There’s a side of Product Management that many fail to fully address. New product releases are the “glamorous” side of the business. However, you must also plan for the effect on existing products!
Are existing product(s) being replaced?
What happens to orders for the older product?
What happens to active quotes in the sales funnel?
If the older products remain available, will their sell prices be adjusted?
What is the contingency plan if the new product(s) are late?
I'm sure that you have more to add to the list. These activities are usually an after-thought but they are critical. You need to communicate and work closely with Manufacturing, Purchasing, Service Support, Sales, etc. to ensure that older inventory is cleared, key accounts are not adversely affected, and orders in process are handled properly. Failure to do so can lead to expensive inventory surplus, inability to support existing users, competitive entry into key accounts...and learning the latest swear words from just about everyone.
Many companies have the philosophy of “if we build it, they will come”:
This is the typical, sad, predictable path:
1. Spend years and tons of money developing a new innovative product.
2. Create a hugely optimistic forecast that can justify the amount the amount of R&D and money spent.
3. Solicit some positive reviews from a few, friendly alpha customer sites.
4. Do a splashy release, train your sales force worldwide.
5. Get a few orders from early adopters (some of these orders are due to huge discounting to place the product at high profile sites while others are simply order conversions which would have received the older product being replaced).
6. Then…nothing. The original forecast gets cut drastically. Sales and Marketing pull out every excuse in the book: “It’s too new.” “It’s too expensive.” “The customers can’t see the value.” “They’re happy doing it the old way.”
This is exactly what Geoffrey Moore pointed out in his book: Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers.
You can have the most innovative products but you have to get past the relatively small number of innovators and early adopters that made up your initial sales and sell to the bulk of the customer base – two-thirds of which will be your “Early Majority” and “Late Majority” (aka "Pragmatists" and "Conservatives"). Couple this with the fact that today’s innovation is tomorrow’s commodity. Technology changes so fast that you have only a very brief head start for an innovation to be a clear differentiation.
As Moore states, the “Early Majority” “share some of the early adopter’s ability to relate to technology, but ultimately they are driven by a strong sense of practicality. … They want to see well-established references before investing substantially. Because there are so many people in this segment—roughly one-third of the whole adoption life cycle--winning their business is key to any substantial profits and growth.”
This important customer base is thinking: “I don’t want to be your guinea pig.” “I don’t want to rock the boat.” “Show me the money. Don’t make me try to figure out why this is good for me.” You must reach this group of prospects or your product will never gain momentum and fail.
In today’s business environment, this means mind-share and thought leadership. At this stage, you must show thought leadership and be able to articulate why your innovative approach is superior. The ultimate goal at this stage is to have early-stage, innovator-type customers who are enthusiastic champions of your solution. So how do you do this? You develop collateral such as case studies, customer testimonials, third party articles that can articulate how the solution would work in the reader’s environment and show the benefits. The reader must gain understanding and confidence in taking that step to purchase. A strong, established company with a good brand name may have some advantage here over a newer, smaller supplier.
Let’s take pharmaceuticals as an example. New drugs are usually not prescribed by the majority of practitioners if there is an existing solution. The doctor is familiar with the older prescriptions and their risks - they have no impetus to change. So a drug company has to push hard with case studies, seminars, testimonials from established experts to buy the doctors' mind share and change their perspective. This may include direct ads to the prospective patient to “talk to your doctor about the possibly of taking XXX” which forces the practitioner to at least learn about the new drug. (Drug companies are fascinating studies in marketing.)
So don't blame your sales force if you haven't done the groundwork for them.
Remember: You must have “Mind Share” before “Market Share”!
Note: I suppose that a Boston cab driver who drove me from Logan Airport years ago would be classified as a typical “Early-Majority” or “Pragmatist”. We were going through the Boston Sumner Tunnel and he told me that he would not take the new Ted Williams Tunnel when that was completed. He reasoned that there was no guarantee that it would be 100% safe and he did not want to drown with no way out. He was sticking with what worked. (Unfortunately, he was correct. A woman died when a section of ceiling fell on top of a car traveling through the connector tunnel due to failure of adhesives used.)
One of the most difficult tasks for product development is prioritizing features. It can turn into a contentious task with disagreement from different stakeholders. Features are usually drawn from a wish list based on customer feedback, sales and service feedback, management, etc. Unfortunately, some of this is biased. Management may not understand the market but insist on features discussed during their last customer visit or what they just read in the morning newspaper. Sales wants features based on their lost orders. Engineering wants to use this as an opportunity to fix the aging platform. In many instances, the squeakiest wheel, biggest mouth, or most persuasive people can get an unfair say. It a “darned if you do or darned if you don’t” scenario for Product Managers. Someone is going to be unhappy because you can’t do everything.
So that’s where Pugh’s Charts can help make the ranking and decision making easier and clearer.
Suppose that we have five possible new features to be considered, A, B, C, D. We already have an existing product and want to know if any of these possible five features would improve it.
We first must decide on the criteria used to judge the features against. In this case, we pick just five. The criteria should be based on your company goals, e.g. a specific market penetration, increased OTC sales, gaining a top 10 account, etc. and they should have upper management buy-in before you start.
Now we draw our Pugh matrix (chart). The possible features are drawn across the top, which will be judged against the selection criteria, which is shown on the left column. Notice the column named “Base Line”. This is our reference point which is the existing product that we are either improving upon or replacing. (It can also a competitor’s product or substitute.) We place a “0” for each criteria for the baseline as a start.
The next step is for the product manager or team to place a 0, +1, or -1 in each cell for "Considered New Feature" versus "Selection Criteria":
0 = no gain or loss
+1 = gain, improvement for the selected criteria
-1 = loss, detriment to the selected criteria
We then sum the values in each column for considered feature. The completed chart gives us an overall view what the rankings for each considered feature based on the sum. However, not all selection criteria are equal in importance to company goals so this particular chart should be considered unfinished and used only for “go” or “no-go” at most. In our example, "Flashing LED" and "Windows 8 Support" both appear to have the same importance because all selection criteria is treated as equal.
We now add a weight factor against each selection criteria. For example, if our first criteria of safety is a 2, and the second criteria (to meet a certain industry standard) is twice as important, we give that a weight value of four. The company edict is to grow the China market so that criterion gets a weight value of five.
If we now apply our weight factors per selection criteria against the initial assessment per desired feature, we get a much clearer and refined picture of the feature rankings.
However, we now have another missing factor: how much effort, e.g. resources and time, is needed to get each desired feature. A feature that takes 2 years to develop and release may not be as desirable as an equally normalized feature that takes 1 year, e.g. Flashing LED or Voice Recognition in this example. So we now add a row showing the relative effort required to get each feature. The value can be 1, 2, 3 or 1 and 2 in this case to represent a 1 year or 2 year effort (units for effort need to be decided). We now create a final decision factor based on the ratio of the Sum for each Possible Feature versus Effort needed – we call this the Value for each possible feature. The Value may be considered “the Bang for the Buck” very similar to the Marketing definition of product value as the ratio of benefits to cost. In our example, Chinese language becomes our top priority, followed by Windows 8 Support, Flashing LED, and Voice Recognition.
This modified Pugh Chart takes away some of the guesswork and emotions in selecting and prioritizing features. It still does not take into account those features that you always get on the wish list but miss the cut-off (they also tend to be the planned features that get chopped out when projects run out of time). In those cases, you have to either accept this as reality or twiddle with the pertinent weight value. Same principle applies to those favorite pet features of upper management. Either face up to the CEO and GM with the Pugh chart results or add another selection criteria named “The big Kahuna wants it ” aka “Keeping my job”.
