Make it Easy for B2B Prospects to Buy (address the last mile problem)
"Research is a process where you can spend a lot of money and come up with zero. Isurus guides me quickly through the key decisions, helps me avoid the pitfalls, and makes sure I walk away with high-value implications."
-Vice President of Marketing, Enterprise Content Management System Provider
Do some prospects slip away at the last stages of their buying journey, even though it seems your sales and marketing teams have done everything right? You may inadvertently be making it difficult for some prospects to make a decision. The following illustrates how this situation arises, and how to avoid it (names have been masked to protect the guilty).
Yellow Manufacturing seemed ready to buy Acme Tech’s CRM solution. It had conducted research about the solutions available prior to reaching out to vendors set a preliminary budget, etc. prior to reaching out to vendors. Acme provided extensive information about its CRM suite, outlined the different options available, demonstrated everything the solution could do and answered every question Yellow raised. But after months of back-and-forth Yellow put the initiative on hold.
What happened? Acme made it difficult for Yellow to make a final decision by providing too much information. In short, Yellow wasn’t ready to process the amount of information Acme provided and ended up with analysis-paralysis.
The tendency to overestimate readiness to buy stems from a misinterpretation of the new buyer journey. Many articles from the past few years talk about how prospects are 70% (or some comparably high %) or more through their buying journey before they reach out to vendors. These data suggest that when the prospect calls a vendor, they have objectively worked through their needs, know what they want and are at the stage of collecting the specific information necessary for vendor selection.
In reality, for many prospects the first 70% of the purchase journey focuses on the rudimentary elements of the buying decision. Yellow identified the problem that needed to be solved, the type of solution that might be able to help them, and some vendors that provide that type of solution. Their knowledge was still broad and thin when they reached out to Acme and competitors. Yellow may have been through 70% of their journey, but as with many situations in business and in life, it’s the last mile where the real learning, thinking and challenges take place.
When Yellow reached out to Acme CRM, it still needed to determine whether to invest in a solution at all. By providing stacks of information about its products, Acme increased the dimensions Yellow needed to consider, raised questions Yellow hadn’t thought of before, and made the solution and decision feel too big. Collectively this slowed down the decision process and eventually knocked Yellow out of the sales funnel.
This confusion about Yellow’s readiness to purchase isn’t entirely Acme’s fault. Prospects like Yellow can contribute to the impression that they are an informed buyer. Consciously or note, Yellow worried about being taken advantage of by Acme’s sales team and process, and presented themselves as knowing more than they did. Yellow knew the buzzwords, and had specific questions—they talked a good game. In addition, when faced with complex questions, people often substitute a smaller, easier to understand questions in place of the hard ones. Many B2B technology solutions raise big picture considerations about business processes, integration, how ROI will be measured, etc. The list of specific questions Yellow asked Acme CRM reflected a need to get their head around the solution, rather than an indication that they just needed a few more details to finalize their selection of vendor.
Improving the last mile.
Vendors can implement two related strategies to improve their effectiveness and win-rates during the last phases of the prospect buying process.
- Map the last 30% of the buying journey in more detail
- Use a prescriptive sales approach
Mapping the last 30% of the buying journey
When B2B marketers map the buying journey, many tend to focus on the steps in building awareness and consideration, which happens to be where marketing has the most responsibility. However, by paying as much attention to mapping what happens after a prospect engages with the sales team can enable their company to close more deals. Some of the key aspects to explore include:
- How knowledgeable and informed is the typical prospect when they begin to interact with the sales team. This helps marketers and the sales team set a baseline for creating materials and processes that speak to prospects in a way, and at a level, they can understand.
- Identify the 2-3 core drivers of the buyers purchase motivation—even when buying the most complex product, most prospects are focused on improving a handful of key activities. This will provide a framework for marketers and sales team to speak to the benefits that prospects care most about – instead of a range of things that are interesting but unlikely to influence their purchase decision.
- Determine the internal barriers your internal champion is likely to encounter and provide data and recommendations for how they can overcome them. Once your champion is sold, the deal can still be derailed if they cannot sell it internally.
Use a prescriptive selling approach
When prospects reach out to vendors most are still trying to understand what solutions would be the best fit for them and whether to should invest at all. Many ask for different options because they don’t really know what they need and hope that one of the options presented will stand out as the right choice for them. Instead too many options can confuse the issue. Research conducted by CEB shows that vendors that take a prescriptive approach—provide a recommendation with a clear rationale instead a series of options—close significantly more deals.
That said, it is important for your recommendation to be in line with the core drivers of the prospects purchase motivation. Prospects tend to reject solutions they view as too broad in scope relative to what started them down their purchase journey. Put another way, presenting your entire suite of products can knock you out of the running if the prospect is focused on a single module.
