Tag Archives: Business Development

5 Steps to Assuring the Success of Your Branding Program

Posted on by

 

A Good Brand: Cause or Effect?

Perhaps it’s a result of living in the Northwest for the last 20 years that I am periodically afflicted by the “salmon complex” – the uncontrollable impulse to swim against the current, despite obstacles. And so it is, I find myself in such a stream with regard to the growing pandemonium toward B2B branding programs. It’s not that I don’t believe that “Brand” has value, in fact, just the opposite. Brand has enormous value. It’s just that brand power is the effect, not the cause of B2B market success – and the strategic research proves it.

I have had the opportunity to observe a wide range of branding initiatives at B2B companies. At opposite ends of the spectrum, two come to mind. The first was a simple logo redesign for a small private company. The other, a million-dollar comprehensive branding initiative for a mid-market public firm. Neither initiative seemed to have any visible impact on the firm’s earnings.

After those initiatives had been in place a while, I asked the executives of each company whether they thought their branding program was a success. The answer, in each case, was an unequivocal “No”.

Not too long ago I gave a talk on market strategy to MBA students at a prestigious local university. At the end of the talk, one of the students approached me and expressed amazement and disbelief. How could I possibly give a detailed talk on market strategy without mentioning the importance of branding? He was agitated and animated, his arms waving about as he skittered around in front of me, like a drop of water on a hot skillet. It was as if I had missed stating the importance of water to agriculture.

 

So, why all the hysteria and stampede around branding?

Even though branding programs often fail to move the needle – their popularity remains ubiquitous. There are a number of reasons for this:

  • It feels good: A new brand. A refreshed tag line. A fantastic logo. A clean, well-constructed website. Looking at these products of a branding program makes you feel good. Customers can quickly see the highly visible outcomes. Executives smile at the wondrous accomplishment, reinforced by the adulation of their peers telling them how snappy it all looks.
  • The majority of the creative energy needed can be subcontracted to, and accomplished by, outside folks – minimally increasing anyone’s internal workload
  • Marketing and sales teams are hounding their management to spend money on branding
  • Branding gives the marketing team something concrete to focus their energy on – something on which to build a whole marketing communications program
  • Websites need to be constantly refreshed anyway – and a rebranding typically does that in a big way
  • There’s little downside risk, except for the money spent
  • Everybody’s doing it, and
  • Everybody’s selling it

Now, please don’t get me wrong. I sincerely appreciate the value of a good brand image in attracting customers – but a brand (the image, interpretation and meaning of your name, tag line and logo) is an effect not a cause, of success. What impact would the Apple logo have if Steve Jobs hadn’t first amazed the world with a steady stream of mind-blowing, innovative products?

What your company and its products and services mean to their target markets, i.e. the customer experience surrounding your value proposition, must have already been delivered and validated in the marketplace before a brand can be meaningfully established.

 

Strategic Marketing Research and RPQL

The voluminous PIMS* database and research from the Strategic Planning Institute, conclude that the customer’s perception of a product’s quality relative to its competitors, is the prime driver of financial success. This is called RPQL – Relative Perceived Quality Leadership. The research concludes that financial success is the outcome of achieving RPQL – and brand power is also a result of RPQL – not the other way around.

Quality means more than just “it won’t break”. It means that the product or service experience meets customer expectations – consistently delivering on its promises. And, delivering a relative perceived quality leadership experience takes consistent organizational rigor and discipline. No matter the logo! The customer must experience RPQL first hand, and then the synaptic connection can be made to the brand name and logo.

 

Achieving the Branding Impact You Intend: 5 Steps

  • Develop, deliver and confirm a meaningful value proposition experience first:

The Law of Value Exchange states, “The source of all economic value in your company originates from a customer’s willingness to exchange their cash for what, in their perception, delivers greater economic, physical, emotional or political value in return.”

  • Assure that your value proposition targets a market with substantial momentum and potential:

The world’s best boat, sporting the flashiest logo and most clever tag line goes nowhere in a river that is devoid of water. And remember, a brand has different meanings to different markets. Focus your investment and energy developing a meaningful RPQL experience in a meaningful growth market.

  • Don’t muddle corporate and product branding:

Smaller companies with petite marketing budgets often try to create one brand for the whole firm. But they may be serving multiple market segments with different products delivering different value propositions. In such a situation, it might better to focus branding budgets on specific products, vis-à-vis branding the whole firm. For example, the GM (General Motors) brand has been badly damaged recently by a torrent of recalls, however one brand RPQL experience (Corvette) remains solid.

  • Understand what your firm means to your best customers:

I asked new and returning clients why they buy from QMP. I was surprised; it really wasn’t what I thought. When I repeatedly heard the same reply, I immediately changed the corporate logo to reflect that perceived value and experience. Here is the QMP logo.

qmp-logo-RGB-1200px

Yup. Our clients told us they engage with QMP because they gain invaluable insight because we challenge them to think.

  • Align your brand:

Alignment does not mean just marketing materials, fonts and messaging. It means your whole damned company. From employee recruiting, to training, to product design, values, culture and customer service. All components must be aligned to reinforce the customer RPQL experience – which is your brand. When you invest in that kind of brand discipline, your brand promise will be delivered.

*****

*PIMS stands for the Profit Impact of Market Strategy, a data base initiated by GE in the 1960’s to study the connection between strategy and profit. It is now maintained by the Strategic Planning Institute. It has tracked more than 500 key metrics of thousands of companies since the 60’s.

