lustratus REPAMA

Archive for the ‘prospects’ Category

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

Q. What do the questions…

“How do porcupines make love?”

and

“How do you ’sell’ open source software?”

…have in common?

A. The answer to both is “Carefully!”

Software sales is a funny business.  Push too hard and you’re open to accusations of potentially ripping people off through aggressive tactics, don’t push hard enough and you end up having had many nice discussions (tea and biscuit meetings as they are known) with many nice people but your children go hungry.  It’s a balance.  And nowhere is this more in evidence than in the open source world.

I was chatting to an ex-colleague last week about the issues they have taking their open source software products to market.  I know that sounds like an oxymoron “taking open source to market” but there is usually a business model somewhere when commercial organisations put effort behind open source projects.  And so it is with my mate’s organisation.  They supply documentation, services and support in addition to taking the responsibility for ensuring the stability of releases of the open source projects that they are behind.  They allow organisations to see open source as a viable and low cost alternative to commercial-off-the-shelf software.  And by all accounts, despite what my colleague Steve Craggs said about open source adoption slowing in his 2009 predictions, their business is doing well.

Many commercial software organisations have invested in open source initiatives.  I’m not talking about the pure-play open source vendors such as JBOSS, Apache, Red Hat or MuleSource, but rather commercial-off-the-shelf software vendors who have put their “support” behind open source initiatives. They donate code, they place key people onto committees, they even open up divisions of their own commercial organisations dedicated to providing commercial support services.

In doing this, you have to wonder at their motives.  I mean, if their open source initiative is wildly successful does that spell the end for their commercial products?  Is it a hedging strategy?  An obfuscation strategy?  An intelligence gathering strategy?  Either way they can’t afford to run these efforts at a loss for too long, but neither can they bring their usual commercial sales and marketing tactics into play.  Open source market dynamics are very different.

Open source economics rely on getting “market” reach, having the best community/product, attracting a volume of users and therefore achieving critical mass.  Open source projects that achieve these things in their particular software segment are likely to find their software in use within end-user enterprises and can then expect these companies to require services.  And hence a market for support services around the open source project is born.  It happens almost by osmosis.  As a result, being first and biggest in open source matters more than it does in the commercial-off-the-shelf world.

The issues for those second movers in open source markets who can’t rely on the critical mass in open source are many and varied:

• How do you force the sale?
• How do thy get new users?
• How do they move on from evaluation of the software to generating revenue?
• How do they promote the commercial offer behind the open source project?
• How do they sell?

The dilemma for second movers in an open source market is that open source communities can’t be built to order.  They can’t be pulled together solely by the actions of a commercial entity.  Sure they can be encouraged and all the right ingredients can be put in place.  But open source is about the community working for the good of the community and is not about hard sell.  Selling to open source communities is seen as a no-no.  Open source is “free” software.  There is no selling to be done.  Like worker bees in a hive or ants in a mound, the community en mass decides to use the software, or not.

So all open source vendors can do is put passive offers to deliver services out there in the hope that the community reaches a critical mass and the need for these services occurs.  “Build it and they will come”  It’s a little bit like a shy teenage boy that goes to stand close to a girl, but stops short of asking her for a date.  If you don’t ask you don’t get.

Whilst this approach is earnest and admirable, it doesn’t help to drive sales.  And if you represent a commercial vendor who has sales expectations from the services you wrap around open source projects, then you will be judged on your quarterly performance and not how earnest you may or may not be.

My question however is what is wrong with making statements about the value you can provide the open source world, and for asking for money for that?

If you’ believe that you’ve got a valid commercial offer that delivers value, then why not shout about this and ask for money for it?

In the coming months, we’re going to track a few open source project “vendors” with our REPAMA Methdology to take a look at how they tackle some of these problems.  I’ll report back some of our findings.

Danny Goodall.

The Ideal Customer

As mentioned in the previous blog entry on the positioning statement, I’m going to continue to flesh out the details of the seven other positioning elements.

This time its the ideal target customer, so let’s first revisit the format of the positioning statement just to give us a context.

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 ideal customer allows the organisation creating the positioning statement to express the characteristics of their ideal target customer for the product or service they sell.  This can obviously be done in many different ways and I’ll list some of the more common ones below.  In the previous blog entry I gave an example of the REPAMA reverse-engineered positioning statement for Microsoft ESB Guidance.  We saw that Microsoft’s ideal target customer was defined as:

FOR Microsoft BizTalk Developers

Between you and I, this is not the most definitive classification of ideal customer I’ve ever seen, but when reverse-engineering a vendor’s implied positioning from their outbound marketing communications, it’s often as close as we can get. I suspect that Microsoft’s internal classification will expand on this to include other characteristics that make their ideal target client more relevant to them.  That said, in the context of the ESB REPAMA Segment Analysis Study that we conducted, we’re pretty confident that this ideal target client is correct for Microsoft.