Making it easy for prospects to buy
The vendor that makes it easy for Yellow to make a decision by presenting information they can understand, addressing Yellow’s core needs, and presenting a recommendation instead of options, is most likely to win Yellow’s business.
While B2B marketers wait for their organizations to adopt big data tools, they can leverage a range of cost-effective data sources to inform decisions that move their companies forward.
The following are some of low-cost or free data sources (little data) B2B marketers, product managers and strategists can use to evaluate market opportunities, competitors, customer needs and overall market trends.
- US Census
- Publicly available reports/articles
- Mining internal data
- Interviewing sales reps and account managers
- Deeper read of customer survey data
- Social media and job sites
- Conducting win/loss interviews
- Reference class comparisons
Hoovers/D&B (or other list sources)
Hoovers (www.hoovers.com) self-service, prospect, list-building tools can help determine the number of businesses in a segment. Once you set your parameters (e.g. Hospitals with at least 500 employees) Hoovers provides counts for the number of businesses in that segment overall and in sub-segments (e.g. hospitals with 500-1000 employees). You can refine your search, start over, etc. to get more data. You don’t pay unless you purchase a list.
US Census Bureau
The Census provides similar data to Hoovers, but has the advantage of historical data which allows you to see if a segment is growing/shrinking (www.census.gov/econ/). One downside is that the Census’ search tools are clunky.
Publicly available reports/articles (desk research)
B2B marketers need to understand the segments they serve, or plan to enter. Insights into market trends, product use, and market dynamics can be gleaned by reviewing publicly-available reports and articles. Government agencies and trade associations produce reports on broad economic trends and share data from market surveys they conduct. Each industry also has its own trade publications that discusses overall trends and challenges.
Analyst reports profile specific markets and product categories. Most analyst reports charge for full access, but there are often nuggets of information in the free synopsis. In addition, the data source is often cited in other publicly-available sources such articles and vendor marketing materials (e.g. we are in the Magic Quadrant).
Many B2B companies issue press releases when they acquire a new customer, make an acquisition, form a partnership, etc. providing insights into the direction the competitor is headed.
Having a reference librarian or researcher can make the information gathering from these sources much more effective and efficient – simply Google searches can waste a lot of time on a goose chase.
Mining internal data
Sometimes, B2B marketers don’t know what data they available because it is spread out across the organization in different systems and databases. Conducting an information audit will identify the data available for analysis. Taking it a step further, combining the disparate data into one database or spreadsheet can provide surprising insights through simple cross-tabs or pivot tables. If you have more advanced analysis/reporting tools, all the better. Some companies have staff and tools that make pulling the data together easy. In others, B2B marketers must slog through the merging, cutting and pasting data and data files.
Interviewing sales & account reps
Sales and account reps have more direct contact with customers and prospects than anyone else in your company. You can use informal one-on-one conversations, structured round-table discussions or simple online survey tools to explore the requests they receive from customers, competitors they see in the market, solutions in place, etc. Their feedback may be biased towards short-term sales, but it can still provide insights into overall market trends.
Deeper read of customer survey data
VOC and NPS surveys provide a great deal of data beyond the overall score – which often gets the attention. For example, reading through the full set of open-ended comments provides context and texture around customer needs. Combining other customer data with NPS data allows you to look at trends and differences across different type of customers (e.g. product segment, sales volume, tenure as a customer, etc.). Manually creating a spreadsheet that combines the data is cumbersome, but often faster than trying to get things combined in your ERP or CRM system.
Social media, and job sites
LinkedIn, Salesforce’s data.com, and Hoovers provide insights into a competitor’s number of employees and revenue. You can see how many staff are devoted to sales and marketing activities, where sales reps are located, etc. Each source will have a slightly different number for these metrics but by looking at more than one you will triangulate on a usable estimate.
Jobs sites such as Indeed.com and the Hiring section of a competitor’s website can indicate if the company is growing and their focus (e.g. are they hiring more marketing people than would be expected, a certain type of engineer, etc.).
A search of SlideShare can uncover sales and investor presentations and similar materials that show how a competitor is presenting itself to the market.
Conducting win/loss interviews
Conducting interviews with recent wins and losses provides insights into the market’s decision process, vendor evaluation criteria, and how you compare to competitors. Win/loss interviews are best conducted by a third-party partner. If using an external partner isn’t in the budget, the interviews should be conducted by someone not connected to the sales process.
Reference class comparisons
The goals of data-driven decisions are to predict the future and narrow uncertainty. Reference class comparisons—an analytical approach, rather than a data source—can help frame likely future outcomes. The past doesn’t necessarily predict the future, but it’s a good place to start. Future product introductions, acquisitions, entries into new markets, etc. are likely to unfold similar to previous efforts. If you predict that the new effort will be significantly different from the past it forces you to evaluate and identify the data that supports your assumptions.
