An expert
is someone who can anticipate changes in the market and therefore decide or
advice what changes in the “marketing mix” (product, place, price, promotion,
people, process and proof) will be needed . To be able to do so , you must be
systematically and regularly contacting and listening to the “voice of the
customer” . This involves listening to
all 3 types of customers . In fact an expert has an understanding not only of the
customers but also of all the 5 forces that operate in the market
summarized by 5Cs. This article is largely about listening to the customers
but towards the end a small section is also devoted to the other 4 Cs that an
expert is expected to know.
ß POTENTIAL CUSTOMERS à ß EVALUATORS
/ PROSPECTS à ß EXISTING CUSTOMERS à
1.
POTENTIAL (CUSTOMERS) : those who could be – but are yet not – even
considering buying the type of product you sell (either yours or your
competitors). It is possible that they are not sufficiently aware of the
problem that can be solved by your product and hence are passive towards your
market. If you want to take a
spectacular “big leap” in your revenue, then the answer may lie with these
type of customers because most of your competitors are likely to ignore these
customers labeling them as non-customers. But remember, biggest gains in market
size are possible if such customers can be transformed from being passive to
being active. Such a “big leap” will
require pioneering changes (“first to the market”).
Example :
Shampoo market in India showed a quantum jump when one-time-use sachets were introduced. This
brought many customers – who were occasional users of the shampoo- into the
market. These customers could not afford to buy a whole shampoo bottle
earlier. Are there any customers who need your “product category” but are not
buying it because they want a different product, price, place, etc…
2. EVALUATING (CUSTOMERS) (Also called PROSPECTS) : these are somewhat better than the passive
potential customers mentioned above because they are aware that they have a
problem that needs to be solved - and hence are undertaking a “search mission”
to find out what solution will solve their problem, who all are offering it ,
and what are the terms and conditions of purchase. These are the customers for whom an active
battle between you and your competitors must be taking place right now and your
marketing and sales departments must be spending a lot of time and money in
converting these customers to you. All such customers will end up into one of
the 3 buckets (1) they will abandon the idea of purchase mid-way and go back
from being “prospects” to “potential” (2) they will land up buying your
competitors’ product (3) they will buy your product. If you want answer as to why you are currently winning / losing, these
are the ones you need to go and talk to!
3.
EXISTING (CUSTOMERS) : These are the people who recognized that they had
a problem and thought that your product will be able to solve it and that your
terms and conditions were best suited to their needs – and hence bought from
you. The biggest mistake people make for
such customers is to take them for granted (they do not even measure their
satisfaction because “if they bought they must have been happy) and not spend
enough time to research how to keep them satisfied and how to use their
satisfaction to generate references and testimonials and case studies to
improve future business. The second
biggest mistake many companies make is to listen reactively to the noisy 20%
customers (who may not necessarily be their best customers) and forget to
listen proactively to the 80% silent customers who may not complain, and make
noise, but will silently walk away.
These days the cost of acquiring a new customer is so high that you
cannot simply afford to let a customer go away because you took him for
granted.
Listening to
existing customers is usually within your comfort zone but but do not do it as reactive
exercise rather than a proactive process. Technical support will call you and
says, “Go visit Customer X. They are unhappy with us right now.” Or a sales rep
calls and says, “Go visit Customer Y. If you put in Feature A for them, they
will be a good reference account.” In this discussion we will explore not only
how to listen to the noisy 20% of your customers (the ones most companies react
to), but how to listen proactively to the quiet 80% of your customers as well.
To become a market expert you must listen to all the above 3 types of
customers. Your company must systematically and regularly contact and listen to
the “voice” of all these customers.
Becoming
an Expert in your market has 8 parts
Know the
elementary concepts of market research
Part
1 : Introduction to Marketing Research
Part
2 : What is Qualitative Research?
Part
3 : Quantitative Research and Sampling
Part
4 : Types of Market Research
Know how to listen
to each type of customer
Part
5 : How to listen to passive potential customers
Part
6 : How to listen to active evaluators / prospects
Part
7 : How to listen to existing customers
Know all the 5
forces that operate in the marketplace
Part
8 : Analysis of 5 Cs : Customer, Company, Competitors, Collaborators, Context
Part 1 :
Introduction to Marketing Research
Effective
marketing needs information about number and location of customers, their
wants, market demand, competitors, distribution channels etc.
3
Ways of Getting Information in Marketing
For
many decisions would need all 3 types of data.
The information
needed by marketing managers comes from 3 main sources:
1.
Readily available internal company
information
: sales, orders, customer profiles,
stocks, customer service reports etc
2.
Readily obtainable marketing
intelligence :
This can be gathered relatively easily from suppliers, customers, distributors
in the normal course of interaction. This is a general term for the information
that can be gathered through usual day to day operations and that can help the
business prepare and adjust its marketing plans. Sometimes it is also possible
to buy the information from companies like Dun & Bradstreet.
3.
Specially commissioned Market
research projects
: When management does not have internal information or when it finds that the
market intelligence is unreliable or old, it needs to undertake specific market
research studies to support their marketing strategy. Market Research can be
qualitative or quantitative.
Uses
of Market Research
Marketing
decisions need information regarding
markets,
products, prices, promotions, distribution etc.
