February 28, 2012
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The oddest request I ever received from the head of a sales organization was “Can you stop promoting the product for a couple of months?”
It was an old company with a new product that had gone nowhere before I took the reigns of their marketing department. I established a strategy that relied on precise market segmentation, focusing on the top two segments, then making buyers and strategic partners believe we were the only serious product in the market. Sales jumped 26% in the first year, we chased two competitors completely out of our target segments, and had a sales close rate above 80%.
The poor sales folks couldn’t keep up with incoming calls.
The strategy was to bias the opinions of buyers. This required them believing that we not only cured the generic problem (which our competitors did too) but we also cured the buyers personal job-related problem (in this case, that we could reduce their job stress) and that we were a safe bet (which reduced their purchase decision stress). The product was mainly used as a plug-in to enterprise-class applications and IT utilities. By focusing on two product categories therein, and partnering with the top three competitors in those segments, we were able to clearly target 66% or more of the potential buyers in those two segments.
In periodicals read by users of strategic partner software, we bought full page display ads (remember buying those) whereas out competitors kept their 1/4 page ads. This demonstrated greater strength to the buyers, clearly attached us to the partner products, and gave us ample space to communicate our solving buyer generic/functional and emotive problems. We also treated our strategic partner’s sales teams like our own, coaching them on what motivated buyers, what our brand and key advantages were, and why our solution made their product whole. Buyers heard the same story in ads and from their enterprise application vendors (which included HP, IBM, CA and some other obscure firms).
Appearing at partner trade shows merely solidified the concepts we were planting in their craniums.
Being boosted by both presence (ads and trade shows) and partner sales teams, set a brand that biased purchase decisions. When the need to solve the generic/functional problem arose in a prospect’s company, we were perceived to be the only viable choice. A default buying decision was created for them. This all demonstrates the difference between lead quality and lead viability.
 A quality lead is one that meets certain criteria (qualifications). The problem with merely qualified leads is that the motivation to buy your product does not exist. Qualified leads are simply people who are approachable and might consider buying your product. A viable lead is one where the likelihood of selling them your product is enhanced. IBM develops viable leads largely through historical brand strength – nobody ever got fired for buying IBM. Creating viable leads requires creating positive differentiation in the minds of buyers. The differentiation can be functional – such as broader or superior features – or it can be entirely emotional.
Studies show that emotions sell better, even for B2B software products.
Interestingly, people will echo your biasing once they own your product, even if the branding is not entirely accurate. People need to believe the decision you forced helped them to make was the right one. Thus, biasing decisions to create viable leads then starts a cascade effect, turning buyers into brand advocates and generating more buyers – the buzz effect. Buyers not infected with biasing won’t do the same.
Pick a differentiated brand then find all the vectors through which your target buyers receive brand biasing. They soon will have no choice but to call your sales team.
February 14, 2012
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“Our market is mature, and is saturated. We have to steal customers from our competitors.”
There are some absurd technology marketing truisms, chief of which is that anything is so static that a market won’t and cannot be changed. Resting on the notion that there is only one recourse to growing a customer base means certain cerebral sediment has set – that market leaders don’t. When your market is saturated, you should think about changing the market or at very least adapting to changes in and connected to your market.
 First, no market is ever saturated. New companies come to life every day. A start-up limping along on open source and big dreams will be tomorrow’s Twitter and will need products they cannot afford to buy today. Freemium models work well in markets where long-term customer nurturing can be guided and automated. More mature companies occasionally switch technologies tied to yours, and thus create opportunities for you. There’s a customer born every minute (wait, that doesn’t sound good).
Technology users expand their operational base and augment what forms of technology they use. When a competitor’s customer upgrades their DBMS to support virtual storage, do you offer tools that provide value in the clustered environment? If you do and your competitors do not, then their customer has shifted to a new product category in which you provide value. The market may be saturated, but some products are designed to be more equal than others by anticipating changing customer needs.