The weights assigned for selection criteria and effort are not going to be 100% accurate but everything is relative so the scoring should still work out. These charts are by no means perfect so feedback is most welcome!
Much thanks to Martin Wright at Instron ITW (who studied under Stuart Pugh himself) for educating me about Pugh Charts and Bruce McCarthy for introducing me to decision matrix concepts. Bruce is a master at marketing and has a similar version (ref: http://www.slideshare.net/ProductCampBoston/prioritization-301-advanced-roadmapping-class-bruce-mccarthy).
At some point, after the information search process, a prospect gets down to comparing products and services based on particular attributes. This phase is called the “Evaluation of Alternatives or Options”.
Customers break down their buying decision criteria into basically 3 three interconnecting realms:
A - Crucial – These attributes must be available or no sale, e.g. a family may consider side air bags to be a requirement in an automobile purchase
B - Important – Features or functions still considered as priorities but some substitution may be acceptable.
C - "Nice-to-Have" – Incidentals which are a plus but to be strictly considered as bonuses in the overall buying process. For example, a copy machine may make coffee but that usually will not factor into the purchase criteria.
During the evaluation, the buyer will place different levels of importance with each attribute, e.g. safety, performance, ease of use, cost of ownership. The buyer will evaluate and rank how each brand rates on each attribute. Much of this evaluation may be highly subjective. The attributes and order of importance may be based on a customer’s particular set of problems that needs to be solved and past experience. Marketing and Sales may influence the list and order by raising unforeseen problems or benefits tied to solutions based on their product* attributes. Advertisements, Case Studies, and Buyer’s Guides are just some of the tools to influence the Buying Decision Criteria.
A Seller must understand the buying criteria from a customer’s perspective and honestly assess how their products fulfills the attributes in addition to how aligned their attributes are with the buyer’s order of importance. This also applies to assessing their competition and alternate sources.
I find the diagram above to be a clear and simple way to illustrate the customer’s buying criteria relative to one’s own product and the competition:
You will quickly see what the Buyer perceives as your strengths and weaknesses in comparison to your Competition.
From here, you can take action. Tactics may be to raise the order of importance for your unique attributes if they rank lower on the Buyer’s list, improve your offering to match the Buyer’s list and order, or exploit any competitive weaknesses in comparison to your attributes and ranking. Another important consideration is to reflect upon whether your product(s) and offerings are out of step with the market and really need technical improvement to be competitive.
* Attributes may be more than product related. They may be service support, installed base, name recognition, etc.
Sales and product people try to be affirmative with every question that a customer asks. They sometimes get nervous if they don’t know the answer or have to say “no”. Sometimes, it is actually good to say “no” or “we do not have that “, some customers get very suspicious if you just answer “yes” to every question.
In some cases, a better approach would be to start answering the question with a question: “Why do you ask?” or "Why are you asking that question?" (This may be a bit too blunt or direct and make the customer defensive, so a better statement may be along the lines of “Hmm….that’s an interesting question. Why are you asking that?”. Understanding the reasons that the customer is asking their question helps you formulate a more appropriate reply.
For example, customers often ask whether a product has a particular capability or feature. By asking why they were asking, they might reply that they were just curious or that a competitor did or did not have that capability. Often, the customer will provide you background information on their problem(s) that this perceived capability may solve. In this case, you may not have the particular feature that they were inquiring about but, by understanding the problem, you can offer a better or alternate solution.
Let’s use a non-business (and extreme) scenario. Suppose that a married man had a girlfriend on the side and his wife suddenly asked him the question, “Who is Angela?” By first asking “Hmm. Why are you asking that question?”, the man can better assess the situation and formulate his response based on the reply.
If his wife said:
1) “Some lady named “Angela” called and asked to speak with you. She hung up when I said that you were not home.”
His reply may then be “I don’t know anyone named Angela. It must be a telemarketing call with my name on the list.”
However, if his wife said:
2) “You were asleep kissing your pillow and mumbling the name “Angela” last night.”
His reply might change to “Oh! Angela was the name of my pet turtle when I was a kid.”…or he may realize the gig is up and start packing!
Hopefully, one will always be faithful and truthful in life. It was just a good example showing the power of “Why are you asking that?”
(I haven't thought out what would happen if someone replied "Why are YOU asking ME why I am asking that?")
One of my favorite business professors, Prof. Duncan Simester of MIT Sloan, gave a very surprising insight about customer searches for product information when making purchase decisions.
As customers, we all search for Information in order to make a buying decision. There is a trade-off between the cost and benefit of searching – the amount of search that customers do is a function of the cost and benefit of the search. For example, a company may rightly create a dedicated team to undertake a long, costly search for a large capital purchase, e.g. new enterprise system, because the benefit and consequences make the cost and time worthwhile. They would not do the same for the office coffee maker.
When discussing the role of prior experience, one would have thought that the novice or neophyte with the least expertise would devote the most amount of research. As one gains expertise, you would expect a number of possible paths: 1) some decrease in the amount of search, then a 2) a leveling off or increase of some order (due to expertise leading one to knowing more of what to ask).
One could arguably expect a representation of "Amount of Search" compared "Prior Expertise" to resemble something like this:
However, this is not true. The actual representation for the amount of search versus a customer's prior expertise looks like an inverted "U":
Those with the least expertise actually do not know where, who, or what to search for. (They would not even know how to interpret the information if they got it.) Information may be provided but not being received.
The ones with the most prior expertise, the “experts” also do the least amount of research because they “think that they already know”. Since they felt that they already knew the solution, they saw no need to discover new options. In their minds, the benefit of search is low. Once people have formed strong beliefs, it becomes very difficult to change them due to their bias. Duncan gave a great example of a new, promising drug failing because the doctors felt that they were already experts and knew what to prescribe based on past experience.
Note that it is not the actual benefit of the customer search, it is the perception of the benefit of searching. If customers can’t see the point in searching, they won’t. This phenomena also varies among segments and will change over time. From my own personal experience, those with engineering backgrounds can do search to the point of being anal. ( I researched beyond the "four C's" when I was buying a diamond engagement ring: angles, leakage, plugging numbers into calculators, etc. - the jeweler finally asked me if I was doing a research paper.)
So what does this all mean for a product manager or marketer? For starters, understand that your customers are not all the same based on their prior expertise and adjust your message accordingly. Avoid jargon with neophytes and focus on a more consultative selling approach. Case studies are a useful way for prospects to visualize themselves in a similar situation and help them better understand the problems that your product or service will solve. For the "experts", you may need to focus on technical, industry media / conferences and target high profile, respected leaders in that industry to help spread the message,
This topic was discussed in a very informative web broadcast by Prof. Duncan Simester, “Why Good Products Fail”:
Blackberry recently placed a paid post on LinkedIn with the comment that “We’re not the only ones questioning Knox’s security” and a link to a research article criticizing Samsung’s Knox security platform for Android.
The reader reaction was decidedly mixed and swift. Almost half the comments were negative:
Notice that the readers weren't even questioning the validity of the post or linked article (Blackberry could have been 100% correct) - they strongly objected to the delivery. Although Blackberry's target, Samsung, is not a little underdog, the audience sensed a lack of fair play.
The lesson is that outright negative selling and trash talk leads to a double edge sword. People generally don’t like it and are put off. It makes the seller look petty and small. Always strive to highlight and discuss what makes your value proposition better and present your differentiation in a positive manner without disparaging the competition.
The same applies to your personal life. Don't talk negatively or take cheap shots about others behind their backs. Stephen Covey advised that you always speak about others as if they were present. Otherwise, your listener(s) will think that you will do the same to them when they are not around and view you as one not to be trusted.