For more information on branding success contact Jerry Vieira at The QMP Group 503.318.2696 or Jerry@qmpassociates.com

Reaching the CEO

Posted on by

 

Here is a reprint of a recent interview Jerry did with Kevin Price, author, publisher and radio host for the “Price of Business”.  Kevin is a syndicated columnist, both writing for the Huffington Post and appearing on Fox News. The interview explored professional approaches to reaching the CEO of small to midsized firms.

 

Price: Tell me about your firm (number of employees, location, type of companies you work with, etc.).

The QMP Group, Inc. is a Portland-OR-based management consulting firm whose mission it is to help small to mid-size, Business-to Business firms increase their market valuation. We accomplish this by helping them adopt the rigor and disciplines of the QMP (Quality Marketing Process) methodology. That methodology is embodied in our  Marketing & Sales Engine model. We install, repair, replace, align or supercharge whichever of the gears need attention.MarketingandSalesEngine

While The QMP Group itself operates periodically with only one or two employees, we service a wide range of our clients’ needs through close collaboration with highly qualified and experienced consultants of other complementary specialties: Finance, Organizational Development, IT, Operations, Supply Chain Management and Manufacturing.

Price: Tell us your story about reaching C-Level executives to do business?

I started reaching C-Level executives through Thought Leadership, that is, sharing my insights on market strategy through public speaking and writing for business journals. Basically, I was driven to passionately share my beliefs on the subject of the overriding importance or market strategy. I believed then, as I do now, that there is no more important management function than formulating a good market strategy, for the well-being of all stakeholders in a firm: the employees and their families, owners, shareholders, suppliers, customers and the community in which the business resides.

In the early days of my consulting practice I would give a talk at venues where CEOs convened to hear about specific topics of interest. I would give my talk and folks would walk up to me afterward, hand me a business card, and say, “That’s real interesting stuff. I think it might be able to help us. Please give me a call to arrange a time to get together and talk.”

Those introductions led to client engagements. Engagements led to client successes, and successes led to CEO-to-CEO referrals. QMP’s business is still largely maintained through talks and referrals.

One more point about talks. I call talks “Networking from the front of the room”. How else can you get 20 to 80 CEOs and Executives to give you their undivided attention for 45 minutes (with 15 minutes for questions afterwards). Not only that, whoever is sponsoring the venue does all the prep work: food, invitations, scheduling, room set up, etc. There is no more efficient way to reach Executives and CEOs en masse.

Of course, we are not talking about a 45-minute sales pitch here. There is no quicker way to destroy your reputation and credibility as a Thought Leader than trying the hard sell in a talk about insightful business practice. We are talking about a sincere exchange of insights that will help the listener.

Price: Do you know of other examples of businesses being creative in this endeavor?

Let me answer with a story. Several years ago our local chapter of the Institute of Management Consultants convened a members-only working session for the purpose of sharing our personal stories about what we attributed out personal consulting success to. Most of us in the chapter work with the CEOs or high level execs in our client firms.

Naively, I thought that all would say the same thing that I said, namely Thought Leadership – leading to CEO-to-CEO or advisor-to-CEO referrals.

As we went around the room giving each member a chance to tell their own story, I was amazed at the variety of “secret ingredients” of success in reaching CEO’s. Some said their personal network, some said referrals, some said their coaches driving them, some said, believe it or not, cold-calling! Being an engineer I became fixated with finding what could possibly be the common thread in such a diverse set of paths-to-success – and here’s the conclusion I arrived at.

In each case, what the consultant was really saying is, “This is what has worked for me, because this is who I am – naturally.” The individual who said networking is well known in the organization for having and staying connected to a personal and professional network that rivals God’s. The individual that said cold-calling teaches sales and cold-calling techniques for a living.

What I am saying here is that, a person’s path to connecting with a CEO inevitably follows the path of, and leverages, who they naturally are. It builds on what their natural affinity is and how they have channeled it.

A final note on this point: Once you have made your first CEO contacts and built first level successes – the referral machine (CEO-to-CEO or advisor-to-CEO referrals) takes over a fair share of the burden of CEO introductions.

Price: What lessons, if any, do you derive from these stories?

Great Question! Find out who you really are. Discover the thread in your life that is constant, and I believe you will find that it has consistently driven your past successes. Find it then extrapolate it. If that all sounds too esoteric, talk about it with a personal or business coach about your search for the thread. Strengths Finders (the book and the self-assessment) are very helpful. Here’s a link http://strengths.gallup.com/default.aspx.

Remember, your first CEO success can create a flywheel of CEO referrals. So give it all you’ve got. Leave nothing on the field.

Price: Tell us why it is important to for you to pitch to the CEO.

The owner of a privately-held firm is typically its CEO. The firm’s market value is connected directly to that owner’s wallet and net worth – and that individual’s personal wealth (short and long term), and the future of his or her family, are tied to market valuation of the business. Decisions about how to invest to increase that valuation are exclusively the realm of the CEO.

In addition, we are typically executing business process and organizational transformations in our engagements. These process changes have broader and longer term implications on employees, customers and owners, than say, paving the parking lot. The CEO must be involved and actively participate.

Price: What are some unique things you have done to get the attention of CEOs?

CEO’s trust their peers and their advisors. As a consultant, a CEO is not likely to quickly trust you, because they don’t know you. So, getting to CEO’s usually requires a bank shot of trust. A referral from a CEO’s advisor or respected peer is that bank shot of trust.

In turn, for a referral to be made to a CEO by an advisor or peer, that advisor or peer needs to: a) trust you and, b) believe in your expertise, either through personal experience or reputation.

