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 8 - The "OUR PRODUCT [has this unique selling proposition] element from the positioning statement

Throughout this series of blogs I've been examining the format of the positioning statement that we use in our REPAMA consultancy and analysis services.  In this final entry in the series I'm going to close out by looking at the pay-off, the crescendo, the exclamation mark at the end of the positioning statement - the USP or unique selling proposition.

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].

The USP is one of those over-used terms that has found friends at all levels of responsibility throughout sales and marketing organisations.  I've heard everyone from line of business managers, to sales people to CEOs use this term.  Everyone feels they have a handle on it and over time the term has come to generically mean "differentiator".  Whilst I'm in favour of strategic marketing concepts finding friends throughout an organisation, there is a considerable amount of subtlety and craft missing from the "common" understanding of the USP.  So let's start with some definitions and perhaps a little bit of history.

Rosser Reeves - what a great name.  He sounds like he should have been some shady 1940s London underworld gangster.  But he wasn't.  Instead he was an advertising man, one of the first in fact and it was he who brought us the concept of the unique selling proposition.  For him, its use and definition were rooted in (print) advertising and as such the formal definition assumes that the USP is being used in some form of promotional campaign.  There was also an implied assumption that we were dealing with business-to-consumer advertising too.  Since then we've broadened the definition to think of it as any general proposition made via any medium (adverts, web site, emails, phone calls, face-to-face conversations, etc.) whether that be business-to-business or business-to-consumer based.  Whilst the use of the USP may have changed, the disciplines and thought processes used in its creation are still valid today.

The definition below is taken from the book Differentiate or Die (survival in our era of killer competition) by Jack Trout and Steve Rivkin.  In this book the authors refer to Rosser Reeves' 1961 work Reality in Advertising from which they quote Reeves' three-part USP definition:

1. Each advertisement must make a proposition to the consumer.  Not just words, not just product puffery, not just show-window advertising.  Each advertisement must say to each reader "Buy this product, and you will get this specific benefit."
2. The proposition must be one that the competition either cannot, or does not, offer.  It must be unique - either a uniqueness of the brand or a claim not otherwise made in that particular field of advertising.
3. The proposition must be so strong that it can move the mass millions (i.e. to pull over new customers to your product).

As I mentioned above, whilst many of these disciplines are still valid, there is now so much competition in just about every market category, segment and sub-segment that being "unique" is increasingly more difficult.  So it's no surprise that many of the USPs I see when reverse-engineering vendor's positioning statements are often just SPs - with little or nothing unique about them.

When looking at the USP in the context of the positioning statement its important to remember that the "OUR PRODUCT" positioning element is typically paired with the "UNLIKE" section.  The UNLIKE element sets up the main alternative and the OUR PRODUCT element describes the USP that the alternative doesn't have.  As shown below:

UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition]

The biggest challenge in defining this element of the positioning statement is in defining that unique space (number 2 on Rosser Reeves' list above).  With product categories, segments and sub-segments so granular across many markets and with ultra competitive competitors competing within each of those segments, finding a position that only you can own is not the work of a moment.  In addition its important to remember that we're not just trying to find a unique space, but a unique space that has compelling value to the consumer/customer as outlined in Reeves' point 1 above. 

In reality what tends to happen (in my experience of the infrastructure software space) is that the first entrant to the market (first mover) aims for something unique which is then "flatteringly" copied by later entrants to the market.  To later entrants this makes sense as they want to have some of the pie of the first movers and are happy to trade uniqueness for being perceived as similar to the market leaders.  Understandably it makes sense to "look" like the first mover.  This tends to lead to what I call "standards-based marketing" and simply creates a homogeneity of messages and propositions amongst the market protagonists.  This leads to little real differentiation and leaves prospects studying highly technical features to really understand the differences between products.

Examples

• OUR PRODUCT removes up to 20% of data centre costs whilst reducing your carbon footprint
• OUR PRODUCT starts reducing risk from day one.
• OUR PRODUCT not only integrates with your existing systems but also provides comprehensive management capabilities
• OUT PRODUCT ends world hunger (Well maybe not - but you get the idea)

Real world example

(If you have a specific interest in the SOA and ESB market you might find this section interesting...)  In our latest REPAMA Segment Analysis Study we looked at how a number of ESB vendors approach the market.  The vendors and products studied included Oracle's Service Bus, Progress Software's Sonic ESB, TIBCO's ActiveMatrix Service Bus and Microsoft's ESB Guidance.  Reverse engineering these vendors' positioning statements gave some interesting insights and as an example I've listed Microsoft's USP section below:

OUR PRODUCT provides a superset of ESB functionality, extending the ESB pattern to include modelling and execution of business rules, workflow, and adapter integration.

Here Microsoft selects a pretty strong USP.  They claim that UNLIKE other ESBs they provided extended functionality.  Whilst other ESBs may legitimately claim that they also offer extended functionality, they are not actually making that claim.  So this certainly passes Rosser Reeves' test above. 

