Jul 31

Understand the Industry and Market

Understanding the market you are in may seem so obvious that it doesn’t bear discussion in a blook about marketing.  However, in technology marketing, especially in the enterprise segment, the industry is so continually in flux that it can be nearly impossible to pin down your category.    This is particularly true for newer technologies.   The technology landscape changes so quickly that categories are challenging to define.

The Streaming Video vs. UC Example

One example I’ve been close to recently is the categorization confusion surrounding webcasting and video streaming. Where does that fit in the technology industry?  An easy answer is that it is within the “enterprise video” marketplace, which is described as an approximately $700 million year segment.  You could also make a pretty good argument that enterprise video streaming is part of the much larger “Unified Communications” (UC) sector.  UC used to describe everything from phone handsets to video chat applications.  UC is a potentially massive category, encompassing much of what is now thought of as the phone industry – a hundred billion dollar plus space!  Or, is online video for corporations actually part of “Unified Communications and Collaboration” (UCC)?    Which is it?  And, does it matter?

Here’s a deceptively simple question.  Do you need to know what market you are in if you are going to sell a product?  Maybe yes.  Maybe no.  It is always shocking to me how many technology marketers cannot complete the most basic sentence describing their products. They are unable to fill in the blank in, “This is my product. It is a ________ product that does XYZ.”   When I worked on the Microsoft SharePoint team, there was little definitive agreement on what kind of product it was, even though it was selling at a rate of over a billion dollars a year.  It was a collaboration tool, a content manager, a search engine, a web authoring environment. It was almost a foot cream.

Think about the evolution of cell phones into smart phones, which is not evolving yet again into the split between phones, smart phones and app-phones, and tablets.  You could easily choose to buy a device without a care in the world about whether it was an app-phone or a smart phone.  You chose the device because it had features and functions that you liked.  Perhaps it was a good value.

With corporate technology, it’s not that different.  If you are considering a voice-over-IP (VOIP) system, how much impact will the product’s categorization have on you?  If the product is part of the UCC category, rather than just regular UC, will that matter?    At a feature level, whichever product fits your needs best should be the choice.  You may be influenced by analysts who report on product segments, however, regarding what they think the future holds and what will mean for your product selection.   If you read that collaboration solutions will inevitably merge with communications, making UCC triumphant over basic UC, that may influence your selection.

The real reason that categories matter is that they tell people a lot about how certain vendors are doing.  Product categorization and market segmentation in the technology industry is mostly about the vendors. Who’s winning.  Who’s not…   This is the source of the confusion.  Vendors want, for many reasons, to be perceived as the winner in the marketplace.  Who wouldn’t, right?  But, the preoccupation with being the winner leads to some awful marketing problems.   Vendors face pressure to categorize their offerings as winners, even if the winning segment isn’t well defined.  Thus, we end up saying, “This is my [winningest, cutting edgiest] product,” not “This is my [well known, reliable but low cost] product.”

Valuation is the biggest driver of categorization confusion.    Venture capitalists and the stock market place quite different values on technology companies based on their perception of what they are doing.  This is only fair and reasonable. All businesses are valued based on their perceived potential to generate future earnings.   If you are in the buggy whip business, watch out…  However, with technology, the valuation dynamics are a bit out of hand. Tech is one of the few business sectors where people can realize massive gains in valuation based largely on what Wall Street folks call “deal optics” – what you look like you’re doing.   We have gone through several cycles of boom and bust over this, with a few longterm winners, such as Apple, eBay, and Microsoft still on the market.  Even after the “tech wreck” of 2002, when so many vaporous technology companies imploded, the market still has an appetite for the next big thing.

Categorization is directly tied to valuation.  If you are in the enterprise software field, for example, a dollar of revenue for your product deployed as a traditional on-premise server solution will translate into about $2 of entity valuation.   A dollar of revenue of your product deployed as a software-as-a-service (or cloud) solution will give you $6 of valuation. If you are doing $10 million in on-premise business, you’re worth $20 million.  If you’re doing $10 million in SaaS, you’re worth $60 million!  What would you rather have?

