The Six Common Sales Myths

Posted on March 13, 2014June 21, 2018 by Jerry Vieira

Over our 20+ years of working with sales teams in a wide diversity of industries, we have seen and noted Six Common Sales Myths, each of which hinders success. They are explained in a series of articles published in our QMP Insights Blog. The article titles and links are listed below. Simply click the title link to open and read each.

Dispelling these myths can quickly improve the productivity of your sales team.

Be forewarned, however. Some of these concepts might be controversial or run counter to the established sales culture within your firm. So, handle them with care.

Myth #1 – “A Sales Person’s Job is Just to Sell, Sell, Sell“

Myth #2 – “You’ve Lost to an Inferior Offering“

Myth #3 – “Sales is all About Relationships”

Myth #4 – “It’s a Price-Driven Market“

Myth #5 – “Closing Techniques are Effective“

Myth #6 – “The Biggest Accounts are the Best Targets

Click here to read the complete Six Common Sales Myths Series.

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For information on the QMP Sales Process Improvements and Sales Training Programs call us at 503.318.2696, email to qmp1@qmpassociates.com or visit our Contact Us page and tell us of your challenges. We’re here to help.

The Key Components of a Thorough Marketing & Sales Audit

Posted on January 10, 2014June 21, 2018 by Jerry Vieira

The word audit can strike fear into the heart of almost any person or organization that is its target. “Audit” conjures up images of someone in a position of authority digging through paperwork and records looking for evidence of malfeasance, mistakes, incompetence or non-compliance.

However, when a business performs an audit on their marketing and sales function, they typically just want to answer two basic questions:

What can we do to improve our sales results?
What can we do to improve our marketing and sales ROI?

At its purest intent a marketing and sales functional audit should not conducted to uncover incompetence, to fix blame or to penalize, but rather to discover opportunities to make both marketing and sales more effective. If the motivation of an audit is solely to find a scapegoat or assign blame, the problem is not in the firm’s marketing and sales function, but rather in its culture and leadership.

Step 1: A Quick Starting Point – The Self-Audit

We, at QMP use an 8 dimension, quick 50-question self-audit or self-assessment approach to determine whether there is need for deeper investigation. The output is a simple spider graph which illustrates the impressions that the executive team has of its marketing and sales organizational capabilities and effectiveness.

Figure 1

The shape of this figure provides a general idea of where performance gaps are perceived to exist. However, this is a chart which reflects executive impressions and personal observations – not a formal, detailed analysis of processes and capabilities. If the chart reveals high capabilities, but sales performance is actually poor, there is strong misperception among the executive team. But if both the chart output and the firm’s performance are satisfactory, the need for a detailed audit is probably not compelling.

(Click here to request this free self-assessment tool)

Step 2: The Detailed Audit:

If a detailed audit is indicated, the model in Figure 2 provides a framework for conducting that audit. Each of the 8 dimensions of the spider graph will be evaluated within that model.

Figure 2

he Marketing & Sales Engine™

All gears must turn efficiently and together for optimum revenue generation. If any gear is broken or stuck, the engine stalls – and it can only turn as fast as its slowest gear. If a marketing and sales audit is going to identify opportunities for breakthrough or discover where things are malfunctioning, an audit must assess the systemic working of all the gears – even the little ones. One must even include in the audit the oil in the oil pan – which we call Performance Excellence, or the Culture of the firm. A healthy corporate culture can grease, or an unhealthy corporate culture grind to a halt, the firm’s marketing and sales engine.

Auditing the Gold Gear: Market Strategy:

“Even the best soldier becomes a casualty when engaged in unwise battle strategy.”

Audits of Market Strategy often lead to the greatest sales breakthroughs. It is common that a strategy audit reveals a lack of market focus. And though it may seem counter-intuitive to consider narrowing rather than expanding one’s market range, a redeployment of resources to a more tightly-defined, more economically lucrative market segment, almost always results in accelerated growth and less cost.

In one case, prior to a strategy analysis, a rather smug marketing and sales executive said, boasting “I don’t care who buys them (his products) or for what reason. All I care is that they buy a lot.” His attitude reflected itself in the highly unfocused efforts of his sales team. This manager did not expect significant impact, nor did he believe much would be revealed, from a strategy audit. In actuality, the audit triggered a strategic market re-focus which triggered strong double-digit growth for a handful of years while enabling price premiums along the way.

Opportunities for sales breakthroughs are available by looking into other aspects of the firm’s strategy as well, not just its strategic focus. Breakthroughs can be found in analysis of the channel-to-market, pricing policy and the alignment (or rather misalignment) of all the components of the strategy together.

Auditing the Blue Gear: New Business Development

The Business Development gear comprises what most people consider to be classic, tactical marketing. It includes the firm’s e-commerce process, web presence, advertising, sales tool kit, lead generation process, print collateral, trade shows, branding, press relations, publicity and social media. Contrary to the intuition of many – more emphasis on this gear is not always better. Conflicts arise when the strategic intent is to focus while the tactical marketing team is hell bent on “getting our name out there” to as many people as possible.

A Business Development audit can reveal such things as: a) misaligned messages and focus, b) opportunities for shifting resources from expensive promotional efforts (trade shows, advertising) to more effective and less expensive targeted publicity and press relations, or c) a poorly conceived sales tool kit.

One of the most common gaps in a firm’s Business Development program is the lack of a “Thought Leadership” program. In general, thought leadership is the process of building a highly visible industry presence and reputation for your firm and your people, as industry experts. When people look for a solution, they often seek out the experts first – most of the time these days, with an internet search. Thought Leadership is typically the role of technical specialists, marketing spokespeople or senior executives of your firm – the people with enough technical or industry knowledge to be considered experts. “Thought Leadership” involves public speaking, writing and publishing articles, writing blogs, participating in industry association panels, conferences and committees and even involvement in community issues. That activity is heavily reflected in internet presence.

Auditing the Red Gear: Sales Process Disciplines

Within the sales function, the audit checklist is long. Here’s a sampling:

the reality, quality and current value of the sales pipeline
the usefulness of the sales tool kit
the relevance, effectiveness and currency of the sales training program
overall sales process effectiveness
the discipline of providing, and quality of, market intelligence feedback
the sales person’s understanding of the value proposition, differentiation and ideal customer profile, particularly for new products
the alignment of the compensation plan to the strategy

Something as simple as re-establishing focus on the Ideal Customer Profile can achieve rapid and significant results. While running a mini-audit, one of our clients discovered their sales people did not have a clear idea of the types of opportunities they should be pursuing. Sales sent in everything they dug up for a bid, swamping the quote department.

We took the client through a focus exercise and profiled the ideal opportunity. It took only a couple of hours to formulate. Within 9 months of this re-focus, their win rate had increased by more than 15% while the number of quotes generated decreased by nearly 33%. They won more of the right kinds of profitable opportunities. It was that simple. Less waste. More success. No blame.

Low-to-no-cost adjustments to issues discovered in an audit are common and can significantly increase sales productivity.

For example, research has shown that 35% to 50% of the customer opportunities in a sales person’s pipeline will never reach a “buy” decision. These are costly, unproductive investments of sales and support resource that have ended up in the “No Decision” bucket.

The likelihood of an opportunity ending in a “No-Decision” is inversely proportional to the degree of the “Compelling Need” a customer feels about solving their business problem. If a customer is not faced with a compelling need to fix their problem they will not buy any solution – yours or your competitor’s. A quick audit of the sales opportunities in the “No Decision” bucket brings cold reality to bear on the need to do a better job of qualifying customers.

Auditing the Soil: Performance Excellence, aka the Culture:

Think of a company’s culture as its soil. At its best, it is nutrient rich and encourages growth. Think of strategy as the seed. Even a genetically perfect seed will not grow in nutrient starved soil. On the other hand, a genetically inferior seed, planted in nutrient rich soil, will at least yield some crop. Culture is everything.

The nutrients in a firm’s culture are its values and its behavioral norms. In our experience, the best cultures exhibit the following characteristics:

the setting of clear expectations
individual and organization accountability
clarity of ownership of initiatives and results
measurements and metrics
rewards and consequences tied to performance
honesty and openness in communications
periodic progress checkpoints (at minimum, monthly)
a sense of urgency to deal with barriers and challenges to progress
teamwork
a creative problem-solving orientation focused on solutions not blame

In our engine model the culture is the oil in the oil plan pan in which the gears move. The culture lubricates and sustains a healthy engine. Without oil the engine seizes up. Without a solid culture of performance excellence, your business seizes up.

Conclusion:

A marketing and sales audit is simply a periodic analysis of what’s working and what’s not. It is a discipline that requires digging into the marketing and sales process to look for opportunities, barriers, bottlenecks and trends. We know from experience, that initiating an audit and analysis, with the discovery of root cause as its objective can spark sales breakthroughs and improve marketing & sales ROI.