Consultants accomplish this transfer of trust by either; a) demonstrating a track record of success that the CEO’s peer or advisor has witnessed firsthand, or b) building their reputation as substantive Thought Leaders, i.e. speaking and writing on topics germane to the CEO’s circumstance. Those written opinions, talks and successes need to be insightful and substantive.

Your track record and reputation as a Thought Leader, in the minds of a CEOs peer or advisor, is your CEO magnetism.

Price: Tell us about the type of companies with which you like to do business.

We prefer to do business with firms with CEO leaders that are,

1) open-minded,

2) decisive,

3) foster a company culture of accountability and expectations and

4) actively participate in the business.

Formulating an improved market strategy takes knowledge, expertise, analysis and creativity, but more importantly, execution takes real leadership. So, I guess, I am saying the type of leader is more important than the type of company.

Price: What suggestions do you have for others trying to reach CEOs.

Become a Thought Leader. Write, blog and speak to CEOs and CEO advisors.

Build Your Trusted-Advisor Referral Network: Research into how ideas and innovations diffuse into a market place indicates that intra-market network communications (peer-to-peer, or trusted-advisor-to-peer communication) is 13 times more effective in the spread of that idea than mass communications.

Make sure your network knows how to recognize clients you can help:… and, don’t be shy to ask for referrals

Treasure, Preserve, Respect and Thank that Network: Stay in communication, acknowledge and appreciate former clients, advisers and referrers.

Always Act in the Best Interest of Clients: Trusted advisors are trusted because they are transparent and the CEO believes that they are acting in his best interest. Sublimate your needs to the client’s best interest in all that you do. That reputation will me your badge of behavioral honor.

Document your Successes: Measure and record the indicators of your success – and assure they can be validated by references from that engagement

 

*******

Diagnosing Stalled Sales

Posted on by

 

Just Ignoring or Pushing Through the Pain is Not the Answer 

As an entrepreneurial CEO or owner of a small or start-up company, you probably don’t have the economic safety net to tolerate long term losses or less than adequate speed and growth in the adoption of your new products.  You also may not feel you have the time or cash to stop everything, pull the team together, and completely re-visit your base assumptions and offering design. This is where panic sets in. What do you do?

iStock_000007014290Small

Typically, if you ask your marketing, sales and engineering team what should be done, they will come to you with a laundry list of quick fixes: requests for price reductions, funding approval for new marketing initiatives or even more complex and higher performance product features which, they claim, are certain to turn around the problem. As CEO how do you know what to bet on? How do you know if you’re throwing good investment dollars after bad? How do you avoid having to seek out more funding and perhaps dilute ownership?

A number of years ago, I was asked to assess the viability of a new product that was struggling to gain traction in the marketplace. The CEO of this high-tech, pre-IPO firm wanted to know whether the product line could be saved. Sales were almost non-existent – profits negative. There was no breakthrough in sight.

The product manager of this line was convinced that if the psychological price barrier of $1,000 could be broken, customers would flock. The current selling price was $1,100. In the meantime, while price reductions were being considered (not seriously), the product manager was spending his time and budget setting up new distributors around the country, building promotional materials, stocking shelves with minimum quantities, training sales reps on how to demo the product and, in general, “flogging” (his word, not mine) and constantly “badgering” (my word)  the distributors to produce more sales.

Two weeks of field investigation revealed a strategic opportunity to re-focus the market strategy.  Twenty four months after that refocus:

–          the selling price had increased from a $1,100 to more than $4,000. (Yes, it went up, not down!)

–          the largest single customer order went from $20,000 to more than a $1,000,000

–          the number of customers (hospitals) grew from 2 to more than 150

–          the product-line, and the people, were saved

–          the story added to the attractiveness of the IPO

And all this was accomplished while spending less in marketing, not more.

 

How was this accomplished?

This turnaround was made possible by discovering what, up to that time, was an ignored sector of the current customer base, where the product’s value proposition was significantly greater than for other customers.  The business was then refocused on that smaller, yet more lucrative, group of customers. Focus allowed a reduced marketing budget. The result was greatly accelerated adoption, revenue growth and profitability.

Peter Drucker in his book, “Innovation and Entrepreneurship” calls this, leveraging “the unexpected success”. It’s accomplished by digging through the customer lists, examining the motivations of a customer that bought (that you didn’t expect to buy), and discovering that the value proposition they received was well beyond both what you imagined and/or what other customers receive. If you then discover that there are a lot more customers out there like that one, with the same problem to solve, you have a great place to begin your refocus efforts.

There are basically two phases to these kinds of turnarounds. The first is a high level diagnostic exercise and the second is a process for assessing and selecting a lucrative alternative target market.

 

Phase I: The Diagnostic Exercise:

In this phase we encourage a simple hierarchy of 5 diagnostic questions to start.

Question 1:  Does The Target Market Have Momentum?

A dead man in a canoe will make forward progress if the stream is flowing fast – and a strong current makes up for a lot of inefficiencies in rowing, and can even compensate for inexperienced rowers rowing backward.  Momentum covers a lot of sins. Inherent market momentum arises from fundamentals in the marketplace – demographics, economics or regulations.

Question 2: Is the Economic Value Proposition Valid?

In B2B, both new and mature products must provide meaningful and calculable economic value from the perspective of the customer. Customers buy for their reasons, not yours – and even though you may be convinced that your product’s value proposition is universally meaningful, it does not mean your customers see it the same way. And not all customers in all markets receive that value to the same degree. So it’s important to get your team to honestly validate the economic value proposition through visits to target market customers in specific and different market segments.

Question 3: Is the Competitive Position strong?