Other customer characteristics that can be used to segment the market to effectively define the ideal target customer include:

• Industry/Vertical – Can you define the industry or vertical market that the ideal client belongs to?
• Geography – Where are they based?
• Size – What size of organisation? – by revenue or employees
• Reach – The reach of your organisation – local, regional, national, multi-national?
• Budget – Is the client able to be classified in terms of how much money they have to spend?
• Pricing – Are they sensitive to price?
• Job title – What is their position/job title?
• User – Who will use the product?
• Decision maker – Who makes the decision on this type of product?
• Image – What image does this client have? – Leading edge, conservative, well know, leader in their own market.
• Benefit – What will the product do to improve the client’s life?
• Reason to buy – What compelling reason does the client have to buy the product?
• Use – What other complimentary or competitive products are they using?
• Concerns – What are the main concerns of your target client?
• Business type – What is their type of business?
• Business model – What is their business model?
• Competition – Who is their competition?
• Clients – Who are their clients?
• Problems – What are their problems?

So examples for a company that sells products used by telecommunications organisations might include:

For…

• Mobile telecommunications organisations
• Mobile telecommunications organisations concerned with adhering to new governmental regulations
• Mobile telecommunications companies that sell through channels
• Mobile telecommunications organisations that have a prestige image
• Mobile telecommunications organisations that operate at the budget end of the market
• Mobile telecommunications organisations that compete with RingRingTelco Corp.
• etc.

What we’re attempting to do here is to segment the total available market so that we end up with a segment that is a) big enough to sustain us but b) small enough for us to dominate.  Obviously credibility and ability to reach these organisations comes into the decision.  So if I were a product marketing VP for a 10 man start-up software organisation, whist I might be attracted to an ideal target client of “the largest global banks struggling to implement a worldwide roll-out of XYZ application”, I might lack the credibility or the reach to be able to deliver on this.

So as we can see the ideal target client goes right to the heart of the business planning for the product unit or corporation and is incredibly important to define accurately.

So that’s ideal customer, I’ll tackle the “pain” section in a future blog.  <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.

A great book if you want to freshen up your client/prospect communications and empower your sales team to sell more.

I read a lot.  Mainly fiction but I also read a fair bit of marketing strategy.  In the main these books are OK and I typically “learn” something every time.  But just occasionally, as was the case with Product Marketing for Technology Companies by Mark Butje they really make an impact.  The Jelly Effect – How to make your communication stick by Andy Bounds is one such book.

If I’m honest, the structure is not completely intuitive.  The main subjects – Networking, How to sell more, Referrals and Presentations don’t really gel together for me.  The introductory concepts are excellent and each section in isolation is well written and full of information and new ideas but I’m not sure they all belong in the same book about effective communication.  Perhaps that’s just me.

The title refers to the idea that if I throw enough information out there some of it will be relevant – it’s like throwing jelly at a wall – eventually some will stick.  But should we ask our prospects and clients to wade through mountains of communication before we share the most important facts with them?  Andy bounds believes not.  Instead he thinks that we should plan how we communicate by first understanding the audience, understanding their needs and understanding the value we can bring to them and then placing that value proposition front and centre in our communication.

Andy Bounds’ USP, if you can describe it as that, is his communication skill developed due to his very poor eyesight.  In fact Andy’s mother is totally blind.  As a child Andy had to help his mother “see” the environment around her and as such from an early age had to learn how to communicate a) just enough information b) the most important information.  Consequently his communication skills have been honed to the point of no wastage.  Andy has taken this skill into the business world and has developed exercises to help marketing and sales folks to communicate effectively and to get results.

There are some great exercises in the book about how to boil down a value proposition from a series of positive facts (a variation on the “so what” test).  And Andy’s ideas around AFTERs (a similar concept to “benefits instead of features”) are really well observed.  I’ve recommended the book to a number of clients and the feedback has always been very good.  Andy is obsessive that any communication should be relevant and aimed at getting the right result.  His writing style together with the spacious layout of the book and the easy to read exercises make it very easy to follow.

If you’re looking for a book to challenge you about the way you currently communicate with your clients and to freshen up your marketing communication then put this on you Xmas reading list.