A Final Note: A Marketing & Sales Organizational Self-Assessment is not the same as a Marketing & Sales Audit

A Self-Assessment is an organized compilation and scoring of your perceptions about the capabilities of your marketing and sales organization and processes. An Audit is a validation or invalidation of those perceptions from a deep dive into weaknesses and root causes of performance gaps. Self-Assessments record perceptions. Audits discover reality.

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Learn more about what kinds of growth opportunities a QMP Marketing and Sales Effectiveness Audit can reveal. Or, request a free QMP Marketing and Sales Organizational Capabilities Self-Assessment through our Contact Us Page. We’re here to help.

The 8 Client Personality Types

Posted on June 4, 2013August 25, 2014 by Jerry Vieira

Aristotle, (though some attribute it to Mary Poppins), is purported to have said, “Well begun, is half done”. We’ll stipulate that neither Ari or Mary were talking to a group of consultants, or consultative sales folks, but consultant types quickly learn that early preparation can make a big difference in their ability to achieve a client success.

Beginning well requires quickly determining whether all the key ingredients of a “complete” success even exist. These ingredients include; 1) a client executive that has the personality to affect organizational change, 2) the potential of a major economic benefit for the client, 3) a style match of the consultant to the culture of the client organization and 4) solid gains beyond just your fee, for you, the consultant.

The Executive Personality Factor:

Early in their careers consultants learn that project success is rarely generated solely from their own catalytic, outside-in efforts. Every success needs internal collaboration with a client executive to affect change, assure execution and sustain the economic benefit of a project beyond the engagement.

Recognizing the critical role the lead executive plays in client success, we conducted an analysis of the last ten years of QMP engagements. We wanted to discover the earliest predictors of success from personality-reads on the lead executive. Why did we do this? Because, not all engagements are “complete” successes, and we recognized that achieving a complete success significantly multiplied the economic benefits for both us and our clients.

That analysis brought us to this conclusion:

“The personality type of the highest client executive involved in a specific consulting engagement, not simply his title or position, is the best predictor of an engagement’s ultimate success and the longevity of economic benefit received by both the client and the consultancy practice”

In your career, you may have participated in any of the myriad of commonly practiced personality profiling exercises. Myers-Briggs may have awarded you the distinction of an ENTJ or ISFP. Another test may have designated you a color personality, such as an Orange, or in the DISC profiling system, labeled you an “S”.

While self-knowledge is valuable, it’s not likely you will be able to ask your clients to subject themselves to a battery of personality tests before you provide them a proposal or start an assignment. So the problem remains. How can one identify client types and predict success from the earliest discussions? How can one know when to stay and when to run?

Sorting through hundreds of transactions resulted in our Approach-to-Business (ATB) scale for classifying executives. Admittedly, it wasn’t the most scientific of studies. We don’t have a research psychologist on staff. We simply sorted and grouped like-client individuals, named the groups and then regrouped by project success.

The grouping resulted in eight categories. Only three of the types seemed to have the key success gene, which we identified as the ability and courage to drive change.

So that this last point is not lost, it deserves mentioning again. The key factor in the successful types is their ability to manage and execute organizational change. In our experience, all types will say they are prepared to affect change but only three types actually do.

It’s Not the Title, It’s the Type

It is common to hear among consultants that “executive buy-in” is essential for engagement success. Our data refuted the generality of that claim. We restate it this way, “buy-in from executives at the right level and of the right ATB types is essential for success”. To truly be valuable in generating success, executives must be both the right ATB type and high enough in the organization to marshal resources and get attention when needed.

We have tested our ATB classification with consultants from around the country. They almost universally and immediately, recognize their own current and prospective clients among the types – as well as their project and proposal successes and failures. Once the patterns of these ATB personality types are recognized, one can adjust tactics, refocus resources appropriately and save an enormous amount of time while increasing the probability of “complete” success.

The 8 Client ATB Personality Types:

STUMPs: STUck in the Mud People will never change, they will never buy. They have a limited point of view and don’t move very far from it. Even if you are convinced, beyond any doubt, that they need your help and could reap enormous benefit, it is irrelevant. They are simply disinclined to buy professional services. Don’t try to convince or educate them, because they really don’t care. Politely walk away. Don’t persist. Unsolicited proposals will simply frustrate you, while bemusing them. It’s futile.

Takers: Takers know how to take. They take great notes, your time, your materials, your ideas, your concepts, and turn them into their own. They use your materials surreptitiously, under the radar. Credit or compensation for your ideas? What ideas?

Imagine having your third meeting with a client who appears to be interested, has taken a lot of notes but little or no action. Now, imagine the time and frustration you could have saved had you known from the outset that this potential client was a Taker. These prospects are experts at appropriating concepts and ideas, often asking during preliminary discussions if they can have copies of some of your key documents “to review with their people”. Don’t go there.

Opportunists: Opportunists want to purchase the minimum, bare bones package of services. Their hope is that purchasing the minimum will generate great results. Their expectation is first class results for the “economy” investment. Follow-through to success is rare, since they don’t have the expertise required to execute. Quite often the Opportunist will start many small projects. They will lose interest quickly if results are not immediate or if it seems like too much effort.

Boss-Made-Me-Do-Its: BMMDI’s (pronounced “Bim-Me-Dees”) are the political hangers-on of the corporate world. They provide lip service and public support for an improvement initiative but usually have little sincere enthusiasm—particularly if the consulting assignment has the likelihood of revealing and correcting weaknesses in their own department or function. They will engage, but only long enough to satisfy the boss. If the boss’ attention goes elsewhere, the engagement will die on the vine – as will success.

BMMDI’s have no personal commitment or belief. They may even engage in “lipotage” – public lip service, followed by indifference, or worse, sabotage. (The word “lipotage” was coined by my colleague Bob Phillips and co-author Larry Johnson in their book “Absolute Honesty” published by AMACOM Press).

A particularly hopeless combination is a BMMDI with an Opportunist boss.

Terribly Troubled: TT’s really need help and are willing to invest in serious solutions. Their level of pain is high, as is their motivation to fix the problem. They may research alternatives, but will make a decision quickly. They are typically in a rush to get started and consequently may miss some alternatives – but they will move forward. Spend quality time with these prospects to ensure they understand what will be done (deliverables), what’s required for success (commitment) and how you will fix the problem (approach).

Frustrated Drivers: FD’s can be very intense and quick in studying alternatives. Many times these are executives that inherited a family business or took over after a long oppressive or “old-fashioned” leader – perhaps a StuMP.

They have been waiting a long time for the opportunity to straighten things out. Their drive and motivation is high. They usually understand the weak points, the resources and commitment needed and, upon decision, will drive for quick, visible results.

Establishing well-defined goals, benchmarks, checkpoints and progress measurements will help FDs satiate their sense of urgency. Communicate frequently, clearly and succinctly. Emphasize speed, drive for quick traction and show results.

Sincerely Growth-Oriented (SGO): SGOs are there for the long term. These are clients that readily recognize they have issues and challenges, and demonstrate a sincere and strong desire to improve. An ideal type of client, they understand performance excellence and are motivated by it. They thrive on achieving goals and are constantly improving basic business processes. They are the best-of-the-best clients, intellectually, emotionally and financially. If you consistently provide high value to them in your engagements, SGOs will remain loyal for a long time and continue to award you new projects and referrals.

Dreamers: Imagine Don Quixote, the idealist and self-imagined white-knight savior. Dreamers are lofty in their vision and motivation, perhaps even charismatic, yet impulsive and occasionally misdirected. They are typically challenged at getting organizational buy-in and support, based on a history of failed past initiatives. Their grandiose visions of the corporate future are rarely realized. They talk enthusiastically but show little interest in getting deeply involved in the details of execution .

According to our research, Terribly Troubled (TT’s), Frustrated Drivers (FD’s) and Sincerely Growth Oriented (SGO’s) generate the most meaningful successes by an order of magnitude, in terms of the highest long-term value for all concerned.

But wait! Good ATB genes are required, but not sufficient.

ATB considerations create opportunities for complete success only if the three other raw ingredients exist as well.

Ingredient #1: Strong Economic Benefit:

Business-to-business executives buy consulting services because of a basic belief that the money invested in those services will return significantly greater economic value than the cost. If there isn’t a meaningful economic benefit to be achieved for the client, com “complete” success may end up a ‘Pyrrhic” success.

Ingredient #2: Consultant Style, Capabilities and Personality

These ingredients must Blend with the Client’s Culture: Clients want a consultant whose expertise is well-matched to their specific needs. Furthermore, the ideal client relationship must be based on mutual trust and open communication. But even with these factors covered, execution remains the biggest challenge, because the people in the organization must change the way they do things.

The ability to affect change is enhanced with good communication – and communication is most effective when the consultant’s personality and style match the personality, style and culture of the client organization.

