Time to Channel Effectiveness

Time to Channel Effectiveness

What is the right measure of “time to market”? Is it the ‘time to working prototype’, the ‘time to first production unit’, or the ‘time to volume production’?

The answer is none of the above. All of these are measures of internal operations that may not have market impact. Time to Market should measure when the customers have been provided with the information they need in order to buy and occurs after production. Production capacity without customer orders does not qualify as being in the market.

A more appropriate measure is “Time to Channel Effectiveness”.

Meeting this measure requires the average salesperson [including 3rd party channels] to be able to cost effectively sell the value of the product. All too often firms will focus on minimizing the time required to achieve production only to find that there is a more significant delay in the time required to achieve cost effective, value-based selling in the channels.

Once a firm realizes that market success [ie revenue] is based on “time to channel effectiveness”, then it becomes appropriate for the CMO to identify and address those factors that prolong that time required for the average salesperson to be able to cost effectively sell the value of the products.

Know your Customer, Know your Sales Channels



We know that customers are not a monolith, but instead a rich diversity that we must incorporate and address in our marketing if we are to achieve the revenue success that we desire. Leading firms are realizing that the sales channels that reach our customers are not monoliths either. Within every sales channel there are differences of sales skill, customer knowledge, product/services knowledge, successful sales experiences, and leadership roles within their sales group. To achieve our market success objectives we must also incorporate and address this diversity in our marketing programs.

We all have learned the importance of knowing our customer. The ability to know our sales channels provides several powerful new capabilities to a firms marketing efforts.

For many products and services, our primary communications with the customer goes through a sales channel, shaping not only what is said but also frequently determining whether or not there is any communication at all with the customer [outside of the direct marketing and advertising].


Designing marketing programs for usability by the sales channel personnel:

Sales personnel with significant diversity include the attributes of sales skill and level of knowledge of either customers or products/services. Design marketing programs must have a targeted level of skill and knowledge as the “design center” for the program. Certainly a marketing program that assumes a high level of customer knowledge and sales experience is very different than the marketing program for an entry level sales person. The marketing program design for a product specialist with a strong industry focus is also very different than a marketing program designed for a sales rep in a distributor with multiple product lines.

By knowing the these Salesperson attributes that reflect diversity, and measuring the success of the marketing programs, sales personnel with different levels of these capabilities can improve the effectiveness of both the marketing and sales efforts with marketing programs designed for salability.



Over fifteen years ago the functions of Engineering and Manufacturing came to the realization that when Engineering designed for Manufacturability, the time and cost of achieving production levels were significantly reduced. This capability is referred to as Concurrent Engineering, and so appropriately achieving Marketing for Salability has been called Concurrent Marketing.



Case Study:

One of the largest [top 5] software companies was introducing a new software architecture, but the sophistication of the software limited the deployment to the top 100 senior account directors. This occurred because the second tier of sales personnel was only known at the “monolith” level, which was assessed to be due to the lack the breadth of skills for the broad architecture sale with customers. However each of these sales people had depth in specific areas that directly relate to the new architecture. If these specific skills and successes were known, then specific programs could have been designed by Marketing so that each of the sales people could have implemented as sales initiative based on their knowledge and skill. Segmenting the sales personnel based on their skill and knowledge, and deploying the appropriate marketing program could have doubled the selling capacity for the new software capability announcement.



Designing Marketing Programs for Maximum impact:

Knowing the sales channel extends beyond the attributes of skill and knowledge and even into specific sales team dynamics.

For example, the frequent challenge for new product launches is in gaining momentum in the sales channels. Knowing the salesperson that sells a capability in a location would allow the firm to incent that sales person to encourage/assist others in making their first sale by offering duplicate compensation for any additional product sale made in the next 60 days.

Being able to identify the leaders, early adopters, etc in each of the sales groups makes it possible to focus additional resources on the leaders to utilize them to initiate the adoption of the selling effort by the sales channels. The timing of communications to the sales personnel can be timed to coincide with the expected adoption rate within the sales channels.


Summary:

“Build it and they will come” may work in the movies but does not work with customers. Firms are now learning that “build it and they will sell it” doesn’t work either. Compensation alone is rarely the answer. Success with sales channels depends on marketing to the sales channels with the same level of focus and sophistication that is currently being used to achieve customer success. Today we may “market” to the sales channels with sales events, announcements, sales compensation, etc. Usually these marketing efforts still treat the sales channels as a monolith, even though we learned from our experience with customers that we can improve our results by knowing our customers and segmenting our efforts accordingly.