1)
Information
about the market
a) Potential for existing products (e.g.
market size, growth, changing sales trends)
b) Forecasting future demand for
existing products
c) Assessing the potential for new
products
d) Study of market trends
e) Analysis of competitor behaviour
and performance
f) Analysis of market shares
2)
Information
about Products
a) Likely customer acceptance (or
rejection) of new products
b) Comparison of existing products
(price, features, costs, distribution)
c) Forecasting new uses for existing
products
d) Technologies that may threaten
existing products
e) New product development
3)
Information
about Pricing in the Market
a) Estimates and testing of price
elasticity
b) Analysis of revenues, margins and
profits
c) Customer perceptions of “just or
fair” pricing
d) Competitor pricing strategies
4)
Information
about Promotion in the Market
a) Effectiveness of advertising
b) Effectiveness of sales force
(personal selling)
c) Extent and effectiveness of sales
promotional activities
d) Competitor promotional strategies
5)
Information
about Distribution in the Market
a) Use and effectiveness of
distribution channels
b) Opportunities to sell direct
c) Cost of transporting and
warehousing products
d)
Level
and quality of after-sales service
Conducting
market research
There
are 4 ways of carrying out market research:
1)
Do it yourself – personally : This is often the case in
smaller businesses. Here, marketing staff do the research themselves. Sample
sizes tend to be small - which may be appropriate if there are a relatively
small number of customers.
2)
Do it yourself - using a marketing
research department
: By employing a marketing research manager, a business may benefit from
specialist research skills.
3)
Do it yourself - using a fieldwork
agency : Often
the design of a piece of market research can be completed using internal
resources - particularly if the business employs a marketing specialist with
knowledge of research techniques. However, the scope of the research (for
example, interviewing a large sample of consumers in various locations) may be
beyond the resources of a business. In this case, the fieldwork can be carried
out by a marketing research agency.
4)
Use the full services of a
marketing research agency : Where resources permit a business can invest in the full range of
skills offered by marketing research agencies. A complete service would
include:
a) Preparation of proposal (survey
design, costs, timetable, method of feedback)
b) Conduct exploratory research
c) Design the research questionnaire
d) Select the sample
e) Choose the survey method (e.g.
telephone, postal, face-to-face)#
f) Conduct the interviewing
g) Analyse and interpret the results
h) Prepare a report
i)
Make
a presentation
Part 2 : What is Qualitative
Research?
Qualitative Research is used for “exploration”,
“investigation” or “preliminary understanding” of markets and the background and context for decision
making (example : what all are the benefits that customers expect from a new
ERP system ?). There are two main qualitative methods (1) depth interviews (2)
focus groups. However qualitative research can also include techniques such as usability
testing, brainstorming sessions and "vox pop" surveys.
Quantitative research is used about “measurement” and
“generating numeric data” (example : what % of people want to access their
office ERP through their smartphones). Most often the data is about market
size, market share, penetration, installed base and market growth rates.
However, quantitative research is also used to measure customer attitudes,
satisfaction, commitment and a range of other useful market data that can
tracked over time. Quantitative research can also be used to measure customer
awareness and attitudes to different manufacturers and to understand overall
customer behaviour in a market by taking a statistical sample of customers to
understand the market as a whole.
At the heart of all
quantitative research is the statistical sample. Great care has to be taken in
selecting the sample and also in the design of the sample questionnaire and the
quality of the analysis of data collected.
Market research
involves the collection of data to obtain insight and knowledge into the needs
and wants of customers and the structure and dynamics of a market. In nearly
all cases, it would be very costly and time-consuming to collect data from the
entire population of a market. Accordingly, in market research, extensive use
is made of sampling from which, through careful design and analysis, Marketers
can draw information about the market.
Depth
Interviewing ( Qualitative Research )
Used
mostly in B2B markets
DEPTH INTERVIEWS : In local markets, an interviewer spends
time in a one-on-one interview (generally in the respondent’s office) about
that customer's particular circumstances and
individual opinions. In multi-national markets, telephonic depth interviews
or even on-line depth interviews are used but the “feel” one gets is far more
in one-to-one interviews. The benefits are
1) One gets a feel for the “world view”,
“criteria” and “culure” of the respondent
2) Knowledge of what are the common findings
across a number of depth interviews.
3) In segmentation studies we try and
identify differences between respondents
FOCUS GROUP DISCUSSIONS : The main alternative to depth
interviews is focus group discussions. Focus
Group Discussions ( FGD) (Qualitative Research) Used mostly in B2C
markets. Focus groups is the mainstay of qualitative consumer research. Here
several customers are brought together to take part in a discussion led by a
researcher (or "moderator"). These groups are a good way of exploring
a topic in some depth or to encourage creative ideas from participants. In
technology markets where the end user may be a consumer, or part of a team
evaluating technology, group discussions can be an effective way of
understanding what customers are looking for, particularly at more creative
stages of research.
Group discussions are rare in B2B markets because it is difficult / expensive to arrange busy
executives to come together . But if the customers are small businesses; it may
be possible. (
Note : On line
techniques - conference calls – etc may help.
Part 3 :
Quantitative Research and Sampling
Sampling
Market research
involves the collection of data to obtain insight and knowledge into the needs
and wants of customers and the structure and dynamics of a market. In nearly all
cases, it would be very costly and time-consuming to collect data from the
entire population of a market (this method is called enumeration). Accordingly,
in market research, extensive use is made of sampling from which, through
careful design and analysis, Marketers can draw information about the whole market
without undertaking the cost of contacting everyone in the market.
Sample
Design
Sample design covers
the method of selection, the sample structure and plans for analysing and
interpreting the results. Sample designs can vary from simple to complex and
depend on the type of information required and the way the sample is selected.
Sample design
affects the size of the sample and the way in which analysis is carried out. In
simple terms the more precision the market researcher requires, the more
complex will be the design and the larger the sample size.
The sample design
may make use of the characteristics of the overall market population, but it
does not have to be proportionally representative. It may be necessary to draw
a larger sample than would be expected from some parts of the population; for
example, to select more from a minority grouping to ensure that sufficient data
is obtained for analysis on such groups.