As a result of these types of valuation practices, technology companies engage in egregious contortions to categorize themselves in the high value fields.  In this way, a maker of mainframe tools becames “An SOA infrastructure player,” an email service becomes a “cloud-based collaboration company,” and so forth.  I have come up with a joke to describe this challenge.  I say that if you can accurately define what category you are in, you are too late.  From a valuation perspective, the interesting stuff in the technology market is happening where things are fast moving and loosely defined.

To be fair, the customer is not always confused by valuation-driven category blurring.  Some enterprise buyers want the latest thing.  And, in a lot of cases, that latest thing is what they really need.  For example, budget constraints might push a sincere interest in migrating systems to the cloud.  Thus, even though cloud computing might be the flavor du jour and derided as a fad, it’s a real technology with strong benefits for the right buyer.

Where things get murky is when technologies try to dress themselves up to be something they are not. That benefits no one.

In the case of enterprise video, if I define myself as being in the enterprise video category, I’m limiting myself to a small market with limited upside. (I realize that $700M seems like a lot of money, but for a venture capitalist trying to arrange a big exit, it’s chicken feed.)  Yet, that’s the closest category to what a corporate video product really does.  If I put myself into the much larger UC category, I’m not being clear about what my product actually does. The VCs will be happy, but my customers will be confused.

 

Jul 25

Levers of Preference

As we’ve said, everything drives preference. Preference is inherent in the product itself, and all marketing is oriented toward building preference over all competitors.  For example, every piece of marketing copy needs to play on the reader’s desire to accumulate the “four currencies.”  This can be a stealth mission, with subtle and indirect gestures pushing the reader to consider how your product will give him or her a newfound wealth of money, time and security. A few specific marketing activities, however, should be pursued distinctly with preference in mind.

  • Demos – A demonstration of your product has to be larded with calls for preference, even if they are not overtly stated.   What you have to realize is that everything you say in a demo is prefaced by the unsaid, “Compared to everyone else, we do…”  How can you frame your demo to make that statement sound like, “Compared to everyone else, we are better, because of xyz.”  For example, the Kwikapp photo portal offers better security features than its competitors.  It integrates with all the leading identity management systems, while the competitors only integrate with one ID system.  The “feature barfing” approach to showcasing this advantage is to say, “We integrate with all identify management systems.” There’s no harm in saying it this way, but it would be a lot more effective, in preference terms, if the advantage were stated along the lines of, “You don’t have to worry about integrating with your identity management system.”  This latter approach emphasizes the true advantage of the Kwikapp in human marketing terms.
  • Public relations – PR is the first of three work areas that can drive confidence and preference.  Like the other two, analyst relations, and case studies, publications is all about showing off neutral third parties that have good things to say about your product.   In PR, your goal is to get reporters, and increasingly bloggers and other hybrid personalities, to write about your product.  The PR field has changed radically in the last five years.   Online “clippings” are everything today, while an article in a print magazine is nice but actually useful mostly as a PDF that you can share online.  The end goal has remained the same, however, which is to get other people to talk about how great your product is and build preference through the confidence that instills.  Media mentions take several forms, each of which is helpful. However, not all PR is created equal.
Influence CIO Magazine Wall Street Journal
“Vertical book” USA Today
  Readership

 

What’s worth more, a thousand words in an industry vertical publication or 200 words in the Wall Street Journal?    It depends, of course, on what you are trying to accomplish, but in general, the more influential the publication and the greater its readership, the more helpful the “ink” is going to be in driving preference and confidence.  A positive mention in the Wall Street Journal instills confidence.  A feature article in the Wall Street Journal is golden, assuming it’s saying something good about you.  The chart shown above depicts this tradeoff between readership and influence.  The old adage, “I don’t care what you say about me. Just spell my name right,” doesn’t apply to technology PR and confidence building.  A negative product review will hurt you probably worse than being omitted from the review altogether.