Bud Hyler

"B to B" messaging vs. consumer messaging

“B to B” marketing for considered purchase markets is different than “Consumer” marketing for impulse purchase markets. Your company’s success depends on doing both well; the individual user has to value the product advantages and the Enterprise purchaser has to approve the economics of the purchase. The Enterprise purchase decision for your product or service is frequently a million dollar decision, so it will not be made without considering timing and options.

In many companies Marketing is responsible to provide leverage to the sales channels for revenue generation, which extends significantly beyond the “awareness” focus of normal consumer marketing. Unfortunately in many companies the processes and criteria for B to B marketing is too influenced by consumer marketing’s focus on awareness generation and does not extend its marketing to meet the requirements of supporting the sales cycle through closing.

Effective considered purchase marketing requires both compelling and believable messages for the sales channels to achieve cost effective selling.

If we expect our sales channels to encourage our customer to initiate a project that could require our product we will also need to provide information on the expected value to the customer from that project initiation as well as some indicators of project completion requirements. This program description is much more “actionable” than the usually “directional” customer values associated with impulse purchases. A compelling and believable message requires evidence to support the specific claims being made.

The customer needs to have measures of both the advantage and the differentiating resultant customer value so that the values promised can be compared against competitors. The company’s decision to initiate a project or not is done by a group of managers who compare the proposed project value to the customer over another project’s value. The expected values need to be specific and tangible so that they are able to be compared with the alternatives. They will use real metrics to compare vendors and those vendors’ advantages. The value to the customer of those advantages will then be evaluated and compared against each other.. If we do not provide the information the customer wants and needs, the customer will develop it for themselves as time permits. Worse, perhaps your competitor will provide it. “Directional” metrics that are not comparable are not very useful in this stage of the sales cycle. Each product claim will probably be assessed for accuracy, so evidence for each claim is required information or alternatively a lot of time and trust will need to be provided by the sales channel.

If a company only uses Consumer “impulse” marketing principles this will never be met since the vast majority of consumer marketing’s focus is on achieving awareness, not the closing of the sale.

The impact of not providing customers and Sales with persuasive customer sales messaging, or not answering these key buying questions, is enormous. It is the main reason why most customer messaging is ineffective.

The impact of ineffective messaging is shown in market research studies like these:

"Over 65% of sales leaders feel they're losing business because they don't have a compelling value proposition."
Miller Heiman, Sales Best Practice Study, 2006

"80 to 90% of marketing collateral is considered useless by Sales."
Proceedings of the Customer Message Management Forums, published by the American Marketing Association, 2002 and 2003

"As much as 40% of a sales rep's time is spent creating presentations, customizing messaging, and preparing for pitches."
CMO Council Study, 2004

Managing the portfolio of segments

Maximizing Revenue by Managing the Problem ....
... instead of the Symptom
Part two:

The Portfolio of Segments

All companies understand and can talk about their portfolio of products. They manage this portfolio carefully and enhance it continually. And yet, once again, the products themselves are only a “symptom” of a revenue opportunity. Revenue is generated by the problems and/or opportunities that customers feel those products will address. If the problem goes away, or a better way is found to fulfill it, the need for the product goes away. The company that doesn’t attend to customer problems as well as the portfolio of products may fail to see the shift until it is too late.

Just as there can be a portfolio of products, there can also be a portfolio of customer problems. Every provider of industrial products and services has such a portfolio, but they often don’t recognize it as such or explicitly manage it. As a result, the interaction of products with customer problems is not precisely understood. Companies sometimes discover this too late when a product becomes irrelevant to market needs, or when the problem is in the later stages of its life cycle and sales decline.


Advocating Problems

Everyone in marketing knows that customers cannot be expected to intuitively see the virtues of their product in preference to all other competitors. The art of marketing lies in advocating your particular product as offering the customer greater value than competing products. The same holds for customer problems: the problems you solve best “compete” with a range of other problems the customer could solve, and you must persuade the customer to “buy” your problem solution. Marketing can focus its efforts on delivering highly relevant, problem oriented contexts that the sales force can then “sell into,” improving win rates and decreasing sales cycles.