Tying it together
The secret sauce of big data is that it combines disparate data to form a conclusion based on the relationships that exist. Big data uses algorithms, models, and machine learning to create an outcome that is greater than the sum of its parts. B2B marketers do this daily using little data, basic tools and their experience and judgement – the original big data machine.
Collecting and combining the data sources is time consuming and tedious. It also doesn’t answer all the questions – every decision is based on incomplete data. However, it’s worth the effort: It provides insights that will help B2B marketers evaluate market opportunities, competitors, customer needs and overall market trends.
The Art of War advises that we can outsmart opponents and avoid battle when we “know thy enemy”. While marketers typically define direct competitors as the enemy, internal barriers within prospect organizations pose equal peril.
Isurus has seen many innovative ideas in 20 years of B2B market research for technology companies. Some ideas meet great success out of the gate, others languish for years before taking off, and some recede and disappear altogether. Through this experience, we’ve identified four major reasons that prevent prospects from adopting new technologies.
Satisficing: Inertia poses a strong barrier for products that improve on an existing process or system. Decision makers start with a mindset of “if it’s not broken, don’t fix it”. This is especially true with complex systems, where change leads to significant disruption. Unless the status quo is broken and painful, the new product needs to show large improvements in cost savings, productivity, competitive advantage, and the like, to overcome the inertia. Satisficing also occurs when decision-makers or end users lack a point of comparison for their existing system: The current system seems okay until they step back and compare it to what’s possible.
Competing priorities: Purchase decisions are made in the broader context of organizational priorities. A new product competes with all the other technology projects, even if they address a completely different need. For example, a new supply chain management application competes with a virtual network automation project. A new investment must prove why it is better than the status quo, and why it deserves resources that could be allocated to something else.
Pain of transition: Gone (mostly) are the old days of giant ERP implementations that were years and millions over-budget, and earned the permanent scorn of end-users. Still, some level of process change and learning is inherent in a new system implementation. The benefits of the new system may depend entirely on successful adoption by end users. For example, if Sales doesn’t enter information into the new SFA system, it can’t deliver the intended benefits. The decision to buy a new system will take all this into account: What is the level of change required for the customer to realize the benefits of the new solution? How realistic is it that the customer organization can achieve that change, and what will be required to do so? When is the right time to embark on that journey? The benefits of the new solution have to outweigh the pain of transition, or minimize the pain altogether.
Ecosystem dependencies: Some new products depend on other processes, technologies and systems to succeed. These dependencies occur at a macro level and within individual organizations. Subscription pricing for software is a good example of macro level dependencies. Fifteen years ago, software providers experimented with the ASP model that enabled customers to license major business applications on a yearly basis instead of making a large up-front investment. The subscription model failed to gain traction until virtualization and cloud technologies evolved to make software-as-a-service reliable and cost-effective. At a micro level, an individual prospect needs to have the ecosystem in place to support a new product. For example, a mobile device management solution will resonate much more with companies that allow Bring Your Own Device (BYOD).
It’s worth stepping back to consider how these four patterns apply for your product or market. Start by determining which barriers are relevant and most important in your market. While they are all present to a degree, typically one or two will rise to the top and pose a bigger challenge to your success. Source the data from internal expertise and experience, insights from Sales, or formal market research.
Then decide where the challenge is most effectively solved: Is it a product problem? For example, is it just too complicated for users to adopt? Is it a Marketing problem–are we targeting the right prospects with the right message? Is it a Sales problem–does Sales need to engage stakeholders to address change management concerns?
Approaches to mitigate each barrier include:
- If satisficing is a top barrier, Marketing and Sales need to highlight hidden pain points that the market doesn’t yet recognize. This can include identifying new stakeholders who are most likely to be unsatisfied, or to have the most to gain from disrupting the status quo.
- The pain of transition may require that the implementation process be a focal point in the sales process, to show a clear and successful methodology for achieving the goals for the new system.
- To compete against other priorities, Sales needs to understand IT’s broader plans and goals. This knowledge equips Sales to make the case for your solution. It may also provide a reality-check on the likelihood of a sale, and timing of the decision.
- Mapping ecosystem dependencies at a macro level informs the market opportunity analysis and business case for a new product. If critical elements of the ecosystem are missing, adoption will be slower, take longer, and require more evangelizing. At a more micro level, knowledge of the ecosystem dependencies can be implemented to improve lead generation and qualification.
Successful adoption of innovative products (at an individual customer or for the market as a whole) depends on many factors. Incorporate this analysis into your strategy to effectively allocate resources against the barriers present in your market.