The fundamental value proposition may be provided equally by any number of competitive offerings or alternatives in the market place. Unless target market customers can easily see your competitive advantage and recognize it as meaningful to them – you will not be able to break through the competitive noise.

Question 4: How effective is the channel in Communicating both the Value Proposition and Competitive Differentiation to the target market?

If you want a quick way to assess this, simply ask any of the team (marketing, sales, or engineering or channel partners) to calculate the economic value proposition (benefit) of the product or service offering to a typical target customer. Ask them to do it on the spot… back of the envelope. I am continually amazed how major product development and marketing initiatives are embarked upon without the slightest consideration to this critical success factor.

It is the natural instinct of marketing teams to spend a lot of money at this level and they typically believe that a magic combination of branding, promotion, websites, trade shows, collateral, promotions et al will somehow turn around a troubled product line. If there is any indication of a fundamental problem in the three primary diagnostic levels that come before this one – spending on level four will be fruitless.

We’ll take the canoe-and-stream metaphor one step further. A dead man in a canoe floating down a stream with strong momentum will actually make more progress than a live man in another canoe rowing backwards.  So not only do you need a solid market to support a valid economic value proposition, and a competitive advantage to communicate, you have to have people trained in how to communicate it… and do it well.

Question 5: Can You Consistently Deliver the Value Proposition?

Production and quality problems may be the cause of stalled success, but we rarely find that we have to go this low in the diagnostic hierarchy before we find the real cause of a market adoption problem.

 

Phase II: Evaluating and Selecting a More Lucrative Target Market

In each of the major turnarounds we have experienced in the last 10 years, the real key was not so much the lack of a meaningful economic value proposition, but rather a lack of focus on the segments of the market that would receive the highest economic, emotional or physical value from using the product.

All economic value transfer to your company starts with a customer believing that there is sufficient reason (economic, emotional or physical) to write a check to buy your offering. Different market segments will perceive and receive different levels of benefit from the same product. Markets with the highest value received will yield the highest selling prices.

The 12 basic evaluation criteria for assessing and selecting the most lucrative markets to focus on:

 1. Market Momentum: By this we mean the degree to which the market has fundamental demographic, economic or regulatory factors driving its primary demand. Here’s a caution: many firms and marketing teams get seduced by this factor alone – mesmerized by the lure of big numbers. Even large companies fall prey to this lure. But remember, the largest markets always attract the largest and highest number of competitors. Most of the time, it’s a better strategy to focus on a secondary market. It usually less competitive, less risky, less painful and penetration is quicker.

2. A Common Compelling and Significant Problem: It’s common that if one customer in a market segment has a problem, many others, to varying degrees, will be facing the same problem. If the economic benefit of solving that problem is significant, it’s likely that the willingness to pay a premium for solving it will be present.

3. Economic Benefit to the Customer: Calculate the economic benefit for a typical customer in each market segment. The likelihood is that you’ll get the highest selling prices in those segments where the economic benefit-received by the customer is the highest.

4. Financial Wherewithal of the Customer: Do potential customers in this market have the flexibility to buy and capture funding should the economic value proposition be significant? For example, the University market segment is typically characterized by hand-to-mouth funding availability and long research approval cycles.

5. Profitability of the Transaction: This factor assesses whether transactions in this market segment can be inherently profitable. Factors affecting profitability might be geographic, customization required and willingness to pay for economic value received.

6. Match of Company Assets and Capabilities: The annals of failure are replete with stories about companies who were seduced into attempting to penetrate large emerging markets for which their basic capabilities, assets, culture and structure were mismatched.

7. Accessibility: To what extent are the market, the channel and the key decisions makers readily accessible to your channel and sales process? You can’t communicate a value proposition to someone you can’t get to.

8. Lots of Unfilled or Under-Satisfied Sockets: A socket is a potential customer with the problem and the possibility of receiving economic benefit form solving it. Customers may have one or multiple “sockets”. In assessing market attractiveness we want lots of sockets – most of them still unfilled – or filled with a less-than-satisfactory solution.

9. A Well-Established, Vibrant Intra-Market Network: Studies of the diffusion of innovation reveal that the communication through the intra-market network is 13 times more significant in the adoption of an innovation than mass media.

10. Level of Competitive Turmoil: This factor gets rated opposite to the others. If there is a lot of competitive turmoil, rate this low. If not much, rate it high.

11. Experience and Reputation Match: If the market you are assessing already knows who you are, and your value proposition is consistent with whom you are, your brand name and your differentiators – then you can give this segment a high rating. This is the factor that many marketing people believe that “Branding Programs” can fix. But even the best branding program can’t make up for a poor economic value proposition or poor market momentum – and branding programs are typically very expensive

12: The Availability of a Relative Perceived Quality Leadership (RPQL) Position:Research from the Strategic Planning Institute, concludes that the single most significant factor affecting a business unit’s performance is the quality of its offerings relative to its competitors. The degree to which an RPQL-position available, unclaimed, or vulnerable (if someone already owns it), is a key factor in the selection of a segment on which to refocus.

 

Conclusions and Recommendations:

If you happen to find yourself in a situation of a stalled product line or business – our experience tells us that the last thing you need to do is spend more on marketing. In general, a business refocus is a much quicker and less expensive road to success.

A quick assessment of the customers that have already bought usually reveals those for whom the value proposition is significantly higher. Assessing the attractiveness of the market segment that they represent can reveal your opportunity to break out to success.