Many sample designs
are built around the concept of random selection. This permits justifiable
inference from the sample to the population, at quantified levels of precision.
Random selection also helps guard against sample bias in a way that selecting
by judgement or convenience cannot.
Defining
the Population
The first step in
good sample design is to ensure that the specification of the target population
is as clear and complete as possible to ensure that all elements within the
population are represented. The target population is sampled using a sampling
frame. Often the units in the population can be identified by existing
information; for example, pay-rolls, company lists, government registers etc. A
sampling frame could also be geographical; for example postcodes have become a
well-used means of selecting a sample.
Sample
Size
For any sample
design deciding upon the appropriate sample size will depend on several key
factors
1)
No
estimate taken from a sample is expected to be exact: Any assumptions about the
overall population based on the results of a sample will have an attached
margin of error.
2)
To
lower the margin of error usually requires a larger sample size. The amount of
variability in the population (i.e. the range of values or opinions) will also
affect accuracy and therefore the size of sample.
3)
The
confidence level is the likelihood that the results obtained from the sample
lie within a required precision. The higher the confidence level, that is the
more certain you wish to be that the results are not atypical. Statisticians
often use a 95 per cent confidence level to provide strong conclusions.
4)
Population
size does not normally affect sample size. In fact the larger the population
size the lower the proportion of that population that needs to be sampled to be
representative. It is only when the proposed sample size is more than 5 per
cent of the population that the population size becomes part of the formulae to
calculate the sample size.
Types
of Sampling : the most popular are
below:
Types of Sampling : the most popular are
below:
|
Sampling Method
|
Definition
|
Uses
|
Limitations
|
|
Cluster Sampling)
|
Units in the population can often be found in certain geographic
groups or "clusters" (e.g. primary school children
in Derbyshire. A random sample of clusters is taken, then all units within
the cluster are examined
|
Quick & easy; does not require complete population
information; good for face-to-face surveys
|
Expensive if the clusters are large; greater risk of sampling error
|
|
Convenience Sampling
|
Uses those who are willing to volunteer
|
Readily available; large amount of information can be gathered quickly
|
Cannot extrapolate from sample to infer about the population; prone to
volunteer bias
|
|
Judgement Sampling
|
A deliberate choice of a sample - the opposite of random
|
Good for providing illustrative examples or case studies
|
Very prone to bias; samples often small; cannot extrapolate from
sample
|
|
Quota Sampling
|
Aim is to obtain a sample that is "representative" of the
overall population; the population is divided ("stratified") by the
most important variables (e.g. income,. age, location) and a required quota
sample is drawn from each stratum
|
Quick & easy way of obtaining a sample
|
Not random, so still some risk of bias; need to understand the
population to be able to identify the basis of stratification
|
|
Simply Random Sampling
|
Ensures that every member of the population has an equal chance of
selection
|
Simply to design and interpret; can calculate estimate of the
population and the sampling error
|
Need a complete and accurate population listing; may not be practical
if the sample requires lots of small visits all over the country
|
|
Systematic Sampling
|
After randomly selecting a starting point from the population, between
1 and "n", every nth unit is selected,
where n equals the population size divided by the sample
size
|
Easier to extract the sample than via simple random; ensures sample is
spread across the population
|
Can be costly and time-consuming if the sample is not conveniently
located
|
Part 4 : Types of
market research
The main distinction
between the different types of market research is between "ad-hoc"
and "continuous" research:
Ad-hoc Market Research : Ad-hoc research studies focus on
specific marketing problems. They collect data at one point in time from one
sample of respondents. Good examples of ad-hoc studies include:
·
Product
usage survey
·
New
product concept tests (where consumers are asked to trial new brands, product
prototypes etc)
·
Advertising
development (how does the sample of consumers respond to a specific advertising
campaign? Most TV adverts are researched in this way)
·
Corporate
image surveys (often quite enlightening)
·
Customer
satisfaction surveys (these can often turn into continuous research)
·
Continuous
Research : Continuous studies interview the same sample of people, repeatedly.
The major types of continuous research are:
·
Consumer
panels : are formed by recruiting large numbers of households who provide
information on their buying over time. Research agency AC Nielsen has one of
the largest consumer panels in the world, continuously interviewing 125,000
households in 18 countries. The main competitor for AC Nielsen is TNS which
runs panels in 20 countries.
·
Retail
Audits : By gaining the cooperation of retail outlets, sales of brands can be
measured (using bar coded sales data) to track changes in brand loyalty, market
share and effectiveness of different retail formats.
·
Television
Viewer ship / Radio Listening Panels : These panels aim to measure Viewer ship
or listening minute by minute. This data is critical information for
broadcasters to determine their program strategy (what kinds of programmes to
produce and when to broadcast them) as well as for advertisers (who is
watching, listening, and when?)
Part 5 : Listening to
various types of customers
Listening
to Potential Customers, Evaluators and Existng Cusomers
Most new product managers get inducted to their job by
knowing their product : user guides and brochures, going through the tutorial,
attending formal training, surfing the web, and sitting through product
demonstrations on sales calls. They do not realize that spending time listening
to the market is where the real learning takes place. It is imperative you go
to market as soon as possible to learn what's going on there. Your objective in
listening to the market is to become a market expert.
Customers’
Buying Journey
Customers (Sold) They realized
they had a problem and they bought your product to solve it.
Evaluators (Serious + some curious) They recognize they have a problem to solve and
are actively looking to solve a problem with your product - or your
competitors’ products. This is where your sales force / channel spends its time
during the sales cycle.
Potentials ( Clueless + some curious) This
group is within your target market segment but they do not even think they have
a problem. Obviously they have not come to market to buy either your product or
your competitor’s product..
