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.