Despite the best sales and marketing efforts, inertia keeps most prospects from changing vendors or trying new solutions, even when they display initial interest. Speaking to pain-points is often a more effective strategy than emphasizing aspirational benefits for overcoming the inertia that exists at the end of the B2B purchase decision journey.
B2B marketers naturally focus on the aspirational benefits of their solutions. The big interesting ideas behind their solutions provide much of their brand’s identity. The product management team spends its time enhancing solutions and gives Marketing more paradigm-shifting features to talk about.
These aspirational benefits, especially for new solutions, create excitement, generate buzz in trade publications, foot traffic at trade shows, and initial sales calls. But the level of sales generated often falls short of the expectations built on the positive reactions.
The problem with relying solely on aspirational benefits is that it:
- Assumes that customers are unhappy with where they are at now.
- Underestimates the market’s tolerance for good-enough
- Underestimates the hassle and challenges of switching vendors or changing processes.
- Lacks customer focus – aspirational benefits talks about what the product can do, not what the prospect needs.
Volumes of research into purchase decisions shows that people and organizations typically only invest when they face a pain-point and feel a pressure to act. For decades, sales training organization have made “selling to pain” a pillar of their approach.
Selling to pain is not the same as selling directly to fear, nor is it a negative message. It involves speaking to the areas where prospects are falling short of their goals and objectives and how your solution will help overcome the barriers they face. It focuses on the mundane, nut-and-bolts challenges they face.
Pain surfaces when customers are under pressure to adjust to market changes such as new regulations, loss of market share to competitors, or a general shift in the market’s expectations. It can also come from internal pressures such as slowing growth and top-down directives.
Psychology drives the bias towards pain over aspirational fulfillment in B2B markets. Businesses are made up of decision-makers and decision makers are human. Pains and pressures trigger our loss aversion tendencies and are easier to conceptualize for most people.
- Loss aversion: We feel the loss of something much greater than we do a corresponding gain. Negative feelings about losing $100 are stronger than the positive feelings brought on by winning that same $100. Businesses and B2B decision makers feel pressure when they are afraid of losing something such as market share, profitability, a promotion, or even their job.
- More concrete: Most decision-makers know the problems they face and can conceptualize how a new solution will address their problems: This supplier has a lower price so my overall costs are lower, this CRM system eliminates the duplicate data and work my staff has to deal with, etc. The aspirational benefits (profitability, efficiency, security, etc.) can be ambiguous, especially to a company that feels they are doing an ok job today and that their solutions are good enough.
Corporate vs. Product Marketing
Aspirational benefits still play a critical role in the sales process – they get prospects into the top of the funnel. They garner attention and can position firms as thought leaders. They are core to a vendor’s brand identity. As such, corporate marketing and branding should focus on the big picture aspirational benefits a vendor and its solutions provide.
As prospects move through the decision journey, product marketing, sales collateral, sales processes should begin to emphasize pain-points and pressures, the question of “What is the prospect struggling with today?”.
Identifying the pain
B2B markers have multiple means of identifying the pains and pressures that motivate purchase decisions in their markets.
- Sales team – As part of their process, good sales reps will seek out where prospects have pain. They can provide insights into the broad trends they see across prospects.
- Implementation teams /account managers – Functions that touch customers on a regular basis can provide insights into how customers are using solutions in the real world – what are the using the solution to address.
- Industry news – The key issues business struggle with will surface in what users (not vendors) talk about in trade journals, conferences, user groups, etc.
- Primary research – In-depth interviews and surveys can directly explore pain-points and pressures within customer and prospect markets.
Communicating the big-picture, aspirational benefits of your solution is key to generating interest in B2B markets. However, once you have the prospect’s attention, start speaking to their pain points or they may slip away into the morass of inertia.
The mid-market is an unfulfilled market opportunity for many vendors that serve enterprise segments. Rethinking the needs of the mid-market can improve a vendor’s chances of succeeding with smaller customers.
The mid-market challenge
As enterprise markets mature, vendors look to the mid-market as a growth opportunity that looks primed for entry. Many enterprise vendors enjoy strong brand awareness and the mid-market views enterprise products/services as the “Cadillac” that’s out of reach. The mid-market knows that enterprise-class products provide more capabilities than what they use today and agrees that these extra capabilities provide value.
Given these market conditions, Sales finds it easy to get sales calls and schedule demos. The mid-market likes the attention from premium providers. However, these interactions often don’t lead to as many sales as expected.
Many enterprise vendors frame the problem as a Sales and Marketing challenge, where the mid-market just doesn’t understand the value of the solution, but with the right message or sales process, they could be made to see the light. This is misleading – a range of factors prevent the mid-market from upgrading to enterprise class solutions, even if they would like to do so.
Lessons from BMW
Although BMW is a consumer brand, its experience moving from the luxury market to the mass market offers relevant lessons for enterprise vendors seeking to grow in the mid-market.
