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Browsing Tags commercialization

Stop That Focus Group!

May 3, 2013 · by Taia Ergueta

Source: Snickers Ad

The only thing worse than not having an understanding of customer needs is having an incorrect understanding of customer needs. If you think that you avoid that by going straight to the source and asking them…think again.

Here is a surprising insight from those who study the psychology of decision making. Radiolab* reports that Professor Tim Wilson of UVA did the following experiment as part of his research on choice:

Students were given the opportunity to take a free poster home: Either the well-known Cat Clinging to a Bar poster, or a poster of an impressionist painting. Half of the students could simply take the poster and half of them were also asked to write a brief description of why they chose the poster. Six months later, they were asked if they still liked their chosen poster.

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Getting Great Customer Feedback on a New Technology

October 10, 2012 · by Taia Ergueta

You’ve got very cool new technology that thousands of labs will love. The product is ready. Rev up the Introduction Machine and sell, right? Senova Systems, a company for which I am consulting, is taking a different approach. Just before the full launch they have launched an Early Access Program. I thought you would find the concept and their decisions useful.

Senova has a developed a revolutionary new technology for measuring pH that takes time, risk, aggravation and cost and out of doing this very common measurement. (For more on this see their site: SenovaSystems.com) Their first product is a handheld pH scanner called the “pHit scanner”, They have been testing the product internally all along and further testing is part of the manufacturing scale up and beta sites. But instead of launching it immediately in to the broad market, they are taking the time to do an Early Access Program (EAP).

Why an EAP?

The CEO, Lee Leonard, is a serial entrepreneur. He knows that his market comprises highly diverse applications and that there is no way for his team to test the product in all the ways that customers will use it. He also knows that as great as the technology may be, the user experience is just as important. To ensure that they launch with the kind of confidence that only comes from deep customer knowledge, he is taking the time to do the Early Access Program.

How Many Customers to Involve

I have been involved with Early Access Programs before. An Early Access Program can take various forms. It can involve a small number of customers early in the development program, getting their input at critical junctures in the process. It can simply be a way of ensuring key customers that they will have the first units. In this case, Senova’s key objectives are to understand customer use cases thoroughly and to find any unknown corner case situations that stress some aspect of the product. For these purposes, the EAP will include a large (50) but selected set of customers. By selected, I mean that they will have customers apply and will choose a set that represents the broad range of applications that use pH measurement.

Nuts and Bolts: The Terms

Here are the 2 key parts of an EAP and the example of how Senova chose to accomplish them:

Incentive: Just getting the chance to be among the first in their company or field to get their hands on a pHit is a big incentive for some customers to participate. But to ensure that the participants are real customers (not just curious technology aficionados), the Senova program is structured as a discounted Try and Buy: Each customer selected to be an Early Access Program participant, gets to purchase a pHit scanner at a 50% discount on the retail price of $1,650.00. (To give time for the “Try”, EAP customers won’t be billed until 30 days after delivery). These customers also get a money-back guarantee; if they are not fully satisfied with the scanner, they simply return it.

In addition, participating organizations will be publicly acknowledged as key influencers. (Customers can opt out of this if they prefer anonymity.)

Required Input From the Customer: You need to be very specific about what you expect from customers in an EAP. It is common for customers to be eager to participate and then get too busy to do their part ( use the product, write an app note, or whatever else you have asked of them).

In return for the above, Senova asks its EAP customers to commit to the following:

Use the product under their normal laboratory conditions for 30 days.
Provide Senova with feedback on the user experience and technical performance through structured conversations and documents.

If you want a more complete example of how to describe or document such a program, click here to see the Senova description and FAQs.

How to Choose the Customers

If you want participation during product development, you cannot afford to involve too many customers, so pick just a few from the most important target market(s). Your closest customers may not be the best participants. For example don’t involve the most demanding customers if you want a minimum viable product market entry. The intent is toto make sure you are meeting the target market’s needs solidly.

If you want to give some customers the first units either to establish key influencers or simply as reward or for their ego gratification, then your top customer list will drive the number involved.

If, like Senova, you want to experience a diversity of application areas deeply, involve enough customers to get a good sample of the full range. For example, Senova is taking applications from interested parties and will choose 50 customers that cover as broad a set of use scenarios as possible.

Bottom Line

Yes, conducting an EAP will require significant effort and attention. You may even postpone some revenue. But it is an investment in customer insight that will yield extremely high returns.