Danny Goodall

It’s an easy question isn’t it?  But its one that in my experience is so often misinterpreted or wrongly answered by high-tech software vendors through their web sites, marketing materials and meetings with prospects.

When a prospect poses that question of a software vendor, what are they looking to understand?  The answer is that they actually want to know what you can do for them.  They want to quickly envisage what will be left behind after they have bought software from you.

So an answer like:

“ACME provides KJ8 compliant infrastructure that is compatible with the latest WP* series of standards”

…does not really answer the question “What does ACME Corp do?”.

Consider the situation when a sales representative from a high-tech company engages a prospect in conversation and the prospects asks the question:

“…so what does ACME do”?

Behind that questions is the implication that the prospect wants to know what ACME Corp. could do for him.  But instead of providing that information, I’ll wager that the sales rep will list a series of facts about ACME Corp.  He’ll start by telling the prospect the name of the company, the product name, the product category and he may also go on to describe some of the features of the product.  Like this.

“ACME Corp has recently introduced our DooperSuper product which is an advanced enterprise capability product that features support for the KJ8 standard”.

This is wrong.

Well it’s not wrong, but it’s the wrong time to provide this detail.  Remember the context of the question is that the prospect is thinking “What will this do for me?”, “What would I be left with if I were to become a customer of ACME Corp.?”.  An answer like the following would be more suitable:

“ACME Corp. helps our customers to reduce their data centre capital and energy costs”

This immediately tells the prospect what they would be left with if they were to become a customer of ACME Corp. and, if they’re interested, they can follow-up by asking for more detail.

So the question remains.  Why do so many high-tech vendors not lead with such a value proposition in their marketing communications?  The answer I think is two-fold.  Firstly, I think then many early marketing high-tech vendors have a very technical audience which means they feel that they should lead with some technical facts rather than translate this to a value statement.  This is naive because even the technical audience wants to know what they would get if they were to become a customer.

Secondly, many vendors do not understand the value that they can provide.  They’ve never documented the business value enjoyed by their customers.

So here are a few lessons for high-tech vendors:

1. Review your current customer successes
2. Look for a patten of the benefit or value that you’ve delivered
3. Adjust and tier your prospect communication.
   1. Lead with what your prospects will be left with – what will persist after the sale has been made.
   2. Add supporting technical detail where relevant.
4. Train the sales force to engage prospects in the same way

Danny Goodall.

I’ve been scanning other marketing blogs recently, attempting to get a feel for what other folks are doing out there at the moment.  I see lots of advice on creating strategies to generate leads through social media and the creation of networks.  Whilst I wholeheartedly support any efforts to get closer to prospects by creating communities and networks, that alone will not cut it when IT spend is under such close scrutiny.

Imagine this situation.

You’re a senior manager in an IT division of a large corporation who is tasked with delivering more than you did last year with less resources than you previously had.  You’re technically very savvy and when a software vendor proposes new technology you quickly “get” the technical proposition and you are equally able to project the potential benefit to the business that the technology can provide.  However, you also know that there is a draconian spending policy in place at the moment.  A policy that says that no matter what potential justification or pay back or total cost of ownership evidence is presented, you are not able to spend a penny.  So does this mean that you’re not able to spend any money this month/quarter/year?  No it doesn’t.  There are a small number of projects that are allowed to go before the spending “committee”.  These are the projects that are imperative to the business – the funded initiatives.

So the question for the vendors out there looking to generate leads is

“What are the funded initiatives for my prospects?”

This situation came to light recently when looking at the results of a REPAMA study on the value proposition of 3 vendors in the high performance messaging market.  Whilst 2 of the vendors were fundamentally taking the same value propositions to market, the other vendor was the only one to talk about a specific value proposition around risk mitigation.  This risk proposition wasn’t one I would usually associate with high performance messaging and I couldn’t reconcile the difference.  I discussed this with my colleague Steve Craggs and it was Steve that pointed out that the vendor was focussing on this area because in a slowdown specific types of projects are still funded.  A smart move.

I recently did some work for a cloud computing/application virtualisation/DASM vendor and I have to give credit to them for understanding the above principle very clearly.  Right at the heart of their marketing planning was the question:

“In what areas are our prospects actually spending money?”

This resulted in a short list of project types where prospects were spending money and this list defined their entire go-to-market approach.  The logic is simple.  If a prospect isn’t able to spend money, no matter how convincing the argument or relevant the technology, then there is little point in going through the motions of a sales process only to bravely lose the battle when you ask for the money.

