Archive for the ‘Product Marketing’ Category
Sales Gone Bad, Blame it on the Customers
You hired a new sales person and for unexplained reason, they cannot perform. They had all of the references, met quota since the dawn of time, etc. When you ask them about it, they blame it on the customers not buying in this economy. Having run both sales and marketing in previous recessions, I know how bad conditions are for revenue generation in this market. Unemployment in some states is now double what it was just a couple of years ago. Some industries sales are off 25% or more.
It is a tough market, but… with unemployment at 10%, that still means 90% of people are employed. Sales are off 25%, that means you still have a base of 75%. Numbers mean a lot, but only to justify the point of the moment. Good companies grow even during recesssions and I grew sales 280% over one year in the last recession. You have to work harder, smarter, hire good people, and be more innovative.
So, back to your sales person. Not working out as expected? Explainable as a bad hire, yes.
3rd or 4th sales person who came in like a rock star and left like a roadie? No, probably something else is too blame.
Chances are that you have a marketing problem masquerading as a sales problem. Not just a marketing communications problem, but chances are the sales people are having to do too much conceptual selling too early in the sales process. It shows up in presentations and meetings. What should be a 2-3 minute concept overview turns into a half hour explanation. Good sales people are natural story tellers, but if they don’t feel comfortable, don’t tell the same story each time, or look wooden; you probably have a marketing (messaging) problem.
Marketing’s role is to communicate the concept, support the sales process, and make it repeatable. Sales people in large organizations who take roles with smaller companies, which don’t have the sales support infrastructure, have a hard time transitioning to the new environment. I call it comfort with ambiguity. It is a lot harder to sell without the references, brand, collateral, and case studies.
Also, smaller organizations require sales teams to build the activity structure that large sales organization provide to their sales teams in the form of reports, quotas, and direct management. It takes a lot of self-discipline to build the structure on your own. Some larger organizational sales people do that instinctively and will work through the transition, but others need a more established sales support structure and tools to make them successful.
Marketing can only fix half the support issues (messaging and tools), but will not fix the self-discpline issue. A good marketer will come in and review your marketing collateral and listen to the “story”. Chances are that the value proposition is “fuzzy” and the audience is not well defined. By reviewing the product offering, the marketer can reset the value proposition of the offering and map it to the audience. If the core is correct, building marketing materials to tell the “story” becomes an exercise in building the visual elements that assist in communicating the concept.
A key to success is interviewing potential and existing customers. You have to speak their language and speak to their motivations.
Finally, a good marketer will adjust the marketing materials to support and accelerate each stage of the sales process. One key challenge in any sale is the “porpoise effect.” You gain momentum during a sales call, but lose it in the interim between contacts. This usually results in the sales person reselling the solution multiple times because the stakeholder gets busy and isn’t able to remember the value proposition. Good sales support from marketing allows the sales person to focus on the heavy lifting around the relationship; providing the support tools to do the communication of the concept, value proposition, and credential the organization.
Is Your Marketing Like Teaching A Dog to Read? Part 2
Filed under: Marketing Strategy, Marketing for CEOs, Product Management, Product Marketing | Tags: buyer behavior, collateral, customer advisory board, customer evangelists, emerging growth companies, features, functionality, market segmentation, objections, opportunity costs, packaging, pain identification, porpoise effect, PowerPoint, pricing, Product Roadmap, sales process, Social Media, value proposition, Website
Comments (1) In part 1 of this series, I shared a story about a professor who taught his dog to read… obviously, the dog could not read at the end of the semester, but the professor “taught” the dog. Unfortunately, this is very common in marketing, especially in emerging growth companies. The companies have very “pretty” marketing materials; website, collateral, powerpoints, but when you cannot really understand the audience, value proposition, or why they are different.
The litmus test for marketing materials is whether you can use your competitors name in your materials and it would apply. Or you could insert a company name from another industry and it reads just fine. Finally, you could insert any company name and no one understands what you do.
The real challenge is that the organization did not go through a structured exercise to map the value chain: audiences to benefits to functionality to features. Here is a high-level process to do just that:
1. Focus on identifying the market & associated segments
2. Fnd the pain – immediate call to action – for each segment; ie. this is the problem or opportunity you address; your solution = benefits
3. Communicate in the language the market understands – means you need to have a market SME, customer advisory board, or perform lots of prospect interviews to understand their needs in their language.
