Most organizations set their sales and marketing teams up for failure from day one by building a product or solution out of context–a poor, weak or nonexistent use case and product differentiation. Context meaning the real world environment (business problem or use case) that the product or solution was specifically built to solve. Ideally, the product or solution to this business problem provides so much value to prospective customers that they will not only be interested in learning more but they will be compelled to take action and only your organization has “it”. In many situations, an organization’s inability to focus on a compelling business problem will fragment their efforts and the result will be the drawing of a camel rather than the intended horse.
Some leadership teams have a difficult time saying no, especially when a prospect is offering dollars to stray into that gray area called professional services that more often than not does not result in productizing the one-off and then leads to a support nightmare. If there was laser focus on the business problem to start with and the market sizing and targeting homework was completed then the confidence to say not to anything that was not a core fit increases dramatically. When a company refers to their solution as a Lego kit and it can be configured to do a little bit of anything is when the alarms should go off and the best idea is to go back to the use case and product differentiation drawing board. Even if an organization does have the discipline to say no and stay focused, it must offer a prospect a unique approach to solving their business problem. Technology driven companies tend to still believe that all they have to do is to build the best mouse-trap and game over. Well, the game-over part is probably accurate but not with a positive connotation. The inability for the sales team to add value to a conversation with a prospective customer with innovative thinking is going to result in the same old issues and requests:
- Build a new sales deck as the old one is not working
- There are “no good leads”
- We need references
- Qualified opportunities sit in the sales funnel as “radio silence” is reported on opportunity after opportunity
- Close dates on deals slide back a quarter or are reported as closed lost
- Frustration sets in as the sales team struggles to scale with only a few reps (lone wolfs) making their number
Before even “day one” of a development effort, the answer to the question of “why” an organization should allocate development resources must be understood and easily communicated by the “core team” and eventually the entire organization. The context for discussion has to use case and product differentiation. Then, with each additional day of investment in development time and resources, the “why”or context should become clearer and crisper not only to the core team, but to the larger team as well. More often than not however, the opposite occurs, and the sales and marketing teams receive something thrown over the fence at the completion of the development phase. Then the mad scramble by marketing ensues to buy a “whole lotta lipstick for the pig.” Typically, an organization will apply an inordinate amount of resources in a fire-drill approach to figure out who exactly will buy this product or solution, what they will do with it, how they will gain value and of course, how to message it. Unfortunately, the aforementioned scenario is more often the rule than the exception.
Use Case and Product Differentiation – Defining the Use Case
Step one for defining the use case and product differentiation is really about understanding the business context and this is done by asking and answering the right questions. If an organization has competent product management and product marketing functions that are working together, it is relatively easy to understand a “day in the life” of the customer and the business problem in question. Many organizations refer to this as the “use case” and this should serve as the focus for why the product or solution is being built, assuming the market sizing and penetration analysis reveal this market has the opportunity to provide the financial incentives the organization requires. It’s at this stage, right there and then, that key questions need to be asked and answered in a compelling manner:
- What is the business problem (use case)?
- Why is this important to a business?
- What are the financial consequences of not addressing the problem?
- What are the financial gains of addressing the problem?
- Who would likely be making a purchase decision?
- What would motivate and organization to take action?
- Why does one’s organization solve this problem better than anyone else?
- Which customer behavior would have to change to adopt one’s solution?
- How would one’s organization facilitate changing customer behavior?
- What proof points would be required, in a customer’s mind, to validate the solution?
- What are the required capabilities in the product or solution?
- What are the questions that should be asked of a customer to understand whether this product or solution would provide the perceived value?
- Under what circumstances should a salesperson walk away from a prospect?
There’s a 90%+ probability that organizations either do not ask the above questions or that the responses to the above questions are not compelling. The typical response from organizations is that it’s too hard or too time consuming or that it requires too much time or that there are not enough resources to address these questions. All of these responses are probably true. However, why would an organization apply scarce people resources, millions of dollars and quarters or years to developing a product or solution without knowing the answers to these questions?
Use Case and Product Differentiation – What to Do?
Realizing that organizations (other than Apple and the like), will never adopt a process like the one outlined above, the best approach is a SWAT team approach to developing a use case and product differentiation. The SWAT team intervenes as early as possible in the development process to address all of the pertinent questions raised above and they communicate the findings to the core team for review and input. The goal is to focus the team back to the core issue — i.e. the organization’s product differentiation—as this will ultimately dictate a product or solutions success, unless the play is only to compete on price.
Use Case and Product Differentiation – The Use Case
First, there needs to be a thorough understanding of the business problem and environment. There is no shortcut to developing the use case and product differentiation and it requires hands-on, in the trenches, day-to-day exposure of the business issues, workflow, constituents, systems and financial and organizational impact. It’s critical to include both a strategic and tactical perspective for all functional areas that will be impacted. And, this analysis should not be isolated to one customer but representative of enough companies to make a market, and that market should provide the revenue opportunity for a vendor that creates a compelling product or solution. The output of this assignment — understanding of the business problem — is to document the specific use case to be addressed by a new product or solution. The work completed at this stage will become the backbone to establish the unique selling proposition, core differentiation and validation needed to effectively sell this product or solution. Specifically, the use case and product differentiation analysis will be required for the organization to develop the content that will empower a sales rep to not only challenge the way customers view their business, but to introduce innovative thinking about how they should view their business and plant the seed for their solution to be presented and accepted, at a later date.
