Value not Features – 2 Stories from the Trenches

08/05/2010

Product Marketing and Product Management are disciplines where the theory is easily understood but practical execution is really hard.  I asked Tim Johnson, (who frequently leaves smart comments on this blog) to share a couple of his “from the trenches” stories.  What I love about both of these is they illustrate perfectly how shifting the focus from “product features” to “value to the customer” can make a huge difference.   Enjoy!

If you are like me, you hate getting into price wars with your competitors – or letting your sales people get into them.  When you have a similar  feature/function set, it’s hard not to fall into the trap.  The best way to avoid ‘buying the business’ is to keep the conversation focused on what is REALLY driving the buyer: the pain they are experiencing, how that is disrupting their business and how it impacts them personally. You will have a different, more significant conversation with your buyer that gives you an advantage and will help preserve your profitability. Know your buyer’s metrics and you will know what you have to say to them.

I know this is Buyer Persona 101 stuff for a lot of you but I will illustrate with a couple of stories – and I love telling stories!

Story 1 – Focus on Value to Stop Going over the Discounting Cliff

Back in 2002, I was a solution architect for one of the big systems management companies.  The SA group was a tiger team that was called in to help close and architect significant deals.  I was the only non-techy on the team because I kept the focus of the discussions on what was driving the business buyers.

That February we got called into an opportunity with MegaCRM.  The deal was going badly because our competitor’s widget was 2 percentage points more efficient in server utilization than our comparable widget.  We knew from experience (we used their product) that MegaCRM had other issues
that needed solving but the conversation had gotten stuck on server utilization and was rapidly turning into a price issue – which we knew we would lose.

We scheduled a 4 hour meeting with the CIO and several of his top lieutenants.  The first thing I did was draw out on the white board all the business services the IT group were responsible for providing to MegaCRM.  Then we drilled into how data and processes flowed through all those services and where things broke.  After that, I asked the CIO and his team if their bonuses were affected by these disruptions and circled those parts on the white board that impacted their paychecks. The technical guys on the team spent the next 2 hours going through all the products we provided that helped that data keep flowing, improved the processes or prevented them from breaking in the first place.  The only time we talked about features was when it was germane to a specific problem we were solving for them.  By the end of the session, we had addressed every point of daily or weekly disruption that had impacted their business and their bonuses.

Just as I was putting away my briefcase, one of the lieutenants at the end of the table asked, “What kind of load does your widget put on a server?”  I immediately replied, “How are you compensated?”  He said, “Pardon?”  I said, “Are you measured by how well you provide these business services to MegaCRM (and I pointed at all of the ones on the whiteboard) or by server utilization of some box in the corner of your datacenter?”  He gulped and said, “Business services.”  I said, “Thank you,” shook hands with everyone and left.

Two days later the sales rep closed a deal for $2.4 MM for several products – about 4 times the size of the original widget opportunity.  He sent me a post card from the Quota Trip.

Story 2 – Get to the Real Customer Problem

May 2007.  I had just repositioned and relaunched the web security offering for one of the major SaaS vendors and got asked to help out with a deal
that was struggling.  The prospect was a clothing logistics firm and they were balking at the price of the service.  Their business is managing clothing inventory from the time it leaves the sewing machine through the time it is on the boat, then truck, all the way to receiving dock at department stores in the US.  They can get fined by their customers if shipments show up late or early – even if it is due to factors beyond their control like weather, labor disputes, road conditions, etc.  They are highly motivated to control every factor they can control and were getting hit by viruses from users browsing compromised web sites.

Eventually the conversation came to the point where I asked the buyer how he was compensated.  He didn’t quite understand the question (and I thought the sales rep was going to have a heart attack) so I rephrased it to, “How does your management know you are doing your job so they can pay your bonus?”  He said, “We’re measured on up time.”  I asked, “How you been doing on that?”  He replied (and I kid you not), “We’ve been doing  okay…” then his voice broke midsentence, “…the last couple years.” I didn’t need to press it any further.  The tone in his voice told me that his family was still upset with him because their summer vacation was going to be around the wading pool in their backyard rather than on the beaches of Tahiti.

I worked on the sales proposal with the rep off line and kept the discussion focused on how our solution was going to preserve up time and it sailed through to PO with almost no price negotiation.

If you get too enraptured with your product’s features, just remember Adele Revella’s immortal words: “Get Over It!”  Buyers don’t buy features – they buy solutions to their problems, especially those that help them earn their bonuses.  If you ramble on about your new red thingy and he likes green, you just bought yourself a price war.  Speak instead about how you are going to fix your buyers’ problems by understanding how they are personally affected.  You will have a different and more satisfying conversation with them and your sales reps will close more deals.