4. Test your messaging – social media participation, sales calls, speaking events, networking events, advisory boards, analysts, etc. Frequency and time allow you to polish your messaging. I know that I am ready when I can get through the 1st several meetings with a prospect or an investor without them finding holes in my presentation and Q&A. Doesn’t mean your offering won’t have challenges in due diligence, but if you are targeted to the right audience with the right solution, the first two meetings should be about concept, relationship, and “fit”.
5. Model your marketing on the sales process – each stage is idenitfied and marketing’s support required – One of the biggest challenges to getting the marketing materials “right” is identifying the scenarios under which it will be used. If your sales process is to work through partners, then providing a generic sales presentation won’t work. If you are selling into a specific vertical, then understanding the buying process may mean that you have to have 2 different presentations; one executive and one technical for different meetings. Collateral and sales support materials are very expensive to produce (opportunity costs) so focusing on a limited number of high-quality tools versus having a checkmark for materials is critical.
6. Focus on how to speed up the sales process – optimize, accelerate, replicate – momentum, reselling, bridging – One of the biggest challenges in any sales process is the “porpoise effect”. You build momentum and then it subsides, you resell and build momentum, and then it subsides. Most qualified buyer sales that seemingly look qualified with a need, but don’t get beyond the initial sponsor die due to lack of momentum. Either the sponsor could not sell internally or lost focus… The ability to empower your sponsor to be an evangelist will assist you in maintaining momentum. Everything in sales support should be around how do we help the potential customer make a decision faster. You will close more sales this way.
7. Participate in the early sales – look for objections – price, package, credentialling, references, technology, features/functionality, language, benefits, positioning, competitors. My biggest beef with some marketing communications people is that they don’t understand the market, customers, or the products. I want to get in front of the customers and interact with the market. I need to understand the buyer behavior and get feedback to fine tune the messaging.
8. “Save your powder” – the first set of sales to early adopters doesn’t require big marketing; focus on sales support, business development, online marketing, andPR; expensive marcom, tradeshows, events, and brochureware after the message has been tested. Save the marketing dollars till you have proofed the model and are ready to grow big. My approach to marketing budgeting is like “rolling a snowball downhill”. Make a small investment to credential your sales process; when the market is proofed, build upon the foundation.
9. Build a customer lifecycle early. Know where you are going and how you will get there. Build towards a critical mass of referencable customers. Shrink the product’s functionality & features to slightly beyond what your target market requires. Also, make sure you set customer expectations so that you can exceed them. Make sure the roadmap is clearly articulated and scales with your customer expectations and your identified new market segments.
10. Your first set of references and referrals are the most expensive & the most valuable. Focus the organization on wowing the customer and tie all organizational goals to customer satisfaction.
Making sure your marketing “dog” can actually read is critical to scaling your business. If you have to personally evangelize to every new prospect to get them to understand the concept of your product and the value for them, you will have a very expensive sales process. Even service companies need to package their services to scale effectively.
Part 3 will address the challenges of Mid-Market companies.
Part 4 will address the challenges of Established Brands.
Is Your Marketing Like Teaching a Dog to Read? Part 1
Filed under: Marketing Strategy, Marketing for CEOs, Product Marketing | Tags: brand strategy, emerging growth companies, established brands, marketing communications, Marketing Strategy, mid-market companies, packaging, pricing, product benefits, target audience, value proposition
Comments (1) I had an accounting professor who told us a story about a colleague of his who decided to teach his dog to read. This professor crafter a full lesson plan and spent 12 weeks delivering a daily lecture to his dog. At the end of the semester, he certified that he had taught his dog to read. This obviously doesn’t actually mean the dog could read, but he delivered a beautifully, executed lesson plan.