The basis for this claimed USP is that their ESB Guidance is underpinned by their BizTalk product - which features broader functionality than other "simple" ESBs.  I think this is a pretty well constructed USP - despite the fact that the rest of Microsoft's marketing for the ESB Guidance is pretty poor.  Perhaps this is a function of the non-product nature of ESB Guidance.

In summary when defining the OUR PRODUCT element we're looking to communicate a specific benefit that will be delivered that none of the competitors or alternatives are able to offer, all of this couched in language that compels the prospect to take action.

So that's it for the OUR PRODUCT element and for the positioning statement series too. <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.

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.

The positioning statement

Positioning

Happy 2009! I've been in debate with a number of correspondents about the layout and format of the positioning statement that we use in the Lustratus REPAMA-based research.  So I'm going to dedicate the next few blog entries to the positioning statement.  I hope to answer the following questions. 

• What is the positioning statement? 
• Why use a positioning statement? 
• What is the value of a positioning statement? 
• What is the format of a positioning statement?

The first thing to say is that over the years, having worked with some of the best product marketing people in the industry, I've seen many different approaches to positioning and equally many different formats for positioning statements. Each of them, to a greater or lesser extent has been valuable.  Most positioning statements that I've seen and used have had a very similar structure.  Although I have seen some that have been very different, in fact more like a what I would refer to as a value statement or a value proposition.  Perhaps I will revisit them in a future blog but here I'm going to focus on the classic positioning statement.  So as I've mentioned there is no single way to construct a positioning statement but Lustratus has settled on a specific format that captures and conveys the seven key product marketing elements and it is this format that I will concentrate on here.

What purpose does the positioning statement serve?

It's probably best to start with a definition for positioning first.  And if positioning statements are contentious then the the broader subject of positioning is even more so.  Whilst there are many views on this, for me, positioning is about creating a unique, compelling and defensible space in the minds of your prospects where your product/service and only your product/service sits.  Your ideal prospect must feel that you created the product/service for them alone to answer their specific problems and very importantly they must understand exactly how you are different/better that the alternative/competition.  Most product marketing professionals understand this well but as mentioned above, the development of positioning strategies and the statements that captures those strategies can take many different forms.

In my experience most positioning statements are designed to be internal tools for the development and then internal communication of a unique and compelling market proposition.  The positioning statement seldom gets used externally (with customers or prospects) in its raw format.  External marketing communications strategies are typically developed using the internal positioning statement as a guide. 

The positioning statement conveys the following seven product marketing elements:

1. The Ideal customer
2. The main pain that the ideal customer has or the negative situation they find themselves in
3. The name of the product
4. The name of the product category - the generic way to refer to the class of product (I often see this omitted)
5. The main benefit that the product provides and the key reason that the prospect should buy the product
6. The primary competition or alternative
7. The unique selling proposition (USP)

The format of a positioning statement

A positioning statement is natural language-based and should read fluidly and easily as a single sentence and yet should contain all seven of the marketing elements above.  This sounds like a complex task and to aid us in that development we use a specific structure for the statement.  This is shown below.

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].

So the "for", "who", "our", "is a", "that provides", "unlike" and "our product" elements give our positioning statement the structure it needs. 

An example positioning statement

An example positioning statement is shown below. It is taken from the upcoming Lustratus REPAMA Segment Analysis Study into the Enterprise Service Bus (ESB) market segment. In the study we reverse-engineer the seven marketing strategy elements of positioning statement (as well as many others) used by a number of the vendors in the ESB space - in this case the products examined were Microsoft ESB Guidance, Oracle Service Bus, Progress Sonic ESB and TIBCO ActiveMatrix Service Bus.  In the example below we've attempted to capture Microsoft's position and proposition in the ESB market.  

FOR Microsoft BizTalk Developers WHO are building solutions that leverage the SOA pattern OUR Microsoft ESB Guidance IS A loosely-coupled messaging environment THAT PROVIDES an infrastructure for enabling a service-oriented architecture UNLIKE traditional ESBs OUR PRODUCT provides a superset of ESB functionality, extending the ESB pattern to include modelling and execution of business rules, workflow, and adapter integration

It's notoriously difficult to be precise when reverse-engineering a vendor's positioning statement and sections like the "that provides" and "our product" are especially difficult to define precisely.  But hopefully it shows how an organisation like Microsoft might set about defining its approach to a particular market segment.

In the next several blogs I'll expand on the positioning statement and cover each of the seven elements in a bit more detail.  <More information can be found in the Lustratus REPAMA Guide here>

Other posts in this series

The Positioning Statement
FOR... positioning element
WHO...positioning element
OUR...positioning element
IS A...positioning element
THAT PROVIDES...positioning element
UNLIKE...positioning element
OUR PRODUCT...positioning element

Danny Goodall.