Two Different Whole Solutions Based on Same Product

Imagine for a moment that you are in the hotel business. Your basic product is a hotel room. But instead of selling hotel rooms, you decide that you want to solve your customers’ problems. For vacation travelers, the “whole solution” that you decide to sell is shown on the left in the diagram below. For business travelers, your whole solution is shown on the right. Now go back to real life. What things should you add to your product or service to completely satisfy your customers’ compelling reason to buy?

Two different whole solutions constructed from the same product

Two different whole solutions constructed from the same basic product.

See my post “Selling a Product vs. Solving a Problem” for more about whole solutions.

Selling a Product vs. Solving a Problem

All of my clients have struggled to reorient their thinking from selling a product or service, to solving the customer’s problem. What’s the difference? When you think that your business is selling a product or service, you don’t see everything that your target customers need in order to be successful or happy with your product or service. This makes it very difficult for you to win and retain customers, and to grow your business, because satisfying your customers is a hit-or-miss proposition.

On the other hand, when you think that your business is to solve the customer’s problem, your view shifts from being focused on your own products or services, to being centered on your customer’s view of the world. Now you can answer the question, what is the “whole solution” – the set of products and services needed by your target customers to completely satisfy their compelling reason to buy?

When you sell whole solutions, you will be fulfilling whatever compelled your customers to choose you as their supplier, and you will be satisfying them completely. Think about the products or services that make you so happy or meet your needs so well that you prefer them over their competitors so much that you’re willing to spend more, or go farther, or wait longer to obtain them – they are compelling whole solutions for your needs or wants.

How can you tell whether you are selling whole solutions that really solve your customers’ problems, instead of selling just products or services that might or might not satisfy your customers? Here are 2 diagnostics you can use:

  1. What percentage of your customers say they are completely satisfied with the product or service that you sold them, would recommend your product or service to other people like them, or will buy (or renew) your product or service again? If that percentage is less than your competitors, you’re not selling the whole solution that your customers need. In fact, your competitors are eating your lunch.
  2. If you don’t know how you stand versus your competitors in answering question 1, then what percentage of your qualified prospects do you actually close, or what percentage of people who visit your website or walk into your store actually buy something from you? If that percentage is a lot lower than you want (or too low for you to achieve your business goals), then you’re not selling the whole solution that your prospects or website visitors or retail customers need.

In both cases, you need to either change your focus to be on customers you can satisfy better than your competitors, or you need to change what your selling or how you’re selling it.

Why is it so hard for the management teams of many companies to change from selling a product or service, to selling a solution to their customer’s problem? Among my clients, I’ve found the following barriers or blinders:

  • No one on the management team was ever a customer for the kind of product or service that the company sells, so they don’t “relate” to their customers and can’t understand their customers deeply enough to make the right decisions about product, price, promotion, packaging, place, or any other attribute that will compel their customers to buy and be satisfied.
  • The management team either doesn’t have the data or cannot decode the metrics of their business to see that they are doing a poor job of satisfying their existing customers, getting references or testimonials from them, and/or getting repeat business, renewals, upsells, etc. This problem is particularly severe when the management team rationalizes their poor performance as “not their fault” by declaring that their product is so revolutionary that most customers don’t understand it (and that’s why their close rate is low), or that they cannot find enough customers who need it (and they need more leads instead of figuring out how to increase their close rate), or that it’s a lot easier to get orders from customers who might or might not be satisfied than it is to put in the effort to focus on just those customers they can satisfy (and that they can tolerate having a lot of unhappy customers who won’t buy again).
  • The management team is confused about the purpose of their business. “The purpose of business is to create and keep a customer,” wrote Peter Drucker, one of the best-known and most widely influential thought-leaders on management. No business can succeed if its purpose is something other than creating and keeping customers.

If you are struggling to change from selling products or services to solving your customers’ problems, you’re not alone. You can do it. My clients have done it.

Startups Should Test and Learn Their Way to Success

I’ve been involved with 51 startup tech companies as a founder, executive, investor or consultant since the 1980s. Most were entrepreneurial startups but a few were “intrepreneurial” businesses inside Fortune 500 companies. The primary difference between the startups that succeeded (achieved the objectives of the founders or leaders) and the startups that failed, was how their leaders resolved the key decisions that make or break a startup business: what products or services to develop, which customers to pursue, which business model to implement, how much to spend on different initiatives or functions in the company, how to fund growth, and so on.

The approach that worked best in my experience with these startups was “test and learn.”

How does a startup test and learn? How do you know that your testing and learning efforts are focused on the right issues, have the right metrics, and yield the right answers? The founders and investors in a startup are in a hurry, so how can startups test and learn really fast?