This is a common occurance in Marketing, as well. It manifests itself in several ways:
Smaller, Emerging Growth Companies - Marketing Collateral Which Doesn’t Say Anything
A common challenge for smaller companies is the mistake that Marketing Communications equates to Marketing Strategy. The first thing early stage companies do is engage with a marcom firm and focus on building the prettiest branded website they can afford. Then they throw in the logo, marketing slicks, and a powerpoint. All of these are important, but they skip some important steps; like defining the product target audience, defining the value proposition, and mapping the features/functionality to the product benefits, validating the pricing and packaging, and then testing the messaging to make sure the priorities of the market are accounted for in their planning. This results in a marketing program that “teaches the dog to read”, but doesn’t actually communicate a clear call to action or even explain what the company does for whom…. the end result is that the actual communication and education about the product’s value has to actually occur during a sales call which isn’t very scalable. Part 2
Mid-Market Companies - Siloed Marketing Communications Channels
More established mid-market companies have a different problem in that they have mostly grown organically so they have done a good job of communicating the concept & value of their offerings. The common approach to marketing tends towards mimicking what larger, enterprise companies have done with a “pasta method” approach to marketing… throwing everything up against the wall to see what sticks… Without the coordination or the brand recognition of larger established brands, the market really doesn’t see the ”get” the value of the offerings because there isn’t a cohesive multi-channel story. The lesson plan is a fully fleshed out lesson with multi-media slides, but you only get to hear half of it….
Established, Enterprise Brands – Fighting Economies of Scale
Large enterprise brands have the resources and the history to communicate brand strategy. The challenge for large enterprises is the challenges of coordinating the vast organization to deliver a consistent message. A friend of mine told me about working with one major brand that had a different agency of record for each communication channel. And the different agencies didn’t play very nicely. Now, add in multiple products, divisions, and new communications channels. Large enterprises have the access to talent and the resources to deliver the “whole lesson plan”, but without the ability to coordinate, it is like having the lecture delivered by multiple professors on different campuses.
The rest of the series will focus on strategies to enable companies of different sizes to build sustainable foundations for communicating the value of the product offerings. At the end of the day, if you cannot get your message across in a way that is compelling & differentiated, translated into actionable prospect leads, and resulting in closed sales; it is like “teaching your dog to read.”
Part 2 – Emerging Growth Companies
Web Marketing: Leveraging First Mover Advantage on the Web
Filed under: Marketing Strategy, Marketing for CEOs, Product Management, Product Marketing, Social Media, Web 2.0 Software | Tags: adoption, available market, Barriers to Entry, Barriers to Exit, Competitive Advantage, competitive positioning, Customer Acqusition Costs, customer relationship, First Mover Advantage, Iphone Market, Micro Economics, partnerships, product management, product marketing, Social Media, twitter, Web Marketing, word-of-mouth marketing
Comments (2) Since I did a MBA research project on First Mover Advantage on the Web in 1996 for a hybrid Micro Economics & Marketing class, I have approached marketing on the web with an eye to the economic impact that the low (near zero) cost for distribution on the web would have on competition.
We have seen it in multiple online vehicles; first it was email, then application distribution, ecommerce, blogs, online communities, and now social media tools like Twitter. My research was about the challenges first movers have in creating sustainable barriers to entry for subsequent market entrants. The ability to create entry barriers for competitors directly impacts their ability to maintain profit levels (reflection, in part, of customer acquisition costs) as subsequent companies enter the market.
We are seeing in the IPhone market with applications. Someone creates a popular application and then there are four similar applications. The challenge is that there is very little in terms of barriers to entry for the competitors. The first mover can get a very limited runway to market themselves with a unique offering before the market is established. The subsequent buyers cannot really differentiate in quality. The only barrier to entry for later entrants is the number of users of an application (popularity) which provides a small advantage for the first mover.
Now, a first mover can take advantage of the web to solidify a lead if they can combine entry barriers with exit barriers. If I can get into the market before others, create a differentiation that is hard to duplicate, and find a way to make it even harder to switch (for cost or niches), then you can build upon the lead.
First mover advantage, even in that situation, is not absolute as there are large numbers of examples where later entrants, with deep pockets and brand equity, were able to catch up to the first mover. The reasoning is pretty simple. you are the market leader with a large percentage of the market, but only sell to 5% of the available market. The competitor buys 80% of the next 10% of the available market that actually buys & they all of a sudden they can catch you and become the market leader.