Ingredient #3: Wins for the consultant:

Beyond the economic payoff, other rewards await a complete success: case studies, new tools and techniques, raw material for articles, referrals, follow-on business and new networking connections. If you are going to invest the next six months in a major client engagement, it’s better to find one of that holds the promise of the multiple rewards of a “complete” success.

Personality to Profit

A consistent challenge in selling consulting services to a new client is getting an audience at the right executive level. It is a coup. But when the actual discussion starts, it is common to get so focused on the problem at hand that one can easily forget to look for all the key ingredients of success.

We started this article with a quote from Aristotle, so it’s only fitting to end with a quote from the great American philosopher, Yogi Berra. Berra is purported to have said, “You can observe a lot, just by watching”. Let me add this, “..but you must remember to observe.”

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Learn more about the QMP process for reading people and creating winning sales strategies in our one-day Sales Skills and Process Training Workshop, 60/90 minute on-line Sales Webinars or, for consultants, our Consultancy Navigator program. If you have special need let us know of them through our Contact Us page, or call us at 503.318.2696.

The Need for Asset Optimization Discipline

Posted on May 2, 2013August 25, 2014 by Jerry Vieira

When the going gets tough …

… most business executives cut expenses. Consultant services are among the first to go. In tough economic times we consultants too-frequently hear some variation of, “Your proposal is great, but we simply don’t have the cash at this time to move ahead with it”. And lest you consider this blog posting an appeal to businessmen to hire consultants, let me assure you right-out, it is not. It is an appeal to businessmen to adopt an asset and investment optimization discipline and thus create a powerful force for growth, in both good and bad economic times.

By asset optimization I mean a process for assuring that every dollar of cash, every employee and every hour of time is aligned and consistently targeted at the best possible opportunity for growth – and if it isn’t, to re-target it. A process for executing that optimization exercise follows and is offered for you to consider.

Step 1: Make an initiative attractiveness wish-list

Identify 6 high-yield, high-probability-of-success bottom-or-top line growth initiatives you could embark upon if your organization had the cash, talent and/or the time. Next to each item put the name of the best talent available to execute that initiative along with an estimate of the amount of cash and time (calendar months) it would take to execute that project. Rank the initiatives on the list from highest to lowest in terms of most attractiveness. Keep this list fresh by updating it no less than once a month.

Step 2: Search internally for assets (time, talent and cash) to reallocate

Identify currently committed assets that are the least productive in your company. I have found that a large percent of managers and owners do not want to confront this step, largely because it forces a look at non-productive employees, legacy initiatives and pet-projects.

As an example: If an owner has 100 employees, is it likely there are two that are marginally productive? Assuming for the moment that their cash outlay is $40,000 each, eliminating their positions would free up $80,000 for alternative investment.

There are certainly other sources of potential asset re-allocation and making employment decisions is emotionally difficult, for certain. Nevertheless, barring the emotional pain of confronting this particular an alternative, the list of potential resources that could be reallocated should be identified for each initiative.

Step 3: Make the tough asset re-allocation decisions

This step is why owners and GM’s get paid the big bucks – to make decisions on asset utilization.

A general on the battlefield does this all the time. He is constantly looking for points in the line at which to target his battlefield assets. He continually sends out patrols to discover opportunities to exploit to generate breakthroughs. Assuming his orders are not simply to hold, the good general always knows which segments of his line to hold and at which to launch an attack

If there is anything I would wish for owners and managers it a decisiveness gene

I recently experienced a client who delayed a critical asset-reallocation decision for a year, only acting when an emergency arose.

Why is such an approach is not used more often?

Through the years I have discovered three primary reasons that small-to-mid size business owners and managers don’t practice this discipline: 1) they simply never thought of it, consumed by day-to-day crisis-driven issues, 2) they want avoid having to make the tough decisions it points them to and 3) no one has held them accountable for working through such an exercise.

A consultant can only help them with the first.

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Learn more about the QMP Group and how it can transform your organization into a powerful engine for growth

Finding New Markets

Posted on April 15, 2013August 27, 2020 by Jerry Vieira

Where does one begin the search to find new markets?

The good news is: new high-potential market opportunities are typically discovered closer-in than you would imagine. Some await discovery hidden in the clutter of your current customer list. Others find you, not the other way around. In either case, your task is to recognize and quickly assess their viability.

The biggest barrier is not that opportunities do not exist, but rather that firms have not dedicated a resource, and put in place the discipline to continually explore, vet and test their viability. New market opportunities can quickly and positively impact the bottom line. So, the key to growth is learning a) how to consistently be on the lookout, b) how to recognize possibilities and c) how to test their reality and viability.

Places for discovery:

Here are six places that have created the biggest up-sides for our clients.

Current customer list: it’s the small customers, not the big ones
Fulfilling customers’ unrecognized needs: the iPad and the SUV are good examples
Your competitors’ current markets: they are not as homogeneous or impenetrable as you might believe
Channel-to-market: is your channel providing more or less value to your customers than your customers need?
The sales pipeline: most sales people are poor at assessing an opportunity for its real, bigger-picture potential
International: some international demographics and economics are compelling

If you think you’ve already looked in these places, you might want to check again after reading this blog post.

Your small customers:

Some of the most significant growth opportunities we have seen have come from analysis of small, unexpected customers that have, under the radar, slipped into a firm’s customer list. They are typically considered insignificant and/or outliers for two reasons: 1) the revenue amount represented was relatively low and 2) they came from outside the primary market targets of the firm. However, a quick analysis in several cases revealed that these customers were actually representative of much larger markets – markets with large numbers of customers with the same significant unmet needs that were already being satisfied by the firms’ product lines better than any other offering available.

In one case, the small “insignificant” customer was representative of 20,000 similar organizations nationwide, none-of which had as good a solution to their problem as was being delivered by the firm’s software. This new market opportunity was tested and validated within 90 days. Growth over the next two years in that market more than doubled the company’s revenue

Well-known business thought-leader, Peter Drucker, in his book “Innovation and Entrepreneurship”, named this phenomenon “the unexpected success”. “Unexpected successes” are characterized by customers buying your product from markets you had not considered, getting benefits you had not conceived because your solution was inherently better than alternatives they had to consider.

This common dynamic means that someone in your firm should always be asking your “unexpected-success” customers these four questions:

Why did you buy our solution?
How many more people like you are there, out there?
How many of those other people have a good solution now?
Where do these people hang out?

The lack of a consistent asset dedicated to this analysis, delays the discovery of breakthrough new opportunities.

Your customers’ unmet needs:

The iPad, the SUV and the microwave oven are examples of new product ideas that were formulated to meet customer needs that were “subconscious” or simmering just below the surface of a customer’s “experience” with current solutions. The key words in this sentence are “subconscious” and “experience”.

Typically, in smaller companies, not enough time is dedicated to thinking about the subconscious needs of customers and the customer use experience. Most product development roadmaps we have seen are driven by; a) urgent responses to competitive moves, b) the drive to reduce product costs, and c) evolutionary feature extensions to current offerings. None of these create new market breakthroughs.

New market breakthroughs come from insights into customer behaviors, problems and product usage.

Your competitors’ current markets:

In the 1970’s GM (50%), Ford (25%) and Chrysler (15%) collectively owned 90% or more of the United States automobile market. Now some 40 years later, imports represent a huge portion of that same market. The lesson learned is that if you do not fragment your own market, a competitor will do it for you. The caveat: In each segment of the competitor’s market you target, you must have a relatively advantaged solution.

Imports won their initial US auto market share by fragmenting the US automaker’s markets and offering a value proposition that represented a significant value proposition improvement in one specific segment – the industry’s most vulnerable – small, economic compact cars. After establishing that foothold and clinching their quality reputation in the compact segment, they then stepping-stoned through the other segments – leveraging that quality reputation.

Your new market opportunity may simply be created through a focused initiative at a segment of your competitor’s markets that is most vulnerable due to that competitor’s neglect of the segment. This is particularly effective if the competitor is much larger. You should never attack a competitor on all fronts at once. However, all competitors are vulnerable to fragmentation and differentiation aimed at dissatisfied or under-satisfied customers in some sub-segment of their business.

Your channel to market:

Most firms decide on their channel-to-market based on what benefits it provides in market coverage. The market (customers) really only care about the services the channel provides to them – not the exposure it provides to the firm. If the channel is under-satisfying the needs of the customers’ this represents an opportunity for a) increasing value delivered and compensation received, or b) increasing market share based on service.

Amazon was launched as a channel alternative to brick and mortar book stores. It didn’t capture all book customers – but it did exploit a vulnerability and weakness of the then current book stores by offering convenience and in-home browsing. It created the on-line-bookstore market.

Your sales pipeline:

A sales person’s effort in pursuing an opportunity is typically influenced by three factors: a) the anticipated initial purchase amount, b) the magnitude of the long-term opportunity as communicated to the sales person by the customer’s purchasing department and c) the commission rate associated with the opportunity.