******

Learn more about strategically improving low sales performance here, call us at 503.318.2696, email to qmp1@qmpassociates.com or connect through our Contact Us page

Finding New Markets

Posted on by

 

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.

iStock_000017273443XSmall

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

Copyright Jerry Vieira and the QMP Group, Inc., 2012

******

Networking from the front of the room

Posted on by

 

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.

iStock_000011097975XSmall

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.”

or

“ Wow! That’s a clever approach.”

or

“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)

 *******

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.

 

The Basics of Foundational Marketing

Posted on by

 

“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.

Foundational-Marketing-JMost 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.

 *******

The Biggest Sales Myth

Posted on by

 

A sure bet on what sales people believe…

One of the first topics commonly included in sales training programs and books is a discussion of “Sales Myths”.  Over the years I have heard a number Pulling Out Hair of these myths and have my own favorite set of a half-dozen or so that we use in our sales training program.

The myth that is particularly revealing is implied in this question we ask to sales people:

How many of you have ever lost to an inferior offering?

When I ask this, I always accompany it with a warning that it’s a trick question. In spite of the warning, a nearly unanimous show of hands is the response.

That’s when the trap closes.

It’s all about perspective

The truth is that you never lose to an inferior offering.  It may appear inferior in your eyes, and from your perspective.  You may even be able to show the specification inferiority in absolute provable, numerical or physical terms.  But, it’s not your eyes and perspectives that matter.  The only eyes and perspectives that matter are those of the customer.

So, what is the real story?

Losing to an offering that is inferior in your eyes really means some, or all, of the following:

  1. You didn’t truly understand the criteria the customer used to make the decision until it was too late.
  2. You didn’t ask what the criteria were.
  3. You didn’t develop enough trust with the customer for them to share the criteria with you.
  4. You didn’t understand the circumstances that influenced the customer.
  5. You didn’t understand, or were unable to advise the customer to re-consider the decision criteria.
  6. You were selling into a poorly qualified opportunity, one that didn’t match the strength of your offering.

Test yourselves:

If you are a sales person, or someone who has access to the sales pipeline of your firm, select the top six opportunities in the pipeline.  For each of these opportunities list the top four to six criteria, in decreasing order of importance, that the customer will use to decide what to buy – or even if to buy at all.

When we use this exercise in our training programs, the stunned and embarrassed faces in the crowd are something to see.

Not too long ago, we were working with a client sales person on his pipeline.  He was proudly sharing page after page of opportunity strategy worksheets.  On every sheet the decision criteria, a section we strongly encourage sales people to document and use in formulating strategies and action plans, were exactly the same.

I had to ask how that could be – and if that was truly what the customers were telling him.  If it were so, it would have been the most incredibly homogeneous market I had ever seen.

He replied, “No, the customers didn’t tell me those criteria.  I know how my customers make their decisions.  I don’t have to ask.”

Was this response arrogance?  Laziness?  Fear of asking? Lack of belief that decision criteria expressed by the customer is relevant?  Whatever the reason, this poor sales person embarrassed himself in front of his peers and management?

Phrasing the question effectively

Much of the value that sales people receive from sales training is in learning key phrases and techniques for asking tough questions.  These questions might be about funding availability, decision-making power, the competitive situation, gaining access to other folks involved in the decision, or, in this case the decision criteria.

One of the common traps sales people fall into with respect to understanding decision criteria is assuming that while they are talking with the customer, decision criteria are naturally being revealed in the normal course of conversation.  Sometimes they are.  Sometimes they aren’t.

The safe stance is to assume that they aren’t revealed.  So, here are some questions to assist in revealing the real decision criteria:

Assuming you are not the exclusive decision maker, would you feel comfortable sharing what you believe other members of the committee are concerned about and would use in selecting the final solution?

If you feel uncomfortable speaking for them, what benefit do you think there might be in gathering the decision makers and influencers to work through and collect all the decision criteria and perspectives?

Have they compiled their concerns, needs and preferences in any sort of document?

Is there a vendor’s guide that would help assure that we will meet or exceed all your criteria?

Of course, there is always the option of asking directly, “What are the decision criteria”?

In reality, based on the responses of the hosts of sales people attending our training programs, that last question is rarely used.  The more common scenario is that sales people believe that they know everything about the customer’s decision process simply by having had a discussion.

A final check…

Even if you haven’t broached the subject of decision criteria directly, and believe you know enough from the conversation, it is helpful to run through the following routine to review what you understand the criteria to be.

“Thanks for taking the time with me, Paul.  Before we break up here, would you mind if I spent just a moment to confirm that I understand the criteria you will be using to make your decision.  Here’s what I inferred from the conversation. (Re-cap here).

When you finish, ask, “Is there anything I missed?  Is there anyone else that we need to speak with who might have additional criteria?”.

Explicit, Implicit and Hidden Criteria

If you follow that dialogue you get only explicit criteria.  It’s certainly better than not knowing anything – but it’s incomplete.

Implicit and hidden criteria are best revealed through keen observation.  While much is said in sales literature about listening skills, keen observation skills are equally, if not more important.

Observing and noting the physical surroundings, the personalities of the buyers, the organizational and political situation in the customer’s firm, the personal ambitions of the buyers and body language can reveal approaches which meet implicit and hidden criteria.  If the office is highly organized and neat, so should be your proposal, your meetings, your presentations and your communications.  If the customer works in teams, package your offering as a team effort.  Implicit and hidden criteria / requirements can be met at the sub-conscious, as well as the conscious behavioral level.

Keep in mind what Yogi Berra is purported to have said,

“You can see an awful lot just by observing”

A final point:

In the hands of the skilled sales person, dialogue and observation must work closely together to identify customer buying criteria.  The more the criteria are understood the higher the probability of winning and the lower the risk of losing to an apparently inferior offering.  .

