Lustratus REPAMA - Strategic Marketing Analysis

Standards-based marketing - an antidote "Sell Differently" Part 3

Part 3 - Sell Differently

I'm continuing this series of blogs here by looking at the techniques that software vendors can use to create the "illusion" of differentiation in markets where technical standards have led to little material product difference.

Perhaps the most obvious differentiator between organisations that have "broadly" similar technology, and an area that particularly hurts smaller or less well established software vendors, is the vendor's approach to selling. 

Which audience strata do you aim at and what do you say to them? 

At its most crude this can be the difference between Vendor A talking to a technical audience about the features of Product A whilst Vendor B is talking to line of business managers within the same company about how their product will provide some business benefit or other. Two similar offerings, with similar capabilities being "sold" in very different ways to very different parts of the same organisations.

The benefit of selling at a business level is enormous.  Decisions get made at that level, budgets get signed off at that level and enterprise-wide relationships get built at that level.  However, the difficulty with this approach, especially for smaller or less well connected vendors, is that gaining access to senior management outside of the IT domain of their prospects' organisations is very difficult. 

It takes years of building credibility and demonstrating proof of delivering benefits (reducing risk, Increasing profit, saving time,removing cost, etc.) to buy a ticket to the business-benefits ball.  Unless you've paid your business benefit taxes, have documented how you've helped deliver benefits and have an army of references willing to stand up on your behalf you're likely to not be taken seriously. 

In addition, in my experience, the skills that a sales exec needs to credibly describe the features of a technical proposition are usually mutually exclusive from the ones they need to engage a senior C-level exec in a discussion about the business issues that keep them awake at night.

So where to start if you're a technology-focused vendor looking to sell differently?

Well it's a journey and will involve dramatically changing the way your organisation thinks, behaves and looks.  Many of your staff will have to undergo a dramatic transformation and many won't make it (especially the sales team).  Then you need to look at developing marketing messages for IT Business and the Business audiences.  You'll do this by talking less about specific product capabilities and instead aligning yourself with where the prospect wants to be AFTER they've done business with you. 

What are their pains, what are they looking to achieve, how can you help them do this and what proof can you provide that you've done it before?

The marketing materials and programs that support such a business audience-focused sales approach are very different too.  And whilst this has a significant impact on the structure of the marketing organisation, perhaps the biggest challenge is that just because you're now selling to a business audience doesn't mean that you stop marketing to the technical audience.  We still have to convince these guys that we're able to do the job. So now you're waging a marketing battle on two fronts and this means significantly greater investment. 

But before embarking on this approach you should ask yourself whether you're committed to the journey.  I've worked for, and with many organisations that have seen "selling to the business" as the holy grail, the panacea to address their competitive losses and their inability to control the sale.  But embark on this journey without fully committing to the changes it WILL have on your organisation and it will lead to a bloody disaster.  I speak from bitter experience.

Well that's about it for the "selling differently" approach to differentiation in a homogenised market.  The benefits of selling at the business level while your competitors are talking to "minions" in the technical side of the business are enormous, but as I've mentioned about it's not an easy journey.

I'll cover some more differentiation techniques in coming blog posts.

Danny Goodall           

"Aim wider", "focus everywhere" and other oxymorons

I’ve just had a conversation with a friend, an ex-colleague who was picking my brains (for free I might add!) about what he could do to make his sales year look better. 

I asked him how his product was positioned and where his focus was on the market.  He told me, and in doing so mentioned 3 industries,  3 market categories and 4 sub market segments, 4 or 5 target audiences and a similar number of problems they address in each of the 3 industries.  I told him that this isn’t a focus.  It’s a hedging of bets.  It’s a baiting of many hooks in the vain hope of landing at least one fish.  My mate was embarrassed.  He knows this himself. 

Focus, especially in these tough times is an absolute necessity.  If you can’t focus to the point of one or two key problems you solve, you can’t expect your prospects to work out what you do and what you could do for them, and don’t expect to be in business come the economic recovery.

And my mate’s company isn’t a small, inexperienced company lacking real marketing talent.  On the contrary they have really good people.  So how did they get themselves into this situation?  The answer is that sales management, worried about the lack of leads and general interest in the product in the market had put pressure on the marketing organisation to “aim wider”, to target some of the areas the competition and other vendors in adjacent market segments were targeting. 

The result?  They were “targeting” everyone.

So it was the sales departments fault then?  Well despite being a paid up member of the Marketing Protection League, I’m not going to endorse the marketing=good, sales=bad stereotype here.  The marketing team was at fault.  Sure the sales team were acting without a plan and not working from common sense, but that's understandable.  Just as we're led to believe that waterboarding can make you say and do things that you don’t really mean, so come the end of the quarter when the members of the sales team has to put various bits of their collective anatomy on the line, they will happily advocate changing strategy 7 times a day,  5 days a week.

So it’s up to the marketing team to lead the company through these crazy times.  Understand your ideal client and what their problem is, understand the value you can provide them that will make them want to buy from you and understand why you’re different from the alternatives.  Perhaps most importantly make every effort to gather intelligence that will tell you where your prospects are still spending money.  Focus is what you need in these tough times. 

