Defining and Winning a New Market
It is always impressive when an innovative company can carve out a new market segment and dominate it with double or even triple digit growth. Many more companies fail trying to evangelize “new emerging markets” that never have enough compelling value.
When it comes to marketing, my absolute favorite technology company is Salesforce.com. We use it, and the other day I went to log in and came across the following banner.
Forgive me for not knowing before, but although I had not heard of “the social enterprise”, I got it right away. Not only that a couple of days later I saw Gartner’s magic quadrant for Social CRM. Here is a market that in theory didn’t exist a couple of years ago and it is now projected to be a $1B market. Now that is great marketing.
So what separates the market makers from the market fakers? Here are my top factors
- It has to make sense, keep it simple
- Most likely it evolved from an earlier market, for the biggest winners there a game changer that cripples the older market.
- It should be differentiated but meaningful
- There has to be competition; no competition, no market
More often than not the big winner is not an incumbent. For example look at the CRM market. Siebel essentially defined the market by taking what companies like Goldmine did and “going enterprise.” Salesforce.com came along and went “On Demand”. Much less common is the incumbent reinventing themselves. However, Salesforce.com is now promoting Social Enterprise along with numerous smaller entrepreneurial firms. Apple is another obvious incredible incumbent. Microsoft and Yahoo are examples of companies that cannot seem to innovate “the next big thing.” What will happen to other one time market makers: Nokia, Motorola, RIM, etc.?
One Hundred Qualified Leads Please
Marketing and sales alignment…sales is our customer…closed loop….lead scoring…..visibility…campaign ROI….
Last night I got 3 orders for leads: Would you like budgets of $10K or $100K? Do you want them in the eastern region or western? Mid-market or Fortune 500?
Everyone agrees that “sales is our customer” but do we do a good enough job with our own “market strategy” for our “customer”? Do we know the set of “products” we should have available for sales? They should include
- Market strategy
- Target prospect profile
- Go to market plan
- Value proposition and messaging map
- Sales kit (collateral, presentation, pricing, etc.)
- Leads
So what does sales “owe” marketing? Instead of a vendor-customer relationship, best practice is a balanced relationship, since sales has responsibility back to marketing. These commitments consist of:
- Focus their prospecting and sales efforts on target market and prospects
- Intense and timely follow up to leads
- Objective feedback on quality of all marketing deliverables
- Collaboration on sharing win/loss information
- Provide early insight into significant opportunities that may impact product requirements
- Not bring small deals “that only need..” to close
Sales and marketing collaboration is a two way street.
Should You Strive To Be Like Apple?
A few weeks ago I was in a board meeting reviewing a strategic initiative. I am always struck by simple questions that drive constructive discussion. In this case the board member asked, “Using Michael Treacy’s Model, do you think Kewill is product oriented, customer oriented, or efficiency oriented?” The answers were relatively consistent, but there were differences based on each person’s perspective. The views also included, where we have been, where we are today, and where we are going.
Yesterday, I came across the WSJ story talking about “How to Be Like Apple”, which discussed how to create an environment that fosters creativity and innovation. Of course emotionally everyone “wants to be like apple” – the question is what does it take? More broadly going back to Michael Treacy’s work is one area of focus better for high technology?
In my opinion it comes down your people and the passion. Emotionally, my experience in high tech is successful companies are either product or customer focused. This often gets defined by the founders or subsequent senior team. Did they come out of engineering or sales & marketing? Either side can create energetic, entrepreneurial environments. “Efficient” high technology companies tend to be pretty boring, although I will admit medium and long term may be quite successful financially.
Where is your company? Are you where you need to be?
Segmentation Versus Fragmentation
I was recently at the Gartner Supply Chain conference and was discussing market strategy with some analysts and colleagues. The topic of markets and market segmentation came up, and I realized that many marketers (and others) get confused or are too rigid in how they segment markets.