 

  • Analyst relations – Reports by recognized industry analysts can have a huge impact on preference and confidence.  Analysts offer themselves to the market as the ultimate in third parties.  They are neutral and knowledgeable. They compare products and select top candidates for consideration.   As a result, as you may know, analysts can command serious dollars for their work.  Analyst relations is a subtle game, however, with many misconceptions and myths surrounding it.  We will delve into AR, as analyst relations is often called, and PR, in depth a bit later on, but for now, consider the following:
    • There are two classes of analysts.  A small, select group are paid by enterprise buyers for their opinions.  The biggest, of course, is Gartner, though Forrester and some specialized smaller firms also belong to this elite group.  Other analyst firms are able to offer market insights to vendors and publish reports that are of general interest. However, they are not viewed as being completely impartial by the buyer.
    • You cannot buy good analyst coverage.  There’s a myth that you have to “pay off” the good analysts in order to get positive coverage. This is not true.    What’s true, though, is that if you are not a client of the analyst firm, you will not likely get much attention from them.  And, there’s some truth to the idea that you can engage with the analyst firm to the point where you make your products and views better known to them than if you did not engage with them. In other words, if you invite analysts to visit you for consulting, they will get much more exposure to you than if you didn’t.  But, it will cost you.  At the end of the process, you will still get an honest review, which you will listen to if you are smart.

 

  • Case studies – True accounts of real customers using your product are a fantastic way to move the needle on preference and confidence.  Buyers like to see companies like theirs using your product before they will entrust you with their business.  No brainer, right?  Well…  Case studies are not all that hard to create.  Typically, you interview the customer and write a two page document that summarizes the business challenge the customer faced and how they solved it with your product. So far, so good.  The problem arises, however, with permission.   Small companies generally don’t mind being the subject of a case study. In fact, they might feel flattered and enjoy the publicity.  Big companies, especially those that are publicly traded, hate having their names used (or misused, as they might put it) by vendors.  Big companies are very reluctant to grant you permission to publish a case study about them.    Their reluctance is based partly on a concern about brand dilution and possible liability.  If Coke allows a vendor to use their name, and that vendor is later accused of fraud, does that reflect badly on Coke?  Maybe, but in my experience, big company hesitation about case studies is a bit of a baseless hangup.  It’s a power thing, too, and that can actually be your ticket in the door for case studies.  If you are willing to grant favors or discounts, you may be able to buy a case study from a big client.

 

Jul 21

Mapping the Mind of the Customer

When we talk about building preference, we are really talking about shifting the prospect’s inner mindset about our product. We have to become mind readers, and then mind changers, in this process. This may seem like a tall order.  How can we know what’s on the prospect’s mind?  (As Eddie Murphy did so well in “Trading Places,” when he just knew that the pork belly buyer was anxious to buy his son the GI Joe with the Kung Fu Grip!)  Well, we can’t know what’s truly on the prospect’s mind, but we can make some pretty accurate guesses.

Think about it like this:  If you see a man standing in the cold without a jacket on, you can read his mind. He’s thinking, “I’m cold.”   He might also be thinking, “I’m angry at life,” but that’s beyond our marketing mind reading abilities.    When a prospect is considering your product, there’s more on his or her mind than “I need X type of product.”  What’s on the mind of a prospective Kwikapp buyer?  He needs a photo portal of some kind. That’s a given.  If he didn’t need one, you wouldn’t be interested in talking to him.  But, what’s really on his mind?  Let’s do some mind reading.