The most complete answers to these questions that I’ve seen are in Eric Ries’ book, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. By following the “Build-Measure-Learn” process explained in Ries’ book, startups can get continuous feedback from the market, so that they can decide whether to continue with their current plan or “pivot” into other directions. Build-Measure-Learn becomes a cycle with a built-in feedback loop that improves the quality and “rightness” of decision making.

When I co-authored Building Routes to Customers in 2009, I had been applying the Routes-to-Market (RTM) methodology to help managers and executives make these same decisions more systematically and successfully for over a dozen years in both large companies (IBM, Microsoft, HP, Cisco) and small companies (Knoa, e-Smith, ShoreTel, HaloSource). When first-level managers in these companies were empowered to work as a cross-functional team and use RTM to make these decisions in their businesses, they outperformed the previous results in their businesses, turned around troubled businesses, and/or launched impressively successful new businesses. The RTM and Build-Measure-Learn methodologies have many things in common, but the linchpin is test and learn.

So how do you test and learn your way to success?

  • Step 1 is to develop an hypothesis about how customers will act when you provide a new or changed product or service to them.
  • Step 2 is to measure how the customers really act.
  • Step 3 is to analyze the information from the measurements and determine what the impact was on the customers’ actions. For example, did current customers buy more, or did new customers buy for the first time. Other kinds of change in customers’ behavior might be more important, such as telling their friends or colleagues about your product.

You need to test and learn scientifically, not subjectively.

Testing requires discipline, not the chaotic thinking of the founders of many startups. Learning requires an open mind that’s not wedded to the assumptions of the startups’ leaders. Test and learn is the yin and yang of making the decisions that drive success.

Smart Entrepreneur Takes Start-up from 0 to 200

When my good friend and collaborator Jonny Goldstein of Envizualize introduced me to Mina Mansour in January 2010, I thought that Mina had a brilliant concept for a product family of software plug-ins that add ecommerce capabilities to Salesforce.com, the popular sales force automation system. Mina is the founder and president of IdaApps, a software company she started after 2 years of building custom apps for Salesforce.com customers.

Mina saw that many of Salesforce.com’s 65,000 customers needed inexpensive online product catalogs and shopping carts so they could easily add ecommerce to their Salesforce.com operations, instead of spending $100,000 and up for custom-built ecommerce sites. Mina explained to me that she had:

  • built and tested two easy-to-setup ecommerce apps for Salesforce.com’s Force.com cloud computing platform
  • submitted the apps to Salesforce.com’s app certification process
  • identified several consulting and software services firms who could resell and customize her apps for their Salesforce.com customers
  • started building a pipeline of leads by networking with people at Salesforce.com meetings.

When I talked with Mina, I realized that she had two more assets that would be very valuable:

  • she had 1,000 followers on Twitter (from connecting with people in the Salesforce.com ecosystem)
  • she had the “can do” attitude required to overcome the obstacles that all start-ups face.

Over the next 6 months, I worked with Mina to help her negotiate a contract with and close her first customer, sign her first channel partner, build her marketing and sales process, fine tune her marketing messages, fill her pipeline and close more deals. With over 200 customers worldwide today, Mina has proven her concept many times and over, and taken her start-up to the big leagues.

Please click on the image below (opens a YouTube page in a new browser tab) to see a terrific video about the eCatalog and eStore apps from IdaApps, and then check out the IdaApps website for testimonials from her customers and more info.

IdaApps video

 

Is Conflict Part of Your Go-to-Market Strategy?

As they grow, many technology companies evolve their go-to-market strategy from a direct sales model to a model that includes both direct sales and channel partners. In this evolution, management adds channel partners in order to scale their sales resources more cost-effectively than is possible by hiring only direct salespeople.

Unfortunately, the resulting go-to-market model often includes inherent conflicts that impact the company’s competitive effectiveness and success in the market. In these companies, direct sales and channel partners don’t understand how they are supposed to fit together, don’t have an effective way to resolve conflicts when they occur, and sometimes sabotage each other. Symptoms of these conflicts include:

  • Complaints by the members of the direct salesforce (from individual sales reps up to and including the head of sales) that channel partners “add no value” in specific deals or across the board.
  • Never-ending debates between the CEO and CFO on whether channel partners are really necessary and worth the 30-45% discount.
  • Sales management “looking the other way” when a salesperson takes an order direct instead of through a channel partner in situations where channel partners normally get the order.
  • Channel partners guarding the identities of their prospects and customers from the vendor, to avoid the possibility that vendor personnel will tip off other channel partners or take the deal direct.
  • New product launches that are planned and executed without any partner involvement, even though management expected that partners would start selling the new product as soon as it was announced.

Each of these symptoms is the tip of an iceberg of confusion and mistrust, misdirected or wasted efforts, internal bickering instead of competing with the company’s real competitors for the customer’s business.

If your company has these problems, what can you do to reduce and eliminate them?

