Firebrick Consulting: Tech Positioning for a New Era from Firebrick Consulting on Vimeo.
What do successful companies of every size -- from Apple and Cisco to Riverbed and Workday -- all have in common?
They have a compelling, differentiated story. In our work with over 200 companies, we find that very few companies are able to translate their product, service, or IP into a message that resonates with buyers, clearly differentiates from the competition and captures the imagination of the market. Check out Firebrick's new video and find out, in less than 3 minutes, how to create a breakthrough positioning story.
I was invited to participate in the NASSCOM Product Conclave in Bangalore, India. During my visit, I tried my best to get a better understanding of India and the IT movement in this country. At breakfast with a local tech executive, he told me all I needed to know about India was A, B, C – Astrology, Bollywood and Cricket! After this conference, I think “IT” needs to be added to this statement. As 1200 eager tech entrepreneurs crowded into conference rooms that spilled out into the hallways, it dawned on me that I was witnessing the next economy arising for India.
Last year I participated in NASSCOM and was invited back to sit on a panel and present another workshop on positioning and differentiation strategies. The conference was over-subscribed (again) this year and the number of attendees continues to grow. Despite the positive audience attendance, what a difference a year makes! Last year, all I seemed to see at the conference were copycat products – does the world really need another online meeting or CRM application? It appeared there was a pervasive attitude across the Indian tech community - they were all seeking validation from Silicon Valley.
This year, the rapid adoption of cloud and mobile have opened up an entirely new ecosystem of Indian product companies, bringing in innovative product ideas and disruptive business models. I heard about Payroll applications with a subscription price of 30 cents per user, mobile ad-networks that are actually driving revenue, mobile traffic apps, innovative video platforms, and supply chain optimization.
India seems to be looking inward and applying mobile and cloud to solve the business issues and problems facing Indian companies.
They are building lightweight apps that can be dispersed to millions – confident that if these apps can solve the complexity and scale of the business issues in India – the rest of the world would be easy. I’m convinced, and excited that the next generation of Indian technology companies have been born and are bringing a new wave of innovation to the world.
We have a client with innovative IP that has developed a disruptive cloud infrastructure platform and service. The value of this technology is significant because it delivers a 2X performance for ½ the cost – and has the promise to completely upend the market. Needless to say, the founders are brilliant - often the smartest people in the room. They pride their technology on being so “different” than the Amazon Web Services, Rackspace and others in the burgeoning market category.
But “different” doesn’t sell.
dif·fer·ent/ˈdif(ə)rənt/
Adjective: novel and unusual
Buyers aren’t looking for “different”, they are looking for “better”.
bett·er /ˈbetər/
Verb: improve on or surpass
What a difference one word makes.
By changing the conversation from “different” to “better”, the company immediately strengthened their competitiveness in sales cycles. The company took off.
A subtle, but significant shift - “our technology is different than the others” to “our technology delivers significantly better price/performance”. The result is exponential. Now they are having conversations with their ideal buyers that is road mapped to their buyer’s needs. This shift set the stage and enabled the company to articulate a value proposition that no competitor can match.
B2B has become “B2Any” – and the advent of cloud and SaaS solutions has moved subscription business models with Go-to-Market to the forefront as the new levers for disrupting markets, driving valuations and significant revenue growth. Companies such as Zuora are fueling the "subscription economy". And a new generation of companies and products has taken advantage of this inflection point - Workday, Box, ZenDesk, Citrix Online, Joyent, Yammer and of course, SalesForce – and the market is rewarding these companies with committed revenue growth and large valuation multiples.
However, pick up the paper on any given day and you’ll read about another failed subscription-based product or recurring revenue company. At the same time, other subscription companies take off and become wildly successful. What makes the difference? The culprit is simple. Typically the root cause is not the product/solution, but a poorly conceived subscription model that fails to quickly engage enough customers and consumes a company’s cash before realizing the benefits of a committed revenue stream.
After working with almost 100 cloud/SaaS companies, we have a few observations:
- Pricing/packaging can be disruptive. Most tech companies simply copy the competition and don’t exploit the power of subscription business models as a differentiator
- Many lose their way: exponential sales and marketing costs to acquire ACV
- Churn is a death-spiral for most subscription businesses and must be managed from the start
- Monetization and customer engagement strategies are different!