The rewards:

Additional product testing that can validate yours or find weaknesses early, when they are least costly to fix.
Develop close relationships with participating customers, leading to ongoing customer insight, potential influencing of other customers and maybe even longer term loyalty!
Usage information that can reveal additional needs, opportunities to improve design and user experience, opportunities to integrate activities or products that are upstream or downstream from your current product.
Service and self-service content.
Faster time-to-ramp based on more effective commercialization and sales efforts.
A more engaged internal team that gains the confidence and inspiration that only comes from close customer exposure.

Input Welcome

Have you done Early Access Programs? If so, what has been your positive or negative experience with them. If you want assistance with an EAP contact me by clicking here.

Your Marketing Needs Four Pillars Too

July 23, 2012 · by Taia Ergueta

Most tech businesses have product marketing. Sometimes Marketing starts and stops there. If you build it they will come, right? Or, as one manager told me when I suggested that we work on messaging, “Taia, the product IS the message”. Even among the more enlightened, Marketing is a lot like South America: People know the outline, but don’t ask them about the number or position of the countries.

So here it a short and sweet starting point for you. The four pillars of marketing. What functions fall under each. With whom they need to work most closely. And the key metrics for each. It can be you very own Arch of Triumph. Some assembly required.

Note:

This model surrounds Product Management with the important things that they often cannot do either because of the skills or time needed. With the addition of the Market (vertical) Management, full Marcom and Market Development you can address true customer needs and do modern demand generation. This is true commercialization.
From left to right, the key interfaces shift from Customers to Internal partners to Sales (“Field”). If you have a small team these interfaces can happen more easily. With large teams, you’ll need to actively manage this to ensure the right collaboration.

Download the above document: Linked Doc

Input Welcome

Are there key functions missing?

Do you have a better model of marketing?

Speed Up Your Sales Improvement Time

July 20, 2012 · by Taia Ergueta

Sales are below plan. Does the blame game begin, or do both Marketing and Sales know what to do NOW to make a difference?

I was in a business where a sales shortfall triggered a “Performance Improvement Plan”. The afflicted business unit would go off to investigate the problem and conjure up a convincing plan for fixing it. Then implementation of that plan would begin. If someone happened to get pregnant at the beginning of this process, they had their child about the same time that we were seeing the results of this process. And those sales results were not always good. There had to be a better way.

There is. Here is a way to reduce the response time and increase the confidence in the fix.

Model What You Intend to Do

Many business development/intro plans are this:

The sales goal(s)
The list of a bunch of things that everyone will do.

Basically, there is a big collective hope that the latter will produce the former. The dynamics of how that is expected to happen aren’t specified; so when the sales don’t materialize, nobody knows what failed. Not enough “things” done? Price wrong?

The better way: “The Magic Formula”. Estimate values for these three key drivers of sales performance and then track them as metrics:

Average sales price + Length of the sales cycle + Win rate

At the beginning, you may not have much to go on to set these. Not a problem. Make an educated guess (you’ll refine that over time as you get more data). Use those estimated values to model how you will get your sales goal.

Example

Here is a model for a hypothetical business projecting $500K of sales in 12 months:

Magic Formula: Average sales price $30K, 4 month sale cycle, 25% win rate

Given the average sales price, you need $500K/30K , 17 sales in 12 months
At a 25% win rate you need to engage 17 x 4 qualified leads: 68 total
Given the 4 month sales cycle, you need to have engaged seriously with those 68 qualified leads in the next 8 months.
If you know half of those already, then you need to generate 32 qualified leads. Let’s say you need 7 prospects for every qualified lead: In this case you need to generate 32 x 7 prospects – a total of 224 prospects to generate and qualify in the next 8 months.

This approach focuses Marketing and Sales on the right level and types of activities needed to meet the goal. It makes the market development or time-to-ramp commitments much more solid. It also requires the two functions to work together to set these formula value estimates and refine them. Those discussions often surface hidden concerns, alignment gaps and expectations, reducing later issues and forging good relationships.

How Using This Can Speed Your Reaction Time

Ok, back to the scenario in which the order rate is below expectations. Instead of flailing at causes and fixes, go to your data. Which Formula factors are not as you estimated?