Market segmentation should be fundamental skill of every marketer, although there are many lenses at which one needs to view their customers. The first question to ask is “are you segmenting one market or are there multiple markets?” Even this has degrees of gray. I characterize a market as a group of people/companies that have the following traits in common:
1) Pains points to be solved. These need to be relevant and specific. They not “aspirations” such as “save costs or “improve customer service”
2) Processes that run their business: this could be the way the market, distribute, buy goods, etc. Obviously they also need to be relevant to your offering.
3) Roles that use your solution and gain benefit. Examples would include common titles, departments, etc.
4) Competitive landscape. If in each “segment” you have different competitors changes are you are in different markets.
5) Do the customers talk and collaborate with each other? Read common trade journals, go to common events, are there industry associations, etc.
Once the market is defined, there is a multitude of ways to segment it. Some are traditional such as company size, geography, vertical, some are more subtle:
1) Innovative versus laggards
2) IT focused versus business focused, who has power when buying technology
3) Home grown versus off the shelf
Segmentation is as much art as science, since one company’s market could be a segment to someone else. The most important element of segmentation is to relate the above factors to your solution and the problems it solves.
Over-egg the Pudding
Two weeks ago on I was a call with my colleagues from the United Kingdom and I heard the expression, they have “over egged the pudding.” One of the enjoyments of international business is the exposure and learning to different cultures and colloquialisms. After the call I looked up the definition and found
If you over-egg the pudding, you spoil something
by trying to improve it excessively.
It is also used nowadays with the meaning of making something
look bigger or more important than it really is
Is your marketing team a culprit of “over egging the pudding?” In today’s world high tech buyers are typically pretty savvy. Gone are the days of buying on hype and getting on the next rocket ship.
Here are some signs that show your messaging is aligned with customer value and their perception of your company:
1) Your sales team uses the tools your produce for them throughout the sales cycle. They ask for more content, not simply more leads
2) Do your programs pull above industry average
3) You inbound programs are your best vehicles for leads and deals
4) Your website is a focus point for industry education and you can show growth through increasing traffic and lead capture
Of course the other end of the spectrum of “over egging the pudding” is also poor marketing.
SixthSense – Impact on Marketing
Who said social marketing was the be all and end all?
Marketing Spin or Market Value?
A couple of weeks ago I was sitting at a seminar next to an independent consultant. He was telling me about some new initiatives from Cisco around monitoring and controlling computer devices. The first example involved automatically turning all the phones & computers off in a call center when they are not in use in order to save energy. The idea being if it was a two shift operation, the devices could be automatically turned off for the idle third shift. The second scenario was putting RFID tags on newborn babies. If the baby left their room without authorization, the hospital elevators and doors would lock automatically, and the hospital would ensure the infant was not abducted.
After explaining these with much enthusiasm he said, “I do not know if there is any real value in these, but Cisco is a marketing machine, so we believe we can make some good money.”
Without debating the value of the initiatives, it made me wonder: How much success is inherent value versus pure spin marketing? Obviously on the strategic side of marketing the whole objective is to find new markets and deliver value, but fundamentally there has to be some core value. No question spin marketing can accelerate the success or even ensure it gets a strong enough foothold, but if there is not enough core value, the marketing efforts will be expensive and time consuming.
Treasure Hunt – Marketing & Sales Diagnostic Map
I recently participated in a couple of value mapping sessions with the VP of Sales and our teams. What struck me is that in the blog world is a lot of commentary of alignment between sales and marketing on lead generation (or demand generation as purist would say.) However, the art of synchronizing the value proposition, and how is gets tailored for a specific customer is a lot more challenging. What are true values that customers buy into, and how does a sales person in a complex B2B sale navigate and figure out which value points to highlight and focus on? Of course there are many books on complex sales, value based selling, etc. The gap I see is where does marketing end versus the point where sales pick up?
Conceptually I like the concept of a marketing diagnostic map as shown here. This is a very generic map that can apply to any B2B technology solution. It needs to be customized as outlined below.