Business is always evolving, and thus customer needs tied to changing business directions create new customers. Five years ago the concept of private clouds was vague, whereas today it is part of the IT linga franca. Adapting products to meet changing business trends moves a product along to new customers (those leapfrogging in technology implementation) or those who are following trends as they solidify. Same market, same customers, new needs.
Yes, in mature and saturated markets you need to steal customers from competitors. But how you steal them, how you create them, and how to find new ones is possibly more valuable than expensive toe-to-toe sales battles and prying unwilling people from their preferred technology.
January 24, 2012
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Start-up founder eyes cross when I ask “what is your segmentation model.”
I often must resort to CPR to revive them.
It is not that the concept is unfamiliar to them. Nor are they shocked into stuttering zombies due to weak mental stamina. It is that segmenting markets is unnatural to them, and often practiced in aberrant ways that make politics look savory by comparison. It is the unnatural aspect which throws both novice and veteran entrepreneurs.
Image using industry verticals to segment the iPhone market, and you’ll instantly understand why some segmentation models are unnatural.
(Brief war story: I once consulted to a firm that had a huge IPO, and then saw their basic business model crumble. During the initial consultation preparing them to enter a new market, I asked “What is your market segmentation model?” They reported it was based on industry verticals, which seemed odd to me. I asked why they selected industry verticals and their CEO said “Well, it is as good as any other segmentation model.”)
My dictionary defines a segment as “one of the parts into which something naturally separates.” Natural is the key to market segmentation. There are many factors for selecting a market segmentation model, but buried in Silicon Strategies’ dozen steps and six key criteria, the natural basis for evaluating competing products is fundamental. Different segments have different needs, priorities, expected outcomes and communication modes. These begin to define the natural segments within a market, and they all start by understanding in reasonable detail customers, marginal customers and non-customers.
 One case study concerns a software development platform vendor that came to Silicon Strategies Marketing a few years back. They too were leaning on unnatural segmentation models, and getting unnatural results. Through our review process, we listed and eliminated many market segmentation schemes that did not meet key criteria from the customer perspective, which in a word were natural fits. For this specific product, we discovered that one of the two primary segmentation vectors was the average software project team size and locality. Industry verticals, development languages and even the formality of the development cycle were less relevant than the size of the coding team.
When selecting your market segmentation model, never use a default. Doing so sinks massive resources and time into chasing non-customers, or creating totally irrelevant messages and value propositions. Seeing the market from the perspective of a wide set of customers, and mapping how they relate to products and one another, unmasks segmentation options and shoves you down the path of chasing viable buyers.
It is the best way to get your slice of the pie.
October 25, 2011
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A cult is a religion with no political power.
— Tom Wolfe
Cults are good in the context of marketing, though not so much in real life. Religions are slightly more respectable, though each views the others as large cults. Yet the mechanics of cults, religions and matters of faith are informative in shaping a corporate brand.
The difference between fanbois and followers is thin.
 In the early iPhone era, Apple customers were called a cult. Early adopters of iPhones were evangelical to the point of annoying. Regardless of personal motivation, iPhone fans fawned and proselytized the new portable computer. While their numbers were small and their zeal was large, the cult moniker was apropos. With relatively no market (political) power, the iPhone faithful were as bedeviling as Jehovah’s door knockers.
Today, iEverything is a religion because the masses have adopted most, and sometimes all of the doctrine.
Cults, religions and brand loyalty are all based on faith. Granted, good products build faith through experience, but it remains an article of faith about the value delivered by the product. To build brand religion requires first cultivating a brand cult, then establishing enduring doctrine concerning core values. It is impossible to leap from and unbranded product to a brand religion without first forming a brand cult.
Attempting it will brand you as a false prophet, and we know what happens to those folks.