The first thing to recognize is that customer predictions of ultimate volume activity (part b above) are typically overstated – many times to hold up a carrot in order to exact the best pricing for whatever it is you are going to quote. More important than the volume prediction, is its logic. It should never be accepted at face value. Discovering the logic is what separates pursuit of a typical opportunity from discovery of a breakthrough market.

To test the validity and logic of a large prediction the savvy sales organization pursues a revealing question chain:

What ultimate economic, regulatory or demographic market factors will drive such high demand for your customer’s product?
Is this product introducing a whole new revolutionary value concept that no one has offered before (like the first microwave oven) or is it an evolutionary product (like current microwave oven offerings) – just bouncing along an incremental improvement curve?

Purchasing managers almost always over-predict the anticipated adoption of their new products. However, the answers to the two questions above may reveal a truly large and compelling market opportunity. For example, a firm that makes metal fabricated parts for military and aerospace customers may find in its pipeline an opportunity for a part for a medical device. That opportunity may represent a number of situations: a) someone looking for a competitive quote to replace their current supplier, b) the need for a part for an evolutionary incremental product or c) a breakthrough new product. Looking at the face value of the opportunity may not reveal the truth behind the opportunity. Only by delving deeper can the truth of new market opportunities be discerned.

International:

The demographics and economics of India and China are intriguing. The average age of the population is much lower than in the United States, their educational levels are growing, their income per capita is growing and their middle class is also growing. Indra Nooyi, the current CEO of PepsiCo, when asked where her company will be investing in the near future stated those facts – along with two population statistics that clinched the answer. India has a population of 1.1 Billion people and China a population of 1.5 Billion people. (Current stats are 1.2 Billion and 1.3 Billion people respectively). For PepsiCo the investment decision is made.

Those investments will require infrastructure and support – a “demand-halo” – from smaller companies, creating an opportunity for international expansion. Navigating the local laws, regulations, cash repatriation and other idiosyncrasies of international expansion is a bit of a challenge but it can be done. If you don’t do it, someone else will – likely some competitor.

Conclusion:

Given the incredible amounts of money spent today on branding, websites, Search Engine Optimization, sales promotions and tradeshows it is sad that a small portion of those funds do not find their way to support a “market opportunity sleuth” (MOS). Even if your firm has only 10 people in it – assigning the job of MOS to even one-half a person would be wise. That person should be responsible for scouring the areas listed above and reporting monthly on findings. After all, even if only one breakthrough opportunity is discovered in the course of a year – the investment would be worth it.

Read our related posts “Diagnosing Stalled Sales” and “Foundational Marketing – and please send us your comments.

For more information about Finding New Markets and Assessing their Viability call QMP at 503.318.2696 or eMail Jerry Vieira at jgv@qmpassociates.com

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Networking from the front of the room

Posted on April 10, 2013August 25, 2014 by Jerry Vieira

There are two statements I hear repeatedly when speaking with professional services firms. The first is, “It’s a relationship business.” The second is, “We generate the majority of our new business through networking and referrals.”

In fact, service professionals (attorneys, bankers, financial advisors, IT service providers, consultants, brokers and accountants), tell me that they are encouraged (if not by their bosses, by everything they read) to attend a lot of networking events, engage in conversation, not drink too much and hand out business cards.

They are, in effect, being encouraged to play a numbers game. The more events attended and the more cards handed out, the more new clients. Why this approach? Because, it has worked in the past – and if it is not done, new client opportunities dry up. With all the hype in recent years about branding, eMarketing and social media – networking still ranks as a top priority for generating new clients for professional services firms.

But, think about this kind of networking for a moment. In the 30 minutes or so before an event speaker is introduced on the dais, you are supposed to: a) meet as many new people as possible, b) demonstrate sincere interest in who they are and what they do, c) identify their key challenges, d) empathize and e) build up enough mutual trust to get them to remember you well enough to agree to an appointment in the the next, oh let’s say, 3 months. There must be a better way.

The professional services marketplace is much more competitive these days. A lot more people are handing out a lot more business cards at a lot more events. In addition, a swarm of unemployed executives, and there are many, are buzzing the networking circuit. The bottom line is that professional services firms need a better way than traditional networking to stand out and find new opportunities in this market. They need a more effective way than traditional networking to generate the essential credibility and trust that precedes all new client opportunities.

Front of the Room Networking

Front of the room networking is the act of being the headline speaker at networking and other business events. It has incredible power to attract new prospects and many advantages over crowd surfing. The following list of advatntages illustrates the power of this approach:

1. An intriguing title will attract the right kinds of prospects with the right kinds of problems

Picking a title which addresses and offers approaches to problems commonly faced by your clients is a way to garner interest in your talk. In fact, if done well, the people attending will self-pre-qualify simply by demonstrating enough interest in the topic to attend and listen.

I recently offered a topic to an organization of management accountants for their October monthly meeting entitled, “How to Judge the Reality of your Marketing and Sales Team’s 2012 Forecast”. October, being coincident with most firms’ annual planning efforts, was perfect timing, and the topic being relevant attracted a good amount of attention.

2. Offer to speak at a venue that attracts, by function and title, the key decision makers or influencers for the service you provide

While it may be flattering to be asked to address the local Boy Scout troop, and you may get a feeling of civic and professional pride in doing so, if your professional services are bought or recommended by B2B CFOs, you may want to reserve some energy and your best jokes for the latter crowd.

3. Insight is Essential

Assuming you are addressing the right crowd, with the right topic, with an intriguing catchy title, your talk must provide insight. To be effective it must have the effect of causing people to tilt their head, look up toward the ceiling and say to themselves, “I never thought of it that way.”

“ Wow! That’s a clever approach.”

“Wish I had thinkers like that in my organization.”

or, best of all …

“I MUST to talk to this guy/gal after he/she finishes.”

4. The hosting / sponsoring organization typically does all the logistics work

They invite the people, promote the event, reserve the venue, arrange and pay for the breakfast, lunch, snacks, coffee, beer or wine (depending on the time of day), provide you a flattering introduction and assure that the place is cleaned up afterwards.

5. You speak (and consequently network) to the whole room at once

Being the featured speaker at a monthly meeting typically permits you to address 25 to 100 people simultaneously, instead of engaging in chit-chat one-on-one for 10 minutes with each of 3 people. As mentioned above, typically networking and association get-togethers allow 30 minutes for that kind of chatting before the speaker starts. That allows time for meeting 3 new people – if you don’t waste time catching up with your buddies first and talking sports, books or politics

6. You have their uninterrupted attention for 45 minutes

For this networking approach to work, you must be an engaging speaker and deliver value. You cannot take advantage of the opportunity and try to sell. You must be willing to share.

Many people feel they will be giving too much away if they do this. As a consultant, my experience is that you can give someone your complete process binder and they will not be able to deploy it without your help. The caution is that you can really only share so much. You must protect your Intellectual Property – but do not fear to share a lot. It builds your credibility, demonstrates your expertise, illustrates your commitment to help and provides more opportunity for your listeners to want to talk with you afterwards.

7. It helps you continue the development of your ideas, products and intellectual property

The compelling need to think and develop your talk after you have committed to it, has the added benefit of forcing you to take thinking time. This thinking time always generates new ideas that you can test with the new audience.

And here are some tips for giving a great talk and getting great results:

1. Assure you have an audience of decision makers or highly placed (by title) recommenders

As a colleague of mine said, “Pick your talks by who you want to listen to you, not by who accepted your talk”. Before i recognized this, I wasted more than one evening giving great talks to very interested attendees who weren;t anywhere near the decision to decide on using my services

2. Make your presentations interactive

Another key point is the need to engage interactively with your audience versus lecturing. Small exercises that illustrate key concepts are very helpful. One of the most effective tools is some sort of self-assessment which illustrates key gaps in the current situation of the attendees.

3. Make frequent eye contact with individual people in the room.

It gives listeners a feeling of a personal conversation and intimacy with you even though there may be 100 people in the room.

5. Don’t forget to smile

If people see you are enjoying yourself, and excited about talking with them, they will enjoy themselves and be excited about talking with you.

6. Exchange business cards after your talk

If the sponsoring organization does not provide for it, offer to make (and personally deliver) copies of your presentation to the attendees if they provide you a business card. Also ask if they would mind being on your mailing list when you get their card. At the accountant meeting mentioned in Point 1 above, out of 50+ attendees, I collected 12 business cards after the talk by people coming up to me, expressing their appreciation for what I had to say and requesting the presentation. Within the next few days, I had scheduled four appointments.

7. Follow up quickly, when they ask you to

A final point is worth repeating: Remember, you are never selling when you give one of these talks. You are providing information and insight. The sense the audience feels of you as an expert is what creates the magnetic attraction for you to come and solve their problems.

Summary:

Speaking in front of crowds is an integral part of Thought Leadership and an active Thought Leadership effort is essential for a professional service providers’ business development efforts. A well constructed Thought Leadership effort builds brand, reinforces your individual and firm’s reputation as experts, piques client interest, builds web traffic and provides opportunity for price premiums.