The map captures the value fit of a product for a particular market segment. The general idea is the value zone represents the major potential areas that sales needs to align with a customers pains to drive a deal. That is starting with the end in mind, how do we get there, who does what? Let’s start in the middle and at the beginning of the process
Core Qualifiers: These are fundamental attributes that define the market segments. For examples industry, company size, geography, buyer’s title, and department, etc. Perhaps this may include ERP type, etc. This is marketing’s job to define these broader based demand generation takes this as input to the who are we trying to reach.
Pain Zone: The pain zone, as the name implies identifies the potential pains you can solve for the market segment you are targeting. Examples, would include fragmented IT systems, poor visibility to spend, customer service issues, etc.
Value Zone: This represents that concrete value points that any prospect in the target market segment could potentially get from your solution.
Note I have been careful to say potential since I would suggest it is marketing’s job to ensure sales knows what the pains and value options are, also perhaps some navigation on sub-segments where pain/value might be greater. For example if the overall market is manufacturing, one specific pain/value might be more acute in high tech companies that run Oracle. Now it is sales job to navigate the map, and identify the customer specific value and associated pain.
One final key concept is in the value sectors. For pretty much any B2B solution the value falls into the three sectors identified: Customer Value, Operational Costs, and IT Costs. One could argue IT and Operational Costs should be grouped together, but in my experience within customers usually one or the other (business or IT) has the clout and is driving the bus.
Customer value comes in the form of creating value that increases the top line. This is achieved through new customers, new markets, or better customer service. Operational value delivers profits to the bottom line through business focused savings. I am sure by now you get the IT costs sector.
My experience is products/solutions are typically focused more heavily in one sector.
Now once sales is done they should be able to outline the value for a specific customer as shown here.
Now the most challenging part is to make this operational. I will leave this to another post for a few reasons: (1) there are lots of angles to take; (2) I have not figured it out; (3) I would love some suggestions.
Do You Need a Psychiatrist?
Over the New Year’s holiday I was at a friend’s for dinner and we played a game called “psychiatrist”. It can be quite fun, if a little bit risqué. The game requires at least 7 or 8 people, with one playing the psychiatrist. The person being the shrink cannot have played the game before and here’s why. All the others have the same problem, and it is up to the psychiatrist to find out what that problem is by asking probing and personal questions. The condition that every player has is that they are answering the questions based on they believe person to their right would answer. The final twist is that when someone gets an answer wrong, the person to their right must declare “psychiatrist”, at which point they switch seats. You get the point.
The above game got me thinking about lead qualification and the sales process. Is your sales team wondering around asking diagnostics questions trying to find the pain and compelling event? In today’s world creating a strong differentiated value proposition is just the start. Even developing compelling and consistent messaging is typically best practice. However, these are not enough. What I believe complex sales require is a diagnostics map. A diagnostic map basically provides guidance on where to probe based on the prospects context. The context includes the customers business, vertical, organization, etc. as well as where you are in the sales process.
Do you have any good examples of a diagnostic map?
Messaging Fairy Tale
Recently I was walking through Heathrow airport and was struck by HSBC’s “Different Points of View” campaign. The main point of the campaign is that a simple word or image can mean very different things to people based on culture, context, etc. One example is shown above with a picture of a bridal couple on top of a wedding cake. There are three different versions with the messages: Fear, Fate, Fairy Tale.
It re-enforced how critical messaging and context is to high tech marketing. In this world it is almost always a complex sale, with multiple communications channels (e-mail, phone calls, meetings, formal PowerPoint presentations, etc.), each hitting different roles within the prospect. Although it is obvious the VP of transportation will have different perspective than the director of IT; getting the right message, delivered in the right way can be challenging. How the messages are “packaged” impacts their effectiveness as shown in Malcolm Gladwell’s book Blink.
The following is a starting point to deliver strong messaging:
1) Define the titles and roles you need to reach
2) Based on role what are the most relevant value points
3) What are the best channels to reach these people? In this case channels might be as simple as an e-mail blast or as sophisticated as a complex discovery process.
A core messaging map is a useful internal tool that can be used by marketing communications, sales, business development, product marketing to ensure content and tools for the campaign are aligned. In today’s social marketing world with information overload, the right messaging and context are fundamental.