So I also left my humble comment with Blackberry:
A plane crashed into the frozen tundra in the far north. Two survivors staggered out of the plane, clothes torn and barefoot. A hungry polar bear appeared on the horizon, spotted them, and was running full speed toward them. One of the survivors started to run, and realizing that he was alone, turned around to see the second man putting on a coat and taking boots from luggage strewn on the ground. “What the @!@& are you doing? There’s a hungry bear coming! We have to outrun the bear!” shouted the running man. The second man finished tying up his boots and replied, “I don’t have to outrun the hungry bear, but I do have to outrun YOU!”
The moral of the story holds in product management and life. Don’t be a perfectionist. Often, “good enough” is all you need to win the order and beat the competition. In fact, being “perfect” may cause expensive delays and actually burden your products with unwanted features which few are willing to pay for. In this day of scarce resources and money, a good product manager or strategist knows what “good enough” is.
"Good enough" does change over time as technology, needs, and expectations evolve so it does not mean that you can be complacent.. That's what product updates or upgrades are for - and serve as a good, potential revenue generator.
There are 2 applicable rules or laws which govern "Good Enough":
80/20 Rule (Pareto's Principle)
Learn how to apply the “80/20“rule in life. Twenty percent of your work will be responsible for eighty percent of your results, so focus 80 percent of your time and energy on the 20 percent of your work that is really important. Likewise, in business, roughly twenty percent of your customers will bring in approximately eighty percent of your revenue or profit – so focus on being “good enough” for them as a priority.
The Law of Diminishing Returns
Obey the “law of diminishing returns” - to continue after a certain level of performance has been reached will result in a decline in effectiveness. This is called “bang for the buck” – you need to move on to bigger and better things. In fact, disobeying the law has dire and unwanted consequences. Think of Bruce Jenner, Michael Jackson, and all the celebrities who continued to add plastic surgery? Or a teenager who messes with a zit. At some point, they overdid it and arguably got the opposite results that they intended.
So don’t be “Mr. or Mrs. Perfect”. Know when “Good Enough” is, well, “Good Enough”.
A shoe company sent its top two salesmen to develop business in a remote backward continent with millions of inhabitants. The company didn’t hear back from either employee for 2 months so, fearing something dreadful, they went looking for them. They found the first salesman and he was despondent. He failed to get a single shoe order, crying: “I can’t believe this, but NOBODY wears shoes here!”. Begging to leave, they brought the poor soul home. The company then went searching for the second salesman, finally locating him in a faraway village. The second salesman was giggly carrying a suitcase full of orders, happily laughing: “I can’t believe this, but NOBODY wears shoes here!”
The moral of the story is not only about one's attitude but that innovation can be hard to sell. People are complacent and resistant to change. Many tablets were developed prior to the Apple iPad. PARC was the creator of the GUI, mouse, WYSIWYG, Ethernet, etc. but failed to properly commercialize and profitably exploit such innovations.
Change involves overcoming a certain comfort level, breaking custom and tradition, new costs, new procedures, processes, new learning, etc. In many cases, the “buyer” doesn’t even know what questions to ask or even recognizes/acknowledges that he even has a big enough problem that needs to be solved by the innovation. The Seller can have similar issues of not understanding the pain points and, particularly, the pain points and needs that the customer cares about (or even aware of).
(This story and insight are courtesy of Allistaire Black from Huthwaite UK who is a a fantastic teacher of SPIN Selling.)
In Star Trek, the Kobayashi Maru is a Starfleet Academy training exercise designed as a no-win scenario. The cadet crew receives a distress call from the civilian freighter, Kobayashu Maru, disabled in the Klingon Neutral Zone, and any Starfleet ship entering the zone would be in violation of the Organian Peace Treaty. The approaching crew must decide whether to attempt rescue of the Kobayashi Maru – violating the treaty and endangering their own ship and lives – or leave the Kobayashi Maru to certain destruction by the Klingtons.
Students inevitably try to save the freighter and end up not only failing to save the doomed ship, but also sacrificing themselves to no avail. In the Start Trek series, Captain T. Kirk was the first cadet to win (on his 3rd try) – by reprogramming the computer so that it was possible to rescue the ship. In effect, he changed the conditions of the test and rules of the game. (This is very much in line with Stephen Covey's first rule in the "Seven Habits of Highly Effective People": Recognize that you are the Programmer in life.)
So how many “Kobayashi Maru”s are you presented with every day when you’re told this or that cannot be done for set reasons, e.g. “It’s not part of our process”, “...outside of our Standard Operating Procedures (SOP)”, or that “You cannot fight City Hall”? One of the biggest problems with SOPs and procedures are that people treat them as something that Moses brought down from the mountain, written in stone, and unchangeable over time. Processes, rules, and procedures can and should be changed with the times. However, in many other cases, you cannot be a James T. Kirk and rewrite the rules, e.g. you cannot create a “win-win” when it is definitely a “no-win” situation, e.g. the market requirements cannot be fully met by the engineering team due to resources and time or a customer just hates your company without a clear reason.
So What Do You Do with a Kobayashi Maru?
1. Always think like James T. Kirk: “I don't believe in the no-win scenario.” When there’s a will, there’s a way. Rewrite the rules. Change the game. There was an evangelist named “Reverend Ike” who preached prosperity theology. Supposedly, when questioned about the biblical verse: “It is easier for a camel to pass through the eye of a needle, than for a rich man to enter into the kingdom of heaven.” Rev. Ike replied “A rich man can buy a bigger needle.” Leonardo da Vinci and the Wright Brothers challenged the law of gravity with flight. We talk about shifts in paradigms, thinking outside the box (apologies since I hate such clichés).
2. Destroy the Kobayashi Maru yourself - In “Stone and Anvil”, Mackenzie Calhoun realizes that it is impossible to rescue the Kobayashi Maru so he destroys it himself! He also reasons that it is more merciful to kill the civilians outright rather than let them be captured and tortured; and he assumes that the ship itself was a trap. In real life, your Kobasyashi Maru’s only suck up time and energy to your eventual demise. If your product does not meet the market requirements and you cannot get it completed, then be honest and sink it rather than waste additional release resources. If you are in a bad relationship, get out before it gets worse! (In this case, get out, don't literally destroy your boyfriend or girlfriend. It's illegal.) Too many people are afraid to tell the Emperor that he is not wearing any clothes. Emotions and people are involved so It’s a very difficult but necessary decision. Sometimes, you have to move on. In a Machiavellian world, mercifully ending the Kobayashi Maru’s will allow you to focus on better and more profitable efforts, e.g. investigating how the Kobayashi Maru got stranded to prevent future recurrences, aiding others, etc.
So don't be afraid to face and deal your Kobayashi Maru's in life.
Live long and prosper.
Do you wonder why a seemingly happy customer ends up considering or buying from a competitor? The sales engineer tells you that he never heard of recent dissatisfaction. In fact, he gave them two free software upgrades a few years ago when they changed operating systems. Where was their loyalty?
Customers buy from a company that delivers a solution for their problems and offer the best value. Customers leave or quit a company because it failed to deliver on expectations or customer service.
Matthew Dixon, Nick Toman, and Rick DeLisi in their new book, The Effortless Experience: Conquering the New Battleground for Customer Loyalty offers some fascinating facts about customer service and loyalty:
Companies fail to understand the customer journey – what the customer experiences and cares about after installation until the next purchase. Customers care primarily about two things: 1) getting things done efficiently and effectively and 2) getting their problems resolved quickly and efficiently. It means having a product or service that delivers on expectations and, in times when it does not - being able to reach someone quickly and conveniently, customer representatives who can make real-time decisions, resolving issues during the first company contact without being passed around or starting the conversation all over again, to have a company contact take ownership of the customer problem and resolution, and lastly, to keep a promise of when the customer will get a reply or resolution. Dixon, Toman, and Freeman called it "making it easy for the customer", creating loyal customers primarily by resolving their problems easily and quickly (ref. 1).