Harley Davidson is an example. For whatever reasons, post WWII soldiers lacking domestic thrills rivaling shooting Nazis sought motorcycles, whiskey and women. These were the early bikers, who were positively tame compared to today’s MC members. They preferred Harleys and no “real” biker would be caught riding a Triumph or Indian, and mentioning Honda, Yamaha or Kawasaki with reverence would get you beaten. Thus, images of people who shunned societal conventions and lived on the wild side were Harley’s first cult. This cult image was amplified when the American Motorcycle Association claimed that 99% of all motorcyclists were law-abiding citizens and the “real” bikers started calling themselves the one-percenters.
Later in history, aging baby boomers who could afford a Harley without spending their kid’s college fund donned biker garb and hit the highway. These Rolex Riders expanded the Harley brand cult into brand religion. Yet potbellied CPAs would never have given Harleys a second glance had not the mystique of the one-percenter cult driven the Harley brand image.
The marketing strategy here is tricky, but if you understand the brand-cult-religion progression, it is manageable and can be expedited. New products often have identifiable early adopters who are anxious to promote your wares. Identifying all their drivers – but most importantly the values that have deep emotional bases – is your starting point. Cull from the short list of deeply emotive cultish motivations those that appeal to the wider population. These become the core values of your brand. Saint Peter may have preached many things, but saw that the doctrine of a loving God was more marketable than the ornery fellow found in the Old Testament.
Peter found the common value that took Christianity from a cult into a religion.
Brand religion is the marketing strategist’s Holy Grail. To obtain that blessed state you must cultivate your cult, find what the fanatics have in common that also applies to the wider population … and pray.
October 4, 2011
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When the earth quakes, you either endure the trauma, relocate or eventually get swallowed by a gaping hole that appears beneath.
 Markets often have tectonic transmutations whereby old terra firma is relocated. This occurs with alarming frequency in technology markets – the upper rings of Hades are littered with tech companies that did not move quickly enough (you have long teeth if you remember names like Ashton-Tate and VisiCalc). Yet fault line spotting is a rare sport in high tech, and even catches change makers by surprise.
One massive market plate is on the move, and television as we know it is about to disappear.
Commodity broadband is making highly selective, on-demand video entertainment a reality. In the bad old days (last year) one consumed video entertainment by subscribing to ever expanding channel bundles packaged by cable and satellite companies. The economics of broadcast television – where producers, networks, cable companies and affiliates all got a piece of the action – caused prices to rise and competing providers to package bulkier sets of networks. We long for simpler times when there were 57 Channels And Nothin’ On, not 999 channels with even less worth watching.
The same companies who made residential broadband affordable also provided the means for Hulu, Netflix and Amazon to entertain you, without rigid schedules and no packages of unwatched programming that rivaled food for a chunk of the family budget. Now cellular providers are entering the same space, making video entertainment an always-on and on-demand experience. Who cares that you missed The Simpsons on Sunday when you can replay that episode whenever and wherever you are, and pay nothing or very little (I survive on a $100/year Netflix habit while my neighbor pays that much per month for cable).
This shift is forcing cable and satellite companies to unbundle channel packages. After years of raising rates 6-10% a year, cable companies are facing an a la carte future. But unbundling is only half the shift, the part that frees customers from the unwanted expense of renting unwanted programming. The other half is on-demand viewing of all content types. Cable and satellite companies have offered on-demand movies, but customers are now acquainted with on-demand everything. Want to see last night’s Colbert Report, reruns of All In The Family or even live concerts? It is all available and you don’t have to pay your cable company a dime more than your monthly internet connection fee.
Cable companies may devolve into mere broadband providers as the market eliminates many middlemen (as I write, independent producers are getting their materials online in near-direct distribution arrangements, promoting via social media). Cable companies didn’t see the shift they themselves created, and built no replacement. Unbundling channels is a delaying tactic, but one that will not stop the inevitable downhill slide.
The marketing lesson is that you must watch for fundamental changes in technology that fundamentally change your markets, or conversely create those technologies and predict where the earth will open. Failure to do so means watching everything get swallowed and ground between moving plates.
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