*****

Learn more about the QMP process for understanding customer decision making and creating winning sales strategies.

 

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

Posted on by

When we ask salespeople in our workshops to raise their hands if they have ever lost a deal to an inferior competitive offering, they almost universally raise their hands – even though we have told them ahead of time, “It’s a trick question.” 

The truth is: No one ever loses to an inferior offering.

iStock_000010460151XSmall

“How can that be true?”, you ask. “How,” you may ask, “could anyone consider that crap, superior?” 

If you lost, all the evidence indicates it wasn’t really an inferior offering, after all. That truth of it lies in two facts; 1) the decision-maker’s perspective and the values from which the relative superiority and inferiority judgement arose both differed from yours and 2) the outcome satisfied only one person’s needs – and that person wasn’t you. But, ultimately, the outcome is the final proof. 

At the moment a customer, and/or the ultimate decision maker, makes a decision to buy another “inferior” offering instead of your “superior” offering, that other offering is being perceived as a superior alternative in the eyes of that decision maker  – by a unique, hidden or secret set of evaluation criteria that you simply don’t understand or chose to ignore. Your personal opinion doesn’t, and didn’t matter. Relevant value is only in the eyes of the beholder – not the seller.

There are several reasons we are led to self-deceptively believe this harmful myth.

1. We, in sales, think all value is economic. That’s the reason we put so much emphasis on price competitiveness. 

Perceived value can be economic, but it can also be emotional or physical. When my family was young, I remember spending a lot of time analyzing car models and test driving a half dozen or so, narrowing them all down to two finalists. I sequentially drove both of them home for my wife’s final OK. She ran out to the driveway, a new-born in her arms and our other child, a two-year old, clinging to her jeans. She sat in the first car while I held the baby. She didn’t drive it. No excitement.

I returned that car and came back with the other option – a different brand and model from a different dealer. We repeated the drill. While she was sitting in the second car, she reached down, ran her hand across the seat (not leather in those days) and said, “This is it. It feels right.” We bought that car. It had nothing to do with the performance, reliability, handling or any other criteria I was discussing with either sales person. I didn’t have a clue that a “feel” test was going to be the ultimate consideration and the final decision point. I thought, as the salesperson did, that I was acting as the “official” power purchaser and “ultimate” decision maker. 

This “feel test” was an obvious physical value – not an economic or emotional one – and it held importance in the criteria by a “hidden” decision maker. 

2. We don’t understand the real decision criteria. In the story above, I narrowed down the choices. However, there was another final hurdle that neither the sales person or the purchasing agent (me) knew of.

3. We don’t understand all the decision makers  (See my new car story, above)

4. We emphasize the wrong product (or service) strengths. Not all strengths are meaningful to all buyers – or with the same relative importance. There is nothing more irritating and distracting than a salesperson spewing data, stats and features when you are trying to focus on the one, two or three most important things in your personal decision tree. 

5. We try to sell to the wrong target customer in the wrong target market. We continually hear, particularly from inventors and entrepreneurs when we ask them who their target customers are, that “everyone” can use their new product, service or invention. This leads to inefficient use of sales time, and significant mismatches in message. Telling the whole story, while missing the relevant customer or market-specific benefits, is common and leads sales people to say things like, “They (the customers) just don’t get it.” 

We have witnessed a company that believed so strongly in the universality of their value proposition nearly go out of business as they scattered their message as broadly as possible. Panicked by their rapidly dwindling marketing and sales pocketbook, lack of success and anxiousness to avoid failure, they engaged us. We told them to focus very tightly on markets and customers where the value received was the greatest. They finally agreed and the business began to turn around in less than 3 months. That simple change resulted in a four year run of breakthrough growth.

6. We don’t understand our own value proposition and differentiation: Each of our products or services should have a clearly articulated value proposition and differentiation in all three value areas; economic, emotional and physical. These values must be enhanced by the corporate brand – the ambient light that our products shine in. Johnson & Johnson, 3M, GE  and Apple (to a somewhat lesser extent these days) all bask in the glow of that favorable corporate light. The corporate light typically shines an intangible emotional and implied physical light on products and services.

Don’t bail on price as a last desperate attempt to fix your perception mistake.

One final point: To think that price is the only variable available to trigger a buy is flat wrong. But that is the topic of another myth. Suffice it to say, if that were true we’d all be driving the cheapest cars on the road.

Watch our QMP Insights blog for Sales Myth #3: “It’s relationship business”

*****

Copyright  The QMP Group, Inc. 2013 All Rights Reserved

Click to learn more about the QMP Sales Process and Skills workshops or call us at 503-318-2696 or through our Contact Us page .

Common Sales Myth #3 – Sales is all about Relationships

Posted on by

It’s a Relationship Business!

That four-word phrase is probably the most common statement we hear when we talk to sales people about their business.  It is even more common than the statement, “It’s a Price-Driven Market” – though more often than not those two statements travel closely together.

Relationship

Do You Have Brothers and/or Sisters? The Limits of the Relationship

To challenge the assumption that businesses are primarily relationship-driven we ask salespeople the following questions.  Here they are, with the typical answers.

Q.  “Do you have a brother and / or a sister?”      A. “Yes.”

Q.  “Do you have a good relationship with your brother or sister?”     A. “Yes”

Q.  “If your brother or sister tried to sell you something that would be detrimental to your business, would you buy it?”     A. “No (expletive deleted) Way”

Q. “What if they threatened to would tell your Mom that you refused to buy from them, would it change your mind?”    A. Laughter.  “No”

Here’s the point: All relationships, even good ones, have their limits

Relationships are based on trust.