A corporations strategy starts with the identification of the customer problems they chose to address that is different than the customer problems their competitors address.
For instance, a company CIO may have a number of potential opportunities to improve processes in a given year, and will choose to address those that appear to offer the highest return within that corporate value system. The customer’s choice may hinge on how he or she defines a problem within a general category. In this case, defining the problem differently may lead to different evaluation criteria. For example, when Microsoft was competing with Borland in the office software market, they found that they were more likely to win sales when customers saw their software investment as a five year decision rather than a two-year decision. Even if competitors do not advocate for a specific customer problem, sellers face implicit competition from different problem definitions.

In either case, problems must be advocated much the same way products are. You must show how addressing “your” problem offers higher value to the customer than addressing competing problems. The same rules for articulating and measuring value apply here. Therefore it is essential to understand the problems you are competing against, and the differential value you offer in comparison.

Conclusion

The fundamental goal of marketing should be to understand which customer problems the company solves best, understand the customer situations and target segments where those problems are likely to occur, and market the value of addressing those problems. Only with these fundamental operating principles can a company maintain the alignment of core capabilities with the marketplace. In this way, a company can continually shape the competitive playing field rather than being shaped by it. Without the anchor of the identified “customer problems the company chooses to address better than anyone else,” a company risks being blown about by competitive trends of the moment, or finding itself trying to match competitors feature for feature (a game which a company can avoid losing, but can rarely win.) Marketing specifically runs the risk of expressing value to the market in a vague or irrelevant way which results in lost sales and a laborious, inefficient selling process.
By aligning with each of the (several) specific customer “problems,” you can sell not only on the basis of incremental advantages of individual products, but also on the overall ability to best address the need. Individual product advantages will not just be compared to features of competitive products, but will be seen in the context of the larger need, and will be seen as evidence of the company’s ability to meet that need. Perhaps more important than immediate marketing considerations, focusing on the fundamental customer problems will provide a consistently successful strategic direction for future developments.

Maximizing Revenue by Managing the Problem

Maximizing Revenue by Managing the Problem ....
... instead of the Symptom

Part one:

Toward a Customer Focus

All companies talk about being customer-focused. The phrase is almost obligatory for corporate vision statements and strategic marketing plans. No one will argue with its absolute necessity. What’s often missing, though, is an operational understanding of what it means, and a plan for achieving it.

The solution to becoming customer centric is simple once you realize that the only source of revenue for provider products and services is by addressing the problems and /or opportunities that customers want to address better than the competitor Problems does not necessarily mean “fire drills” or crises, but anything actionable that impedes the customer’s company from achieving its goals. In other words, the things companies worry about and aspire to are the issues that they try to address through actions that result in purchases. In other words, purchases are made by companies as an action taken to address issues that may be either a concern or an aspiration.

Customer focused strategy occurs when a company thinks about itself in terms of the customer problems it chooses to solve better than anyone else does, and not just as the purveyor of a certain product line. This thinking has implications for all the key aspects of the seller’s organization: it determines what core capabilities are nurtured; what products and services are developed; how these are aggregated for the market; and what is said to the market about them. Any business that cannot identify its top 10 customer problems and/or opportunities (which represent 80% of revenue) that they address better than their competitors do cannot have a customer-centered company strategy.

Needs versus Applications

What, then, is the key customer “problem” that produces revenue for your company? The obvious answer is that customers need your product. But this is superficial; companies don’t exist for the purpose of owning products. They exist to generate their own profit. They buy products and services because in the course of generating that profit, they have an actionable requirement for the result your product delivers. It is this actionable requirement that enables your products to be sold.

Appealing to generic market needs is not enough. To be relevant, you must address the specific application where the customer perceives the problem. You can then advocate the evaluation criteria that will lead to the best solution, and show how your company’s capabilities best meet those criteria.