- Successful companies pro-actively manage customers through a committed revenue journey
Increasingly, those companies that successfully capitalize on cloud or a new inflection point are competing with a well-constructed business model that quickly engages customers through friction-free and enterprise sales channels, employs a multitude of pricing/packaging strategies to drive committed revenue and defend against churn.
However, very few technology companies understand the range of monetization strategies, nor deploy the optimal pricing and packaging to earn loyalty and drive a successful subscription business and valuation.
This past week, I had the honor to speak at NASSCOM in Bangalore India. NASSCOM is SXSW meets Tech Bollywood. Over 1200 Indian-origin technology executives (and another 250+ people turned away at the door) came together to share ideas, learn and develop a vibrant local technology ecosystem. And these are Indian PRODUCT companies, not the outsourcing titans of yesterday.
As I reflect on this event and my time in India – seat of the world’s oldest religions and one of the fastest growing economies of the world. I am struck by the irony that over 1500 years ago the binary numerical system was discovered in India – the foundation for all computing today and the singular reason I am able to have a discussion, half way around the world, with over 350 tech executives about “differentiated positioning strategies” and the “secrets of silicon valley.”
India has the opportunity to lead the world again. Cloud, mobile and social have not only upended the market for US tech companies – but have the opportunity to fuel the new economy for India. India is quickly becoming the first truly digital mobile society. Today, India has more mobile phones than toilets! Imagine the power of 1.4 billion connected minds --- Is the world prepared for the innovation that is about to be unleashed from this country?
As I was giving my speech and sitting on the panel, I was struck and humbled by the thought – is the next Workday, ZenDesk, Yammer, Clairmail or Joyent sitting in this crowd?
- Bob Wright
B2B technology companies, meet your new best customer. The CMO. That’s not a typo, it’s a documented trend.
According to Gartner, one-third (30 percent) of marketing-related technology is now boughtby marketing, not by the CIO. That percentage is only going to get larger as marketing becomes increasingly tech-centric. In fact, Gartner predicts that the CMO’s budget will be 2-3 times the CIO’s budget by 2017.
Our own experience confirms it. Over the past year, more and more of our positioning engagements have been with clients targeting the CMO.
Why is this happening? Take a quick look at a couple of examples and you’ll see that tech is the new key to marketing success.
- SAS: Traditional business intelligence/analytics have been swamped by the rise of digital media, mobility, and marketing automation. SAS recognized that the CMO’s mandate has evolved to managing multiple channels, media, campaigns, and analytics all in real time. Seeing that revenue is now at the heart of every conversation, the company introduced a customer intelligence platform with built-in analytics, allowing customers to find the most profitable growth opportunities and more intelligently manage their marketing investment.
- Thunderhead.com: The company recognized that a disjointed and impersonal customer experience was no longer just an IT issue but also a marketing issue, and devised a new solution that delivers contemporary SaaS business services via the cloud. Now companies can make the customer experience digital, unified, and memorable, and Thunderhead.com can market an innovative solution to an age-old problem—a solution that gets IT and marketing psyched about working together.
And what does this new trend mean for B2B tech marketing and sales teams?
It’s time to start targeting the CMO directly.
And that requires a different selling strategy than most B2B tech companies are accustomed to.
Unlike the CIO, the CMO is not interested in tech for tech’s sake. The CMO is interested in the business outcomes of using technology. Sales discussions must focus on business drivers, not speeds and feeds. Your products, services, and solutions must be linked to business benefits using the metrics the CMO cares about: customer retention, online conversion rates, cost per lead, lead generation efficiency, etc.
And it’s critical to connect your technology directly to revenue. Show the CMO specifically how your product will help marketing prove its value—tangibly and quantifiably—to the CEO.
That means doing a little homework. You need to understand what kind of technologywill be making the biggest impact on the CMO’s business goals so you’re prepared to align your solution with the CMO’s key initiatives. For example, the CMO may be looking at marketing automation solutions such as Marketo or Eloqua. Where does your solution fit in? The CMO may be evaluating social collaboration solutions like Jive, Chatter, or Yammer to leverage customer feedback, or gamification solutions like Badgeville or Gigya. How will your solution facilitate those efforts?
If you can connect your products and services to these or other technology-based marketing initiatives, you’ll connect with the CMO.
Four steps to prepare for CMO selling:
#1. Walk a mile in the CMO’s shoes.