BMW possesses considerable brand equity: Most consumers are aware of it, view it as a premium product, and acknowledge that it produces a higher quality vehicle than say, Chevy and Ford. Unfortunately for BMW, despite this brand equity, the market for luxury cars is finite. BMW’s mid-market opportunity for growth is the average consumer. BMW recognizes that it cannot gain sales with average consumers by emphasizing its quality or advantages in its sales and marketing. Consumers don’t need to be convinced of its quality or how it is better than what they drive today – they already know.
Marketing campaigns can attract a small sub-segment of average consumers willing to stretch their budgets to enter the luxury segment. However, this low hanging fruit doesn’t represent an opportunity for sustained growth.
BMW recognizes that price is the limiting factor and has implemented multiple strategies to make its vehicles more appealing and feasible for its mid-market with varying levels of success. These include:
- Offering competitive financing
- Leasing vehicles at a monthly rate average consumers can afford
- Cultivating a used BMW market
- Introducing lower-priced models for entry level buyers
BMW’s mass market challenges seem obvious, and they are. What’s less obvious is that these same dynamics unfold in the B2B mid-market when it evaluates enterprise-scaled solutions. The mid-market’s barriers include:
- Budget limitations: The mid-market faces greater near-term financial constraints than enterprise markets and while they understand ROI arguments, in the short term they simply do not have the budget available.
- Resources to execute: Even if they have the budget many mid-market organizations lack the people or processes needed to take advantage of the features/functionality of robust solutions designed for the enterprise. This reduces ROI arguments.
- Limited needs: Many mid-market organizations do not have enough volume of data, transactions, production, throughput, etc. to require a robust solution, again reducing the ROI argument.
Strategies for the mid-market
One approach to addressing these barriers follows BMW’s lead and asks: How can we make the product/service affordable/feasible for the mid-market? Strategies to consider include:
- Lowering prices: Can prices be lowered enough to attract mid-market customers? This is the simplest strategy, but also the least appealing – modest price cuts typically do not attract meaningful number of the mid-market and leaves money on the table from enterprises that would have continued to pay the higher price.
- Pricing structure: Can the upfront cost be reduced by tying it to usage, number of users, or some other factor that scales along with the size of the customer. The growth of cloud applications in enterprise technology is due in large part to the short-term cost structure that enables organizations to rent software they would not be able to buy outright.
- Develop smaller solutions: Can the product/service be scaled down to align with the functionality the mid-market uses and the budgets they have available? This could be offering scaled down version or developing a new brand altogether.
- Help customers use the solution: Can programs, trainings, etc. be developed that would help customers grow into the solution? Some mid-market organizations need help envisioning how they could use a robust solution, and the steps they would take to make it work, etc.
These strategies do not come without risk. Lowering pricing and offering scaled down options may increase interest within the mid-market, but may also cannibalize enterprise customers willing to accept less if they can lower their costs.
Determining which of these strategies makes the most sense for any given market requires insights into four broad areas:
- The core features/functionality used by the mid-market today
- Their resources and processes
- Barriers to change
- What they pay today
These insights can be collected in a number of ways including.
- Competitor analysis: Vendors that specialize in the mid-market have identified its core needs and general price tolerance.
- Sales reps: Sales reps have direct contact with prospects and can also provide feedback into the aspects of the solution that generate the most interest, why deal stumble, etc.
- Primary research: Primary research can provide direct feedback from the market in terms of its needs, solutions it uses, willingness to invest in new solutions, etc.
In the end the most important thing to remember when entering the mid-market is that it is different than the enterprise market. The businesses aren’t just smaller, they face a different set of needs and limitations. Understanding those differences can greatly improve your chances of success.
Use Research to Add Foxes to Your Hedgehogs
A year of political polling, talking heads and pundits have given a bad name to forecasting and forecasters – especially the segment known as hedgehogs. But for all their flaws hedgehogs can guide their organizations as well, perhaps better, than their counterparts – the foxes. In truth, successful organizations have a mix of both.
The research and literature of the science and art of forecasting divides the world into hedgehogs and foxes. The labels and definitions come from an essay by philosopher Isaiah Berlin.
- Hedgehogs know one big thing. They hold a specific worldview that they interpret conditions and situations through. In the most extreme, hedgehogs believe all things are guided by a big underlying principle—capitalism, communism, consumerization of technology—to the point of dogma. Even more moderate hedgehogs tend to have biased perceptions which makes their record as forecasters no better than chance. Hedgehogs come in all political, philosophical and business shapes and sizes.
