By Eric Gombrich
I’ve seen it time and time again in the enterprise or business-to-business (B2B) industry; a new product is developed after significant effort, and it’s time to start selling it. But despite initial “marketing research” done to identify what the market wants in terms of features, what customers are willing to pay, and what the magnitude of the target market might be, when the selling begins the results are less than stellar. Have you been there?
The response is predictable; sales starts asking for product changes, wanting to discount, and pointing fingers at the product as being not quite right. This catalyzes a review of the marketing research that was originally done, and blame falls at the feet of those who did the research.
Revenue delays ensue, and those leading the product management & development processes are forced to start making tough decisions regarding ‘tweaks’ to the product to drive short-term revenue, vs. longer term strategic developments that would put the product further at the forefront. In pursuit of the short-term revenue (which is crucial to survival of the business), the postponing of the strategic developments allow competitors to catch-up. It’s a terrible spiral to be caught in. Unfortunately, it’s not unique, and it’s not uncommon.
In much of the work I’ve done, I’m asked to participate in assessment of what went wrong, and how to extricate the business from this cycle. One of the patterns I’ve recognized and I routinely suggest is that the initial research failed to involve the sales process and the people that are expected to execute on it.
Here’s the reasoning I use: enterprise sales, when done well, should follow a methodical process. The process consists of 4 key stages:
1. Problem Identification – the identification and agreement with the customer that there is a significant problem impacting their business that requires attention. This is where the sales person helps the customer see the problem, and recognize the significant impact it is having on the customer’s business;
2. Commitment to address the problem – an explicit commitment by the customer that the problem warrants the investment of time and energy to resolve, and a commitment to do so in the short-term. This is where the sales person works with all of the stakeholders impacted by the problem, and required to address it, to establish a defined customer team who will work with the sales person to see if a solution can be found;
3. Solution Identification – an explicit commitment by the customer that the solution will be of a particular approach. This is where the sales person might work with the customer to narrow the scope of potential solutions to one category – presumably the category the sales person’s solutions resides in. The intent here is to ensure the customer is not comparing ‘apples and oranges’ when considering solutions. Let’s get the customer to agree that the best solution will be an apple;
4. Solution Selections – This is where the sales person convinces the customer that its MacIntosh apple is the best apple for the problem at hand.
When viewed in light of this sales methodology, you can see that what makes our new product different changes in the sales process as the processes progresses, and what we need to state or claim about the product changes as well.
For example, if we know that in stage 4 (Solution Selection), we need to be able to convey that our MacIntosh varietal is the best solution to the problem. This means we should look to what makes a MacIntosh unique, and we should design in to the product those attributes that strengthen this argument.
In stage 3 however, we’re not comparing our apple to other apples, we’re comparing it to other fruits. And because we’re first trying to get the customer in stage 3 to agree that the solution they want to pursue must be an apple – any apple – if following best-practice in the sales process we’re actually selling all apples, not only ours.
It’s not enough that our MacIntosh is red, while an orange is not, and thus we see greater value in red for the solution. That argument helps in stage 3, but falls apart in stage 4 as we are then left with an apple like all others, and the customer will invariably see them all as commodities and seek the lowest price or best total cost of ownership.
If the sales process is considered in the early stages of product management and development, it should significantly influences the feature set, pricing, etc. If asked to participate, sales will think strategically about how it is likely to win business in stage 4, and it will guide the product design optimize the chances of success for that. This means the sales will help define for marketing and product management that when in the throes of the sales process, at the end, it will be competing against other apples, and to win the business, our apple will need the following differentiated features…
This is the premise of the ‘better mousetrap.’ It largely leads to feature differentiation. But what if the solution you’re intending to build is an entirely new category of solution; something truly innovative?
In that case if your sales team can get to stage 4, the win is almost ensured because there won’t be any other solutions to consider. This means the onus turns to the sales team to differentiate your solution from other solution types. In essence, you would have the very first apple, trying to convince the customer that this new type of fruit is far better than oranges. It doesn’t really matter that your apple is red vs. the green of a Granny Smith. You might instead focus on the value of not having to peel it before eating it, and the productivity gains thereof.
Sure, the customer might indicate they prefer red over green (aka, customer requirement), and if we can deliver on that, great. But that feature should not consume development resources at the expense of optimizing the differentiation regarding peeling and not peeling.
Carrying this silly analogy forward and by way of example, we should not invest significant resources to make the apple red vs green because the market research tells us consumers want green if doing so results in a skin so thin that we then have to wrap the apple in packaging to preserve it that (a) adds to the expense, and (b) requires removal. Doing so would weaken the argument necessary in stage 3, wherein we are trying to demonstrate the value of not having to peel the apple.
While it becomes more nuanced, this same concept applies in stages 1 and 2 as well. In those stages, the product design needs to take into account the problem being resolved, and the value therein at an even higher level. At that point, we should be asking is fruit of any kind the right solution to the problem(s) we’re aiming to resolve for the particular market segment we’re after, and can we deliver a solution that results in a value proposition worthy of commitment?
Unfortunately, it’s been my experience that far too often the sales effort is an afterthought, only considered at the tail-end of the development process. This frequently results in sub-optimal performance for the organization, and a ‘development debt’ that can undermine the future success of the entire business.
Have you experienced this cycle in your history? How did you address it? Would love to hear some alternative approaches.