Reading the prospects mind is partly dependent on the prospect’s business role.  IT people read one way. Business people are different in certain ways, though a lot of the underlying issues are quite similar.   The mind of the prospect is usually filled with three competing forces, as depicted in the preference pyramid show below.  Let’s break them down and understand how the tug-of-war in the prospects mind can affect the preference process:

  • Needs – What the prospect needs should be fairly simple to pin down, though not always.  Even if the prospect doesn’t know the precise product he needs, he usually understands what he wants the end solution to do.  In this case, it would be a portal that could manage images for an enterprise behind the firewall.
  • Concerns – Working in the opposite direction are concerns about things that can go wrong with the vendor or solution.  Concerns abound, but a few notable ones include the following
  • Will this product work as advertised?
  • Do these people know what they are doing?
  • Is this product good enough?
  • Will the vendor support it the way I need them to?
  • Is the product developed with the right kind of technology? Will it become obsolete?
  • Will the vendor go out of business or get acquired by a company that we don’t like?
  • Will the product cause problems elsewhere in our IT ecosystem, in the form of excess network load, software integration hassles or disruptions in existing processes?
  • Are there hidden costs, such as dependent licenses, that we are not aware of?
  • Will we get “locked in” to this vendor and have a costly problem if we want to change direction down the road.

 

  • Boundaries – Then pushing back against needs and concerns are boundaries that limit the purchasing options.  Some major boundaries that you will run into:
    • We are a Microsoft/IBM/Oracle/SAP shop. We will never buy a product that is not made by that vendor or certified to work with it.
    • We only host applications on premise. We never use “the cloud.”
    • The solution we choose must work with Mac, Windows, Linux, Android, and so on – we will never choose something that doesn’t work on these platforms.
    • Cost – let’s not forget this one, because it’s pretty basic.  Some of the best solutions are just priced right out of the buyer’s budget.

Now, with this pyramid in mind, think about the product you are taking to market.  How will the buyer perceive your offering given the three competing forces going on in his or her mind?  Will concerns outweigh needs or drive the buyer to an alternative vendor?  Will boundary issues force the buyer out of considering your product or inhibit preference?

What’s the single most important element that can tip the preference thought process in your favor?  Bribery is always a possibility (wink.)  Seriously, though, the number one quality to have in your prospect’s mind is confidence.  Confidence. Let’s say it again: Confidence.    To get yourself preferred in the mind of the prospect, you need to instill confidence in your product.  To illustrate the principle of confidence in the enterprise technology marketing, consider how an IT manager might think about two similar products, one from IBM and the other from a less well known vendor.

Issue affecting preference Perception of IBM Perception of IBM Competitor
Long-term support IBM supports all products for a minimum of five years. Vendor is unclear about length of support
Customization IBM can provide virtually limitless professional services resources for customization. Vendor has a small professional services team that may or may not be able to handle customization demands.
Mainframe integration You have to ask? Vendor has a mainframe plug in.
Scalability The IBM product is built on the WebSphere platform, which has proven scalability The vendor’s product is J2EE based and scales well in theory.

 

How much more confidence will the IT manager have in the IBM solution?  A lot, probably.  Confidence is one of the reasons why IBM is so successful.  Their track record, culture, and depth of resources instill a great deal of confidence amongst potential buyers.  Thus, we have the classic saying, “No one ever got fired for buying IBM.”  Of course, they don’t win every deal, but when they lose, it’s likely due to confidence issues flowing in the other direction.  For example, smaller vendors can engender confidence that they will work harder to please the client than a giant like IBM.   Or, the smaller vendor will build confidence that they are giving the client the best value.  In this subject, I am indebted to Donald Cooper, a business thinker whose work has been a source of inspiration for me for many years.

Human Marketing – The Four Currencies

Donald Cooper is a successful entrepreneur and speaker who approaches marketing from the perspective satisfying human needs. He calls it “Human Marketing,” and at its essence, it’s about instilling preference through confidence.   Cooper talks about the “four currencies” that we all use in our lives and business.

  • Money
  • Time
  • Feeling Safe (physically & emotionally safe
  • Feeling Special

In Cooper’s view, people are constantly on the search for more of these four currencies.  Note that money is just one of them.  Money is not the only arbiter of preference.  As Cooper puts it, “People are prepared to spend more money to save time, or to feel more safe, or more special. Think about your own life.  People are even prepared to take time and to spend a lot of money to not feel safe, in order to feel special…which is the only explanation I have for bungee jumping!”