The first step to fixing these problems is to clarify which customers should be pursued by direct sales and which should be pursued by channel partners. The ideal is to have a simple, clear and unarguable line that separates these two market segments — the “direct” segment from the “indirect” segment.

One example of such a clear line would be a list of named “house accounts” aka “hard deck” that the company sells to directly, with all other customers “off limits” to the direct salesforce and therefore available to channel partners without competition from the direct salesforce. Another example would be to segment the market by company size, transaction size, or some other attribute that’s easy for everyone to discover early in the sales process. A third approach is to assign specific products to the direct salesforce, and other products to the channel, which works as long as it’s clear to everyone, including potential customers, that the products are so different that no one can easily substitute one product for the other.

The smart way to figure out where the line should be drawn is to model the financials for the different choices. The Route Calculator is a great financial modeling tool that can be used to evaluate alternative boundaries for market segments that can be covered by a direct salesforce or by channel partners, with the output being the “location for the line” that produces the most market share or revenue growth or profit (or any combination of quantifiable goals). The Route Calculator is an integral part of Paramarketing’s approach to optimizing the ROI on marketing and sales.

However the line is drawn, it must be enforced. Poachers who cross the line must be disciplined, and the deal redirected to the correct party, so that others won’t cross the line in the future.

Unfortunately, the management of many companies believe that they cannot implement the ideal solution outlined above. They see their world in shades of gray, not black and white. They may lack the will to draw a clear line between one market segment and another, or between one set of products and another, because they fear it will limit their growth or their ability to change their mind in the future. Companies that are built through acquisition often find themselves full of overlapping products that are not easy to separate for different channels.

The solution for these companies is to take it a step at a time, starting with documenting the “gray area” where deals can go either way (to direct salespeople or to channel partners). Over time, they need to reduce the size “gray area” in order to widen the sizes of the opportunities that clearly belong to direct and indirect channels.

Every company should have a go-to-market strategy that maximizes profitable growth and minimizes wasted efforts. Conflicts between direct sales organizations and channel partners impact both growth and profitability. The problem is not the conflict; it is a lack of rules and poor enforcement of the rules. That’s something that management can and must resolve.

Website Reorganization

We moved our website content from one hosting company to another, and reorganized it to make it easier to find useful and related information. We’re part way through this process. Unfortunately, some information isn’t visible on our new website yet. Let us know what you’re looking for, and we’ll send it to you or post it ahead of the queue.

Dave Drives Profitable Turnaround with Routes-to-Market

In this quick and easy to understand video, Dave, a product manager for a footwear company, uses the Routes-to-Market methodology to turnaround sales.

 

Still Cold Calling? There is a Better Way

I thought only office supply companies were still using old and worn cold calling tactics but turns out I was wrong. Recently, a friend who is a Regional VP of Sales of an enterprise software company complained that her boss had mandated a weekly “cold calling day” for all sales people. Growing the pipeline is their most pressing sales challenge but cold calling is no longer a productive way to do that.

This type of reaction and the exponential waste it creates makes me cringe. Sure, there is a small percentage of sales professionals with silver tongues who manage to have some cold calling success, but for the vast majority cold calling is ineffective and inefficient.

Old habits die hard and this must be the case for cold calling as a tactic. Most sales leaders today learned a sales methodology in which cold calling was a given. It’s time to replace “cold calling” with “permission marketing.” Permission marketing is not new. Seth Godin, the father of permission marketing, made the concept famous. His classic line, “How do we get people to raise their hand?”, is the question that progressive sales leaders should ask today.

Before you say, “that’s marketing’s job, that’s not my area of responsibility”, let me say, “think again.” To borrow from fellow blogger, Kristin Zhivago, “the traditional division between marketing and selling no longer matches the customer’s buying process.”

Why is this so, you ask? The neatly organized idea that marketing captures inquiries, nurtures them into viable leads, and then, when qualified, passes them to sales, just doesn’t jive with the buyer’s reality. With Google power, a prospective buyer can go from acknowledging they have a problem through the various stages of the buyer’s journey in an afternoon. Buyers’ questions that BG (Before Google) required a conversation with a salesperson are now answered through online searches that pull from blogs, websites, discussion forums and other social network communities. In short, the line separating marketing and sales functions is blurred.

This is good news for sales organizations who choose to adapt. By looking at the sales challenge differently and by using Modern Marketing, you can create a relationship with prospects in which they warmly welcome a call from your sales team because they’re ready to talk to a salesperson. Obviously, this kind of call is much more productive for both the customer and the salesperson.

Old habits and outmoded techniques die hard but the world has changed. Sales teams that adapt to the evolution of the customer’s buying behavior will find the click they hear is a prospect clicking to buy rather than a prospect hanging up on an unwanted cold call.

Google Power Has Changed the Buyer-Seller Relationship

Takeaway

As a marketing and sales leader it’s just good sales hygiene to have someone regularly “google” as if they were a prospect for your product or service. That way issues that show up can be addressed so they do not adversely affect your prospect’s perspective and your pipeline growth.