In temporary staffing, for example, the customer need can be defined “replacing or augmenting staff.” But the specific client applications within that need are where relevance, and the possibility of customer action, really start:


Generic Need More specific need identification
Augment/replace staff 1. Unexpected absence (illness)
2. Planned outage (vacation, maternity leave)
3. Add staff for peak season (add capacity)
4. Add staff for specific project (add capacity and skills)

Against these 4 more specific customer need descriptions there are now 4 specific criteria that anchor the capabilities of any soution being proposed:

1. High level of broad generic office skills
2. Pre-training in specific office processes with pre and post meetings “bundled”
3. Some individualized capabilities, rapid trainability
4. Specialized individual capabilities

This emphasis on specifics enables clients to see a clear, actionable path to address their specific problems, and to then recognize the relevance of what you have to offer. The result for your company is a better response from the focused marketing campaigns, easier qualification of good prospects, and a shorter sales cycle.

knowing the customer - segmentation

If you asked a friend in San Diego how many words he has for the concept of snow, he might reply "one." with a puzzled look on his face. The same question asked to another friend in Boston might get the answer "two": snow, the old white stuff that you can build a snowman with, and sludge, a dirty awful slushy mess. Ask a Norwegian on the other hand, and you would get back eight different words, each referring to a unique variety of snow:

Skare: Fallen snow that gets damp, then forms an icy crust on its top.
Sne: Perfect, powdery Christmas-like snow glinting in the sun.
Sno: Generic white stuff.
Sludd: Rain/snow mix that falls on balmy, 32 degree days.
Slaps: Dirty sludge in the gutter.
Skred: A mini-avalanche.
Kram Sno: Wettish snow. For snow sculpting, not skiing.
Kladdefore: Snow clinging to the bottom of skis.

Even more descriptive is the Eskimo vocabulary, which includes 32 different types of snow. Eskimos use more words to describe snow because they understand and interact better with the various types of snow than the Californians, New Englanders, or even Norwegians.

Vocabulary is a key metric of understanding, in everyday life, as well as in business. It is interesting to see how many words a company uses to describe customer. Many corporations only have less than 10 words such as major accounts, manufacturing industry, indirect, etc. To be useful in marketing, each of these words that describe the customer should represent a segment. I am told that one company has over 300 distinct segments (and therefore 300 words that describe customer). Marketing effectiveness is limited by how well each segment's needs are understood and addressed in both the product and the marketing message. Being able to describe customer segments is a necessary first step to understanding the customer, which ultimately underpins a company's ability to sell to them.
Becoming customer-driven is a key factor of success in every industry, with the critical tool for addressing customer needs being segmentation analysis. Segmentation analysis facilities sales cost reduction because it allows for tailoring of the marketing message to the specific market segments targeted.
By constructing a clearer understanding of customers, both existing and potential, segmentation analysis empowers management to focus its effort on both managing the customer base and increasing marketing channel leverage.
At the next marketing meeting listen to the words being used to describe the customers and channels. How many different words are used in describing the customers and channel partners? Is this level of understanding sufficient to be the foundation for becoming customer centric?

obstacles to getting the improvements desired

This morning I was working with the Sales Operations group for a F100 company and experienced one of the major reasons that Marketing frequently does not deliver on its potential in improving selling effectiveness.
There are two perspectives that Sales Operations can take in their work regarding providing the sales channel with resources to use in the selling process:

1 - One option is to identify the requirements and aggressively work with Marketing and Product Management to make certain that the requirements are met. Providing anything less than the standards that have been identified is not acceptable.

2 - The other option is for Sales operations to do the best job possible with whatever is provided

Of course I believe that meeting the quality standards in the selling “supply chain” are as critical as they are in a manufacturing supply chain, and insufficient quality is too costly to accept. Unfortunately I believe that too many sales operations groups may be following the second option and just doing the best they can with whatever Marketing chooses to provide.

The process of generating sales is a process, and the quality of the resources and “components” provided to Sales has a huge impact on selling effectiveness. The issue is having the confidence in the “process” of selling to demand that the resources provided are of sufficient quality to support the level of selling effectiveness desired.