I see Cooper’s theory manifesting itself in many aspects of technology marketing.  IT buyers will spend money on technologies that help them save time (easier to maintain, fewer problems), make them feel safe (in terms of job security and stress), and make them feel special.  Yes, this last one is a bit funny but it’s more true than any of us could imagine.  IT people want to feel special, just like the rest of us. Of course, in the case of enterprise technology, feeling special might come from achieving a level of CPU utilization that no one else thought possible, or some other esoteric but important aspect of IT.

The one underlying factor that drives all of this is confidence.  The buyer will prefer and select the product that engenders confidence that it will enable him or her to accumulate the greatest amount of these four currencies.  Our approach to building preference should therefore be informed by the following ideas:

  • Our product saves you money or helps you make more of it.
  • With our product, you will have more time on your hands to do what you really want to do.
  • You can feel safe (in your job) and secure (You won’t get yelled at) and stress free.
  • Our product will make you feel special, giving you all kinds of unique technology bragging rights.

These four ideas are typically in the subtext of any well crafted messaging for a technology product.  In some cases, the message is overt, though in a lot of cases, it’s implicit. The goal is always the same.  Build preference by instilling confidence that the product will deliver on these four critical currencies.

 

 

Jul 13

Create Preference

It may sound silly to single out creating preference as a specific area of technology marketing.  All marketing is about creating preference. Everything you do is meant to drive preference of your product over others.  Yet, it helps to be aware of the mandate to create preference as you go about your marketing work.  Preference building has its own specific tasks and challenges.  Plus, it’s so basic, it often gets overlooked.

For One Thing, It’s About the Product

Another entry that unfortunately needs to be included in the “almost too basic to mention” category is the impact of the product itself on creating preference.   We marketers can get so caught up in our messaging, campaigns, and hype building that we get out of touch with the very thing we are advocating.  The recent demise of the Flip Video Camera can teach us a bit about this phenomenon.  Now, I do not know personally what went on inside Cisco that drove their decision to drop the product entirely, but I do know this: the Flip Cam got overtaken by the smart phone as a video device.  It became harder to sell the consumer on a dedicated video camera when so many smart phones contained a comparable feature.  The target customer groups for the Flip Cam and the smart phone are similar, so that buyer is probably going to go with a video-equipped phone rather than two devices, even if the Flip had better video quality.   No amount of clever marketing in the world was going to shift that preference.

I have been some version of this dilemma many times.  The brass asks, “Why can’t we get such-and-such segment interested in our product?”  The implication is that there is something wrong with my marketing skills.  The problem was really with the product.   You will only get preference if you are within striking distance of what customers actually need.  Thus, if Kwikapp is marketing a photo portal, they will not do well getting preference amongst customers seeking a social software solution, even if the Kwikapp portal has some social features.

 

The Product Preference Flow

Let’s refresh on the overall flow of preference that we want to drive.  Before we can close a sale, our prospect has to go through some version of the following flow of events:

  1. Awareness – The prospect is aware that your company and product exist.
  2. Consideration – The prospect considers your product as a potential solution for his or her business need.
  3. Preference – The prospect prefers your product over other competing products.
  4. Selection – The prospect selects your product over competitors and buys it.

Each stage of the preference flow involves different aspects of marketing, and to some extent, sales.

Stage Key marketing activities
Awareness Advertising, lead generation activities, public relations, social media, Website
Consideration Website, datasheets, battlecards, and other collateral, case studies
Preference Proposal support, whitepapers, analyst relations
Selection Sales support

As the process flows from awareness to preference and selection, marketing’s role diminishes.  The figure below shows how the emphasis from market to sales shifts over the course of the preference process.  The work of convincing a specific prospect to select a product over competitors is the responsibility of sales.  Of course, sales needs marketing’s help to make its case for preference and selection.

Apr 01

Continuing the “Blook” here

This is the new site for Taylor Communications.  I am continuing the “blook” (book in blog post form) about enterprise technology marketing here.  For earlier installments, please visit http://blog.hughtaylor.com.

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