Any activity that violates trust, violates and detracts from the relationship.

Let’s look at the Trust Equation, developed by David Maister, Charles Green and Robert Galford in their wonderful book “The Trusted Advisor“.  According to Maister et al,  Trust equals the sum of= (Credibility + Reliability + Intimacy) divided by (Self Interest).

 T = (C + R + I) / SI

Anything a sales person or their company does to lower Credibility, Reliability or Intimacy, lowers Trust and damages the business Relationship.  As you can also see from the equation, anything that blatantly demonstrates your, or your firm’s, Self-Interest also damages Trust and thereby the Relationship.

Nothing in the equation can affect Trust more than the amount of your self-interest perceived by the customer.  The higher the Self-Interest perceived, the lower the Trust.

Here’s the point. Depending on the Relationship alone can be perceived by the customer as inherently demonstrative of high Self-Interest.  In Relationship terms, “They want me only for my money.”

What Relationships Can and Can’t Do

Relationships can:

  • Get you an audience to make your case
  • Buy you some time and patience when you or your company screw up
  • Get you early, but not necessarily exclusive, notice of a new opportunity at an account

Relationships can’t:

  • Make up for a significant competitive shortcoming in your product or service offering
  • Repeatedly cover for your operational team’s inability to deliver
  • Make up for poor product or service quality
  • Find and win completely new accounts
  • Provide you more than a few percent price premiums
  • Make up for poor market targeting
  • Make up for fundamentally slow market momentum
  • Fix functional short-comings in your products

Here’s the Point: Don’t get complacent because you have good relationships.

Don’t Shoot Yourself in the Foot

Believing that your relationships give you enormous power is, for the most part, fallacious thinking, and can actually ill-inform you on what you and your company need to do. Here are some examples:

  • If it’s all about relationships, what impetus will your engineering team have to design better products?
  • If it’s all about relationships, why should your firm ever reduce prices or negotiate terms?
  • If it’s about relationships, why should operations need to worry about quality? Or delivery?

Here’s the point: Bragging about the customer relationships you have can simply provide unjustifiable cover for others in the organization to not execute their job as effectively as they should.  Remember, it’s still a very competitive world out there.

One More Point: The Fallacy of the Rolodex of Relationships

More often than is advisable, a client will enthusiastically recruit a sales person based on the contacts that sales candidate has amassed during their illustrious sales career.  Sales people treasure and protect to the death, their sales contacts and consider that list as a strategic personal asset.  It becomes a key feature in the personal selling proposition they use in seeking a new job.

Rolodex provides a great tool for managing those.  However, even the best list of Rolodex or CRM-managed contacts, can rarely, for the long term make up for business shortcomings in product, service, delivery, quality, competitiveness and value.

Let me illustrate.  In 1970, General Motors had roughly a 50% share of the US auto market.  That market share was supported by an incredibly, well-established national network of dealers and sales people.  Everyone knew everyone.

Since 2000 General Motors had lost roughly 50% of that 50% share.

Here’s the Point: Relationships aren’t everything.

Recommendations:

As much as has been written in this blog about the fallacies and dangers of dependence on customer relationships, let me make a final few points.

  • You must continue to develop your business relationships
  • You must continue to nurture those relationships based on paying close attention to each of the key elements of the trust equation
  • You must not, for a moment, let the rest of your business team off the hook by bragging and convincing them they only need to depend on your ability to develop and maintain good customer relationships

*****

Copyright 2013 The QMP Group, Inc.   All Rights Reserved

Click to learn more about standard and tailored QMP Sales Skills and Process Workshops or Contact Us at 503-318-2696 to discuss your sales and sales management challenges.

Revitalizing Stalled Sales

Posted on by

 

As the economy continues to bounce along, (some say showing signs of a small movement off its bottom while others disagree), business owners and managers are getting impatient to find ways to boost revenue.  Not only are we seeing evidence of this within our own client base, but also our “Insights” blog post on “Diagnosing Stalled Sales”, published in June of 2011, has re-surfaced recently as the top-read posting on the all time QMP blog popularity-list.  The second most popular blog on that list is “The Marketing and Sales Audit”.  Business leaders are looking for revenue answers.  Standing idly by and waiting for the economic recovery is no longer a reasonable option.

As I re-read that “Diagnosing Stalled Sales” post, I realized that it was too diagnostic and not prescriptive enough.  After all, what good is a diagnosis without a treatment? Apologies to those readers who came away from that post less than satisfied. This post makes up for that shortcoming. 

Deciding What to Do

The first thing to recognize is that all revenue increases must come from one or more of the following four sources: 1) introducing new products, 2) stealing market share from competitors (new account wins in your current markets), 3) the natural momentum of your current markets or 4) penetrating new markets.

New Products:

If you have a new product-development initiative in the works, good for you.  But pursuing this option for increased revenue typically takes time and money.  Both are in short supply these days for small to mid-size businesses, exacerbated as our clients currently relate, by the challenge of tightened banking requirements.

New product development initiatives typically fall into one of three categories: a) improving what you already offer, b) meeting some new customer requirement or c) launching a breakthrough.

Meaningful overnight revenue upsides are rare from new products as it takes time to develop, tool, test and introduce a new product.  It then takes time for the market to become aware of it, understand it, change their old ways of doing things (and who they may be buying from) and begin to adopt your new product.  There are ways of accelerating this adoption rate, but only if the product is a breakthrough – something that fundamentally turns the market on its ear.  Even in that case, time is the challenge.  Twenty-five years into its existence, I still meet educated people who don’t own a personal computer, and it took 50 years for the automobile to be completely adopted by consumers.

