One of the problems for many companies with different business teams and Product Managers is the danger of “turf battles”. Each group and manager has their own set of priorities, view of customer needs, maybe even different target customer, and thus, different product strategies. For example, Service may be a separate profit center measured by revenue so they may seek to raise maintenance and support prices based on their perspective that the installed base is captive (since the products have proprietary parts, firmware, etc.). However, a prospective customer may look at the lifetime service costs and total system price as part of their initial decision process and decide not to purchase the product(s) based on the high annual service cost. So the company, as a whole, lost the initial product sale and future service revenue. Sales may try to save the initial sale by deeply discounting which results in a lower profit margin – and then the product may be viewed by upper management as a low margin product not worthy of future investment. This can start a vicious cycle. The company is competing against itself and acting like a ship with many rudders.
Think of this as a country going to war (and you are going to war against your competition). You can't have the Navy, Air Force, Army, and Marines each deciding their own targets and strategy - they need to know who the target is and share the overall strategy and mission. You then allocate the bulk of your resources to get that done. Whatever is left over can be used for their projects, maintenance or other purposes.
What happens when companies have individual product managers setting individual product strategy? The result is:
1) Limited resources are spread even thinner.
2) Short term thinking wins. He who generates immediate revenues gets the attention of upper management.
3) Everyone fights for Sales mindshare and the best product does not necessarily win.
4) Products lack commonality and rarely share the same user interface.
5) Sales people end up selling product features, not value propositions or benefits.
6) Engineering gets to decide the product priorities. Many times, the “sexiest” or most exciting project for them wins.
7) Mixed or conflicting messages to Sales, prospects, and customers.
So how do you prevent this?
An organization must align with the customer and develop its strategy around customer alignment.
You focus on the target customers and put yourself in their shoes:
1. How do they buy?
2. How do they budget?
3. Is service money a separate annual budget?
4. Who ate their customers (internal and external)?
5. Who are the key players/influencers?
6. What does the customer want to do?
7. How does the customer want to accomplish this?
8. What does their current work flow/process map look like? What would they want it to look like?
9. What’s critical, important, or minor in importance to them? Today? Tomorrow?
10. What keeps your customer up at night?
11. What are their priorities and initiatives? Today? Tomorrow?
12. What current or future events, e.g. regulations, market forces, technology, can affect them?
13. How much growth is in their business or market?
Once aligned, you set your strategy based on “the big picture” – a portfolio of products and services designed to show that you understand the customer, the problem(s), and have the total solution with the best value propositions.
Customer Alignment provides:
1) A true overall understanding of what a target customer values.
2) A true understanding of the revenue streams.
3) Knowing where the real growth and potential are.
4) A unified & clear overall product portfolio strategy & direction for all.
5) Common branding.
6) Use product breadth as a selling point – one stop shop concept.
7) Better prioritization of resources.
8) Better control of sales negotiations with overall package pricing and discounts.
9) Engineering focused on how solutions developed versus which products to work on.
10) Easier for Sales to focus on selling solutions and benefits.