Applying the Learning Curve in Marketing and Selling

Currently the cost of Sales and Marketing can account for 40% of end user price (distribution costs would be included). Companies can no longer afford to exempt 40% of the costs from a systematic effort to reduce costs by harnessing the experience curve.
A fundamental principle of continuous improvement in manufacturing is the experience-based learning curve. In many companies, manufacturing is able to implement processes yielding significant cost reductions (14-18%) every time cumulative experience doubles. What many companies do not realize is that the opportunity exists to establish a similar learning and improvement process in Marketing and Sales. If you were able to increase your marketing and sales profitability only 10% every time your company doubled its sales experience, total profit improvement would be significant.
Currently only manufacturing has a systematic process for learning the best approach and processes to use for each product. While all companies use everything they know about manufacturing to determine the best initial approach, we are dependent on the experience gained in the product manufacturing process to move from this starting point to ever-greater efficiency. Continuous improvement is a mechanism for capturing and applying this learning-curve experience, but an analogous framework does not exist in marketing and sales.
And yet the need exists. Companies don’t usually think that a sales force has to “learn” how to sell. The assumption is that occurred in sales training. But “learning” how to sell a new product or to a new segment is different than learning sales skills. When a product is first introduced, there is no proven “best” way to sell it. As with manufacturing, we use everything we know to define the best possible starting point, but we depend on our best salespeople to “learn” effective ways to create sales. This undoubtedly works for these “best” salespeople, but the opportunity to maximize the value of this learning comes from moving it beyond the “superstar” performer to the mainstream of the sales force. We need to capture “what works” so we can create the sales programs that enable the successful selling approaches to be replicated by every salesperson, but with less direct sales time and skill needed. Just as manufacturing has several processes designed to facilitate the learning process through the capture of experience, Sales needs to implement similar processes. Examples could be the equivalent of “Quality Circles”, “Pilot Runs”, etc.
If this initial learning isn’t captured and supported as the sales efforts move to the mainstream of the channel (i.e., the average salesperson), these salespeople would have to increase sales time to substitute for the sales skill and experience differential. At some point the amount of selling time required makes the sales effort uneconomical, and even then the win rate would decline. The result is to “commoditize” the product by selling on price.
Proactive "experience curve" learning for channel migration:
While we tend to refer to “the Channel”, there is in fact a continuum of channel resources, both within any one channel and between the complete range of channels (including customer self service as a channel!). Channel effectiveness is determined by two factors; the difficulty of transferring confidence of the Value Proposition, and the Time and Skill available in the channel.
Using the parameter of Time and Skill available, the capabilities of each channel can be assessed regarding their ability to effectively sell given the quality of the Value Proposition at any point in time.
A firm’s ability to utilize channels with increasing reach is limited by their ability to reduce the Time and Skill required for the transfer of confidence of the Value Proposition to the average skill and time available in the channel.
The objective then is to reduce the transition time within one channel by systematically improving the quality of the value proposition by proactively capturing the experience of the current channel. As the current channel learns the calibration of the customer value and accumulates increasing evidence, the quality of the Value Proposition improves to the point that new channels, ones with greater breadth but lower time and skill capabilities, can effectively sell.
The impact on the share of opportunity gain objective is to reduce the time to channels that can capture significant share due to their breadth of reach.
For many new products gaining penetration of the targeted channel is critical to the business plan, and frequently the first company that can demonstrate success in a channel with greater capacity captures the market share.
Each channel has "not to exceed" level of skill and effect they are willing to speed selling a product in the channel. If the selling process has not been "reduced to practice" for implementation of production selling at or below their threshold of effort, the channel will not be an effective product of sales transactions.
It is critical to implement a process that captures experience and incorporates that experience into increasingly effective selling tools and approaches, therefore developing a learning based "experience curve" for cost reduction. Especially for new products where there is little or no initial experience for use in identifying a selling approach that works.

Customer Centered Value Propositions

The Development of Customer Centered Value Propositions

Most people are not very interested in carburetors. They don’t capture the imagination, they are not particularly attractive, and for most of us not fascinated by automobile engines, the rank very low on the list of things to think about. We would have difficulty evaluating one carburetor over another in terms of rated performance, and many of us are somewhat uncertain as to what it actually does.

And yet, if you told me that my car would not run, and that I wouldn’t be able to get to work without one, or that a malfunctioning carburetor would cost me hundreds in extra gas and car repair bills, I would suddenly be a lot more interested. I could now perceive carburetor performance in terms of something that was important to me: the ability to get places in my car. I would have a context for valuing an otherwise uninteresting piece of equipment.

Companies are a lot like cars in that many products and services contribute to their functioning well. They are also like cars in that most people who operate them don’t understand all the mechanical details of how they work. There are any number of products and services that could contribute to companies being more efficient, more profitable, or better able to fulfill their goals. But most company decision-makers aren’t going to have the time the interest, or the technical breadth and depth to understand the implications of all of these products and services. Why choose one “carburetor” over another? And what happens when a new product comes along that doesn’t replace any current function, exactly, but enhances the performance of the whole?