I can think of 3 companies who excel at developing customer loyalty:
I was impressed when I watched JetBlue deal with a cancelled flight in Baltimore. They offered a stranded customer the next scheduled flight out of Baltimore or another earlier flight out of Ronald Reagan Airport in Washington, DC – with JetBlue paying for the taxi ride there. The JetBlue representatives were engaged and empowered. I saw complimentary snacks and drinks on carts out at the gate for stranded passengers waiting for the next flight out. So not only was JetBlue addressing issues no. 1 (getting stranded customers onto an alternative flight), it was proactive to address corollary issues – crowded gates with stranded, hungry, and thirsty passengers.
Amazon just does it right. Most frequent requests, e.g. product returns, order tracking, cancellations, can be done online and almost instantaneously without human interaction and they reply to online inquiries within 24 hours, if not much faster. Should you have to call, there is the option to have them call you back and they will know exactly which order or situation you were calling about. In many cases, people will prefer one channel to interact, either online or telephone. People do not like to switch “channels” unless they have to and even then, do not want to repeat their needs from scratch.
The representative always seem to know your last conversation with them so you don’t have to start from the beginning…and they take care of you in one interaction.
What’s Killing Most Companies in Loyalty
1. Pushing Customer Service Efficiency. Customers can feel the pressure when a customer support representative is trying to rush and end a call at the expense of listening, understanding, diagnosing and solving the customer problem. Customers don’t get angry, they get even,
2. Compartmentalizing groups and bureaucracy – No one likes to be passed around and having to start the conversation over. The worst is being transferred and lost, then having to start over. (At the very least, companies should take down the contact information so that they can call the customer back if lost.)
3. Untrained or outsourced customer service – customers get frustrated dealing with off-shore or contract staff clearly reading from or consulting scripts with programmed replies.
4. Incomplete Product Releases – incomplete/poor documentation, incomplete help in products, un-intuitive user interfaces or operation, not fixing known bugs lead customers to initiate contact, yet these are things that could be could have been foreseen and corrected prior to product introduction. A company skimping on user training leads to more calls to customer support. Remember the saying: “A stitch in time saves nine”.
Companies are focused on innovation which, in most of cases, refers to product innovation. Product innovation is only part of the customer experience, the majority of the experience will be customer and company interactions, and those interactions will determine how the customer thinks about doing business with the company in the future.
Steps to "Make It Easy"
Companies try to profile, map the process for customers, and understand the problem(s) prior to the initial sale. The next steps (which are rarely taken) is to do similar exercises to be in the customer’s shoes when they need to solve problems after the initial sale:
1. What are the most common reasons or problems that a customer may need to contact you for assistance, e.g. product return, product assistance, down machine during warranty period?
2. How many of these reasons or problems could be proactively resolved so the issues go away, e.g. better documentation, product enhancements, including extra pieces for assembly?
3. What channels, e.g. online FAQ, online chat, telephone, are available for the customer to contact your company for assistance?
4. Flow chart the steps with company contact name and time required in each channel to get a problem resolved, e.g. steps to return an item with full refund.
5. Identify the obstacles in each flowchart (step 4) that prevent resolution with the first company contact.
So understand how a customer interacts with your company after the sale. Eliminate the obstacles. Empower your staff to solve problems instead of hiding behind policy statements. Ensure that they find it easy to get the resolution and answers they want and through the first contact.
Ref 1: Stop Trying to Delight Your Customers by Matthew Dixon Karen Freeman Nicholas Toman - Harvard Busoness Review July - August 2010
Many companies do two types of surveys:
1) Customer surveys to learn about a customer's profile or
2) Post-sales or post-installation surveys to gauge the buying and product installation experience as a means to measure the customer’s overall initial satisfaction.
The problem with surveys are that they don't necessarily provide accurate data and can be intrusive:
1. They interview the wrong people. In B2B, the buyer (decision maker) and end user is usually not the same person. I once received a very unhappy post-installation survey where the respondent complained that the system was too complex so I called the user immediately to get details and resolve any issues. The user received my message and passed it to his manager (the buyer). His manager was kind enough to reply and told me to take the comment with a grain of salt, sheepishly saying that the user was an older gentlemen who found technology, including his cell phone, challenging. In fact, they were waiting for him to retire so they could get someone else on the system.
2. People are too new or intimidated to answer truthfully. Some people just don’t know or haven’t had time to get familiar with the product.
3. There is a “Honeymoon” period where everything might be wonderful when a new, pretty looking product shows up. Asking 10, 30, 60, or 90 days after the initial installation will likely give you different results.
4. Personnel changes during the life of a product. The initially trained users who understood what they purchased may leave and new, less or untrained users take over blaming the product for any shortfalls – and their views will be considered during the next purchase.
5. You’re more forgiving when things are under warranty and you don’t have to pay to get it fixed.
6. On a scale of 1 to 5, some people never give 5's even if they experienced a "5". A "5" may equate in their minds to be the ultimate orgasmic experience which is hard to benchmark without more experience.
7. You don’t want to upset or offend the sales or service staff since you may have to work with them for the near future.
8. There are plenty of ways to skew the data. I once watched a Sales representative complete the survey form in the shipment with the customer – which made the customer very uncomfortable (the company moved to a third party survey service to avoid this from recurring).
9. People get tired and start making things up to finish surveys, especially long surveys. I was constantly pushed by a bank to complete a survey each time I did business with them. I didn't have the time nor wanted to share personal information. Yet, I felt bad for the bank customer representative because she admitted that no one liked it but that she had no choice because her manager mandated that she do this. So I answered the questions but just to appease them, e.g. Q: What are you saving your money for? A: To build a rocket ship to the moon. Q: How do you invest your money? A: Contraband. So how useful was that survey for anyone involved?
Surveys do have their place but you have to know when and how to use them, as well as be very careful with the results.
Age old question: Do you give your best discounts to new prospects or existing customers?
Every argument is legitimate. Couple them with these other arguable "axioms":
So what is the answer? Do you give your best offers and discounts to new prospects or existing customers?
Answer: It depends. You need to determine; 1) how valuable the customer is to you and 2) how flexibility the market and shopping around is for the buyer.
Customer Value means profit. Pareto’s Principle (80/20 rule) applies: Approximately 80 percent of your profit will come from ~20 percent of your customers. These are the customers who buy your higher end products and services, subscribes to updates, routine services, etc. There are other customers who do cost you more than they are worth through buying low volume/low margin products, requiring extra support, are remote, never being happy, bad mouthing you, etc. Focus on the customers who bring in the money and keep them happy. Learn to treat the others differently so that they don’t drag you down, e.g. charge zone fees for services, give priority support to your premium customers,even raise prices or minimum order levels for the less profitable customers.
Flexibility refers to how easy is it for the buyer to shop around and switch. In the home improvement business, Home Depot and Lowes are almost always near each other so the buyer can easily go the store he likes. People can now go online to make most purchases. Flexibility may be based on personal factors and the particular situation. For example, many at work buy auto insurance from an affinity company that offers direct payroll deduction. They might like another insurance company but the direct payroll deduction makes the auto insurance easier to buy and renew.
Yale University Professors Jiwonong Shin and K. Sudhir studied the idea of "punishing or rewarding current customers" in their 2008 paper "A Customer Management Dilemma: When Is It Profitable to Reward One's Own Customers?"