Don’t get me wrong, new products are strategically important for a firm. I strongly encourage new product development, particularly if the product fills some need the customer didn’t even know they had – a real breakthrough.  Breakthrough products typically bring sustainable growth, give customers a meaningful reason to change and provide higher margins.  (More on this subject in a future blog post on the subject of Innovation).

So, keep developing; keep considering new ideas; just don’t expect the heavens to open and revenue to come raining down quickly.

Stealing Market Share from Competitors:

One of the fundamental principles of military strategy is, “The hardest ground to capture is the ground that is occupied. It typically takes anywhere from 3 to 6 times superior resources to take over a position from an occupier.  Interestingly, most of the initiatives that small to mid-size companies attempt (unwisely) to increase sales fall into this, the most challenging category.

These days, there are a number of popular marketing initiatives that are all the rage – search engine optimization, the use of AdWords, re-branding, social media and database marketing – to name a few.  These are not inherently bad or good.  However, the key to achieving significant growth with any of them is to assure their use in a focused way combined with growth options #1 (Introducing New Products) or #4 (Penetrating New Markets).  Using them in a focused way assures maximum return for minimum investment.

Some of you may decide that this option, stealing share from competitors, is the only one available to you and that you don’t have time and money for new product development or to try to penetrate a completely new market.  If you do, the road will be difficult and certainly take more resources and time than you anticipated.  If you can’t be dissuaded, here are some tips to make it easier:

a) Try to fragment your competitor’s market: Find and target sub-sets of customers that have a common dissatisfaction with the competitors’ offerings.  The Japanese didn’t attack the US auto market all at once on all fronts.  They focused first on the most vulnerable and receptive set of customers with a quality small car offering.  After establishing this foothold they expanded based on their proven quality reputation.

b) Tailor a market-specific benefits story to the customers in the specific target market fragment you wish to penetrate.  You may even wish to set up a separate website for that specific market. At minimum you will need a focused sales presentation.

c) Focus your sales team on that segment and train them to tell that market-specific story.  Make a concentrated effort for 90 days with frequent feedback from the sales team to see if the story is gaining traction.  The test of traction is a growing sales pipeline.

d) Never lead the penetration effort with pricing reductions.  You’ll hurt yourself.

The Natural Momentum of Your Markets:

This is the primary problem most small-to-midsized businesses are dealing with. It is true that all boats rise and fall with the tide.  That doesn’t mean that some boats don’t move around the bay faster than others, whatever the tide situation.  There are always segments of a market that trend opposite, or move faster than, the overall economy.  If the economic momentum of your primary target market has slowed, and doesn’t look like it will return quickly, then it’s time to consider growth option #4 – penetrating new markets.

Penetrating New Markets

The requirements for a successful penetration of a new market are: a) a good set of target market attractiveness assessment criteria, b) a high degree of focus in your attack on the market and c) rapid feedback and re-targeting process to use as required. You need not make a big, costly production of launching an initiative at a new target market.  Assessing attractiveness, focusing and gathering intelligence about receptivity (basically validating the market’s attractiveness) is not a big deal.

For each of the following questions, start with the phrase, “To what degree..” and score on a scale of 1 to 10.

… does this market exhibit sustainable economic, demographic or regulatory momentum?

… do customers in this market have a compelling problem that can be solved by our product?

… does our product offer a clear competitive advantage in solving that problem for the customer?

… does solving that problem reap a meaningful reward for the customer – economically, emotionally or physically

… is there a competitive leadership position available in the market?

… can we easily reach customers in this market?

… is there strong intra-market communication between peers in this market?

… can we sell into this market profitably?

These criteria will provide a starting point for a relative attractiveness assessment. You may wish to use more, or different, criteria.

Doing it:

It is common in slow economic times for sales teams to increase their activity in trying to sell to a wider range of prospects, try to penetrate large accounts that competitors own, campaign for price concessions to win new business and chase opportunities that are a marginal match for the firm’s capabilities.  As driven by the survival instinct as these activities may be and as resourceful as they may appear on the surface, they are typically non-productive.  In fact, they can be hugely counter-productive.  The results of such efforts are typically depressed profitability, unsustainable success and trapping the firm into businesses and/or products it cannot maintain.  Such activities can also dilute customer support resources, jerk around product development and operations resources, damage the firm’s quality reputation, start price-wars and cause a distraction of the business from what it does best.  It can take many years to recover from the negative consequences of impulsive sales actions taken in the fever and panic of an economic crisis.

I state the case in a dire scenario because the real key to success is focus and feedback.  Focus means staying focused on the target market you decided upon using the criteria above.  Feedback means monitoring progress, receptivity and success frequently and adjusting quickly.

The discipline of a limited number (one or two) highly focused initiatives targeted at specific new markets, followed by rapid sales feedback, has consistently produced good results.  When followed-through with discipline the results have been significant.  Our subject firms have won new clients, avoided price competition, found new ways to provide additional value to customers, increased selling prices, reduced the hysteria associated with trying to respond to every quote that comes within 100 yards of the door, achieved double-digit increases in win rates and made rapid strategic adjustments that saved them from economic disasters.

The approach we suggest requires the adoption of three basic process disciplines: 1) rapid market assessment, 2) rapid and focused launch initiatives and 3) disciplined and frequent field sales feedback.  While these disciplines may be different than what your organization has used in the past, they are easy to learn, cost-effective to deploy and yield a higher probability of success – in both challenging and healthy economic times.

***

We invite you to read our related blog posts “Diagnosing Stalled Sales” and “Finding New Markets“