I once worked with a software company whose offering monitored the age and usage of manufacturing equipment. They offered an alternative to regularly scheduled preventative maintenance by tracking equipment usage and age to determine optimal times to perform maintenance. Older equipment with heavy usage required more frequent maintenance than lightly used newer equipment. The benefits of reducing scheduled maintenance costs and downtime provided strong paybacks.
The only platform the software ran on was showing its age. The primary reason cited in seller loss reports was that they couldn’t run on a newer platform. Based on that input the company invested in developing a new offering. When announced, support for the old platform was withdrawn. As you can imagine management was stunned by a deluge of loss reports because buyers couldn’t run on the old platform.
Product development (PD) based on loss reports can be analogous to driving a car while staring at the rearview mirror. Sellers often don’t ask or aren’t told why they lose. Buyers want to let them down easy and blame price or product rather than seller skills. Some sellers try to choose reasons that will be palatable to managers. I suspect poor salesmanship has never been cited as a reason for a loss!
Customer-Centric Organizations Include Product Development
In launching our business it was difficult to agree on a name. We weren’t enamored with CustomerCentric Selling® but settled on it. A few months later Dell used the term customer-centric in an advertising campaign and made our choice look much better.
A core concept of CCS® is that only buyers can deem offerings to be solutions. Sellers may try force-fitting solutions but ultimately seller opinions have little value to buyers. I’d venture to say CEO’s are of the opinion that their companies are customer-centric. It’s a simple phrase that is challenging to achieve. Claiming to be doesn’t make it so.
As with Sales Enablement, there’s no standard definition of what being customer-centric entails, but I’d like to share a disqualifier. Companies can’t be customer-centric if their offerings don’t address buyer needs. An important component is having customer-facing staff provide input to Product Development. That said, without a framework to provide context field input can be misleading as you’ll soon see.
To become customer-centric efforts must go beyond appointing a person to be the tip of the spear. I offer a few questions for your consideration:
- Does the leader of your customer-centric initiative report to an executive the CMO and CRO both report to?
- What organizational changes need to be made?
- How does the field communicate buyer/market needs to PD?
Traditionally organizations look to sales and marketing to drive top-line revenue. They should look further upstream because PD, furthest from customers and prospects, is chartered with developing new offerings. When ready to launch sales, marketing and product marketing will be asked how new offerings should be positioned so that revenue targets will be met.
In doing so PD deals product marketing, marketing, and sales a hand they have to play with a new offering. If it addresses buyer/market needs, achieving top line is easier. It will enjoy market pull. If not, making the numbers will be tougher. Traditional push strategies will be used. To be blunt it’s easier to sell offerings people need and want to buy.
The Problem with Silos
I hope you appreciate the folly of creating offerings before deciding how they’ll be marketed or sold. I want to introduce the concept of Enterprise Revenue Generation (ERG) to recognize the silos of PD, product marketing, marketing, and sales share a common responsibility to bring offerings to market that address buyer needs thereby and allow revenue targets to be met or exceeded.
Let’s first look at how start-ups bring offerings to market as they face unique challenges but also enjoy many advantages. The founder is hopefully a visionary with a “big idea” for new offerings. As staff is hired, ad hoc meetings over coffee or pizza are commonplace. If funding is needed startups seek angel investors, max out credit cards or approach venture capitalists.
Slide decks presented to VCs will be product-focused. The weakest slides will be the ones that show the potential market size, an assumption they’ll close a few beachhead clients and that revenue will grow as their slice of the revenue pie increases. Employees are “all in” in part because the hope their equity will be worth a substantial amount down the road.
Virtually all money raised is put into the offering. When ready for beta sites founders sell the first few early market buyers that will soon serve as references. It’s at this point a founder may have a belated epiphany: A VP’s Sales must be hired to figure out how to staff up and achieve revenue targets. It seems ludicrous this realization comes so late in the process.
Established companies faced different PD challenges. The company’s existence usually isn’t riding on one offering but internal barriers often cause friction not seen in startups. As companies grow four separate and distinct silos emerge:
- PD creates new offerings despite being the silo farthest from buyers.
- Product Marketing identifies vertical segments to pursue.
- Marketing creates campaigns to drive demand.
- Sales determines how to sell/position offerings to achieve revenue targets.
CEOs assume the silos will play nicely in the sandbox. They may be oblivious to some significant headwinds. Silos heads are peers that don’t report to one another. There aren’t clearly defined intersections between the silos. Over time the leaders and their staffs may develop silo blinders. By that I mean nobody is capable of taking an enterprise view of what’s best for the company. Silos may have conflicting agendas and personalities.
Customer-facing staff is closest to buyers but there is no common vocabulary with which to communicate buyer/market needs to PD. If revenue targets aren’t achieved finger-pointing and assigning blame becomes the order of the day. In the long term, this can create toxic relationships between silos and their leaders.
The silo structure is analogous to a crew team of four rowers that don’t use the same oars, don’t row at the same cadence and have no coxswain steering the boat. Similar to startups how offerings will be sold is determined near the end rather than at the beginning of PD by the sales and marketing silos.
A Collaborative Approach
I’d like to share a different approach to getting offerings to market. Doing group sanity checks with all four silos participating at the start of PD could improve the chances for success. It also helps if a senior executive designated by the CEO attends (referees) these meetings.
Here silos could create a framework to more closely collaborate:
- When considering the creation of a new offering all four silos should identify and agree upon the Key Players titles likely to be members of buying committees for the offering).
- For each title the group should define a menu of desired business outcomes the offering can enable the buyer to achieve. This is the equivalent of answering the question: Why would this title buy this offering? It’s an attempt to understand if there is sufficient value for buying committees to justify purchases. If not it’s time to go back to the drawing board.
- Once the silos have agreed on these titles and goals they should ask customer-facing staff to validate them by soliciting opinions from those titles within the customer base and make modifications based upon the input received from them.
Members of every silo should understand the language used in discussing prospect and market opportunities. A few examples:
- Goal – a business outcome buyers would spend money to achieve
- Latent need – business outcomes a buyer isn’t actively considering
- Active need – A buyer considering a goal but now knowing how to achieve it
- Barrier – a reason a buyer can’t achieve a desired business outcome
- Capability – a feature of an offering that addresses a barrier
- Vision – Buyers can articulate the capabilities they need to achieve their goals
- Key Players – titles sellers must call on to sell, fund and implement offerings
- Champion – a buyer providing access to Key Players (up, laterally or down)
- Lead – a Key Player interested in achieving 1 or more goals
- Champion letter – an email summarizing a buyer’s goals, barriers and capabilities and requesting access to other Key Players.
On an ongoing basis customer-facing staff should poll customers and prospects for new goals as well as the barriers to achieving them. Common terms would allow organizations to provide inside-out views (toward buyers) for PD in stark contrast to companies so product focused they cast blind eyes to buyer/market needs because most of their time is spent looking inward (at their offerings).
The objective would be to understand new buyer goals and barriers to achieving them. This would more clearly define a PD’s role: creating offerings that address buyer, prospect and market needs. Consistent with Covey’s suggestion to “start with the end in mind” ERG can provide a framework for better coordination of silos. This structure can provide the holy grail: a sustainable competitive advantage by letting buyer needs drive the direction PD takes and ultimately make vendors more customer-centric.