Their general rule is:
In only one situation do they suggest going after the existing customer base: customers with high value and high flexibility. Going after new prospects should take precedent in all other scenarios.
The "rewarding" of customers does not necessarily have to be straight forward offers or discounts during the next purchase request. In the Business-to-Consumer world, many businesses use frequent user clubs where purchases become member award points that can be redeemed in some future form. Free hotel, airline seat, or car model upgrades are reserved for high value customers.
It's a good general rule although human emotions tend to turn most situations into individual exceptions, especially when a customer threatens to go take his business elsewhere. Do try to understand whether you have a "good" or "bad" customer, cater to the 20% of your customers who make the most contributions to your purchase volume and profit, and learn how to treat your less profitable customers differently.
The natural reaction for most companies is to lower prices when a competitor cuts prices or discount. This is a vicious circle where all parties fight a war to “race to the bottom” - even the winner loses. We all know the proverbial "Four P's in Marketing" so when one P (Pricing) is under pressure, consider changing the customer perceptions of price by exploiting Product, Promotion and Placement.
Develop a Fighting Brand. Wikipedia Definition: In marketing, a fighter brand (sometimes called a fighting brand) is a lower priced offering launched by a company to take on, and ideally take out, specific competitors that are attempting to under-price them. Unlike traditional brands that are designed with target consumers in mind, fighter brands are created specifically to combat a competitor that is threatening to take market share away from a company's main brand.
The challenge is to make the fighting brand just “good enough” to beat the low-priced rivals but not so good to cannibalize your premium brand’s market share or profit margins.
Improve Your Product (Better Customer Value Proposition)
This may be by product enhancements, services, knowledge, or bundling. Have a better understanding of the customer so that you can understand the “pain points” and better sell your differentiation. Work with 3rd parties to complement your product and grow your ecosystem.
Promotion can move the focus from price to brand, image, and competitive differentiation.
Expand and go for niches. Work with key buying influencers. For example, certain committees or associations may decide on industry standards - you want to ensure that your products meet those requirements and possibly get mentioned as a source. Try to form partnerships with distributors or supplies. A large global organization may find it more efficient to deal exclusively with one supplier. Go for niches where you can leverage your market and application knowledge. Work with 3rd parties to complement your product and grow your ecosystem.
In Marketing and Product Management, you always build on the four P's and can sometimes compensate for a weaker P with the other 3 P's. In other words, watch where and how much you are "P'ing".
“Stop crying or I’ll really give you something to cry about!”
How many times have I had to pause when my mother was punishing me and saying those words simultaneously? Okay, let me get this straight – I am crying because you are whupping me but you want me to stop crying or you will hit me some more?
Little did I know that I was being introduced to the "Stroop effect" at an early age (and re-introduced for many more years to come)...
The Stroop effect is well-known in psychology and describes an experiment about the time it takes to name the color of printed words. When asked to say the incompatible ink colors in which a list of color words is printed (e.g., to say "blue" in response to the word "yellow" printed in blue ink, "red" in response to the word "green" printed in red ink, and so on), people have a temporary mental block and can't do it quickly. However, when asked simply to read the same list of words (e.g., "yellow" in response to the word "yellow" printed in blue ink, etc.), people fly right through the task.
In most cases, you should have a difficult time with the Stroop experiment above because part of your brain is fixed on the text colors while you are trying to focus on the words. You don’t usually expect things to be so disjointed.
Why should you care about the Stroop effect?
The Stroop effect is really about removing distractions and having consistency to enable efficient completion of tasks. Cut down on all the “noise” that gets in the way of a clear message. It also points to our selective attention, our conditioned processing (for words vs. colors, etc.), mental preference for congruence, and struggle to filter out noise in thinking and working.
As a manager or communicator, your message must match your actions and behavior. Is it “Do as I say, not as I do?” Remember the old joke, “Beatings will continue until morale improves”? It’s difficult for people to do what is asked when they see a conflict in reality.
In product design, pay attention to color, fonts, and graphics. For example, people love to use icons. It’s modern, compact, and saves on translations. Ensure that it truly is universal and easy to understand. For example, we still use a disk graphic to represent “Save” yet an increasing number of adults have never seen a floppy disk. In some cases, text accompanying icons, via hover help or an actual label, may be more user-friendly and efficient.
Your Brand is also subject to the Stroop effect. Ensure that all customer “touch points” when interacting with you, e.g. design, customer communication, collateral, service, etc. are all consistent with the message that you want to convey.
In Marketing, the Stroop effect implies that people are conditioned to respond more to concepts and words that draw them in mentally and emotionally (versus a product). You can see in the Stroop experiment the power of color.
So keep the Stroop effect in mind in all that you do or convey...otherwise, you might just get the opposite of what you want!
How do we typically plan new products and decide where we compete? Most companies segment their markets. They may divide their market into product categories, e.g. function or price (high and low tier) or segment the customer base into target demographics, e.g. age, gender, income. B2B (Business-to-Business) companies usually segment by industry and company size or by buyer profiles.
Clayton Christensen, one of the most prolific business professors and influencers from Harvard Business School, suggests that this segmentation is a major fail. People within a certain demographic don’t buy because of being within a certain demographic segment. For example, 12-18 year age teenage girls don’t go ga-ga over Justin Bieber just because they are 14-18 year old teenage girls. It may be a correlation but not the cause. If you can find the cause, you can create the right product.
Rather, Clayton suggests thinking about products as being “hired” to do a “job”. Think of people as not “buying” a product or service but “hiring” it to solve a problem, then provide a product that can deliver the necessary result(s). Each job has functional, emotional, and social dimensions. You must get into the mind of the customer, follow him or her throughout the day, and as Clayton suggests, ask “Why does he do it that way?”
Professor Christensen gives a profound example with his famous “milkshake” experience. A fast-food restaurant wanted to improve milkshake sales. It followed the classic segmentation by product (milkshake) and then by customer type (who most likely will buy milkshakes). So they followed the normal opportunity evaluation route of asking people who fit that particular customer type profile to evaluate the product and provide feedback (read: feature changes). The feedback was clear but product “improvements” based on this feedback did not increase sales.
So a new researcher went in and watched when and how each milkshake was purchased, the time and whether other items were also purchased, whether they drank it at the store, etc. It turned out that 40% of all milkshakes were bought in the morning, with nothing else, and buyers took them back to their vehicles. So the researcher then asked customers basically (but not in these exact words),”What job needed to be done when you came here to hire that milkshake?” The answers were that these customers had a long commute, weren’t really hungry but knew that they be hungry soon, and wanted something to keep them going until lunchtime. They also had an extra hand to keep busy and wanted to make something to make the commute interesting. Other products such as a bagel, banana could not do the same “job” (too dry, didn’t last long enough, etc.). However, a shake was nice and thick, took time to suck down, was clean, and kept you full until lunchtime.
So now, by understanding the job that needed to be done, the fast food company knew how the milkshake could do the job better. Make the shake thicker so it lasts longer. Add fruit bits so it’s more interesting during the drive. By understanding the job that the product is supposed to do, you end up growing the category. It’s not just milkshakes but taking share from bagels, donuts, etc. (Think about this: milkshakes were not even being considered a breakfast item when classic segmentation is applied!) The product is improved and the market is expanded by knowing all dimensions of the user experience (the ultimate user experience).
Professor Christensen's talk about his Milkshake experience is linked here:
Customers will only buy your product or service if they:
Remember that customers do not buy features, they buy benefits – and they select a product or service based on the total value offered.