For a good book on the pillars of Thought Leadership, grab a copy of “The Expert’s Edge” by Ken Lizotte (McGraw Hill)

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Networking from the front of the room and other Sales and Consulting business development practices are part both the QMP Sales Skills and Process Workshop and the QMP Consutlancy Navigator Program offered by The QMP Group. Click on their titles to learn more.

Lazy Due Diligence: Improve the Analysis, Improve the Outcome

Posted on April 10, 2013August 25, 2014 by Jerry Vieira

Too often, acquisitions don’t deliver the results expected

You are probably as perplexed as I am, at the repeated difficulty that acquisitions have in delivering on their promises of growth.

The title of a June 2006 survey report from Accenture says it clearly, “Executives Report that Mergers and Acquisitions Fail to Create Adequate Value”. The subtitle was, “Deals Often Come Up Short on Delivering Anticipated Revenues, Expected Cost Savings and Successful Integration of Information Technology”, caps the point.

When asking acquirers what causes these shortcomings, there are usually a handful of common responses.

• “The integration is not going smoothly.”

• “Their market took an unexpected dip”

• “Their new product isn’t coming out as fast as we’d like”

Few will admit that the culprit may have really been an inadequate due diligence process – one that failed to reveal some fundamental weaknesses in the market position or capabilities of the target company.

The “Dead Man in a Canoe” Model of Acquisition Due Diligence

The canoe model begins with the premise that even a dead man in a canoe will make great progress downstream, if the current is flowing fast enough. In fact, a dead man in a canoe will make even more progress than a live man rowing backwards. But, if the water level in the stream is so low that the bottom of the canoe is hitting the stream bed, no one – a good rower, a dead man or a backwards rower – will make any progress at all, no matter how much someone paid for the canoe.

Five factors can be used to asses the reality of the growth potential and the marketing and sales capabilities of an acquisition target.

• How does the acquisition select their target markets and where to invest their development resources? (How did they select the streams to put their canoes in?)

• What is the fundamental health and momentum of the primary markets they participate in and depend on? (How fast are the streams flowing that they currently have canoes in?)

• How valid are both their claimed value proposition and competitive advantage? (How good are their canoes?)

• How healthy (really) is their sales pipeline? (How fast are they moving downstream?)

• How talented and capable are their people? (How strong are their rowers?)

Few investment analyses dig deeply enough to understand these factors. Yet, they ultimately portend long-term success or failure.

The Five Under-Acknowledged Assessment Factors

1. What process do they use for selecting their target markets and investments?

Most smaller acquisition targets simply don’t have their own good process for selecting markets to target. If the acquisition target is currently successful, it may have been through rapidity, responsiveness and informality in the organization that allowed quick adjustment when a market was not responding. Rapid trial and error eventually resulted in the discovery of a “savior” market before cash ran out.

If the acquisition target does use a good target market selection process, then it is probably being validated by their growth history. But, if their growth is temporarily stalled, take it as a red flag. Putting the acquisition’s markets through your own process for identifying lucrative target market opportunities provides a quick sanity check.

If the acquisition target doesn’t have a good process, then that upgrade is the first thing to do when, and if, the acquisition is completed. Leaving this upgrade incomplete after acquisition, assures future stumbles.

2. What are the health and momentum of the primary target markets the acquisition participates in and depends on?

Market demand and momentum are driven by a combination of three fundamental factors; demographics, economics and regulation. There isn’t much anyone can do about the first. However sometimes simply shifting market focus from one segment of the market to another catches a subcurrent of demographics that accelerates demand.

For example, the number of hospitals in the U.S. is declining. The Philips defibrillator business can keep trying to sell into emergency rooms in a saturated hospital market or move to the consumer/commercial market fueled by the demographic of aging baby boomers and government mandated emergency preparedness initiatives.

The economics factor is more complex than demographics. There are macro trends, micro (market specific) trends and, what I’ll coin as, nano-economics (the economics associated with the individual customer sales transaction). If all three are flowing in the right direction, the results are positive. However, streams usually slow down top to bottom. First, macro economics fail, then micro, then nano. For the experienced executive, finding and evaluating the macro and micro level momentum factors should be relatively easy.

Too many acquisitions are bought for product reasons (complementary offerings, new technology, brand name et al) vis-à-vis solid market momentum reasons. Market momentum covers up a lot of inadequacies, at least at the beginning. Its better and easier to have market momentum on your side when the inevitable challenges of acquisition integration arise than not.

3. How valid are both the acquisition’s value proposition and their competitive advantage?

Here’s a sad, but not surprising, story. At a mini-workshop for a group of a dozen CEOs and owners of small-to-mid-sized B2B businesses, they were given a simple challenge. They were asked to imagine their ideal target customer prospect and match it to their best product or service offering. Then they were asked to calculate the typical five year economic benefit that the ideal customer would receive from that offering.

Not one person in the room could do it in the 15 or so minutes available!

In an article by this author published in the December 2007 IndUS Business Journal entitled, “The Seven Laws of Performance Excellence”, the first is the Law of Economic Value. It states, “The source of all economic value in any business is a customer’s belief that they will receive favorable economic, emotional or physical value in return for the cash they are willing to spend with your company”.

There must be a customer-perceived imbalance in the economic, emotional or physical value equation, in favor of the customer. It is what drives nano-economic momentum. This is the true nature and reality of the acquisition target’s value proposition. It drives new product adoption. How well it is delivered vis-à-vis competitors is the true measure of competitive advantage.

A number of years ago, I was asked by a capital equipment companyto review their acquisition rationale for a target firm. I asked, “Can you state how the acquisition of this firm will ultimately provide increased economic value to either your, or your acquisition target’s, customer base?”

Stunned silence answered the question.

If an acquiring company cannot somehow tie its target acquisition investment to the Law of Economic Value, the natural selection forces of the marketplace will ultimately depreciate the value of that investment. Value to a customer ultimately rules.

4. How healthy is the sales pipeline?

Does the acquisition target have, and use, a good disciplined sales process?

Sales opportunity pipelines (or, as some call them, sales funnels) are common support documents in the due diligence process. Rarely does an acquiring firm have a good process for assessing its validity.

Here are six suggested criteria for assessing each major opportunity in the pipeline:

1. Compelling Need: To what degree does the customer have a critical need to solve the problem that the company’s product addresses? Is this awareness from the customer’s perception or our own? Can that potential customer do nothing? Sales research shows that between 30 to 50% of all pipeline opportunities are lost to “nodecision”.

2. Match: How closely do our capabilities match that customer’s need?

3. Economic Equation: How strong, from the customer’s perspective, is the economic value proposition for fixing this problem? Has this value been demonstrated to, and believed by, the key customer decision makers at this account?

4. Competitive Position: How do the firm’s competitive capabilities compare, from the customer’s key decision-makers’ perspectives, with other possible solutions?

5. Champion: How strong is the internal champion at the customer account? How politically powerful, influential, receptive is the champion in the decision process?

6. Leverage: In addition to a sale, what else is gained if the account is won? Does the opportunity open up a new market or help develop a new capability? Does it provide a referral and great testimonial?

It may seem that this kind of effort for each of the target customer’s sales people and each major opportunity in the pipeline is a lot of work. Well, it is called due “diligence”, isn’t it.

The truth is that, if you use a pipeline validation process like this, pipeline “fluff” falls away quickly and the real value of the sales opportunity pipeline is revealed.

The second factor to be considered in sales function assessment is whether the acquisition target has, and utilizes, a good sales process.

A good sales process is recognizable by its ability to not only win a high percentage of opportunities in the pipeline, but also do the following:

• Produce frequently updated, easily visible pipelines

• Create accurate bookings forecasts

• Help formulate sound account opportunity strategies and action plans

• Collect, communicate and process account, competitive and other market intelligence • Sell economic value, and

• Optimize a sales person’s time

5. How talented and capable are the marketing and sales people?

When embarking on an acquisition and beginning to meet the people at the acquisition target, those employees can usually be sorted into three types.

The first are the “fearful-skeptics”. These people are simply trying to keep their jobs, stay under the radar and do whatever it is they need to survive the acquisition integration.

The second type are the “hostiles”. They fear loss of power or influence, the coming discomfort associated with an upset of the status-quo, exposure of their incompetence and/or visibility given to their lack of progress.

The final types are the “eager-embracers”. They are the ones that usually say something like, “I’m looking forward to this. I can really see the benefits. I’ve been formulating some innovative ideas for some time, that I’d like to share with you. How can I help?”

These last are the few who will already have developed their own process, who continually want to see things improve and who simply can’t stand ineffectiveness, slowness and inefficiency. Just a few of this type is critical to have in a good marketing and sales organization.

In assessing the people and talent there should be two key roles represented.

One Good Marketing Strategist: One good, talented marketing strategist can create programs that launch firms into incredibly rapid growth opportunities.

