This is the million dollar question I ask my B2B SaaS clients to which I usually either don’t get a response or they tell me that it’s a good question that should be answered.
Do you know what your return is on product development investment?
Related Article – https://nxtstep.io/daily/product-development-return/
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Episode Transcript
Hey folks, Sean here, and today what I want to talk to you about is the return that you’re getting on your investment into product development. Now, when I first start working with my B2B SaaS clients, they almost never have any context for this, which is always surprising to me. The reason why this is so surprising to me is because this is consistently their largest expense as.
Time, effort, resources, capital, largest number of all of those categories is can typically be found in a B2B SaaS organization as investment into product development. So the question when I ask it of the clients that I work with, when I simply propose, you know, what type of return are you getting from all of this investment and all of this activity, I usually get either crickets as a no response or a response along the lines of something.
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that’s a great question, but no one has asked it before, so that is always surprising to me for obvious reasons. But the, one of the other reasons why this is, I say, kind of alarming to me is because if you don’t know what type of return you’re receiving, then how do you know whether or not it’s a good investment?
If you’re not sure whether or. , the dollars that you’re placing into something significant like that is producing a return, then you don’t know whether or not it’s a good investment. So we end up having a lot of dialogue around this, and that is really the catalyst for figuring out how to fix this in dialogue with my B2B SaaS clients.
So, we’ll, that will open up the possibility of taking a closer look and as we. Closer into where that money is going and what type of return it’s producing the, you kind of, you start to like peel back the onion and the information that you find can be pretty surprising for those that I work with, as in just how much of those resources are going into something that isn’t producing a return.
I’ve shared this in a couple of recent pieces of content that I produced, but there’s a feature adoption report out there from a company called Pendo. That they did a few years back where they found that nearly 80% of the investment into product development is essentially wasted because, and the way that they measured that was that 80% of that investment goes towards features that are either never or rarely used, indicating that all of the effort that led to that feature winding up in the.
essentially was wasted because no one ever used it. So now I find this as to be a systemic problem throughout product development organizations for B2B SaaS companies. So if you haven’t looked inwardly at your process, I would encourage you to do so sooner rather than later. This is usually where I start, and there is a ton of opportunity to make improvements if you look closer and you find problems elsewhere.
there’s a lot of time, effort, resources that is not producing a return, so that’s why I’d encourage you to kind of look first.