Paraphrasing & Quoting Wikipedia:
Value is the relationship between the consumer's perceived benefits versus perceived costs of receiving these benefits. It is often expressed as the equation:
Value = Benefits / Cost
The customers get benefits (e.g. productivity, additional revenue, labor savings, etc.) and assume costs (e.g. purchase price, implementation, training, maintenance). Value is subjective (i.e., a function of the customers’ estimation).
Quite simply, a business wins an order by convincing a customer that they provide more value than other businesses. Customers, particularly those technically inclined, do not buy based on fluff and tend to rationalize any buying decisions. I have heard too many product and marketing managers justify their pricing premium with broad statements such as “We’re the name brand”, “We have the best specs”, “We’re easy to use”. Those statements and $2.50 will get you a ride on the NYC subway. Sounds like motherhood and apple pie.
You need to quantify for the customer and yourself what are the unique differentiators and the value that they bring to the customer versus the next best alternative.
Let's use a new car purchase as a simplified example:
You are looking at justifying the purchase of a Ferrari.
Economic Value Analysis (EVA)
By using an Economic Value Analysis (EVA), you can determine how much value you offer, how much more it costs a customer to work with you, and what your net positive unique value is to a customer. Many of the values change depending on customer and marketing segmentation. An EVA avoids fluffy propositions and forces you to "put your money where your mouth is". You attach a dollar value to each product feature/benefit to help quantify its worth to a customer. You can also consider it as visualizing your pricing and value positioning.
For an EVA, you need to determine :
Determine the Economic Value before negotiating with your customers. An Economic Value Analysis will help you substantiate your net unique value in quantifiable units of measure that a customer cares about and will help justify your premium.
There was a TV show named “The Dating Game” where a bachelorette would ask questions to three bachelors, hidden from her view, and then choose one to go out for a date at the end of the show. Each male contestant would try to stand out from the others by showing swagger, being witty, and sometimes have put-downs of their rivals. “Bachelor No. 2 – How would you describe a romantic night out with me?” “Well, Bachelorette, I would pick you up in my Ferrari, then we fly to Paris in my personal jet for dinner, and finally to my home to play Xbox (my mother makes a delicious cup of hot chocolate).”
Life is “The Dating Game” whether you are dating, working, or selling...
Why should I buy from you? Why should I hire you? What separates you from the crowd? These questions apply to you as an individual and to your company, products or services. This is the premise of branding.
You start to define your brand by creating a positioning statement. This is a short synopsis of who you are and what makes you special - the proverbial "2 minute elevator pitch". It helps others match you with what they need, see value in what you offer, and clarifies your niche and articulates how you want to be perceived throughout your community. It strengthens your identity by helping you see yourself through the eyes of your “customer” and highlighting that "one thing" (or "big things") that sets you apart.
Take your time to think about and internalize these Starter Questions:
1. Who are you? What do you do?
This should come from your mission statement. (All individuals should have personal mission statements regardless of whether they are doing personal branding or not.)
2. What are the specific needs or problems of the market that you serve? How do you satisfy those needs or solve those problems?
Think of three specific and unique ways you can address these needs or problems.
3. Who are your preferred customers? What is your value to these customers?
Identity who you trying to sell to. You cannot be all things to all people so think about which customers you wish to target and why they would choose you. Think about what the customer cares about and what your compelling value propositions are. (Determine your single most compelling value proposition, the top three, and no more than a total of five to maintain focus.)
4. Who are your competitors? What unique benefits set you apart from the competition so that the customer chooses you?
Each product or service has a different set of competitors so carefully identify them and determine what differentiates you enough so that the customer selects you. Define the criteria that customers use when making purchase decisions. Remember all benefits and values are compared relative to the competition.
After answering the above starter questions, you can construct the positioning statement in several ways but I like these two slightly different templates. Template 2 is a modified version of a template from personal branding expert and author, Karen Kang. I got to meet her (fabulous person) and highly recommend her book, "BrandingPays".
Remember that you may have different positioning statements for different products and situations. Be the contestant that stands out and wins in your daily version of "The Dating Game"!
A file with both templates can be downloaded here.
Instead of a typical brainstorming meeting where either everyone sits in silence waiting for ideas to come up or Type A personalities take over and effectively shut off participation, try a “Gamestorming” session.
I used Gamestorming to:
The core game that we “played” was “Post-Up” where players generated ideas on sticky notes (3M Post-It Notes™) and shared them later by sticking them on the wall or flip charts.
How to Play:
“Fire Starting” is the 1st step in Gamestorming – create a spark or light a fire to get the ideas flowing and spreading.
Fire starting can be an open question: “How would you make Product X easier to use?”, “What would you change in Product Y?”
I went with fill-in the blank sentences since I wanted to focus on specific topics, e.g., “For Reports…I want ____.”, “For Indicators…I want______.”
Each fill-in sentence was projected on a screen (you can also write them on a board) one at a time. Each team of 2 people brainstormed together, writing each idea or thought onto a separate sticky note. Each team had their own colored sticky notes. Everyone was given a set amount of time before I moved onto the next topic via the related fill-in sentence.
After all topics were revealed, each team went up to stick their notes to individual walls for each topic and also quickly present their ideas to the entire group.
Teams often had new ideas based on what they were hearing from other presenters and were encouraged to post up new sticky notes.
At the end of the exercise, you can see patterns: sticky notes with the same or similar idea, categories and subcategories. The next step may be to create an affinity map which is to sort topics and categories (I did not since I already started with topics), prioritization of ideas, further discussion of value/effort for each idea, etc.
The Post-Up game generated literally walls of ideas, sparked some real creativity, and participants had a fun time. So try injecting play into your ideas exploration and gathering – a colleague coined my ideas on games at work as “funication” (catchy but possibly career limiting name)!
"Post-Up" is one of the core games described in the book “Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers" – by Gray, Brown, Macanufo.
Have you ever looked at a company’s activities and wonder “What does any of this have to do with getting and making a customer happy?” Show me a company that bases their strategy on internal operations, activities, and metrics and I will show you a company that will fail.
"Who Are You Competing Against?"
Improving productivity, inventory turnover and other internally focused activities alone means making investors happy, but has nothing to do with getting business. In this case, who are you really competing against? Your own old “self”! Such improvement is good, but only in the context of having a goal to gain an advantage against competitors with a set of customers - so that these customers say, "I want to do business with this company!" You need to know how to make customers happy in a way that brings about competitive advantage. Strategy is having a "where to play" and "how to win" against competitors.
You can always have a strategy to win in a certain way in a certain place. The US military changes its organization and equipment based on who and where they are going to fight. They recognized a new world order where Russia is no longer the main enemy and large armored divisions are not going to work. They changed their strategy to emphasize fast, mobile strike specialized units. JC Penny totally sunk itself (and got the CEO fired) by working on mini-boutiques, improving sales per square feet which had, arguably, nothing to do with winning customers from Macys, Target, or other department stores.
Operational Effectiveness vs. Strategic Positioning
1. Operational Effectiveness is creating, making, and selling a product or service faster, cheaper, and with less defects. You do not win on this alone in the long run nor is it sustainable since competitors can eventually emulate this.
2. Strategy or rather, strategic positioning, is about doing things that differentiate you from others for a sustainable competitive advantage. It's about doing similar activities differently or different activities from similar competitors. Great example of this: Starbucks offers high quality coffee in a bistro-like ambiance.
Remember Michael Porter’s “What is Strategy”:
1. Strategy is the creation of a unique and valuable position, involving a different set of activities.
Strategic position emerges from three distinct sources: 1) serving few needs of many customers, 2) serving broad needs of few customers, 3) serving broad needs of many customers. In other words, find niches.