A Few Good (Sales) Men: In sales there should be a few very good and influential sales people that can act as internal opinion leaders. In this role they provide support for the transition with peers and customers, and, through their example, help other sales people learn how to manage the acquisition integration and its incumbent changes.

Conclusion:

There are many reasons for acquisition.

Venture Capital and private investment firms look to discover and increase value for extraction at some future pointand commercial businesses typically look to acquisitions to accelerate growth, capture IP, open up new channels or gain rapid entrance into a new market.

Independent of the type of acquiring firm or the ultimate purpose of the acquisition, those embarking upon the due diligence process are encouraged to adhere two basic principles:

• Be cautious not to violate the Law of Economic Value — the negative consequences of violation may not be immediate, but they are inevitable, and

• Put more “diligence” into the due diligence process when it comes to the evaluation of the marketing and sales functions of the acquisition target.

One final point: Should the good revelations outweigh the bad in this 5-factor analysis and the deal close anyway, by virtue of having dug deep enough to discover the acquisition target’s weaknesses, the acquiring firm has already laid out before them the roadmap for improvement.

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To learn more about the QMP approach to due diligence click here.

Lean Marketing and Sales: The Art of Optimizing both Customer and Company Value

Posted on April 7, 2013August 25, 2014 by Jerry Vieira

“Lean is the process of maximizing the value delivered to customers by eliminating any wasted activity or expense marketing or sales process that does not create, communicate or enhance customer-received value.”

In this QMP Insights blog we offer an approach for improving both top and bottom-lines through the application of “Lean” principles to six key areas in the marketing and sales function of a firm.

Getting Started with Lean in Marketing and Sales:

There are three foundational principles that must guide any application of lean principles to the marketing and sales function

First, the law of economic value is always at work. That law states: All economic value accruing to your firm has as its source, the customer’s perception that they will receive more value (economic, emotional or physical) from your product or service than it costs them (economically, emotionally or physically) to purchase, acquire, set up and use.

Second, avoidance of the application of lean concepts creates growing breaches in your business that competitors will exploit. If there is any place in your product or service offering, customer service process or sales approach that customers consciously or subconsciously perceive as not providing the highest value possible, that gap will be the place you are most vulnerable to competitive attack.

Third, when assessing the relative importance and value of deploying a specific lean initiative, use the first and second guiding principles above. Considering the deployment of lean principles in your product and service portfolio or your marketing and sales function only as an opportunity to reduce costs can result in customer backlash. Bank of America felt that backlash recently when they instituted debit card user fees and we all feel the frustration when we can’t reach a real person in customer service.

The Six Targets for Lean in Marketing and Sales:

Market Focus

Face the facts. Your product or service offering does not offer the same set of economic, emotional or physical values to all market segments equally. Lean means focusing on those market segments where the value-received by customers is the highest. If that situation exists, the law of economic value is satisfied and research shows that the following benefits accrue to your firm:

the ability to garner price premiums
faster market penetration
higher customer satisfaction
more peer-to-peer, word-of-mouth customer communication of that value proposition
higher interest in your product from channel partners
higher probability of achieving market share leadership in that segment
reduced marketing expense
improved sales win rate and faster time to close
reduced product design costs and a clearer product evolution path as a keener awareness of the customer needs in that specific market are revealed
greater returns from focused social media and website investments

Market focus is Lean in action.

Market Communications

The wisdom of lean and focused market communications is the toughest principle to convey to marketing and sales teams. The common fallacy is that, “more marketing expenditure is better than less”. Marketing and sales teams typically will fight tooth and nail to avoid reductions in this sacred arena. They believe that more marketing dollars across more expansive markets means more customers. Not so.

Research (Everett Rogers, “The Adoption of Innovations”) shows that communications of a new idea is best accomplished through opinion leaders in a target market. Peer-to-peer communications, accelerated by opinion leaders, is 13 times more effectively than mass communications. Focused marketing communications programs to reach those opinion leaders, with focused value propositions achieved through market-focused product design is as effective as can be achieved. Social media can help – as long as it is focused.

Focused marketing communications is Lean in action.

Channel to Market

Your business will begin to erode if your channel-to-market provides value only to you and not your customers. Marketers must be vigilant to assure their channel continues to deliver real value to customers and clients. Let’s take Amazon.com as an example.

Amazon.com is, at its most basic level, merely a channel-to-market. They do not write books or build any product. Even the manufacture of the Kindle is outsourced. Amazon’s growth was the result of tapping into an under-satisfied customer value (convenience) and leveraging an emerging technology (the Internet).

By building an on-line bookstore coupled with an efficient order fulfillment process, Amazon stole the customer segment of the book market motivated by convenience, not couches. Relevant value to that segment is: browsing at home, saving gasoline, saving time, the use of peer reviews and comments to facilitate decision-making, fast customer service, the opportunity to contribute reviews and comments, and avoidance of the “out-of-stock to be supplied by another store across town and we’ll call when when it’s in” situation. The introduction of “Whispernet” (the wireless purchase and instant delivery of e-books to the Kindle) further enhanced this basic value set. And taking this value proposition even one step further, Amazon has now added free, unlimited on-line storage of your complete media library (music, books, movies) in the cloud with the Kindle Fire®. Wow!

All this value provided by basically a channel-to-market. Amazon understood how to find untapped needs and use technology to meet them efficiently. This is Lean in action in the channel-to-market

Sales Process Discipline

An oft cited statistic claims that 30% to 50% of the opportunities in the average sales person’s pipeline won’t close because the customer makes a decision not to buy anything. The sales person has, in effect, wasted time and money pursuing something that was destined to never result in a sale. How can one really know if a specific opportunity will actually result in a purchase?

The answer has several parts.

First, if Lean principles are applied in the previous steps (strategy, channel and communications), there is a much higher probability that a purchase will occur, because the value proposition and its communication are more efficient, focused and aligned with customers that are likely to receive the greatest value from your product or service.

Second, if the firm has developed an ideal customer profile that describes that buyer type, it enables the sales team to quickly identify a good potential prospect and politely decline continuing involvement with a poor prospect.

Third, there is a simple set of 5 criteria that can improve a sales person’s ability to quickly qualify an opportunity.

intensity of the customer’s need or problem,
degree to which the product offering can meet that need,
degree of the economic, emotional or physical value the customer will receive by using the product or service,
customer perception of the relative competitive advantage of the product or service solution
the existence of a customer champion for the solution

These principles put Lean in action in the sales process.

Market Intelligence Feedback

Market intelligence is critical to success. Sound market strategy depends on current and valid market intelligence. That intelligence may comprise some or all: competitive intelligence, customer satisfaction, barriers the sales people keep running into, the health of the customers’ markets, usage idiosyncrasies and a host of other informational tidbits. The sales team must be at the forefront in gathering this data, because the sales team is company asset that is in the most frequent contact with the customer.

The most efficient way to gather market intelligence is through weekly or monthly sales reports. Contracting market research firms to gather market intelligence from the same customers the sales people talk to each month anyway, is admitting to un-Lean practices and indicative of other organizational or culture problems.

Here are some thoughts about making your Lean market intelligence gathering:

make a bullet-point market intelligence section a required part of your sales person’s weekly or monthly report
train your sales people how to question and observe – not just spew the benefits of your product
include providing market intelligence in the sales compensation plans and sales position descriptions
provide the ability to award spot bonuses for the most timely and important pieces of information that come your way
read the market intelligence reports; think about and acknowledge them by calling back the sales person who provided the information, thanking them and getting more information

Listen carefully when sales people talk about gaps in the customer’s perception of your product’s value delivered. The first comment is inevitably pricing-related. Pricing-related value gaps are more about market targeting, product design and the customer’s perception of value received than actually about pricing. Pricing is only a symptom of a bigger strategic problem.

Conclusion:

The application of Lean principles to marketing and sales is easy and inexpensive. A firm of any size and market can deploy Lean. Lean principles assure that customers get the best value they can – and in return, consistent with the law of economic value, your business optimizes its own economic return.

Click here to talk to QMP about Lean Marketing and Sales

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Accelerating the Market Adoption of an Innovation

Posted on April 7, 2013November 19, 2014 by Jerry Vieira

The Product Development and Management Association Glossary of Terms defines failure rate as the percentage of a firm’s new products that make it to full market commercialization, but which fail to achieve the objectives set for them. By that measure, it is not surprising that a quick internet search on the subject of product failure rate yields studies that claim anywhere between 50% (commercial) and 90% (retail food) of new product or service offerings fail.

Failure can mean some or all of lost time, wasted money, missed opportunity, damaged credibility, tainted brand reputation, enhanced competitive vulnerability, lost jobs, truncated careers and a host of other unpleasant outcomes. So, whether the real failure rate is closer to the lower (50%) or higher (90%) end of the estimate is not as important as recognizing that discovering ways to improve it is essential.