- Foxes know many little things. They tend to hold back judgements and approach the world from a neutral standpoint, or at least more neutral relative to hedgehogs. Because they aren’t predisposed to view the world through a specific rubric they see a wider set of dynamics shaping situations and conditions. Analysis of forecasting success—getting it right—shows that foxes do a better job than hedgehogs.
This oversimplification of a simplification makes it seems as if foxes would make better managers and leaders than hedgehogs. This isn’t necessarily true. The benefit of being a hedgehog or fox depends on context and the objectives at hand.
The traits that make a hedgehog less effective as a forecaster helps them be effective leaders. Building internal momentum for a new product, entering a new market, reaching a revenue goal or running a startup requires passion and a degree of unbridled optimism and bravado. A hedgehog’s worldview helps them create clear, simple to communicate narrative, of what is happening and what needs to be done. This helps build enthusiasm and commitment among the troops. The fox’s narrative which to a degree says, it’s complicated, it depends on a number of things, and here is the most likely outcome, but not a definite one, isn’t always all that compelling – even if it presents a more accurate description of the world.
The risk of course is the hedgehog’s approach can blind them, and their organization, to competitive and market threats and risks. Many market failures stem in some part from doggedly pursuing a course that is at odds with market dynamics. This is an acute risk in when the conditions or markets are in transition. Startups can overestimate the readiness of the market and the paradigm shifting power of their new product or service. Companies that have been successful doing the same thing for decades dismiss new competitors and ways of doing things. Compounding the problem is that with time foxes can turn into hedgehogs. Internal teams start to view the world from the perspective of their product rather than the other way around. They drink the proverbial Kool-Aid. This is human nature. When you live and breathe your product or service every day it shapes how you understand your customer and markets.
The best leaders and management teams have a mix of traits from both camps – the possess a clear narrative vision informed by a thorough understanding of the dynamics of their markets. The problem is these individuals and teams with these traits are hard to come by. There are only so many Jobs, Bezos, Welches, and Buffetts to go around.
If you worry that your organization has tilted too far into the hedgehog camp, market research can bring foxes, or at least a fox’s perspective, back to your strategies. When done well secondary and primary research can provide an unbiased understanding of the dynamics underlying your market: Your customers’ and prospects’ needs, priorities and opinions and perceptions about their options (including your product/service). With this you get the best of both approaches. The hedgehog’s perspective can rally the troops; the fox’s perspective can point the troops in the right direction.
In honor of the upcoming Presidents’ Day, here’s a look at one of the most respected traits Washington and Lincoln shared that can provide guidance to everyone from the CEOs to product manager and market teams.
They saw the world the way it was, not the way they wanted it to be, or thought it ought to be.
This trait has been universally viewed as a key to their ability to develop effectives strategies at two of the most critical points in our country’s history. It gave them a clear and objective view into the situations they faced and a realistic estimate of the strengths and weaknesses of their positions.
This may sound easy, but for many of us our desires, biases and enthusiasm for our products, companies and teams color our perspectives and prevent us from seeing things the way they actually are. Here are two techniques for viewing our markets and positions within them more like Washington and Lincoln; and one from Benjamin Franklin who while not a president had plenty of sage advice.
1. Identify your biases: Most of us are biased in the areas that matter most to our success. A simple way to identify these biases and blind spots is to make a list of the conditions that must be true for your product or strategy to be successful. Examples could include that the market considers a problem a priority to solve relative to other challenges, or that the market is dissatisfied with existing solutions, or that your sales reps will set 10 appointments a week. Once you have the list of conditions, objectively review the assumptions and evidence underlying each condition. The areas where you may be over- or under- estimating threats and opportunities will become apparent.
2. Make reference class comparisons: Individuals and teams tend to be inherently optimistic about their plans and strategies. We expect things to go well, and closer to the best-case scenario than to the worst. Reality usually falls somewhere in between. Most new endeavors will encounter the same challenges as previous internal efforts and/or as businesses that have faced similar situations. When planning product introductions, acquisitions, and sales & marketing campaigns look back at previous internal efforts and at case studies and examples outside the organization to see how these efforts panned out as a starting point for your forecasts. All things equal, your new product, campaign, etc. will likely follow a similar path. If you think that your efforts will go better, faster, etc. make a list of the reasons you believe that your efforts will be different than the norm. Then use Tip 1 to make sure you don’t have any blind spots or faulty biases.
3. Use Franklin comparisons: When most of us look at the strengths of our products or favorite sports teams we tend to forget that many competitors share those same strengths or have different strengths that compensate. To compare your offering to competitors (direct or indirect) make a list on the left side of a piece of paper of what you think your strengths and weaknesses are. On the right side, make a list of what the market thinks the strengths and weaknesses of your competitor are, not what you think they are. When generating the competitor list Tip 1 can help eliminate the biases you may have. Once the two lists are complete compare them and cross out any points of parity and offsetting conditions, e.g., the competitor’s brand equity offsets your better functionality. This exercise helps identify the mindsets and perceptions your sales & marketing efforts will encounter on the ground.