There is no news here.  It has always been this way, but the economic slowdown will bring this into sharper relief.  So here are 7 steps to follow for lead generation in a slowdown.

1. Understand what the competition is doing
2. Understand your own capabilities and how you are different from the competition (*and change your positioning and messaging if required)
3. Understand where your prospects are still willing to spend money – the funded initiatives
4. Understand what pain is causing the prospect to still spend money – what are they looking to achieve?
5. Create messaging by mapping your own capabilities and differentiation, to the prospect’s pains and their willingness to spend
6. Retrain the sales force with the new focus/messaging
7. Use the right medium to get your proposition in front of the right person in the right organisations

This is marketing 101 but it’s worth restating because as I examine vendors’ marketing strategies I see them doing the same things that they’ve always done and I see little real differentiation.  And paraphrasing that wise old maxim, if you do what you’ve always done, don’t expect to get different results.

Danny Goodall

I was discussing the economic slowdown with some friends over the weekend.  We were trying to predict the likely depth, length and impact but we came to the conclusion that logic and a sound understanding of economics alone couldn’t help.  You’d need to apply complex chaos psychology first.  The issue, we realised, is that whilst people anxiously focus on the harsher trading conditions, we’re not focusing on the positives – the things that will bring us out the other side.

I’m not going to suggest that all we need to do is shut our eyes and wish it away but if we stop anxiously focusing on the negatives, we can turn a bad situation into a better one.  That said, I do recognise that it would be churlish to suggest to someone that has just lost their job that they should simply look on the bright side of life.  But someone’s loss has to be someone else’s gain – even if they were previously on the losing side.  It’s the way of things.

I believe that in enterprise software sales, generating interest is going to be tough for a little while yet.  But it is at precisely this time that market dynamics can be completely turned on their head.  The share of voice and vendor pecking order that “naturally” exists in a given segment can be completely, positively turned around when our staunchest competitors are focusing on the problem and not the opportunity created.

And as it is such a precious commodity, once we have generated a sales lead and it is handed over to the lead maturation process and ultimately the sales team, we better be completely sure that a) we’re saying the right things when we’re on our feet in front of the client and b) we know what the competition will be saying. This means laying traps for the competition, focusing on the things you do well and providing proof of the claims you make.

I think long-time marketing guru Seth Godin has captured it well when he talks about focusing on the wrong boxes.  And I think that the NLP fans out there would refer to the need for positive perceptual filters.  Either way I think it’s time to stop focusing on the red box and pay some attention to the others.

Danny Goodall

Mean.  It’s a great word isn’t it.  But what does mean, mean?  If you see what I mean.  It’s either hateful, the intended meaning of something or, as I want to use it here – an average.  In this case it’s the “average” marketing strategy for a specific marketing segment.  What would be the value of knowing the “average” marketing strategy for any number of strategic marketing elements for the segment in which you compete?

i.e. on average for your market segment who is the ideal target customer organisation? On average what job roles do your competitors target? On average which vertical markets are favoured? On average who does your competition see as their primary competition? etc.

The above Marketing Element Distribution(TM) charts are taken from a recent Lustratus REPAMA(TM) Segment Analysis Study into High Performance Messaging.  The study compared the marketing strategy of IBM’s WebSphere MQ Low Latency Messaging (LLM), 29West’s Latency Busters Messaging (LBM) and Solace Systems’ Content Router.  Whilst the study contains full details for each of these vendor’s strategies, the calculated “Market Mean” reflects the mean value of each of the marketing elements across those 3 vendors.

Lustratus produces this intelligence as part of the Lustratus REPAMA Segment Analysis Study and we obviously plot the positions of each of the vendors in addition to the mean, but this is relatively simple exercise to conduct for yourselves.  The question is what do you do once you know the mean?  Do you look to be outside of the mean?  The religion of “differentiate or die” suggests you probably do.  But the idea that what “most” of your competitors are doing must be right, suggests that you might want to simply track them.  Look at the Vertical Market Segmentation chart above and ask yourself whether you want to aim outside of Financial Services?  Well it might be an uncontested space, but at the same time their might be a lot of tumbleweed.

The answer of course is that whilst you can compute an “average” marketing strategy, the right strategy for your organisations depends on many factors.  Aiming at the average vertical market and at the average ideal customer might be valid strategies because it suggests that is where the rest of the segment feels there is opportunity.  But if you attack these prospects with “average” messaging and “average” differentiation it will be death by a thousand ho-hum cuts.

Either way, knowing what your competitors are doing is a good place to start.

Danny Goodall