Today’s CMO is role is complicated. It’s a high-wire act. They’re dealing with multiple channels, from direct to e-commerce, multiple business models, online sales processes—and anyone can broadcast an opinion about your brand at any time.
That’s why the average tenure for a CMO is now only 14 months.
So take the time to understand what life is like for the CMO. What’s top of mind? What do they care about? What’s keeping them up at night? What are their priorities?
#2. Get your story straight.
You need a crisp, clear way of communicating how your company will solve a huge problem for the CMO. And you need to tailor your story for each CMO’s specific situation, because CMOs are not created equal. Some are tech-savvy, others don’t know if a router is a person or a thing. Some are strategic, others are tactical. Some are worried about cutting cost and risk, others want to take a big risk for a big reward. Also consider industry factors. Consumer products CMOs have very different concerns than financial services or retail CMOs.
#3. Stop the geek speak!
If you’re talking back-end system integration and gigaflops per second, you’re going to see the CMO’s eyes glaze over. The CMO wants to build revenue and relevance, not compute infrastructure. Here’s a quick reality check. If you’re using any of the following ten words in your presentation to the CMO, you’re going to hear crickets chirping: open, flexible, powerful, collaborative, agile, empowering, comprehensive, scalable, extensible, future-proof.
#4: Make the CMO relevant.
Tie your sales efforts to funded initiatives and show the CMO how the initiative will deliver more value to the business faster. In other words, connect them to revenue. Help them quantify how their marketing investments will move the needle.
The role of the CMO is evolving. So should your marketing and sales efforts.
Over time, the average CMO is going to become more and more sophisticated about technology, and the average CIO is going to become more knowledgeable about marketing. Their jobs will depend on it.
But for now, they’re still very different people. And you need to sell to both—differently. Your ability to make quota may depend on it.
Sales thinks your marketing presentations are nice, but they don’t use them.
We recently conducted a survey of 50 technology industry sales leaders to find out if they use the presentation materials they get from marketing, and what their marketing partners could do to improve the quality and effectiveness of what they produced.
To read more, check out Firebrick’s most recent white paper.
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Recently we wrote about how often tech companies define their market in meaninglessterms that fail to connect sales and marketing efforts to the real buyer at the point of revenue. Wouldn’t it be nice, we thought, if someone put together a list of questions – to steer customer interviews that will give you a clear picture of your buyer, and what matters to them.
Well here you go. Below you’ll find a discussion guide that we think asks the important questions.
The problem with vague target audience definitions and flimsy buyer personas is that they don’t describe real people. Many of the tech companies we work with want to sell to the CIO. When you ask them to define their target they’ll say, “we’re targeting the CIO.” The problem is that the CIO label describes everyone from the guy who buys a server for www.nonprofit.com, to Sergey Brin.
In fact, our experience suggests there are at least four different CIO buyer types (more on that in a white paper from Firebrick). But you can’t tell one from another unless you dig a little deeper than their job title.
The questions below will lead you to buyer profiles based on the stuff that guides buying decisions. The answers will help you understand how to engage your buyers in a way that gets their attention, addresses top-of-mind concerns and creates an urgent reason to do business with you.
What do top technology companies have in common? Think about SalesForce, IBM,VMware, Workday, Apple, Riverbed, Cisco. What separates market leaders and category creators from the rest of the pack?
They tell powerful stories.
Stories matter. We see it over and over again. Companies that capitalize on an inflection point and grab a leadership position always have a thought-provoking point of view that resonates with buyers. Customers buy into the story before they buy the solution.
And a story is more than a slogan or a catchy tagline. It’s offering a different perspective, not just pushing a product. It’s a crisp, clear way of communicating how a company or a product will solve a big, hairy problem for customers. It comes from putting the customer’s needs and requirements first, not the technology or the company’s agenda.
Look at Cisco. The company wasn’t founded to sell routers and switches. It started when a husband and wife wanted to email each other from different offices at Stanford and they couldn’t. So they created the multi-protocol router and solved the problem. And they knew others wanted the same problem solved. They didn’t launch a product—they solved a problem and created a powerful story and different point-of-view. And they instilled a customer-first, problem-solving culture at Cisco. You know the rest of that story.