Of course that is only half the story.  Marketing can hand a map with clear directions to the rest of the organisation but it won’t stop them all heading off in different directions and ignoring the map. So that’s where the close relationship between sales management and the marketing team comes into its own.  One plan executed with focus and passion by two teams acting as one.  

Simple.  Well not really, but it's not rocket science.

Danny Goodall

Part 6 - The "THAT PROVIDES [main benefit]" element from the positioning statement

In this series of blogs I'm exploring the format of the positioning statement that Lustratus uses in our REPAMA research methodology.  Today I'm looking at the "THAT PROVIDES [main benefit]" element.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A [product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

In my experience, this positioning element is often watered down so that it lacks any real convincing power.  The purpose of the THAT PROVIDES element is to describe the main benefit that your product or service provides your customer.  It details the value that your target customer can potentially derive and should be compelling enough to provide a reason for them to buy from you.  Instead of this, I often see this element used as a place to add another ho-hum feature or an also-ran benefit.  The question that should be asked is:

"What benefit or value will compel the target customer to want to go through the process of buying from you?"

Whilst this is not a hard and fast rule, the THAT PROVIDES element is often paired with the WHO [has this specific pain or problem] element of the positioning statement.  So that the WHO section  sets up the main pain experienced by the target customer and the THAT PROVIDES section often outlines the solution or antidote to the pain.

It's worth stressing one more time that the positioning process should produce a description of your approach to the market so that a target customer feels that you, and you alone a) understand their problem b) have the most compelling solution.  They should be left feeling that you went into business simply to solve their specific problem.

Examples

• THAT PROVIDES a reduction of up to 20% in data centre costs
• THAT PROVIDES a 15% reduction in the time to bring new products to market
• THAT PROVIDES complete alignment between corporate objectives and IT infrastructure
• THAT PROVIDES complete, accurate and timely visibility into corporate risk
• etc.

The impact of this positioning element is improved dramatically If the benefit can quantified or at least expressed in detail.

There is often a temptation when creating this element to fill it full of technical features or justification.  This is especially true of early market technology companies.  Whilst it is a generally held rule that it is better to concentrate on what the product leaves behind (i.e. the benefit), it is OK to focus on the technical value of the product IF the target customer or at least the target audience within the target customer, is highly technically-focused. 

(This section for those interested in the SOA and ESB market only...)  I'm using an extract from one of Lustratus' REPAMA reports to illustrate "real-world" positioning statements.  Here I've reverse-engineered the positioning statement for Microsoft's ESB Guidance product.  According to their outbound marketing, Microsoft sees the following as the main benefit they provide their target customer (BizTalk developers):

THAT PROVIDES an infrastructure for enabling service oriented architectures

This example falls into the "vanilla" category and certainly doesn't really cut it as a compelling reason to buy.  That said, for the target audience (technical) within the target customer (BizTalk Developers), it represents a clear and (if overtly technically) compelling proposition.

OK so that was the THAT PROVIDES section. In the next blog entry in this series I'll be looking at the "UNLIKE [the primary alternative or competitor]" element.  <More information can be found in the Lustratus REPAMA Guide here>

Danny Goodall.

BTW It should be borne in mind that Lustratus' focus is on the high-tech software industry and whilst positioning as a concept will transfer to just about any business to business industry, many of the classifications we use assume that we're dealing with a technical audience for infrastructure software.  So please bear that in mind for your own industry.

Inaction. The biggest "competitor" in a slowdown

I often find that when building competitive strategies, vendors tend to focus all of their efforts on other vendors with similar products and technologies.  They believe that if they understand how the other vendors in their segment are taking their products to market, they will give themselves a good chance of winning business.  Whilst there is nothing wrong with this strategy, it is very easy to get trapped into the habit of seeing things only from a vendor perspective and forgetting that the customer always has a choice. 

The result is that vendor A believes that as long as he/she builds clear differentiation versus vendors B,C and D he will win the business. The reality is that vendors need to build strategies to combat the other alternatives that might equally well serve the end user.  These alternatives might not be recognisable as a "competitor" at all.

I wrote in an earlier blog about the 8 fingered glove seller who might find that their competition doesn't just come from other glove suppliers but also might come from sellers of coats with big warm pockets.  A little tangential perhaps and a better illustration might be a middleware vendor who believes that its competition for a piece of ERP integration business comes from other middleware vendors but who actually loses the business to an ERP vendor that addresses the problem within the ERP software.  The ERP vendor isn't in the integration space, but they were able to eliminate the problem by changing their software.

Understanding all of the legitimate alternatives that a prospect has is essential and it is this issue that comes into sharp focus in a slowdown where the obvious alternative that presents itself to an organisation is to do nothing.  No amount of competitive planning and intelligence gathering will allow a vendor to win against a strategy of committed inaction. 

This "inaction alternative" represents a double conundrum for early market vendors. The approach that that more mature vendors use to convince the customer to invest is to sell on value, or as part of a solution sale.  They demonstrate the value they've been able to deliver to previous customers, focus in on a pain that they perceive their end user prospects are experiencing and build investment justification for their solution.  It is this justification, if sold at the right level in the organisation, that can turn round a decision to do nothing. 