Most companies think they listen to the market. What they
typically do is listen to the noisy 20% of the customers and listen to
evaluators during sales calls. (Actually, they are busy “talking” most of the
time, not really “listening”) They rarely (or never) listen to the third group,
potentials: those who have not bought the product and are not looking. The
danger in only listening to noisy customers and active sales leads is that you
might build products that only appeal to noisy customers and active sales
leads.
Your future lies in
understanding the quiet 80% of your customers, knowing why evaluators buy from
you or why they bought the competitor's product (through win/loss analysis),
and learning why ?inactive? potentials aren't looking and haven't bought
anything.
For each group we must learn:
1.
Who are they and how do we find them?
2.
What are we trying to learn?
3.
When do we listen?
4.
Where do we listen?
5.
How do we listen?
It is important to balance your visits with all three groups
in the market to get a good perspective on the market and where your company
fits. We need to use a different process to listen to each group to get the
information we need.
Potential Customers
Who are
potentials and how do we find them? those in our market who have not bought one of our
types of products and are not currently looking. Think of them as inactive prospects.
Your first objective is to find potentials and set up an appointment to visit
them. If you have additional resources to assist you in getting the
appointment, use them. But don't outsource the appointment itself.
|
Source
|
How you find them
|
How to engage them
|
|
List
|
|
Call them--?I
am a product manager for XYZ company. I am researching how to deploy our
development resources over the next year." If you have domain expertise,
say, "I used to do what you do. I am trying to learn what has changed
since I was a [job title]."
|
|
Trade Show
|
Trade shows
are usually targeted to a market segment (such as construction), a technical
platform (such as Linux or Windows), or a type of problem to solve (Customer
Relationship Management or CRM). As a product manager, you might already be
signed up to attend the trade show. Talk to the trade show coordinator and
make sure you will have time at the show outside of the booth.
|
In the
booth--ask qualifying questions. Sort visitors into customers, evaluators
(these are the ?hot? leads we give to sales), and potentials (they might be
tire kicking or just want the tchatchke). Contact the potentials when you get
home (?You stopped by our booth. I know you aren't currently looking but I am
a product manager?[similar script as above]).
Work the
show--go to the pretzel or coffee stand. Start up a conversation with other
attendees."I am a product manager?"
|
|
Conference
|
Speaking
engagement--collect business cards
Go to
sessions. Listen to the questions from the audience.
|
Contact people
who came to your session."Remember me? I'm the one that gave the speech
at XYZ conference. Can we meet?"? After the session, "That
was an interesting question you asked. I?d like to learn more?"
|
|
Trade
Association
|
Join the local
trade association for your market segment (usually vendors can join as
associate members). Go to the meetings.
|
At the
meeting, get to know the members. Make sure they know you are not a
salesperson, but that you are a product manager trying to learn more about
your market.
|
|
Executive
Introductions
|
Ask your
executives to introduce you to executives at other companies in your market.
|
These are the
decision makers. Don't abuse the introduction by taking too much time. (Below
is a discussion of what you're trying to learn from decision makers.)
|
|
Friends &
Family
|
Ask your
friends and family if they know anybody in the markets you serve. You might
find a friend of a friend who is the perfect candidate. Ask for an
introduction.
Get to know
people at your kid's soccer games, at cocktail parties, anywhere groups of
people meet.
|
People you
meet personally or through a mutual friend are usually the easiest to engage.
This is the method many sales people have used for years to ?cold call?
prospective customers.
|
What are we
trying to learn?
This is qualitative market research. Essentially, you are
trying to learn how they are surviving without your technology. Why haven't
they bought your product or your competitors? products? Is it because:
·
They don't know about you?
·
They have a slightly different
problem?
·
They have a dramatically
different problem (where you need to re-architect the product)?
·
They don't have the problem?
Until you know why they haven't bought, you won't come up
with the right solution to get them to buy in the future.
Once you get the appointment, learn about the key players.
For complex business-to-business solutions, there is usually a decision maker,
key user, and technical reviewer. It is important to listen to each of these
players.
Decision Maker--what keeps him
or her up at night (not just in context of what you do). You are competing not
only with your competitors, but also for mind share and resources against
everything else the decision maker has to deal with. If the final decision
maker is the CEO, you are competing with both internal and external forces over
which you have no control. The CEO can decide to spend money on internal
infrastructure systems, more personnel, benefits, office space, security,
sales, marketing, development, services, (and the list goes on?). Why should
he/she buy your product? What kind of ROI is he/she looking for? If you focus
your business on solving critical problems, your product will be more likely to
be recession-proof.
Key User? what problems does he
or she face every day? This is the person for whom you will be building the
solution. But keep in mind; the problems might not be large enough that the
decision maker will pay to solve them.
Technical Reviewer--This
person can veto the decision if it doesn't meet the technical expectations, but
generally this person isn't choosing which solution to buy. If the solution is
a threat to his/her job, they could cause a roadblock, however. Understand how
to get on his or her side. Also, learn what ?cool? products they have seen
lately. You might become aware of new technologies earlier than you would have
on your own.
Other things you are
trying to learn:
·
Do they know you? What is their
level of awareness or perception of your company?
·
Where do they buy products like
yours, what process do they go through, what channels would be acceptable
(direct, distributors, VARs, web, catalog), what kind of pricing constraints
might there be?
·
Who is your competition and
what do they think of them?
·
Who do they go to for advice
about products such as yours?
When do we
listen?
Becoming expert on your market is not a one-time project. It
should be an ongoing process. When you first begin, immerse yourself in this
activity. Spend one month visiting 10-12 sites to give you a jump-start. Then,
on an ongoing basis, visit one potential a month so you can stay in touch with
what is going on in your market. In high technology, things can change
relatively quickly, and if you don't stay in touch, you might miss a new trend
or shift in technology.