Second, there needs to be a value driver. Boston Consulting Group’s 2*2 matrix is a popular framework used to communicate value. Gartner has adopted a similar structure for the same purpose. In many selling environments, there are primarily two different functional organizations involved in the purchase decision, and within each there is a strategic and a tactical audience. For example, there may be IT and Line of Business (LOB). It’s important to understand each quadrant (LOB Strategic, LOB Tactical, IT Strategic and IT Tactical) to develop meaningful value statements for each. In a typical structure, acknowledgement exists of the business issues for each audience and the corresponding financial metrics (cost, revenue, profitability, productivity, customer satisfaction) for inaction and action. In a sense, a value proposition is constructed for each audience segment in the four quadrants that supports and reinforces the overall umbrella unique selling proposition for the business. The difference is that the value proposition by segment is meaningful and relevant for that specific audience, and carries a corresponding, quantifiable financial metric with it. By following this format, the sales rep can not only provide innovative insight but also introduce financial motivation for the prospect to act now.
Use Case and Product Differentiation – Product Differentiation
Third, document how the product or solution is different. This is not a list of feature and functions created internally and blessed with internal feedback. Typically, an organization creates a list with internal resources — but to be impactful, it HAS to be validated by customers, prospects, analysts and influencers. In short, perception is reality. Internal thinking on the subject does not really matter if the external audience does not understand or value the message. Research has shown that approximately 15% of differentiation offered by B2B companies is actually recognized by customers to actually be true differentiation. There are usually three types of differentiation:
- Comparative – several competitors have addressed a challenge with different approaches and the merits of each approach can be debated.
- Holistic – an organization’s partner ecosystem provides the differentiation by building out a complete solution.
- Unique – the thing or things that one’s organization does that no other organization does. These have to be relevant, meaningful, impactful, as well as easily communicated by the sales team and understood by a customer.
Depending on the specific situation, there may be a combination of these three types of differentiation used to communicate your product or solutions uniqueness. However, there has to be some unique differentiation for an organization to thrive long-term and enjoy sustained growth. The key is going to be for an organization to rally around the unique differentiation and build relevant assets for the sales and marketing teams to penetrate the market. Prospects must be targeted that “fit the profile”—i.e. those that will have a high propensity to purchase based as they value that unique differentiation. Plays should then be built for sales and marketing to execute in order to lead customers down a path of innovative thinking. Then, the value discussion can be based on differentiation and that will set your organization up to be the obvious choice.
Use Case and Product Differentiation – Validation
Fourth, all information an organization communicates to a customer must be validated by the customer through a channel of the customer’s choosing. Most organizations have their list of references, case studies and success stories and will offer those assets up to prospects, but smart customers will leverage backdoor references and channels of their own choosing to try and find out the “real story”. The rule of thumb here is to use only what your organization can defend and to be careful not to cross this line as once there is blood in the water the sharks will attack. Organizations can build a support network of believers or evangelists to tell their story based on a well thought out and executed content strategy that leverages all channels (face-to-face, phone, email, mobile, social platforms, etc.). It’s important to empower this community of analysts, press, media, influencers, customers, etc. and to facilitate their growth and reach to ensure third party validation is prevalent in the marketplace. Customers are not naïve and if they do not possess firsthand experience, they will contact a colleague, consulting partner or other resource that is “similar” to them for approval and it is a shame to lose a deal to a competitor at this late stage of the sales cycle. To complicate matters, the development team must continue to innovate and differentiate. This is because if your organization truly does have a differentiated product or solution and it is compelling, competitors will copy it or try and leapfrog those efforts to take market share away. The good news is that your organization will be working with a lead, the bad news is that they must maintain it.
The Net: Use Case and Product Differentiation
In summary, set an organization up for success by building a truly unique product or solution to solve a business problem that is pervasive—at least large enough to fuel growth initiatives. Not all differentiation has to be unique but the core differentiation should be, and that is what the go to market strategy should be based upon. Force competitors to compete on your strengths and if you lose there then it was at least your best shot–if you lose a lot, then the unique differentiation may not be real or valued, or it may not be communicated effectively, or it may not be important to the prospective customer. Educating prospects on innovative ways to look at their business that are dependent upon the unique strength of a product or solution is working from a position of power. To operate at this level is dependent upon the entire organization’s support because it requires “going deep” with a prospect. By going deep it allows an organization to focus, and that focus will provide a laser target around prospects with a high propensity to purchase the offering. At the end of the day, a lot of work will be done upfront in the sales process (prospecting) to ensure tighter conversion rates in the sales funnel later on in the sales process. However, this is much preferred, from a productivity and cost perspective, to casting a wide net and spending endless sales cycles with prospects that have a high probability to never progress through the sales pipeline to a closed won status.
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