Yesterday, I talked about engaging the right customers on the right features to know you are getting the best feedback. Products nowadays try more and more to be different things to different market segments. How well your product meets the needs to many different market segments is important to its long-term growth.
Today I’m going to talk about a less comfortable subject- the value of your various customers. Or, more specifically, the value of each market segment. Do you understand the following about the markets you are trying to address:
- How many customers are there in each market?
- How much revenue will you gain per customer? How much profit?
- What does the acquisition cost per customer look like? What is the lead time?
- Does the costs to address the full needs of each market provide enough money to make that market worthwhile?
- Is the market for new feature X or bug Y important enough to pay for the cost or addressing the feature?
Knowing and understanding these numbers is a critical component of planning and prioritizing your backlog. You must plan not only to take care of your customers, but to use the company’s resources responsibly. With limited resources, some of your customers will simply have to wait for certain things. Working like this will help your product make more money faster, allow it to grow available resources to fix problems and build new features, and get everyone what they want faster. In some cases, it may lead to a counter-intuitive business decision- accepting that the cost to maintain your product in market X is not worth the value of the market in the foreseeable future.