For the past 15 years a good part of our work at QMP has centered around helping business-to-business clients turn around under-performing businesses and products. Many of them were struggling with getting new offerings off the ground or gaining traction in the marketplace. We’d like to share with you a bit about what we have learned, in hopes that it may improve your probability of success and help you avoid the myriad consequences of failure.

The Empirical Science Basis of the Adoption of Innovation:

In 1962, Everett M. Rogers wrote a breakthrough work entitled, “The Diffusion of Innovation” (republished in its fourth edition in 1995 by The Free Press). In it he compiled a number of studies documenting adoption successes and failures of all types of innovations over the past 100 years — from sociological to scientific. He included varied research findings, such as the struggles of the Chilean health department with getting Andes mountain villagers to adopt the habit of boiling water for health reasons, Iowa farmers adopting hybrid seed corn and Pittsburg school system principals adopting new math.

While the lessons learned from reading such a remarkable book are many, two items stand out above all others; 1) the adoption or diffusion of an innovation is not a linear phenomenon (meaning it does not gain its energy and momentum just one isolated customer at a time across a wide range of groups), and 2) adoption is significantly accelerated by the dynamics of the intramarket communication network (how buyers in a market or group meet, discuss and communicate ideas).

In fact, one of the most amazing conclusions coming from the research is that communication through the intramarket network is roughly 13 times more effective than mass communication in the adoption of an innovation. This interesting research conclusion predates the emergence of social media, blogging and Tweeting which, by now, are well recognized as an effective internet-powered intramarket communication vehicles.

Mass Communication and Struggles with Adoption

One of the most common problems we find with innovations struggling to gain a foothold in the marketplace is the parent firm’s unwillingness to focus. Rather than taking a chance on a focused launch initiative, they believe it’s better to try a broad one and see what sticks. In addition, the management team and product people are typically so convinced of the universal applicability of the innovation, that it leads the firm to believe that “getting our name out there” quickly, to masses of potential buyers, will be all that is required for success. This is rarely the case.

In pursuing such a course of action, it is not uncommon for a firm to find they have spent valuable economic resources on grand branding schemes and exposure initiatives with a minimal real impact on market penetration. Applying for a second round of dilutive funding to finance a second run at that same holy grail is an option—and some select it – with the same results.

Fragmenting the market to gain a profitable foothold

Buyers, particularly commercial and business-to-business buyers, invest in an innovation because they believe the economic value they will receive from that innovation will exceed the amount they have to pay for it. The market success of an innovation requires that the market which you’ve targeted has a significant enough proportion of customers with a big enough common problem to create a compelling argument for an investment to solve it. The key is, not all market segments have the same problem to the same degree. Focusing your launch on a particular sub-segment of the market where the economic value proposition of the innovation is compelling, creates a much higher probability of success than a broad approach.

If it’s that simple, why don’t more businesses focus?

There are many reasons: First, investors prefer firms that are moving after big markets with big payoffs. The bigger the market envisioned, the bigger the potential payout. Secondly, the inventors have a sincere belief that “everyone” can eventually use their innovation—and eventually they may be correct. Third, innovators and marketers alike get caught in the excitement, glitz and hype of launching a major market initiative launch. It can be a very heady experience. And, fourth, they simply have too much marketing money in the budget and don’t know how to manage it well.

Trying to stand in front of the innovation-launch train as a voice of reason, as it barrels down the track of a well-funded general market launch is fruitless. It’s best to wait till the train burns out its fuel and then catch up to it further down the track when it has stalled.

Not withstanding the previous explanations, there is a more fundamental reason why people don’t focus for success, they simply don’t know how to select the best markets to focus on.

Criteria for Target Market Attractiveness:

Over the years of working the challenge of assessing and selecting the target market segment that will yield the highest probability of success for an innovation, we have developed a series of criteria that seem to work effectively.

Market Momentum: Different market segments have different economic, demographic and regulatory factors which affect its basic momentum. When selecting a market, we want our investments to be lifted and propelled downstream as much as possible by inherent momentum factors in our favor.

Compelling Need: This factor refers to the extent the problem the innovation is designed to resolve is compelling from an economic, safety or regulatory standpoint. Take the Segway for example, the innovative two-wheeled, gyroscopically-balanced personal transport scooter. It’s general market launch, after much early hype, has been less than hoped for by investors and its inventors alike. It is, however, finding its way to higher success rates in mobile security markets, on campuses, malls, large commercial complexes, inner city tourism, and in a slightly modified version, golf courses.

Match: The extent to which the innovation matches and completely resolves the compelling need it was designed to fix. A perfect match will increase customer satisfaction and improve the ability of potential customers to rapidly make the innovation-to-problem-fix mental link.

In the early days of flat panel monitors, when they were expensive compared to bulky CRTs, one of our clients attempted to penetrate the general desktop market with this own version of a flat panel monitor. At a $1,000 selling price, compared to a $249 monitor price, the effort failed. However, when the effort was refocused on hospital rooms (a much smaller segment of the market but with a more compelling set of needs), the monitor was wildly successful. In hospital rooms, space is constrained, electromagnetic interference from CRTs cannot be tolerated around sensitive medical monitoring equipment and sparks from high static CRTs can’t be permitted in oxygen rich environments. The client’s initial adoption failure was turned to success simply by redirecting the market focus—and there were no changes required to either the average selling price or inherent product features. In fact, the selling price increased as, over time, hospitals requested additional features to increase the basic capabilities of an already good solution.

Socket Count: A socket is a potential place where the innovation can be installed. For example, a first estimate of the potential sockets for the microwave oven at its inception would have been the number of households without one. Today, the number of sockets available for new microwave oven innovations is going to be limited to those sockets that either don’t have a microwave already installed (very few) or those for which the innovation solves a compelling need or significant shortcoming with their existing solution.We want to find a market to target our innovation at that not only has a compelling need and positive momentum factors , but also a lot of unfilled or under-satisfied sockets.

Value Quotient: Closely related to the magnitude of the compelling need is the balance of the value quotient from the customer’s perspective. This relates to the value of the benefit to the customer of solving their problem with your innovation, divided by the cost of acquiring, installing, learning and using it. There may be a significant compelling need, but if the cost of the innovation needed to repair the compelling need is prohibitive, adoption will be slow. A rule of thumb is that within three years of purchase the innovation should pay back at least 5 to 1 in bottom line cash flow for the customer. A further note on this point: Value received is not completely economic. Value comprises the complete suite of benefits encompassed in the Economic, Emotional, Political and Physical realms of what your product/service delivers.

RPQL Position Availability: RPQL stands for Relative Perceived Quality Leadership. Forty plus years of research in the Strategic Planning Institute PIMS data base (Profit Impact of Market Strategy) indicates that the single most important factor affecting a business unit’s success is the market’s perception of the relative perceived quality of its goods and services compared to its competitors. One important point to remember—perceived quality is related to the segment of the market. Not all segments perceive quality in the same way. Charging after a market that already has an RPQL leader is equivalent of a military frontal assault on an entrenched position. Not a wise decision.

IntraMarket Network: As mentioned earlier, innovations diffuse more rapidly if there is a strong intra-market network through which the value proposition of the innovation can be communicated—person-to-person, customer-to-customer. The intra-market network comprises two parts a) its venues (events, forums) and vehicles (journals, publications, websites) and b) its intra-market opinion leaders.

Opinion leaders are the real geometric multipliers of the value proposition message. For opinion leaders to be most effective they need to have four important characteristics. First, they need to be rabid believers in the innovation and its value proposition. Secondly, they need to be well-networked. Third, they need to be highly credible in the network of interest and finally, they need to be natural sales people—anxious and completely un-shy about communicating new ideas to friends and colleagues alike.

The next five target market attractiveness assessment criteria are important as well, but if the market isn’t attractive after an analysis of the first seven the second five are not worth working through.

Profitability: Selling the innovation must be inherently profitable. If you feel you have to reduce price to gain traction, it may simply be that you have a questionable value proposition or your perception of the customer’s compelling need is misunderstood. It certainly should bring into question your thoughts about the economic equation factor. Sometimes simply changing the target market can change the profitability by allowing pricing in proportion to unique benefit—as in the flat panel terminal example stated earlier.

Competitive Turmoil: The higher the competitive turmoil the more expensive it will be to create a successful presence. The exercise of focusing down to a smaller, less competitive market segment, will provide a higher probability of surviving any inevitable market shakeout.

Brand Leverage: It’s easier to gain market attention for your innovation if your brand speaks innovation. Apple will easily get media and intra-market opinion leader attention for a new consumer, music or creative computing idea. Volvo will get attention for an innovative auto safety related product—like a car seat or anti-roll stabilizer for an SUV. Neither will get brand traction if they introduce a pillow or dinner ware.

Accessibility: Sometimes markets may be attractive but relatively inaccessible because of sales channel limitations, aggressive competition for limited shelf-space, import/export restrictions, licensing requirements or other considerations.