Need other examples? Look at game-changing CEOs Marc Benioff, Larry Ellison, Steve Jobs, and Jeff Bezos. They disrupted markets and catapulted their companies into legendary status with conversations that re-framed the problem for buyers. They articulated their company’s value in simple, concise positioning stories and a narrative that offers a new perspective to buyers.
So if a great story is the key to success, why doesn’t every technology company have one? The reason is simple.
All too often, the responsibility for positioning is taken on by tech CEOs or product managers who are in love with their technology. And technology moves to the forefront of the story. WRONG. Buyers don’t care what’s cool about your technology or your IP. They care what it does for them.
The most effective storylines carve out a distinct corner of the room—and box competitors in as having a solution for “yesterday’s problem” or “the right idea, but the wrong approach.”
What makes a good storyline? The most effective positioning stories MUST answer three questions for the target buyer:
#1: Why your company or product, NOW?
Tell them in clear, human terms what problem your product solves and why it’s important to solve it TODAY. Is this an old problem that has gotten worse? A new problem caused by fast-changing market dynamics? Will your buyer lose his job if he doesn’t solve this problem? Strong positioning stories empathize with the buyer’s situation and create a sense of urgency about solving a critical problem.
#2: Why is your solution different?
Once the buyer agrees with your point of view, the next question on their mind is “who else can solve this problem?” or “can my existing technology vendor take care of this for me?” Great stories lay down the logic for a new approach to solving the problem. This requires talking about your secret sauce, IP, or game-changing differentiators in terms of business requirements. You can avoid the tedious “feature-checklist” war by articulating the need for a different approach. Different, not better, always wins.
#3: How will this improve my life six months from now?
Paint your buyer a picture of how much better their life will be with an investment in your solution. Your life is “hell” right now (big problem); here is the unique approach (our secret sauce) for solving this problem; here is what your life will soon look like.
All market leaders and category disruptors have a compelling and distinct point of view. If you want to join them, start by getting your story straight.
You’d be surprised how often clients describe their market as “SMB” (small and medium businesses). Or the “Fortune 500.” Or “IT executives.” It’s the marketing equivalent of sending someone to the store with the instruction “bring me back some groceries.”
You end up spending a lot of money and not getting what you wanted.
It’s easy to understand why it happens. Many executives worry that they might take legitimate opportunities off the table if they define their market too narrowly. They lose sight of the fact that the buckshot approach is not only expensive and inefficient, but it actually results in fewer sales and a lower rate of customer acquisition than a more targeted approach. Why? Because it disconnects your business strategy from your source of revenue: the Buyer.
Good targeting, like good strategy, focuses on one thing: driving to the point of revenue, faster.
That means clearly understanding who your buyer is, and focusing your time and precious resources on selling to that person. It’s not about contact lists or SIC codes, and it’s not about demographics or company size. These can be helpful for buying advertising, but not so helpful if you’re trying to establish a meaningful connection that will motivate buying.
Effective targeting is about going deeper. It’s about finding a set of people who have a common problem you can uniquely solve. It’s about pinpointing the behaviors, motivations, and concerns of your best prospects. It’s about knowing your target so well you could almost predict what they’re going to have for lunch.
We like to tell our clients about the “Mary rule.”
Not too long ago we were working with a software company that was just killing it, taking share from much larger and more established competitors. We asked them how they were doing it. They said it was all about Mary. They knew their target so well they were able to give her a name, and everyone in the company felt they knew her personally—her aspirations, motivations, challenges, psychographics, etc. Mary, although she was only a composite, was able to help guide positioning, campaigns, and selling. She connected the people in this company with their buyers in a very powerful way.
You’ll find that effective targeting doesn’t narrow opportunities—it opens new doors. One of our clients, Citrix Online, built a very successful franchise focusing on small businesses, and small teams in the large enterprise. However, the constraints of this broad focus were preventing them from breaking through to the next level of growth. Through our work together we discovered they weren’t targeting “small businesses,” but rather organizations that were eager to embrace a new way of working, whether they were a 1-person consulting firm, a 30-person department or a massive multi-national organization.
The key is to go beyond simple characteristics and get to the things that define behavior and
motivate action. Why do your customers buy your product? Chances are it isn’t because they are a CIO or because they work in a Fortune 500 company.
So get deep.
Sit down with your best customers and ask them a lot of questions. Then look for the patterns. As soon as a clear picture starts to emerge, a picture that others can see as well, you’re getting close.