2. Strategy requires you to make trade-offs in competing—to choose what not to do. You cannot be all things to all people. As one of my programming colleagues said when I pushed him too hard, “We can do anything. We just can’t do everything!”
3. Strategy involves creating “fit” among a company’s activities. McDonald’s tested McPizza and customers just were not willing to wait (it’s supposed to be “Fast” food!). Pepsico owned KFC, Pizza Hut, Taco Bell but spun them off to create YUM! - just did not allow them to focus their activities.
So always know who you're really competing against, know your strengths and weaknesses, look for niches, and be disciplined not to bite off too much when formulating your strategy.
One of the top buzzwords today is “innovation”. Many equate innovating to pioneering – being the first to market, creating and dominating a new product segment or business model. It’s true that some real innovators, e.g. FedEx, SouthWest Airlines, Amazon, have created some truly successful businesses but these are exceptions rather than the rule. Just like pioneers in real life history, most get shot down by arrows in unexplored territory. The truth is that timely and effective execution of an adequate imitation is more important than innovation.
Pioneers do have a market advantage if they can lock in key customers, suppliers, or intellectual property (e.g. patents). The key is to build up market share, brand awareness, and an ecosystem that hinders upcoming competition. YouTube and LinkedIn have done this and have become dominant exchanges. In other instances, it pays to wait and learn lessons from earlier players. The pioneering Osborne was the first successful personal computer - widely imitated and then overtaken by several other computer companies who improved on deficiencies.
The paper “Entrepreneurs' Decisions on Timing of Entry: Learning from Participation and from the Experiences of Others” written by Moren Lévesque, Maria Minniti, and Dean Shepherd in Entrepreneurship Theory and Practice, Vol. 33, Issue 2, March 2009 states that the decision to be the pioneer depends on how “hostile” the learning environment is - how much entrepreneurs can learn by observing other players before they launch compared to what they learn from participating after they enter.
Patrick Barwise, Emeritus Professor at the London Business School, wrote in The Myth of Pioneer Advantage, that in new markets, it is not the pioneer but what he coins as the “fast follower” who reaps the rewards, specifically the fast follower with “a mass-market perspective, willingness and ability to invest in scale and marketing, a focus on customer understanding and continuous improvement, and an existing customer base. The follower learns from the initial market response to the pioneer’s offer, improves that offer, scales up production and distribution, reduces cost, and builds a dominant market share during the new category’s critical early growth phase--which it also helps to drive by investing in marketing as well as in distribution and production. Once the successful follower has established market leadership, it can (and should) aim to be the “first mover,” with relentless incremental and adjacent innovations, to sustain its lead. At that point, there is an advantage in being the first to innovate.”
A perfect example is the famous story of how Bill Gates got rich. Gates started by licensing the DOS operating system software to IBM - software originally named QDOS that Bill Gates actually bought for $50,000. IBM engineers then debugged it further for market release and IBM/Microsoft did all the steps outlined by Professor Barwise to mass market DOS as the dominant PC operating system. Microsoft arguably took steps to also become the “first mover” by incremental updates and to DOS, then moving to Windows 3.1*, etc.
Innovation is critical but effective imitation and timing should never be overlooked. The early bird can catch the worm but the second mouse gets the cheese. It is a matter of situation and timing.
*One may argue that Microsoft stole the Windows GUI from Apple. This still supports the “fast follower” concept (and it could be further argued that Apple was a fast follower who imitated Xerox PARC for the mouse and GUI).
There are times when you simply cannot win the customer or order. No different than wooing every girl, boy, or whatever. It’s a fact of life. There may be perceived and unspoken reasons behind a customer buying decision.
Examples of Perceived or Unspoken Buying Decisions
1. Bias – Some believe that goods made in certain countries are superior or flawed, e.g. “Typical German Engineering”, “Made in China”. Bias can also be some form of discrimination - you may remind the buyer of her ex-spouse (and she hates her ex-spouse).
2. Customer Affiliation – A customer may have some relationship with the seller, e.g. Alumnus of same university, the other company has "Paisanos” (fellow countrymen). I once dealt with what appeared to be a stubborn prospect and offered every point which could not be countered. Exasperated, I asked him why he would not consider us. He finally told me that he was an investor and consultant to a small competitor.
3. A Bad Taste From the Past – They were burnt in the past by your company directly or by an affiliate.
4.“The Invisible Hand” – There may be external decision makers pulling the strings or applying pressure, e.g. A customer whom they supply to may recommend another brand or the buyer's own upper management may have some undue influence, e.g. their company president is on the board of the company you are competing against (true story).
5. The “Underdog” Effect – Discussed in an earlier article, the buyer identifies with a scrappy competitor and wants to help them survive or succeed.
6. Personality Clash – They don’t like or trust the Sales person, Service person, etc. for some reason. Sometimes, bringing in your "Top Gun", an upper manager, can backfire if they are too aggressive and antagonize the customer. Some companies employ "diagnostic selling" using questions to understand the customer problem to the point of a "Spanish Inquisition" which puts the customer on the defensive.
So know that no matter how great a product or service you offer and how many valid customer value propositions that you can show...there are times when an unspoken or perceived factor may influence the buying decision. Try to discover them so that you can take corrective actions - a customer who likes and trusts you may be more open to share these issues.
There's an old joke about set minds:
A man goes to a Psychologist and says, "Doc, I got a real problem. I can't stop thinking about Whoopee." The Psychologist says, "Well, let's see what we can find out", and pulls out his ink blots. "What is this a picture of?" he asks. The man turns the picture upside down, then turns it around and states, "That's a man and a woman on a bed making whoopee." The Psychologist says, "very interesting," and shows the next picture. "And what is this a picture of?" The man looks and turns it in different directions and says, "That's a man and a woman on a bed making whoopee." The Psychologists tries again with the third ink blot, and asks the same question, "What is this a picture of?" The patient again turns it in all directions and replies, "That's a man and a woman on a bed making Whoopee." The Psychologist states, "Well, yes, you do seem to be obsessed with Whoopee." "Me!?" demands the patient. "You're the one who keeps showing me the dirty pictures!"
Watching Apple, dominant in the smartphone and tablet markets, get taken on by Android, Samsung, Amazon, etc. offers a glimpse into consumer mentality and psychology.
I’ve had the good fortune of working with companies that dominate their markets. My current company, Instron, is the world’s largest materials testing systems manufacturer. The name brand is so strong and ubiquitous that scientists and engineers refer to any test system as an “Instron” just as “Kleenex” became synonymous with tissue. (All this was hard earned with years of innovation, dedicated employees, and a customer satisfaction rating on par with Lexus.)
“No One Ever Got Fired for Buying IBM”
Being dominant has its privileges. Prospects know to call you when they are shopping for your type of products. You command a certain amount of industry respect and it is worth some points of trust when it comes to purchase decisions. There used to be a saying “No one ever got fired for buying IBM” meaning that no one gets fired for making the safe pick and choosing an industry leader. Other companies might have better products or offer lower prices, but they often come with greater risks. In the 1990's, the phrase became: “No one ever got fired for buying Microsoft.” The same mentality happens for other products: “Get an iPhone/iPad...you can’t go wrong”.