Strangely, many sellers do very little to make the evaluations easier for their buyers. They market and sell their “carburetors” in a product-centered way, extolling performance attributes as if they were ends in themselves. They assume customers will be perceptive enough to understand both the differentiating advantages and the business implications of these attributes. But how many really are?
What can be assumed in all cases is that decision-makers want their companies, their departments, their processes to run better. They want to solve their critical problems, fulfill their goals, and meet the objectives on which their compensation is based. And ultimately, the only consistently reliable way to market and sell products is one that forges a link between these customer values and the product’s capabilities.

Decreasing the sales cycle time required

“3 call close” program

The most significant improvement companies can make toward increasing revenue is getting Marketing resources directly focused on improving the sales cycle and selling effectiveness. While Marketing campaigns certainly require focus and management, it appears obvious that an equal level of focus on the improvement of the sales cycle is warranted.
What are the “pain points” in the current sales cycle that requires the most time and effort, and where do the greatest number of lost opportunities occur? What are the primary differences in the sales cycle of the best verses average salespeople? What resources can marketing provide to addresses these pain points and differences?

Do most marketing programs get designed by starting with an analysis of the current sales cycle, or start with the product information that we think the prospects should know?

The “3 call close” program is designed to establish the foundation for designing Marketing programs that focus on improving the sales cycle cost effectiveness. For the current sales cycle the following could be identified:
- Most significant steps in the sales cycle and the effectiveness of the resources used
- The gaps in performance based on sales skill and experience
- Try different resources that could be a more cost effective substitute for a sales persons time
- The sales cycle elements that currently require the most skill, knowledge, and experience

This information is gathered by analysis of the firms CRM information where that is available and reliable, augmented with both interviews and electronic surveys of the different sales channels. Perhaps there would be direct participation in sales calls that are expected to be “tough”.

Some of the approaches and questions that are used in the interviews and surveys include:
What are the 5 things the customer needs to believe before they will buy?

When sales people describe the differences between good prospects ready to buy and prospects that need a lot of “help”, the differences can frequently be identified as the differences in what the prospect “believes”. These include beliefs about the value of addressing the opportunity, beliefs about the risk and cost certainty, beliefs about our company’s support and product capabilities, etc. Many of these beliefs are not related to our company, but more related to the prospect and the industry. Identifying these key required customer beliefs is one of the steps in broadening the marketing focus beyond just the product issues required to make the sale.

Are there measures for the claimed advantage and differentiated customer value?
Identify the current Value Proposition claims and elements including:
· The value to the customer of taking action
· The advantage being offered
· The value to the customer of the advantage
· Evidence for each of these three claims
Each of these claims should be both compelling and believable, with metrics for each

Are prospects qualified to be ready to buy the product category or the company’s product?
If only the usually prospect qualification questions [are you the decision maker, do you have sufficient budget, when do you plan on buying] are used, then the prospect is only being qualified for any provider of the capability. It is not until the advantages of the product are included in the qualification questions that the prospect start being qualified for your sales channels.

What is the level of Product/Market maturity?
The level of product/market maturity determines the extent of selling required.
For mature products/markets the prospect usually knows the features they value, and may even have some experience in the area. So the selling is limited in scope to advocating our features/capabilities and their comparative customer value.
The other extreme is that the product/market is so new the customer may not be certain that they want to address the opportunity, and certainly do not know the approach and required “bill of material”. In this case the selling effort has to include selling the right customer problem description and the solution elements required for success.

Where in the sales cycle is the largest gap in performance between the average sales person and the best sales person?
IBM describes one of the goals of Marketing as “providing the tools that will allow the average salesperson to be as productive as the best salesperson.” To develop impactful tools marketing has to know the points in the sales cycle that cause the average salesperson the most difficulty, especially relative to the best salesperson. Without this information and analysis the marketing programs lack targets and goals.

The actions identified above are some of the activities that are part of the “Concurrent Marketing” program that enable Marketing to design marketing that meets the needs of the sales channels.