Use every opportunity you have to visit potentials. You might
already be traveling to a trade show or conference. Meet potentials there. When
you do a speaking engagement be sure to collect business cards and make an
appointment later in the day or the next morning. If your travel budget is
constrained (and whose isn't?), don't overlook potentials that might be in your
own neighborhood.
Don't forget to stay in touch with those you are able to
engage. When you need an outside view, call them to test ideas, positioning,
names, and feature possibilities. However, be careful not to skew your results
by only listening to the same few.
Where do we
listen?
Visiting potentials onsite is by far the best scenario.
Viewing them in their ?natural habitat? is where you will learn the most and
have the best context of their situation. But if you are not able to always do
this, it's all right to also listen to them at the trade show or conference, or
on the telephone. If you have usability labs at your office, observe
non-customers using your products and then listen to them one-on-one afterwards
to get more information.
How do we
listen?
Don't outsource this part of the process! Own it! This is
where the market-expertise lies. And don't take sales with you. This is not a
lead generation or selling activity. It is a market research function and a
listening exercise, not a talking exercise. Your objective is not to drum up
new business by talking about how great your products are, but to learn about the
problems in the market and how your products fit in the landscape.
Here are 10 tips on
listening to potentials:
1.
Observe them doing their job in
their natural habitat.
2.
Spend a "day in the
life" with the potential. Follow him or her around doing the job.
3.
Ask questions: "Why did
you do that? Who needs that information and why? What purpose does that
function serve?"
4.
Keep the questions open-ended.
This kind of market research is qualitative, not quantitative and should not be
conducted like a formal survey.
5.
Don't interrupt--let the
subject finish a thought. You might be thinking, "Our product will solve
their problems!" Save that for later. You will probably still learn
something by letting them talk.
6.
Don't talk about your product.
At the very end of the interview, if it turns out that your product is a
perfect fit, you might say, "We actually have a product that might fit
your needs. Are you interested in learning more?" If the person says,
"No," you need to respect that. The problem is probably not urgent
enough if this is the answer (which tells you a lot).
7.
Get the tour. Many companies
offer a formal tour of their facilities. If so, take it. It can be very
enlightening about their business, about what they are proud of, about how they
do things.
8.
Go with a buddy. Whenever
possible, do these interviews in pairs. What you don't see, your partner might.
One person can take notes while the other observes and asks questions. Perhaps
you should pair up a senior product manager with a less experienced one, a
product manager with marketing manager, or the product manager with a
development lead.
9.
Document the interview in a
call report right away. You won't remember details from one visit to another
unless you do. This will become a body of knowledge you can share with others
on your team.
10. Debrief with someone on your team right after your interview. This
helps you remember, analyze, and share the information you have learned.
This activity takes self-discipline to make it a part of your
everyday routine. It is so easy to slide back into tactical, urgent activities,
but becoming expert on the market is very strategic, and the future of your
company depends on it. It helps you figure out what you need to build 12-18
months from now.
Out of the 3 groups you should listen to in your market,
potentials are the hardest to engage. Why? Because it require you to get outside
your comfort zone. However, becoming
a market expert can be the most valuable of all activities you can do as a
product manager. Only you can make it happen!
Evaluators
First we have to
identify evaluators. Who are evaluators and how do we find them? Evaluators are
those people in your market who have recognized they have a problem to solve
and are actively looking for solutions to the problem. They are looking at your
solution and at your competitors? solutions. This is the part of the market
that your sales channel is most familiar with; they are active leads in the
sales funnel.
Finding
evaluators depends on the type of sales channel you use. The more anonymous
people are during the sales cycle, the more difficult it is to find them. Here
are some tips to find evaluators, based on different sales channels.
|
Type
of channel
|
Source
|
How
you find them
|
|
Direct
|
Pipeline
Reports
|
Buyers in the
sales cycle disappear from the pipeline report when you win the deal, lose
the deal, or when there is ?no decision?. Sales management should be able to
provide you with this information.
|
|
Sales Calls
|
If the sales
people are not cooperative in reporting wins and losses, do this: when you
are asked to participate in a sales call, make it clear to them that you will
be collecting business cards and will be doing win/loss analysis after the
deal is won or lost. If this is the case, sales & marketing management
should try to improve the situation--sales and marketing should have a
cooperative relationship, not an adversarial one.
|
|
New User
Training
|
Go to a new
user training class. Recent ?wins? will be there. Collect business cards to
follow-up with a win/loss interview later.
|
|
Value
Added Reseller (VAR)
|
Pipeline
Reports
|
Losses are
hard to find out about, particularly if your sales staff did not assist the
VAR on the deal. If your internal sales staff helps the channel on deals, you
should track the deals through the sales cycle. Like pipeline reports with
your direct sales channel, this provides wins and losses when an account
drops off of the report.
If you don't
assist your indirect channel with the sales process, try visiting some of
your channel members and do win/loss analysis on a subset of their
evaluators. Include both successful channel members and not so successful
ones so you can analyze why some are more successful than others. It might be
lack of sales sophistication, lack of focus on your product, lack of
training, or any number of other things. Unless you know why they win or lose
deals, you won't know how to improve the situation so they can have more
wins.
|
|
Web
|
|
Wins are
easier to track on the web. You should require minimum contact information
(name and email address is sufficient) when they buy your product or service.