Here is the lesson for early stage technology companies & the tie back to the title.
- Because the internet allows you to communicate cost effectively to large number of people, this means you have a relatively low barrier to entry into a market.
- At this point, a potential buyer will not be able to differentiate the quality of your offering or the credibility of your firm.
- If you pioneer a market and prove successful, you have validated the market for potential entrants.
- If those entrants have an existing customer base & available dollars for marketing to the market, you do not have a very sustainable barrier to entry.
- Hence, you will have to spend more of your dollars as you grow to obtain customers because the market will be more competitive & the economics of scaling communications on the internet. It is exponentially harder to get 1000 people to listen to you versus 100, and exponentially harder to get 100,000 versus 1000. Economies of scale work against you on the internet due to the messaging noise.
Ok, so if you are introducing a new product, how do you protect your advantage?
- Word-of-Mouth Marketing = Lower Customer Acquisition Costs - You have to drive an effective referral program over the web. Social media allows you to do that if you can get a core set of evangelists. This is fundamental to lowering your AVERAGE customer acquisition costs. Free referrals balance your costly marketing and sales costs. Don’t count on word-of-mouth marketing, though, very few companies get homeruns. Hope for the homeruns, but be prepared to manufacture runs to stay in the game until you see the right pitch.
- Offering Value = Adoption – you have to meet & exceed the customers expectations around the value of the offering with something they cannot get anywhere else easily. That means you cannot satisfy everyone, so target an audience who will appreciate your offering. Make sure you get them to be raving fans. This gives you a core group of evangelists. Provide features and functionality that are must-haves, not nice-to-haves. This will involve a great deal of market research to understand the difference. This means investment in technology, automation of processes, unique approaches, patents, etc. Differentiation is not absolute, but it the starting place….
- Pricing & Packaging = Competitve Positioning – Assume that you will have competition and that they will be strong. You need to plan on an aggressive pricing and packaging strategy that creates both barriers to entry for competitors and barriers to exit for your customers.
- Partnerships = Distribution - the right “big brother” partner can enable you to leverage their customer base and brand marketing power to lower your average customer acquisition costs. Partnerships are difficult to build and are time consuming to manage. If done right, you will seed the market for the partner, provide them with sufficient channel support, and assume that you will have to do most of the heavy lifting in terms of closing sales until they see success.
- Creating Long Term Relationships = Barriers to Exit – This is the tricky one as there is a fine line between providing customer value & building in barriers to exit; ie. contracts, location, ability to export data, feature breadth, etc. Barriers to Exit can be perceived by customers as barriers to entry with a vendor. My belief is that companies should strive to be “easy to do business with” and they should focus less on building artifical barriers to exit, but rather more on the true barrier to exit for a customer which are value-based pricing, planned commoditization, continual innovation & service. At the end of the day, if a company can provide competitive pricing for the basics, unique differentiated functionality, and provides world-class service; why would anyone switch?
My next post on this topic will be for companies who are entering an established market with a new, differentiated offering. How do you leverage the web to displace entrenched, but less capable competitors.
The Triple Crown of Web 2.0 & Online Application Development
From a product management perspective, the three major critical success factors for building online applications are Adoption, Distribution ,and Value. Notice that functionality is not on the list & I will explain why. Also, you may think I am having a product management conversation, but as with any good marketing, it has to be rooted in economics. More importantly, focusing on customer acquisition costs.
Unless you have are building your online application as free-ware without a way to monetize the relationships (there are a good number of Silicon Valley garage & VC backed companies still doing this, also a good number of IPhone apps), then eventually you have to figure out how to make money from the application that you are building. Even if you are creating a free application to drive distribution, but you assume that at some point that you will sell something, upsell something, or advertise something; then you probably need to have thought though these issues.
1. Adoption – in a previous post, I discussed why adoption trumps functionality in Web 2.0 applications http://rosenhaft.wordpress.com/2009/05/21/in-web-2-0-software-adoption-trumps-functionality/ Bottom line is that without users, web 2.0 collaboration cannot occur. You can look at the ecosystem of twitter or facebook apps to get an idea, but it works on a micro-level, as well. If you don’t get a significant percentage of your available population to use your application, it isn’t very valuable. With near zero distribution costs on the internet, the real price is customer awareness. You have to capture their attention and interest; otherwise the value of collaborative applications is marginalized.
