can better plan machine maintenance? Or for a fleet management platform that does forklift indoor routing, so that the most efficient routes can be taken in a warehouse?

In B2B, there are a couple of usual suspects when it comes to business models.
  • User-based: the more people using the product, the higher the customer has to pay, e.g., the more forklift managers need to access the fleet management software, the more they will have to pay. Here, the actual value of each functionality of the product is not reflected in the pricing, such as a data analysis dashboard vs. a GPS map that shows the whereabouts of each vehicle. The goal is to get into the number game.
  • Usage-based: the more the product is used, the higher the fee, e.g., with more fleet data stored in the platform, a higher fee is incurred to cover the storage and calculation. Here, sound customer experience and loyalty are often spelled out.
  • Feature-based: In contrast to a user-based business, feature-based let customers or buyers choose from a range of solutions that best solve their problems. The business has more opportunities to charge high on the most valuable features but also needs to properly identify their “most valuable” features for their ICP (ideal customer profile).
  • Negotiation-based: if you have ever stumbled upon a product pricing page that lists not the amount but “Contact sales” for a quota, you know what this is. Certainly, when being contacted, the sales representatives are unlikely to speak an amount out of thin air. Internally, the sales organization will usually have a pricing model for reference, and base the quota on various factors, e.g., industrial fleet data for benchmarking, fleet OEM contact information for automatic maintenance scheduling, etc.
Based on the above models, B2B businesses may look into success indicators such as the following:

If you would like to delve deeper into any or all of these metrics, please refer to the referenced websites.