Is the average sales price below your estimate while the other metrics are holding? Then look to either your discount level or the configurations that people are buying.
Is the win rate lower than you expected? See if the sales force needs more training and check the competitive positioning.

The relevant issues and fixes will be specific to your business of course. The point is that this approach gives you built in diagnostics. Now when sales are down you do not start with a blank slate on which people write their excuses. Instead, you have focus and this gets everyone into effective and affective action, fast. Finger-pointing and delays in turning sales back up are de-motivators; quick iterations that also add to the collective knowledge base on sales generation are big motivators.

Input Welcome

Why Would It Make Sense to Generate the Same Lead Over and Over?

May 30, 2012 · by Taia Ergueta

A product marketing manager asked me if we were just wasting money and time on lead generation: The sales force had just informed him that they already knew all the customers that his lead generation campaign had produced. Here is why generating the same lead repeatedly through Nurturing Demand Generation can be a very good use of money.

A customer in your target market is anyone who could use your product. A “lead” is someone who has the inclination and ability to buy your product in the near future. A customer goes in and out of that “lead” state over time as their needs and ability to buy emerge, get met, and eventually re-emerge.

If you are new to the target market, then your lead generation objective is to find people new to your company who should get to know you before making a decision. In contrast, if you have been in the market for a while you may have encountered many (maybe all) of the customers for your product. In this case, you have additional lead generation objectives: You want to make sure that you are top of mind and aware every time that they go into lead mode. Since customers are not always shopping with intent to buy, lead generation efforts are well worth the money if they:

Tip customers into “lead-dom” by stimulating an appetite for a new product
Make you aware when a customer you may already know, has become an active shopper – a real lead rather than a passive customer.

In the past, it was the sales force’s job to keep your product top of mind during the times when a customer was not ready to buy. Sales was expected to know when a customer became an active lead/buyer by staying in constant touch. Reality: This kind of “nurturing” was rarely practical outside of top accounts. Today, most sales forces don’t have the time or access for this level of intimacy across the needed number of prospects. Enter Marketing.

Marketing is the Cyrano de Bergerac to Sales’ Christian. By keeping in contact with customers, giving them a range of enticing offers to which to respond and carefully assessing their responses, marketing can precipitate and detect when a customer turns into an active lead. It is estimated that you need to communicate with a customer an average of 5 to 7 times before they are ready to buy from you. Marketing automation makes this kind of Nurturing Demand Generation possible.

Just as Cyrano provided the poetry, marketing can use automation to provide the attentiveness and relevancy that customers seek. In this world, Marketing’s gift to Sales is not a new name, it is the gift of high efficiency — a stream of old and new customers who are informed, intrigued and feel cared for and ready to be influenced and buy.

Input welcome: I’ve met so many customers who complained that they felt ignored by the industry. Similarly, marketing and sales people always get a big motivation boost from getting to know customers better and meeting their relationship needs. The possibility of High Touch/Low Cost personalized marketing and customer relationship management is finally here. It is in its early stage. What has been your experience with this?

The Mother of All Metrics

May 2, 2012 · by Taia Ergueta

I nominate Achievement of Projected Sales Ramp Rate (Time to Ramp – “TTR”) as the single most important metric for your business.

To get resounding support for this, I’d better explain a few things.

First: What is the Sales Ramp?

It is the projected pace and level of orders projected in the first year after a product is made available. (The number of years may differ depending on the level of innovation or industry.)

Why is it important?

There are both Financial and Effectiveness reasons. I got a big lesson in these in the PC business, where we had no more than 3 months after product introduction to make money on products that had taken 12-18 months to develop. After three months, deep discounting would begin and you could abandon hope of making up the lost profits missed in those critical first months. The PC case may be an extreme case, but many people seem to think they have all the time in the world to make money on a new product. They don’t. I love a good delusion as much as the next guy, but the cost of this one is way too high.

From a financial standpoint, if you miss that ramp timing, your competitive position, lifetime revenue, and return on investment are all severely damaged. If you expect to sell fifty units of a product in the first year and, instead, it takes two years to do it, the return on that R&D investment will be much lower than planned. This is because of three unsympathetic and inescapable forces:

the time-value of money,
the impact of investing more money to get the same revenue, and
the fact that technology itself diminishes in competitiveness over time.

From an execution effectiveness standpoint, focusing on Time to Ramp ensures that you

Prepare the commercialization before introduction and
Identify and solve start-up problems early.