My recent shopping experience for new health insurance provides a vivid example of the importance of doing this. An insurance salesman called me last week. I took down all the information, got his name and the name of the company he represented, and after the call I googled to find out about them.

The first page of Google results showed three listings that had fraud or something to that effect in the title related to this company. Needless to say, I saved myself time and headache and dropped that candidate fast. My future calls will be limited to only those that have survived my online research and vetting process. You too have probably had your own experience of Google-enabled “empowerment.”

The Game Has Changed – Have You?

As the saying goes, the game has changed. Those who learn the new rules of selling brought on by this rebalance of power will have the edge. Those using old game strategies will find they are losing points.

“Google Power” arms your prospects with information so they have a broader view of their options. Expert searcher Chris Sherman, recently published Google Power to help everyone “unleash the power of Google.” The power of Googled information acts as an equalizer between buyer and seller.

Consider this new-found buyer power within an enterprise selling situation. Buyers are now armed with much more knowledge and insights about the product or service they need. Just as I found “the dirt” on this insurance company, your prospective customers can find “the dirt” on you and your company. It doesn’t matter if the negative news relates to technical aspects of your product or service or to sales tactics. The fact is the news creates a hurdle, and in a worse case a wall, for your prospects and your sales team.

Of course, you work for a reputable company and few Google results for your company are negative. Nevertheless, this “google factor” still changes the landscape for your sales team. Your prospects have likely done their research and know the trade-offs between their top options including your competitors. This knowledge readies them to ask more pointed questions in order to address whatever they found out online about your company. If your salespeople deny, lie, or fail to appropriately address these facts, then prospects will not continue their buying process with your company.

Sales Tactics Must Evolve

Most sales professionals have evolved and truly respect the relationship with their prospects and clients. Yet, I still hear enough commando type stories that I think it’s worth mentioning that traditional “pressure tactics” are out of sync with the new balance of power. Companies and sales leaders who allow these outdated selling techniques do so at their own risk. The Google effect means that even one negative sales experience that gets reported on a user forum potentially affects business prospects for your entire sales team. Consultative selling is in. For thought leadership on Sales 2.0 see the interview with Jill Konrath called “Don’t Become a Sales Dinosaur“.

Don’t let Google results work against your sales efforts. Good sales hygiene includes regular googling the way your prospective clients use Google, training your salesforce and channel partners on how to address the issues that show up in Google results, and updating sales tactics to ensure they fit with the new balance of power between buyer and seller.

Modern Marketing Matters to Sales

Takeaway

Modern Marketing helps sales leaders make their numbers by getting them in sync with their marketing counterparts. Modern Marketing is the combination of things that a vendor does to build relationships with prospective customers via traditional and new forms of marketing communications such as blogging and social networking.

The Revenue Cycle

In the world of Modern Marketing, sales and marketing are linked in the revenue cycle. Before implementing Modern Marketing (MM for short), sales leaders might say that they have no influence over marketing and that marketing contributes little towards helping them make their number. In contrast, modern marketers care about engagement and lead conversion, which is what builds the sales pipeline.

In a B2B world, sales leaders who closely sync with their marketing counterparts have a much easier time making their number than those who don’t. Laura Mashina at Marketo supports this point in her blog post The Marketing and Sales Handshake. She wrote that, with MM, “the traditional hand off from marketing to sales has become a solid handshake.” As a result, MM can serve as a bridge for sales leaders to get a conversation going with their marketing counterparts. This conversation is essential to ensure that the marketing spend produces strong leads that build the pipeline (or funnel, if you are of that persuasion).

Modern Marketing Savvy

Modern Marketing is how companies communicate and nurture relationships with prospective customers during the early stages of the customers’ buying process. These communication touches have a significant influence on whether or not strong leads result.

Modern Marketing might be a new term to you but its effect is something you are already quite familiar if you have ever been offered a live chat session, registered to attend an online or live seminar, downloaded a paper to learn more, commented on a blog, participated in an online community, or googled to research something you wanted to buy.

You are Modern Marketing savvy if you:

  1. Align your marketing messages to your prospects’ interests and point of view.
  2. Establish trust and relationship with your prospects throughout their buying experience.
  3. Ensure your content and service helps your prospects solve their problems.
  4. Use a mix of technology to programmatically touch your prospects.

Use Sales Insights to Develop Prospects’ Trust

A sales orientation is absolutely essential to the success of Modern Marketing. Because the sales team is closest to the customer, they often have the best input for what the customer will respond to. MM programs infused with effective answers to a prospect’s real concerns will create trust with the prospect. When trust is developed at each stage of the buying process then MM generates engagement and drives pipeline growth. This is why Modern Marketing matters to sales.

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