2. Distribution – If you are distributing your application, you would assume ubiquitous distribution, but the problem is that so does everyone else. I had coffee with a CEO recently who told me that there wasn’t a great deal of competition for their application, but when I went online to do research, I found at least 25 or so competing applications. The direct competitiveness was questionable, along with the quality, but even if you gave it away for free; it would be difficult to break through the noise without significant marketing $’s OR a partner that could distribute the application. In essense, you need a “big brother” partner to assist you in breaking through the noise so that you can overcome the barriers to market entry. The partner provides the ability to differentiate from the crowd, gain awareness, and creates an assumption of quality. This can be a technology platform vendor (Iphone, Facebook, Microsoft, Sony, etc) or it can be an industry brand that the customers already buy a complimentary offering. Giving away a free application to drive distribution is also a good strategy, as long as it is part of a larger strategy.
3. Value – you have to provide more value than the prospective user will give; whether its there time, money, attention, relationships, etc. This sounds simple, but when you take into account market segmentation, competitive factors, and other market noise, it isn’t as easy. Let’s assume that you are servicing a vertical market with a very cool web-based application that allows the customer to save 20% off their transaction costs & shave 2 hours per user a week on a particular process. No brainer, they should value this application at least $1,200 per user per month, we should charge them $600. We are done, let’s go to market…. right? Wrong!
Pricing the application is more complicated than that when you take into account the switching costs from things they are doing today, competitive offerings, customer acquisition costs, exist costs, etc.
- You find out they are using an old windows application that they have been using for 12 years. 20% savings doesn’t really mean much to the people using it day-to-day.
- The business owner has an annual contract for support that has another 9 months left on it so the 20% isn’t as attractive as you would think.
- The legacy application does not have the ability to easily export the 12 years worth of data to your web application. So, even though you have used the latest technologies for creating your API, it requires professional services to transition them. Wipes out the 20% savings in the first year.
I could go on, but when you begin to think about how to launch a new web 2.0 application, even though it seems like a game-changer for the market, there are legacy issues that need to be thought through. “Build it and they will come syndrome” has tripped us a good many new improved software applications.
It is hard and costly to simplify the adoption, distribution, and value proposition, right? Yes and no. If you ask the market and potential customers, you will incur costs and time to understand and overcome the potential roadblocks, but the risk mitigation is priceless.
Some simple advise to close on:
- Go where customer is, not where you think they are… Customer perception is your reality…
- It is easier to sell to companies that have money… don’t be afraid of competition or large markets, but do your homework. Smaller, niche markets also can produce more revenue is the pain is greater.
- Customers buy from the company that is easiest to do business fromwith… registration, price, package, etc.
- Distribution on the web is about finding relationships to reach likely customers in buying mode…
- Value is identifying pain, “must have” versus “nice to have” – we are all overwhelmed with choices, where do we focus is prioritized based on our perceived needs. Even opportunities are based upon perceived pain.
- Emotional connection play a large part in impulse, attention, switching costs, substitutions, opportunity, & empathy – all of which play a part in buyer behavior
The single biggest mistake I see companies make in launching new online applications is that they do not think through the factors outside of their immediate control. If you had enough warning that you were going to crash your car, you could change direction or avoid a potential wreck. Involving distribution partnerships and customers earlier in the product development cycle is exactly the way to identify potential “app killers” and allow you to make that “killer app”.
In Web 2.0 Software, Adoption Trumps Functionality
Filed under: Product Management, Product Marketing, Web 2.0 Software | Tags: adoption, application software, connected web, customer expectations, functionality, market segmentation, Social Media, Web 2.0 Software, word-of-mouth
Comments (1) The last several years have seen the greater adoption of social media and other Web 2.0 software components. These component software tools provide users with a more interactive experience, personalization, with the ability to create their own content, links, tags, navigation, etc. Additionally, you are seeing the growth of the “connected web”; web services, RSS, embeddable code, ubiquitous meta-tagging, widgets, consumable data, etc.
