How to Quantify the Seemingly Intangible Value in Product Feature Development: A Guide for Customer Success Managers to Build a Bulletproof Case.
The rate at which customers ask for new feature development can be dizzying for CSM’s. Here are the main benefits why customers ask for new features:
1. Decrease their costs
2. Increase productivity
3. Reduce training time
4. Improve efficiencies
Let’s face it: most applications start pretty bare-bones. SaaS companies call this a minimum viable product (MVP). A minimum viable product is when a new product is developed with only enough features to satisfy early adopters. The company develops the complete set of features only after considering feedback from the product’s users. Hence, the new features request.
When a customer asks for a new feature, I typically ask three questions:
“Why?” My last CTO taught me that this is the most important question. It made my life so much easier! So ask it often. By asking “why” as a follow-up question you can get to the core of why they want this new feature. It’s important to understand why their life would be better, what benefits they would receive if we develop the feature, and helps establish a value proposition that you can use when making your development request. In return the marketing team and sales team may be able to adopt and use it in their customer facing efforts.
“How do you do that now?” Don’t take their feature request at face value without understanding how they do it without the requested new feature, and determining if there is a cost associated with how it will be done. Don’t forget to establish if the request confirms their stated benefit. If it does not, you may not need to make the request at all. Help your customer to add clarity to their perceived requirement. Most new feature requests fall into the category of “nice to have,” and not necessarily in the category of “need to have.”
“How much would you pay per month if this feature existed with an add-on service fee?” We ask this question to understand the potential value only, not because we’re going to charge this customer specifically. If it has no value, the customer wouldn’t pay a penny and thus, you shouldn’t spend too much time making a case as to why you should develop it. If they would pay, this will help you make your case.
Now let’s figure out how we can make a bullet proof case for why or why we should not develop a new feature by quantifying the seemingly intangible value in product feature development.
1. Does it increase productivity for the customer? Ask customers to quantify. Some new features may increase productivity to the point that it allows them to reduce staff or at the least eliminate of specific staff members in the process, freeing them up to focus their efforts elsewhere.
2. Analyze lost sales in the past due to missing feature(s). Most sales department’s disposition lost sales with a reason why the sale was not made. You are seeking the sales that were lost due to the reason code “missing feature” or something similar. Ask sales for this report or be able to create this report from their CRM.
3. Will it lead to upsells? I realize that this type of decision isn’t typically in the hands of a Customer Success Manager; however, I believe in taking initiative and making a recommendation should be seen as a positive. It shows your level of engagement, ability to think outside the box, and the level of care you take with your customers. We also call this Voice Of The Customer. If you believe it could potentially lead to upsells, set pricing to it and based on past upsell percentages, it will become measurable. You can engage employees from other departments e.g. sales, marketing to guestimate pricing if you’re stuck.
4. Will it lead to increased pricing? This can be difficult as it could lead to increase pricing for a single package or lead to a cross-sell into a more expensive package. If there is no precedent to reference, simply include this potential as you see it in your request.
5. Often, the development of a new feature could offset the cost of your customer having to use “other” applications to accomplish their ultimate goal. To further make a case that a new feature would offset the costs of additional applications (not to mention increase renewals) I’ve created this simplified example about CRM applications where anything less than the top of the industry would require a company to utilize multiple products:
A. CRM Lite – Usually a free version, no bells or whistles
B. CRM Full-Blown – Analytical CRM’s, Collaborative CRM’s, Operational CRM’s
C. CRM with its own ecosystem – Salesforce recognized they would not want to constantly add new features to its CRM and created a business model based on partnerships. Instant plug and play expandable features
The key here is to find out pricing of additional applications that your feature could replace. This then becomes measurable.
6. Review churn reasons for “missing feature,” calculate the cost of churned customers.
7. Measure time-to-value – One thing I find is universal amongst all companies is that customers in the “onboarding” phase are more likely to churn than in any other phase in the customer journey due to the amount of time it takes to obtain the value they are seeking. Would your new feature request help shorten the time-to-value? Measure the churn that occurs from this stage.
8. Do some of these changes avoid Customer Support interactions? If you have before/after data on customer contact volume pertaining to specific changes, it’s pretty easy to quantify cost savings.
9. If salespeople say new features helped them close deals, you can show revenue impact.
10. Measure time spent coding: You can meet with whoever the Product Manager is and ask for a 5 minute assessment as to the amount of time it may take to create the feature.
Bonus: Understand your internal customer’s view of success. In my experience, product or development teams will believe in the value if I report to them the adoption rates of the last 12 months’ worth of features they’ve built.
Extra Bonus: Ask 5-10 customers “how much they would pay if this feature was developed.” Use the responses to set pricing and present those findings in your request as “customer preferred.”
Hopefully, you found this helpful. Visit us at www.growthfarm.com if you’d like help creating a professional presentation to show ROI (return on investment) or a CBA (cost benefits analysis). @growthfarm
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