Perceived Value of Differentiators: This last factor comes into play when the competitive turmoil factor is less than optimum. It assesses the degree to which your differentiated position for the innovation, compared with your competitors’ approaches, has meaning and economic value in the target segment under assessment.

Conclusions:

What we have learned in years of helping our clients with the market introduction of their innovations is this: Focusing on those markets that exhibit the best composite results on the listed assessment factors results in:

More rapid adoption
Higher average selling prices
Higher profitability
Higher degree of customer satisfaction
Lower market launch expenses
More defensible positions
Higher probability of surviving shakeout
Learning how to do it consistently in the future
Less ownership dilution

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For more information about how to accelerate the market adoption of your innovative product, contact QMP at qmp1@qmpassociates.com or 503-318-2696

The Basics of Foundational Marketing

Posted on April 2, 2013August 25, 2014 by Jerry Vieira

“You can’t build a durable building on a weak foundation.”

We’d like to share an insight that has helped executives and business owners sort through all the hype and claims over the last several years about an ever growing list of “gotta-do” new marketing and sales techniques.

If you’re a General Manager, business owner or C-level executive, your marketing team probably approaches you annually with a laundry list of funding requests to support their critical marketing and sales programs for the coming year. Those requests may include any or all of; a website upgrade, a branding program, a social media expansion program, a blog, a publicity and PR program or maybe even a new six-figure trade show booth – not to mention the additional staff to help manage it all. How do you decide what to approve? How do you sort through all the hype and enthusiasm about each program and decide what will truly give you the best return for your investment?

The graphic below illustrates an alternative approach to selecting marketing initiatives.

Most people think of marketing as one or more of the items listed on the right side of the graphic — in the grey, typical-marketing circle. Stop a moment and consider the list. Is this what you think of when you think of marketing? If yes, join the majority club. If not, join the other group. It has fewer members – but they are the ones who have found the secret to getting greater return on their marketing buck.

Before those of you in the smaller, enlightened group get smug, remember “typical marketing” programs aren’t completely useless. Let’s be realistic. These days, unless you operate a lemonade stand that will only be open for two weeks in August, everyone needs a website. So let’s agree that, to some degree, typical-marketing expenditures are necessary – and in fact, required, once the foundational marketing base is laid.

But, back to the point – the hidden secret about marketing and what the people in the smaller group know that others may not is this; Rarely will any typical marketing initiatives produce truly breakthrough results — and they can tie up a lot of money! What really sets up top and bottom-line breakthroughs is Foundational Marketing. Foundational Marketing is the stuff in the oval on the left. Foundational Marketing is inexpensive and the primary, required ingredient in every major success.

For any typical marketing expenditure to be productive, Foundational Marketing must be done well. In our experience, foundational marketing tools and techniques have produced remarkable results. For example:

A software firm earned 1,000 new clients in just a little more than two years
A fledgling medical product landed 150 hospital placements in its first two years, with some orders exceeding $1M. Prior to using Foundational Marketing techniques, this product was in only two hospitals, with the largest single order only $20,000.
An electronics firm achieved a 50%+ growth rate for six years straight
A components firm increased their win rate by 15% while investing 33% less quoting time
A wholesale distributor generated a 47% increase in regional sales in 1½ years

None of these breakthroughs required a significant investment in typical marketing.

To contrast the effectiveness of the two types of marketing even further, in one of those cases above, after the success had been achieved using Foundational Marketing techniques a new management team invested in a mid six-figure re-branding typical-marketing program that didn’t move the needle a bit – losing the discipline of Foundational Marketing along the way.

Why don’t more firms adhere to Foundational Marketing disciplines?

They don’t know what they are: B-school educators are fantastic at teaching principles and concepts, but in general, weak at delivering a practical approach to moving those principles and concepts into practice. I speak from experience as, at different times, both an MBA student and MBA-level university instructor. Concepts and principles education does not equate to skills, tools and process disciplines. Most B-school graduates do not come out newly-minted with a honed skill set and tool kit.

They haven’t developed a standard tool kit: You are more likely to find a dozen carpenters that use the same field-proven tools and processes for their trade, than a dozen top B-school graduates that use the same tool kit and process for strategy development. Coming to the job site, most marketing practitioners have to create their own tools and processes, convince the executive team to learn, trust and use them and support the execution discipline to see the resultant strategies through to success. Not to place all the blame on the practitioner, many firms simply haven’t developed a Foundational Marketing process and tool kit.

It’s tougher to do: Typical marketing programs are an easy way out – particularly if everyone in the industry is “doing something”. They can be delegated and the deliverables are easy to see: a new web site, a new logo, a bigger show booth.

They don’t have the discipline to do the Foundational work first: Unless the top-dog insists that Foundational Marketing receives first priority and is the right way to do marketing, it won’t get done. Foundational Marketing is a “think-before-doing” approach.

They think it takes too much time: Building a good foundation doesn’t take long if you have the right tools. We have witnessed strategic decisions made in a few days with execution and success in as little as 90 days.

They don’t believe in it because they’ve never seen it work: Using and trusting Foundational Marketing principles does take some faith and practice, but the track record is proven.

Under the Hood of Foundational Marketing:

Practicing Foundational Marketing is really not difficult if you have the right tools. Good and sound foundational marketing tools are based on empirical marketing science. Even non-marketing people can learn and succeed using them. In a way, a good Foundational Marketing tool is like a cell phone. You don’t need to be an electrical engineer with an understanding of electromagnetic field and communications theory to use a cell phone. All of that has been done for you and integrated into the cell phone. Good Foundational Marketing tools have already integrated sound empirical marketing science into them.

Success with Foundational Marketing does require – and this is the difficult part – transforming the way your organization thinks and the way your team executes marketing and sales. It really comes down to a battle of the mind – more than a battle of the wallet. When your organization understands Foundational Marketing – and begins to use its tools and techniques, both the probability of success and the return on investment of your marketing programs skyrocket.

A complete Foundational Marketing approach has four components:

· Market Strategy: A proven and steadfast way to decide what market segments to focus on and what differentiated position to carve out for your firm and each of its products.

· Business Development Initiatives: These are about how you will approach the segment(s) of the market you have decided to target. While components of tactical (typical marketing) are included, emphasis here is on specific customers to target, specific messages to communicate, the customer’s buying process, channel-to-market decisions and leveraging the intra-market customer-to-customer communication network in the target markets of choice.

· Sales Disciplines: There are two parts of the sales disciplines component of Foundational Marketing. Both require training and consistency. First, an effective, consistent sales process is a must – one which qualifies, discovers needs, proposes good solutions, and wins/sustains long-term clients. The second part is a differentiated sales story that is meaningful to customers – one which assures that your unique benefits story is told consistently through all channels to all target customers. It’s a story that emphasizes the economic, emotional and physical benefits in the right priority, for the right customers, in the right market. Sounds obvious, but many clients actually fail in these two fundamental requirements.

· A Performance Driven Culture: Think of the components of Foundational Marketing as the gears of an engine, the culture of a firm is the oil in the oil pan. (See the figure below). To consistently achieve your goals, the organization’s culture must encourage teams to communicate, execute, adjust, think, make decisions and lead in an honest way. A culture of performance excellence is defined by: accountability, clarity of expectations, measurements and metrics, ownership, open and honest communication, fact-oriented, sense of urgency, rewards and consequences, frequent checkpoints and the ability to quickly and constructively confront barriers and problems. With a culture of performance excellence lubricating Foundational Marketing, the engine hums. Without the oil of a culture of performance excellence, the gears seize.

Can Foundational Marketing fail?

Foundational Marketing programs do fail – for one of three reasons: First, if an organization does not have the discipline to execute and follow through, any program will fail. Foundational Marketing programs are no exception. Secondly, it is possible that some firms are too far gone to be saved by a Foundational Marketing program. However, in 20 years of consulting, we have witnessed only one firm in the second category. They required a complete change of their business model to survive. They did survive, but at a much lower revenue level.

Finally, we have witnessed firms that have relapsed. Relapse is characterized by success with Foundational Marketing, followed by a reversion back to sole dependence on those items in the typical marketing list. Relapse is very costly in money, time and lost opportunity. A relapse typically occurs when a new, uniformed marketing and sales or C-level executive enters the picture.

A Final Word:

A good example of the need for foundational discipline is in the weight loss arena. The basis of all weight loss programs is discipline: discipline to eat better, discipline to exercise more and discipline to adhere to a healthy lifestyle. The latest exercise machine does not obviate the need for discipline.

So it is with Foundational Marketing. Good tools and processes are needed – but organizational discipline fuels the best results. Foundational Marketing, supported by a culture of performance excellence has proven again and again to lower marketing and sales costs, increase market share, achieve more rapid adoption of new products and increase significantly the firm’s return on investment.

To learn more about Foundational Marketing call the QMP Group at 503.318.2696, email us at qmp1@qmpassociates.com or connect with us through our Contact Us page where you can detail your challenges.

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