These three techniques will not make you as brilliant a leader as Washington or Lincoln, but they will help you see your market how it is, not how you want it to be. Paraphrasing Franklin, these techniques will make you wise and help you develop strategies that avoids common pitfalls and to set realistic expectations.
A recent article on forecasting presents historical data and judgment as an either-or choice. We disagree. In our view, the art of forecasting requires both and the understanding of how much weight to place on each depending on the circumstances.
The article outlined research conducted by Dr. Matthias Seifert and his team at The IE Business School in Spain. They evaluated the value of historical data vs. judgement in forecasts for volatile sectors such as fashion and entertainment. These fast moving markets provide a compressed, microcosm to study how demand unfolds at a slower pace in other markets – similar to how geneticists study fruit-flies to understand the transmission of genes in humans. Their data indicate that in volatile markets, historical data provide limited value for predicting the success of new products. For example, forecasts based on a musical artist’s last album do a poor job of predicting the success of their next endeavor. The forecasts become more accurate when based on predictor variables such as the amount of marketing behind the first single and the other artists releasing music at the same time.
This may seem obvious, but that is due to the simplicity of the example. The dynamic exists in more complex markets and situations, it’s just harder to see. The business literature is strewn with examples of companies that based their forecasts and strategies on the status quo rather than look at variables that predicted a change in demand and paid the price (Kodak, Blackberry and Microsoft to name a few). The obvious ones to consider include the current competitive set, existing products, and marketing activity. Innovators and disruptors such as Steve Jobs and Elon Musk take the process a step further and evaluate factors such as products and competitors that may enter the market and what people are trying to accomplish rather than the specific products they use. Seeing the broader picture comes naturally for people like Jobs and Musk. For the rest of us, the book Winning the Long Game: How Strategic Leaders Shape the Future by Steve Krupp and Paul J. H. Schoemaker offers some pointers and practices for looking beyond the status quo.
One of the primary challenges with identifying predictor variables is that they aren’t always evident. As a researcher Dr. Seifert had the luxury of comparing past actions and circumstances with outcomes. The second challenge is that it is easy to get carried away in identifying tenuous predictor variables and then assigning them more power than they likely have in order to create a plausible scenario that fits the outcome we are seeking. Using a reference-class comparisons and historical data provide a disciplined way to reign in this tendency. It involves systematically evaluating historical trends and what other organizations have experienced and asking the question: Why do we expect things to be different. This exercise helps put your hypotheses and variables in perspective and clarifies the degree to which they are likely to make the future different than the past.
At Isurus we include predictor variables and historical data when designing forecasting surveys. Predictor variables include brand awareness, information sources, price, etc. Pain points, desires and motivations fall into this category as well. It’s cliché, but people don’t want to buy a drill – they want a hole. Historical data and reference class comparisons aren’t perfect predictors of the future – but in most cases they are within a standard deviation or two from it: If consumers or businesses have always purchased on price, they are likely to continue to do so in the future.
We think the big take away is that the best forecasts use both historical data and judgement. To ensure you systematically include both, use these three questions when creating your next forecast:
- What would history predict the future would be?
- What factors got the market to its current state? (Level of marketing, competitors, technology, features and functionality, etc.)
- What might be changing or might we proactively change that would make the future different from the past? (New delivery model, combination of features, etc.)
Conventional wisdom says the best way to sell a B2B product or service is to find the highest level champion in the prospect organization and follow their lead. But does that approach really work? Separate studies by the Corporate Executive Board (published in the April 2015 edition of the Harvard Business Review) and the media group B2B Marketing (published in its 2015 Buyersphere Report) indicate that this may be easier in theory than in practice.
The first challenge is how decisions are made. The CEB and B2B Marketing studies show the average number of decision-makers in B2B decisions is 5+ people. In many cases there isn’t an ultimate decision-maker, the decision requires a consensus. The second problem is finding someone on the decision team with enough excitement for, and commitment, to your offering to cultivate that consensus. Although this individual may self-identify in some instances—especially those held up as examples of how to sell in B2B markets—in most cases while a decision maker may be willing to buy your solution, they aren’t necessarily willing to advocate for you. This is especially true if it requires effort to convince other departments with conflicting needs, priorities, and agendas to get on board with the decision.
So what is a vendor to do when facing the consensus sale with no champion? One option is to make a champion, instead of looking for one. Here’s how you can begin to build your champion through your sales and marketing activities.
What’s in it for them?