Losses are more difficult, but you might offer a free trial or limited
service for which they must register on your site. If they don't buy after a
period of time, follow-up and find out why. It is nearly impossible to track
down those who never download or register with you at all. You may need to
periodically conduct market research surveys where you tap into your market
segment and find out if they have ever considered your products or services.
|
If you are part
of a large organization with multiple products and solutions in a complex sale,
it is critical that win/loss analysis be coordinated. The evaluator should not
get 4 phone calls from 4 different product managers asking for the same
information.'Don't you guys talk to one another?'
What are we trying to learn?
Typically,
companies believe they ?listen? to evaluators during the sales cycle. But more
often, they react to individual deals.'If you put feature A in the product, I
can win the deal.' Or, 'I could have won the deal if we'd had feature A in the
product.' The sales rep then says, 'Put feature A in the product.' Sometimes,
the right thing to do is put feature A in the product. But sometimes, feature A
is put in the product for a market of one, not a market of many. It is a
reactive process, not a proactive process.
Rather than
reacting to individual deals and potentially squandering precious resources
solving a problem that one customer has versus solving problems a whole market
segment has, win/loss analysis can provide information to validate (among many
evaluators) what we're doing right and what we're doing wrong. Why are we
winning and why are we losing? This type of analysis helps us strengthen (and
institutionalize) what we do right and correct what we're doing wrong. Many
times, the reason companies lose business is not because of the product, but
because of a flaw in the sales process. And yet when they react to lost
business, they usually throw more features into the product rather than fix the
process. Win/loss analysis looks at the whole picture: product, services,
price, evaluation process, sales channel, collateral, competition, technical
expertise, and interaction with the company.
Generally, we
want to know:
·
Why are we winning?
·
Why are we losing?
Specifically,
we need to learn:
·
How did they find out about
you?
·
Who did they listen to for
advice during the buying process?
·
Were your communications clear?
·
Were there any breakdowns
during the sales cycle? What were they?
·
What is the competition doing
right? Are they winning because they have a better product or service? Or is it
because they are outselling us?
·
Do you have the right
technology, the right product, the right services to solve the evaluator's
problem?
·
What problem were they trying
to solve with your product or service?
When do we listen?
Win/loss
analysis should be performed when the deal is completely closed. Either the
competition or we have solidly won the deal (the contract is signed, the ink is
dry, and the check has cleared the bank). If we do this too early (and we were
winning), it is possible we might raise some questions in the buyer's mind that
causes us to lose the deal (product management will be blamed, even if it
wasn't our fault).
If we do this
too long after the deal is closed, the buyer's memory will fade. We are trying
to measure what happened during the sales cycle, and if they are too deep into
implementation and use of the product, their answers will reflect their current
views, not what they were thinking during the buying process.
In general, a
win/loss call should occur two to four weeks after the deal is concluded.
Where do we listen?
Visiting
evaluators onsite in their natural habitat is by far the best scenario. You
will learn things onsite that you will never learn in other settings,
particularly details about the competition. However, it is sometimes
impractical (or difficult to get permission) to do this for every win or loss.
Augment onsite win/loss analysis with other methods, such as phone interviews.
If you sell over the web, a short web survey can be effective, too.
How do we listen?
Although product
managers should do at least one win/loss report per month, the rest of these
can be outsourced (as long as you read every report and analyze what you
learn). Sometimes an objective third-party will be more successful uncovering
the reasons we win and lose because the buyer trusts that they are not trying
to re-open the deal.
Here
are 10 tips on listening to evaluators:
1.
Make sure the evaluator knows
you are not trying to save the deal (if you lost). Maintain this integrity by
not passing the deal back to sales if you lost due to something that can be
fixed. Learn from it and move on.
2.
Develop a questionnaire that
includes both closed-ended questions (multiple choice, rankings, yes/no) and
open-ended questions.
3.
Ask if you can record the
conversation. If the evaluator agrees, you can go back and review the
conversation not only for content, but also inflections and tone.
4.
If the reason the evaluator
says they went with the competition is price, follow-up later to really
understand this. Was it because the sales person wasn't able to clearly
articulate the difference in value between your solution and the competitor's?
Was it because the buyer didn't need the additional value you provided for the
premium price? Or is your price really too high?
5.
If the reason you lost is the
salesperson, drill down on this. It might not be because the salesperson is
incompetent. It might be lack of credibility, which might be the result of lack
of training on the product or the industry. It might be because the salesperson
needs coaching in uncovering the buyer's needs.
6.
Listen! Your job is not to
re-open the sales deal if the buyer went with the competition. Your purpose is
to learn why. If the buyer says they went with the competition because you
don't have feature X (and it is your best feature!), you simply need to listen.
Something clearly went wrong in the sales process for them to have this perception.
7.
Plan on a 15-minute interview.
If you find the person is particularly open, ask if they'd be willing to
participate in a longer, more in-depth interview at a time convenient to them.
8.
Record all win/loss interviews
in a database so you can share and analyze the information.
9.
Use win/loss data to quantify
features you need to add. Rather than simply reacting to a single data point
from the last sales deal, analyze whether you are consistently losing business
because you are lacking a key feature.
10. Always ask, 'What problem did you think you were solving with this
product or service?'
Win/loss
analysis can give us data to validate the things we are doing correctly and
insight into what isn't working. It is a more effective way to learn the
strengths and weaknesses about the competition (not just about their products,
but also about their sales expertise). In the absence of win/loss data, we
typically react to anecdotes from the sales channel, which might reflect a
market of one and not a market of many.
As a product
manager, do at least one win/loss interview per month yourself. The market
expertise and insights you will gain will far outweigh the time spent on the
interview.