Early market software vendors are typically trying to build brand new demand for their new technological approach.  As a result the "need" does not already exist in their market which makes generating leads difficult when IT spend in under so much scrutiny.  Secondly, early market vendors struggle to document the value they have delivered to existing customer which makes it difficult to justify investment. This is because their sales are usually made to the technical side of their customers' organisations and their propositions typically focus on features and capabilities instead of business value.

A fantastic example of the dilemma that early market vendors face is found in the cloud computing space.  The cloud proposition is multi-layered, subtle and spans hardware and software but it effectively revolves around cost savings and on-demand scalability.  With corporations facing incredible pressure on IT spend, cloud computing should be able to save most large corporations vast amounts of money.  Obviously, there will need to upfront investment and it is also true that many cloud computing offerings need to mature to totally fulfil enterprise needs but the potential benefits are clear.  So it will be fascinating to see how these early market cloud and cloud-enabling vendors will tackle a market where investment in new concepts is tight. 

The irony is that cloud computing offers not only the potential to shave a few points of the corporate IT spend but instead could completely transform the size and nature of IT budgets and departments.  It could be the killer application of the economic slowdown, but first vendors will need to convince enterprises to invest.

We'll be carrying out a REPAMA Segment Analysis Study on the cloud space (Application virtualization/Dynamic Application Service Management) in the coming months, and will be fascinated to map the different go-to-market approaches that the successful and not so successful vendors are taking.

Dan.

Audience strata mismatch

If I were to write in this blog

"18th century art has always been my passion.  It's my belief that since the mid-18th century, art, as captured by oil on canvas, has never been surpassed in terms of quality."

You may ask what on earth that has to do with you - a visitor to a blog about high-technology marketing.  You'd be right to question it because I'd obviously written the wrong thing to the wrong audience.  My message may have been exactly what I wanted to say but I chose the wrong audience to deliver it to.  As it happens, I'm afraid I'm a bit of a philistine when it comes to art appreciation - but hopefully you get the point.

This happens a lot in the marketing world. Many hi-tech vendors are confused about who their audience is or should be for outbound communication.  Others are not confused but through desperation, they will simply throw out as many credible messages as they can, hoping that some of it will stick with someone. 

As we know, effective communication comes from providing the right level of information to the right audience.  Just because a message "works" or seems credible, doesn't mean it the right message for any audience.

When marketing high-tech products, you have a number of ways of communicating to the potential end user of the product.  But first you have to understand how your target audience is segmented and what each segment wants to hear.  Lustratus refers to this as the audience strata and we broadly categorise the segmentation for end-user consumers of IT products as follows:

IT Technical - Represents the overtly technical disciplines within the IT organisation that have no management, strategic  or commercial responsibilities
IT Business - Represents the  higher management levels of the IT organisation that have strategic and/or financial responsibilities
Business - Represents the line of business functions outside of the IT organisation

Both the language and the type of communication used at each level has to be directed specifically at the needs of the individual audience stratum.  Take the example below.  If I was communicating to the Business  about our new product called "Product A", would I write?

"Product A complies with the latest duplex standards (KPT2, RRI v4) and is able to perform the Smithson Benchmark is 18.2 seconds (19.2 with override)."

Or if I was talking to the IT Technical layer, would I write?

"Product A will make your software development team productive in a quarter of the time needed for traditional products"

Finally, is this of relevance to the IT Business layer?

"The risk of corporate governance failures is reduced dramatically with Product A.  Internal systems can be brought up to date quickly as Acme Ltd. found out.  They implemented a complete change of governance systems in less than 2 months, removing risk of failure and resulting in a 20% cost saving."

The answer to each of these questions is obviously "no".  Whilst each of these messages may be valid for the capabilities of Product A, we have to understand the specific needs and drivers of each level of audience.  The question as to whether one vendor can legitimately communicate to all three layers is moot, but selecting the most important audience constituent and developing messages that specifically talks to them is key. 

After all whilst each audience constituent above might be able to understand the implications of the statement, in their day to day jobs these statements add nothing, solve nothing and give no value.

It's not easy for early market or innovative companies to understand who their audience should be.  As a vendor grows and evolves so the audience that they need to reach will change.  A useful technique to ensure that you are saying the right things to the correct audience layer is to monitor closely what your competitors do. 

The diagram below is taken from a recent REPAMA Segment Analysis Study (the vendor names have been changed to protect the innocent). 

The Market Element Distribution diagram shows the priority of each audience strata for each of the different vendors in the study.  As you can see, there is a high degree of correlation between the different vendors as they are all very close to the market mean. If I were a vendor in this space, I would have two choices.  Either I assume that each of the vendors has got it wrong and I should aim at a different layer of audience.  Or I believe that my competitors each understands who the audience is, and I aim for the same category. 

Either way understanding who will be most receptive to the value you can provide is essential.

All of the above will only makes sense you you if I've done my job properly.  That is, if I'm right that the average reader of the Lustratus REPAMA blog is a left-handed, 32 year old male product marketing manager living and working in the US. 

So if you're an art critic, apologies but you've come to the wrong place.

Dan.