The “Cool Factor”
However, the market can fickle. “Name dropping” is a common sales and marketing tactic where you establish credentials by naming some of your best known customers or clients. It’s also a way to impress your prospects and show that, they too, can be in the same club as existing users. It doesn't always work. First, it’s a customer privacy issue – some users are reluctant to appear in promotional materials. In another case, some prospects are “renegades” – they just don’t want to use the same products as others, including their own colleagues. You can make an argument that some people shy away from Apple or Microsoft so that they can be seen as different. I personally got an Android phone because almost every person whom I know had an iPhone – how uncool would it to be part of the herd? Samsung came out with a brilliant ad in 2012 showing a young man waiting in line (presumably at an Apple store) with a bunch of hipsters. It turns out that he is saving a spot in the line for his parents, alluding that the iPhone 5 is meant for the older generation, and uses a Samsung Galaxy S3. So market dominance has to be carefully balanced with the danger that you are suddenly “uncool”. Facebook is no longer “cool” once kids found their parents and grandparents trying to friend them (I'm still waiting for my nephew to accept my invitation from 3 years ago).
Badmouthing the Competition
A less dominating competitor also has more of an opportunity to attack the market leader directly. Pepsi used to always attack Coke by name. It’s difficult for the market leader to reply in kind since they have to acknowledge the competitor and it looks bad when you’re number one (you have more to lose with such a tactic). Apple was able to take shots at Microsoft in the past in the PC arena (particularly with a respected cult figure like Steve Jobs and when they were a small player). Their famous “1984” Orwellian ad played on the Apple Mac liberating worker drones from a colorless world dominated by “Big Blue” (IBM). Yet such a tactic backfired when they became the "leader" in Smartphones - their recent attack on Samsung prior to the Galaxy S4 launch was deemed “defensive, classless, and even desperate” by critics.
The “Underdog” Effect
Generally, you don’t raise yourself up by talking someone down but smaller competitors seem to have some leeway here. The leeway may be attributed to the “underdog effect". People like and root for underdogs, the one who seems to be at a disadvantage and has to struggle. There’s a “feel good” to helping them especially when the buyer identifies with the "underdog". Some buyers will buy simply to give a small, scrappy competitor a chance. However, even big companies take advantage of this effect. Nantucket Nectars drink ads feature the founders – who never mention that they sold out to The Dr. Pepper Snapple Group.
Innovation and Trust
As Mel Brooks said in “History of the World, Part 1”: “It’s good to be the King!” Innovation keeps you and your product “cool” but be aware that being number one can be a two edge sword. You must continuously build trust with your customers and behave differently than your competitors to remain number one. If you’re not number one, look for a niche where you can be number one.
What is a key tool that the FBI uses for catching criminals? They profile them. You may have seen this on TV shows such as Criminal Minds with a a team of profilers from the FBI's Behavioral Analysis Unit (BAU). They analyze the minds of offenders to understand their motivation, their "M.O." (Method of Operation) and anticipate their next steps. As a marketing or product manager, you should be doing the same with your customers or target users.
You must know your customer before you can sell to them. Customers use products in different ways, have different problems to solve, and work in different environments. You need to have a 360 degree view of the user, putting yourself in his or her shoes, to understand their mindset, unique problems, and operating process. We call this the “User Experience” (UX). User experience is real insight from empathy and data; it is a critical way to differentiate from competitors. “User Experience” helps you create the “Product Experience” – how to differentiate your product to win and delight the user.
Key questions to understanding the user include:
1. What is The User Perspective?
2. What are the Personas & User Scenarios?
3. What’s the real need/opportunity?
4. How do/might they actually behave?
5. What motivates them?
6. What’s their environment?
Basically,, you are trying to learn the "Who, What, Where, When, and How" someone uses a product.
Your research will help you create User-centric models. User-centric models represent your users, the things they do related to your products, the things they need to accomplish with your products, and their relationship with your products.
User-centric models help your product teams:
1. Focus on the user at all times (not on the product)
2. Provide a common understanding of who the user is and what is important to them
3. Illuminate how your product will interact with the user
4. Minimize subjective debates about what features are important to users
If you have an (or more than one) easy-to-understand model that represents your user, based on research, you will be more efficient and effective in making design decisions. Two user-centric models are: Personas and Experience Maps.
Personas represent your end users. Each persona has tasks, behaviors, and motivations that your users perform that help your team make the best possible design decisions. They put your design team in the shoes of real people using their products. For example, one persona for a camera product may be a “Fighter Pilot” – A professional who knows photography and likes to play around with lens, lighting, wants total flexibility in configuration, likes connecting to other software for editing, output. A different user persona would be the “PHD” (Push Here, Dummy) – A weekend user who just wants to take family photos, does not want to fool around with settings, wants things to be as automatic as possible.
Process / Experience Maps
Process or Experience maps show how users interact with your products – you see the phases in their workflow, interactions with other people or processes (who the product “touches”), the pain points, bottlenecks, opportunities, etc. Process maps provide a high level, strategic look at how your products fit into the user’s lives and help you understand the broader context where your product is situated. No two maps typically follow the same format or layout, but they often contain a few key components: phases in the journey, touch points, pain points, and opportunities.
How to Create User Personas and Process / Experience Maps
Observing users in their environment is one of the best methods for learning the various User Personas and creating their unique Process / Experience Maps. Some called these “VOC” (Voice of the Customer), OE (Opportunity Evaluation), etc. Create a list of questions for the various users. Ask open ended and closed probing questions, e.g. If there was one thing that we could eliminate in this process, what would it be? What keeps you up at night? Who is the actual end user…an internal or external customer? Many recommend having 3 people for such visits: an interviewer, a “wing man” to observe and jump in when the interviewer gets lost or misses an important follow-up, and a scribe who usually frantically writes down everything he/she hears. (There’s a whole procedure for “Voice of the Customer” which we will discuss in the future.) Create the user experience map with your users to see if they agree with the interaction and flow.
Training customers in their environment is an other excellent method - you'll see the daily interactions, disruptions, and what they actually do versus what they say they do (not necessary the same). Involve your Sales and Service staff to help develop and refine your models.
Segmentation - Different Strokes for Different Folks
Don’t forget to apply segmentation in each of these exercises. Segmentation may be based on user attributes (gender, income, age group, market segments, regions, etc.). 18 year olds don’t necessary behave the same as 30 year olds so you want to create user personas and process/experience maps for these distinct groups. You may further “slice and dice” the segments further, e.g. 18 year old girls vs. boys, to get better understanding of the target user.
Product teams often get narrowly focused on a particular product, or feature set within a product, and lose sight of the complete user experience. User personas and process / experience maps help teams keep their eye on the big picture and generate new, innovative ideas to help make the experience better.
A very entertaining introduction and summary of UX Design is embedded below:
"Harder, Better, Faster, Stronger" is a song by Daft Punk (remixed by others, including Kanye West). Your customers sing a similar tune when making a buying decision.
A customer decision ultimately boils down to three basic categories: "Better", "Faster", "Cheaper"…and a possible fourth one in some industries and countries: "Safer”.
1. Better: Does the product or service make my process, output, organization, or my life better than prior to having it? Do I use less people so that they can do better things? Do we have less errors? Does the output look better; is it more accurate? Does my quality improve?
2. Faster: Does the product or services help complete tasks or get my product out the door faster? Save time?
3. Cheaper: Am I saving money by using this product or service? Is the return on investment positive and better than other solutions?
4. Safer: Does it offer me or my staff more protection from injury, hazards? (More protection means less liability.)
Don’t talk about features with prospects. No one cares about the one thousand features in your products unless they can relate to them.
Talk about solutions, benefits and how those benefits make things “Better”, “Faster”, “Cheaper”, and “Safer”.
Frank Lio is a Product Manager, Strategist, and Change Agent in the Hi-Tech industry. His growing track record of successes include creating 3 winning software products, leading nationwide seminars, and turning around a failing business unit. He is currently serving a dual role as Product Manager and Business Team Support Manager at Instron ITW.
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