Existing
Customers
Everyone seems
to be on the 'Voice of the Customer' bandwagon. But I seriously doubt that most
companies really understand what this means. They pay lip service to listening
to the customer (that's what customers expect), but they often don't know how
to do it proactively. And, being
reactive, they often just listen to the noisy customers (not necessarily their
best customers) and react to the squeaky wheels rather than focusing on the
best interest of their market at large, creating real value that benefits many
rather than a few.
Listening to
customers is usually within the comfort zone of most product managers. But
often, we do this as a reactive exercise rather than a proactive process. Tech
support calls us up and says, 'Go visit Customer X. They are not happy with us
right now.' Or a sales rep calls and says, 'Go visit Customer Y. If you put in
Feature A for them, they will be a good reference account.' In this discussion
we will explore not only how to listen to the noisy 20% of your customers (the
ones most companies react to), but how to listen proactively to the quiet 80%
of your customers as well.
Who are our
customers and how do we find them?
If you sell
enterprise level software, hardware, or services, you should have a database of
all of your customers. Even if you don't have a company-wide database such as a
Customer Relationship Management (CRM) system, do some digging. Check with
accounting and technical support--they are likely to have some contact
information. If this database has been neglected, it is possible you'll need to
do a little sleuthing to find current contact information. If you sell desktop
or personal high tech products, hopefully you have registration information for
a percentage of your customer base. If not, it's time to begin collecting it.
If you have a
lot of products and/or services, obviously you should coordinate customer
contacts. You would look silly if 4 or 5 product managers call on the same
customer within a short period of time ('don't you guys talk to one another?).
And every contact and every visit should be logged. Write up the details in a
call report that can be referenced and shared with others later. This is the
only way you can effectively remember what you learned and transfer the
knowledge to others who need to know.
Don't forget to
look for regular
users of your products. The actual product usage should be
based on what they need, not what buyers think the users will
need.
Here are some
tips on how to find customers and how to engage them to learn about their
needs.
|
Source
|
How you find and
engage them
|
|
Contract
|
If your
customers sign a contract with you, ask for key user information.
After the products have been installed, call the key user(s) and ask to
visit. Most customers are delighted to have a product manager visit.
|
|
Registration
|
If your
product or service requires registration (with an unlocking key), collect
contact information during registration (at least email address). If your
product or service does not require unlocking, find ways to motivate
customers to register when they buy your products. Offer them something that
doesn't cost you a lot--free support for 30 days, free download of a utility,
free tips about using your product.
|
|
|
If you have an
outbound (not selling) function to proactively interact with your customers,
this is a great resource for customer research. See Maintaining
Customer Relationships for more details on the value of this
function in your organization.Ask the customer relations rep to give you
names of interesting customers for you to visit. Periodically, ask the reps
to do quick phone or email surveys to quantify what is going on with your
customers so you can make sure you are not simply reacting to the noisy 20%.
|
|
Online Forums
|
Visit the
forum periodically. This is noisy 20% but can be useful.
Respond to an
issue the customer has raised. Contact the user directly for more
information. Drill down on what the core problem is, not just the requested
solution.
|
|
User Groups
|
|
Ask
the user group to vote on enhancement requests. Here are two approaches to
rating enhancements: First, each company votes with a virtual $1000. You
can place all $1000 on one idea; $100 on ten ideas; or $1 on a thousand
ideas. Or, Second, (better for online) rate each request on this scale :
rate “2” for the success of an upcoming project (no workaround exists) or
rate “1” for this would help but workaround exists or rate “0” if there is
no opinion. User groups do not often come up with breakthrough ideas; they
usually focus on the trees, not the forest.
|
|
|
|
|
|
|
|
|
|
|
Any vendor can
benefit from a Customer Advisory Board (CAB). Bring a group of six to ten
customers together into a room to discuss their strategic plans and how your
product can support their efforts.
Product
management should pick the participants of the CAB. Sales people will pick
their best customers, not necessarily the ideal customer. We should include
economic buyers, technical reviewers, and key users. We need to understand
the needs of each in a complex buying cycle.
The agenda
should include presentations by the customers of their strategic initiatives.
If you have chosen representative customers, this should give you good input
to your future product direction. Then review your product initiatives
(present prototypes or a demo) and solicit feedback on how your product plans
integrate with their initiatives. Finally, ask members to prioritize
outstanding enhancement requests (see methods above under User Groups).
It is critical
to set expectations that this is input to the
product, not final authority.
|
|
Technical
Support
|
Tech Support
interacts with the customer base frequently but remember that only the noisy
20% contact you. However, periodically follow-up on calls. (Your tech support
people can point you to some interesting sites.)
Ask if you can
visit them to see how they are using your products. Usually they will be more
than happy to accommodate you.
|
|
Customer
Satisfaction Surveys
|
Follow-up with
some of the surveys (both satisfied and not satisfied).
Start with a
phone call. Ask if you can further understand their responses to the survey.
If the customer is receptive, ask if you can visit them.
|
|
Web Surveys
|
Get people to
your website periodically (tips, info, education, discussion group)--use this
opportunity to ask them to fill out short survey; periodically do longer
ones.
If you have
good customer relations and proactively contact customers (not just to sell
stuff), you will have a higher response rate to surveys. Keep the ad hoc
surveys short and only do the longer ones annually. Publish the results on
your website and offer the full report early to anyone who participates in
the longer surveys.
|
|
Electronic
Newsletter
|
Another
way to find customers and stay in front of them. Provide articles with
useful, relevant information.
You
can put a link to your surveys here, too.
|
What are we
trying to learn?
What are the
quiet 80% of your customers up to?
·
What is the satisfaction level
with your products, services, and your company?
·
What is the implementation
progress? If the product has become shelfware, why? Is it too hard to
implement? Did the need go away (or didn't really exist in the first place)?