B2B providers can fall into the trap of thinking that their buyers make purely rational decisions. This is especially true of vendors that provide complex or highly technical products or services. The truth is B2B buyers are humans first, business people second, and are highly influenced by emotional considerations. Many B2B vendors recognize this in their advertising and use fear or aspirational themes to get the market’s attention. But once they have that attention they sometimes drop the emotions and shift to rational, business-case content. This is a mistake. Studies show that personal benefits are 5X as motivating as business benefits such as gained efficiencies or ROI. With this in mind, vendors need to help individuals understand what is in it for them. Will the solution help them get a promotion, enable them to spend more time with family, allow them to spend budget in a different way, reduce activities they don’t like doing, etc., etc. These messages don’t need to be blatant, and it probably wouldn’t make sense to be so, but it is important to continue to human side of the decision makers as the discussions become more technical.
Help them sell
Even if an individual is motivated to advocate for your product and service they likely don’t know how to. They are an expert at what they do, not your product or how it will help other departments and organization. They need help that goes beyond ROI and pitch numbers. They need to know what the solution means for other departments and the objections that might surface. They need to be able to articulate why it is worthwhile to other departments, especially if it will require a sacrifice by some of those departments.
Figure out what you and your champion are selling
When most prospects start contacting vendors they still haven’t decided on the type of solution they are looking for. Vendors often assume that they are competing against direct competitors and focus on the benefits of their solution over a competitors when in reality the team is still deciding if they need a vendor solution at all. To be fair to vendors, many prospects don’t realize this themselves; contacting vendors, arranging demos, etc. is easier to do than thinking through their organization’s needs and priorities. As a result, prospects often bring in vendors earlier than they should. In addition, prospects sometimes have to overcome internal barriers before they are ready to adopt a third party solution. They may lack the technical sophistication, have business processes resistant to change, etc. The sale is often more about doing something different, than it is about the differences between vendors.
Making your champion involves understanding who they are as people first, what motivates them, and the hurdles they face in advocating for your solution. Putting this knowledge into action may require changes in how you market and sell the solution: You may need a different set of messages, new sales enablement tools, and or sales training. Fortunately, the extra effort needed to identify and cultivate your own champions will bear more fruit than waiting for one to appear.
Making an effort to imagine yourself in your customers’ shoes may give you a false sense that you understand what your customers want. This counterintuitive statement stems from research conducted by Johannes Hattula of London’s Imperial College and his colleagues. Fortunately there are steps you can take to ensure you are not projecting your opinions onto your customers.
Dr. Hattula’s research indicates that the more empathetic you are (or try to be) the more likely you are to assume your customer preferences would be similar to your own. Put another way, when you try to put yourself in your customers’ shoes you actually think What would I do or want in this situation, rather than What might someone else want. This is engrained into our culture: The Golden Rule says Do unto others as you would have them do unto you. Unfortunately from a psychological standpoint the more empathetic a person is the more likely they are to use their personal feelings to predict what someone else would want. The research indicates that the effect doesn’t change with age or experience.
You can see this effect in your home life. Have you ever wanted to do something nice for someone who was having a bad day but found that the person didn’t appreciate your efforts or worse was annoyed by them? While they probably appreciate the effort, perhaps it backfired because you did what you would want in their situation, which isn’t necessarily what they would want.
These same dynamics can play out in the business world. Product managers with higher levels of empathy believe they understand the market thoroughly and are more likely to ignore research and data that conflicts with their views than less empathic managers. Sometimes they are right – but the Steve Jobs of the world only come around so often. As researchers we see this effect when conducting focus groups: Clients observing the groups fixate on an individual who most closely resembles their own views.
This tendency isn’t all bad. In fact, it is the core of many successful businesses whose customers seek out vendors that match their attitudes and philosophy: A conservative investor may seek out a conservative bank or a bleeding edge tech start-up may seek out the advertising agency that pushes the limit. This works well for existing products and relationships. However, when a vendor introduces new products or enters new markets, mistaking your perceptions for those of your customers can create problems. It can be seen in the number of product introductions that fail despite the product team honestly believing they are creating what the customer wants – their intention is good, but the execution misses the mark.
Fortunately there are easy steps you can take to ensure the level of empathy you have for your customers doesn’t backfire.
- One of the easiest is to remind yourself of your biases. In Dr. Hattula’s research, simply reminding people that their own biases exist reduced much of the egocentric effect. It makes you step back and think rationally about what is important to you and how it may be different than what others want.
- Group decision-making counters the effect. Since individuals have different opinions, the discussion helps people recognize their own biases and perceptions.
- Soliciting outside opinions or using market research can provide a less biased view of the market’s wants and needs.
Regardless of what you do to counter the effect it is useful to remember that as people we have an innate tendency to assume other people want the same things we do. Perhaps the new Golden Rule for marketers should be Do unto customers as they want to be done unto – leave your wants out of it.