Value Propositions useful for average salespeople

One of the first perspectives initially identified in this blog was: The quality of the Value Proposition, based on the level of “compelling and believable”, determines the skill and effort required in the selling process.
For salespeople with average sales skill levels in enterprise “considered purchase" markets , effective Value Propositions need to answer these four customer questions:

1. Why should I take action now to address this problem/opportunity?
2. In addressing this problem/opportunity, what differentiating capabilities do you bring to the solution? [i.e. What do you do better than the competitive alternatives?]
3. What is the value to me of your differentiating capabilities compared to the value I would receive from the competitive alternatives?
4. Why should I believe each of these claims?

While we frequently think of foundations as being physical, information can also serve as a foundation. Just as firms can think of their balance sheet as being a foundation for the firms financials, the Value Proposition for a product, service, or solution serves as the foundation for the marketing programs.

There are more than one type of Value Propositions, each with a different structure designed to support different objectives.

• For markets driven by technical sophisticated buyers, the Value Proposition that is commonly used is "Feature-Benefit".
• For consumer markets, best described as impulse purchase, the Value Proposition structure is “For (target customers), (our products) provides (key benefits) and (key points of difference to competition)".

Many of the Marketing failures that occur in enterprise considered purchase markets occurs because either the "Technical" or the "Consumer" Value Proposition structure is used erroneously, therefore not providing the sales channels the information required for effective selling.

"B to B" marketing is not aligned with Sales

One of the central reasons that B to B marketing is not aligned with sales is the traditional domination of Marketing by Consumer marketing. The consumer large advertising budget and its centralized decision making make Consumer marketing the focal point for consultants and agencies. Additionally the availability of LOTS of data make it much more attractive for University professors for getting papers published. [Until recently neither Harvard nor Stanford offered B to B marketing courses.]
But in many companies the Marketing responsibility is to provide leverage to the sales channels for revenue generation, which extends significantly beyond the “awareness” focus of consumer marketing.
Unfortunately in many companies the processes and criteria for B to B marketing is too influenced by consumer marketing and does not extend to the requirements of supporting the sales cycle through the close. Frequently B to B markets are referred to as “considered purchase” markets, which is different than the “impulse” markets for Consumer marketing. Using that differentiating attribute we can understand some of the requirements of B to B Marketing:
The decision whether or not to initiate a project is done by a group of managers who compare the value to the customer of one project over another. The expected values are specific and tangible. If we expect our sales channels to encourage our customer to initiate a project that could require our product we will also need to provide information on the expected value to the customer that would result from project initiation. And some indication of the project completion requirements. This program description is much more “actionable” than the usually “directional” customer values associated with impulse purchase.
The same is true regarding product/vendor selection. There will be a vendor/product comparison by the buying team! They will use real metrics to compare vendors and their advantages, And then the value to the customer of those advantages will be evaluated and compared. If we do not provide the information the customer will develop it for themselves as time permits, or perhaps your competitor will provide it. “Directional” metrics that are not comparable are not very useful in this stage of the sales cycle. And each claim will probably be assessed for accuracy, so evidence for each claim is a required…or else a lots of time and trust needs to be provided by the sales channel.
These elements which are needed for B to B sales efforts are not usually provided by B to B Marketing, only the traditional consumer "impulse purchase" elements, which really only impact awareness.

Using Marketing to increase sales effectiveness

Companies in "B to B" markets that want to increase revenue will find the most cost effective approaches come from transforming their Marketing to be more aligned with Sales. There are at least five perspectives that should be adopted by Marketing:



- The quality of the Value Proposition, the level of “compelling and believable”, determines the skill and effort required in the selling process

- Marketing Program design can be focused on addressing the sales channels “pain points” in the current sales cycle, not just the product attribute we want to advocate to the market

- Gaining scale in sales channels requires the rapid capture and transfer of experience to the channels with less skill and time available

- Sales channels consist of innovators and followers just like customers, so managing the adoption through the stages is critical for gaining scale.

- Just as both Sales and Marketing have “product advocacy” aspects, Marketing needs to add “Consultative Marketing” to parallel Sales “Consultative Selling”.

The results of the implementation of these perspectives is the significant increase in selling effectiveness of the “middle 60%” of the sales channels [not the top 20% or the bottom 20%], which is more than Sales can achieve trying to do it by themselves.



Over the next several blog entries I will expand on each of these points and indentify the impediments for implementation.



Bud Hyler

BudH@logmkt.com

First Test Post

Hello world