Did the product advocate leave the company? If you don't proactively find out
how they are doing, they might have quietly gone away to the competition.
·
How are they using your
products and services? Is there a shift from buying criteria (things they had
to have in the buying cycle) to how they really use the product (using criteria)?
·
How do the customers who don't
routinely contact us differ from the noisy 20% who do? Which customers are the
most profitable?
Other things you
are trying to learn:
·
Favorite features of your
product (you may be surprised--it is often not what you think is the coolest
thing); what delights them?
·
Would they recommend you to
friends & family? If not, why not? What would it take?
·
Good reference sites; good beta
candidates
·
What value are they receiving?
Specifics--find references and case studies; ongoing win analysis (further
validation on what you're doing right)
·
Impact of your product quality
on their business
·
How can your company improve
products and services to retain customers (remember the lifetime value of
customers)? If you sell new releases annually, what are customers looking for
that they would be willing to pay to upgrade?
·
Additional opportunities (what
new products and services might you offer--are there unfilled needs?)
·
How you can improve
segmentation--if you haven't segmented, analyze where your customers are. Is
there a concentration in a certain segment? Are you successfully meeting their
needs? Are they identifiable?
·
What is the profile of the
ideal customer (what is a good target--demographics, technical profile,
problems they have). This becomes helpful when training the sales force on who
to focus their efforts on, on building products to satisfy needs for the target
market, and for crafting the messages to attract the ideal customer.
When do we listen?
Listening to
customers should be an ongoing activity, not just a once-a-year event. Product
managers should plan to go onsite to visit customers at least once a month. On
a quarterly basis, we should be contacting customers (through customer
relations) to maintain the quality of our contact information.
We should be
doing short surveys (phone and/or web) throughout the year and satisfaction
surveys at least once a year.
Where do we listen?
Listen to
customers everywhere--online, onsite, at user group meetings, customer advisory
boards, technical support, usability labs, point of sale, focus groups (in
person and online), and through email. Anywhere they might be. Their natural
habitat is by far the most fertile, but take advantage of other places they
might congregate.
How do we listen?
Listening is the key to
this activity! Too often when we have an audience with our customer, our first
instinct is to talk. (Talking is selling. This is not selling. This is
research!)
Here
are 10 tips on listening to customers:
1.
Visit actual users (people who
use the product daily) as well as buyers. Visit customers that represent your
target segments.
2.
Spend a 'Day in the life?.' Go
onsite. Follow your customer around through the tasks of the day. See how they
use your products and what other challenges they face every day. Observe how
they work around limitations of your products. Ask, 'Why did you do that?' to
get more insight into their work habits.
3.
Photograph and/or video tape
actual usage of your products either onsite or in a usability lab. Share with
designers and developers if they are not able to go into the field.
4.
Track implementation progress.
What happens early on? What is going on in the middle? What is the transition
from installation to daily usage? Do they need ongoing training? How much
shelfware is there?
5.
If the customer says, 'You
ought to build this, ' drill down to the problem. Always try to understand the
problem they are trying to solve rather than focusing on the solution they are
suggesting.
6.
Share early prototypes and
models with your customers and solicit feedback. Ask how they would use it,
what problem it would solve for them. Try to understand the value it would
bring (actual cost savings, time savings, increase in revenue or market share).
Is it intuitive to use? Do they understand how to navigate through the product?
Beta is much too late in the process to get this feedback.
7.
Drill down on satisfaction
(surveys take the temperature, you need to find the cause).
8.
Are they early adopters? Where
are they in the technology life cycle? Balance who you listen to across the
lifecycle (early adopters, early and late majority, laggards).
9.
Sift through the noise. Rather
than reacting to a single customer request, look for patterns and understand
how the request will impact multiple customers rather than a single customer.
Look for critical problems to solve, not just cosmetic. Look to solve problems
for the market at large, rather than a market of one. Urgent, pervasive
problems that people are willing to pay to solve.
10.
Go with a friend. Four ears are
better than two.
Remember, it's
the voice of the customer (not
yours!). Make this proactive by tapping into the quiet 80%, not just reacting
to the noisy 20%.
Part 8 : Listening
to all 5 Market Forces
In order to profitably satisfy
customer needs, the firm first must understand its external and internal
situation, including the customer, the market environment, and the firm's own
capabilities. Furthermore, it needs to forecast trends in the dynamic
environment in which it operates. A
useful framework for performing a situation analysis is the 5 C Analysis.
The 5C analysis is an environmental scan on five key areas especially
applicable to marketing decisions.
1)
Company
a)
Product line
b)
Image in the market
c)
Technology and experience
d)
Culture
e)
Goals
2)
Customers
a)
Market size and growth
b)
Market segments
c)
Benefits that consumer is seeking,
tangible and intangible.
d)
Motivation behind purchase; value
drivers, benefits vs. costs
e)
Decision maker or decision-making
unit
f)
Retail channel - where does the
consumer actually purchase the product?
g)
Consumer information sources - where
does customer obtain information from?
h)
Buying process; e.g. impulse or
careful comparison
i)
Frequency of purchase, seasonal
factors
j)
Quantity purchased at a time
k)
Trends - how consumer needs and
preferences change over time
3)
Competitors
a)
Actual or potential
b)
Direct or indirect
c)
Products
d)
Positioning
e)
Market shares
f)
Strengths and weaknesses of
competitors
4)
Collaborators
a)
Distributors
b)
Suppliers
c)
Alliances
5)
Context (which affects any of
the 4 Cs significantly)
a)
Political & regulatory
environment
b)
Economic environment
c)
Social/Cultural environment
d)
Technological environment
e)
Ecological environment
f)
Legal environment.
One
way of conducting the 5Cs analysis is given below