The proliferation of these software applications has migrated to every sector; consumer, enterprise, SMB, etc. What used to take NDA’s, sharing and modification of API’s, and endless meetings now can be accomplished with a snippet of code.
As the web transitions to more semantic driven applications and less user-interface driven, you would think that functionality would become increasingly important in applications.
In my experience, the trend is towards the opposite and that ADOPTION trumps functionality. The challenge is that we have too many options on the internet; too much data, content, search results, websites, applications, etc. The word I hear over and over is “overwhelming”.
So, if you have a very limited window of attention from your audience, why would you throw extraneous “stuff” at them hoping something would stick. Instead, take advantage of the Web 2.0 technologies and provide them with a tailored experience with just-enough functionality.
More importantly, focus on what is their motivation and interests. Not all potential buyers are the same. Don’t provide a generic website experience that meets 80% of 80% of the visitors and satisfies none. Instead, focus on identifying what a 100% of a smaller audience that you know will buy and add additonal functionality to support additional segments over time. Customers provide unsolicited referrals when you exceed their expectations and provide them a WOW! experience. This is the heart of word-of-mouth marketing. EXCEED CUSTOMER EXPECTATIONS!
If you cannot exceeed the whole group, then focus on a small enough group that talks to each other and build from there. You see countless blogs and articles about how to launch products on the interet. This is the reasoning behind the axioms. You need a critical mass of associated happy customers that will tell others about it.
It is about numbers. If you satisfy 1% of a large group, that doesn’t make much of a market impact. If you satisfy 80% of a small group, you own the market. Bottom line, adoption of your solution is more critical than providing everything, including the kitchen sink.
Of course, the secret is prioritizing the “right” functionality to satisfy the customer which takes someone asking them….
You Can’t Have a Relationship with a System
Filed under: CRM, Marketing Strategy, Online Communities, Product Marketing, Social Media | Tags: CRM, Customer Experience Management, online community
Comments (1) A fundamental flaw with CRM and the reason that CRM has never reached the level of value that it was touted to provide is that you cannot have a relationship with a system.
CRM does have its place, though. Fundamentally, organizations need to manage the “data” side of customer relationships. Having a centralized place to manage the transactional data is one of the key foundations for the growth and scale of business. CRM systems along with data warehousing systems and others provide a fundamental foudation for providing clear information about running the business.
The challenge is that the systems are business-centric & not customer-centric. We design and build our business systems to run our business, but we don’t necessarily put the customer in the middle. In many larger organizations, with lots of products, markets, segments, etc.; the customer is left to cobble together their own customer experience.
I like the concept of “customer experience management” a great deal. My work in social media is a definitely parallel to the pioneering work done to bring the business closer to the customer. I also like what the folks in email marketing are doing to become multi-channel communications platforms. At the end of the day, the closer you can come to meeting the individual customers needs throughout the customer lifecycle, the better. Even better, integrating the customer touchpoints into a cohesive single point of contact.
To me the analogy to golf works. Most companies, by definition, provide mediocre customer experience. Analogous to landing in the rough. The companies that work on trying to improve customer experience through automation are getting the ball in the fairway. The companies that can figure out how to get their employees, partners, customers, and prospects to interact in a more organic way, putting the customer experience at the heart of the customer lifecycle have a better chance to get it on the green.
The best companies that are getting closer to the pin leverage business intelligence, multi-channel communications platforms, online communities, semantic technologies, and Web 2.0 technologies in conjunction with their current infrastuctures to bring a better customer experience to the table. If you can put a more usable front end to the half-dozen to the Enterprise Content Management systems that are common in a larger organization, you could really assist the organization to bridge across the multiple departments that touch a customer, as an example.
Let’s face it, the company that provides me a better “user interface”, is easier to do business with, provides better targeted recommendations, educates me without asking for a sale, provides access to information and other buyers to assist in my decision making, is transparent in their billing and packaging, connects me to a competent customer service person, and delivers value beyond the price of the product gets my loyalty.
None of this is difficult to strategize, but if it was easy, every company would do it. The challenge is prioritizing in a limited resource environment. At the end of the day, customer experience management is not a destination, but a journey.
Rosenhaft
