Monthly Archives: April 2011

Why customer needs don’t always matter

by Saeed Khan

There’s a great presentation by Brainmates entitled What is Product Management? In it, they say the following:

Product Managers spend time understanding what customers need and want…then develop solutions that solve these problems and satisfy needs and want.

There is nothing wrong with that description, and as a general statement, it is correct. That is where many Product Managers spend their time.  But the fact is, Product Management is not about satisfying customer needs and wants. And that’s a big distinction that needs to be understood.

I’ll say it again.

Product Management is not about satisfying customer needs and wants. Product Management is about ensuring business goals are met and business success delivered.

Now don’t get me wrong. I certainly believe in addressing market needs and driving customer satisfaction. That is definitely a great way to achieve business goals. But keep in mind that addressing customer needs etc. are a MEANS of achieving an END, not an END unto themselves.

This is something that gets lost in a lot of the discussion that happens about Product Management.

Strategy, Investment and Objectives

When it comes to building new products, it’s nice to think that every product is supposed to be a winner and market leader. But of course that cannot always be the case. Some products will never be market leaders, despite people’s best intentions, and some products are never even intended to be market leaders.

Consider all the tablet manufacturers who are releasing products to chase the iPad. And there are a lot of them!

What strategies do they have to gain market share? Do all (or any) of them think they can overtake Apple anytime soon? Given the lack of differentiation amongst them, are they really thinking about customers needs first, or are they looking at the overall market and their own business objectives?

Portfolio Management

Look at any company with a portfolio of products and you’ll see a few products that drive the vast majority of revenue and the remainder which are significantly smaller or are also-rans.

And if you could see into the decision making process of those companies, you’d see that the issue isn’t necessarily inability to address customer needs for those also-rans, it’s business objectives and investment. It’s portfolio management at work.

The questions come down to where to invest — i.e. which customers problems to address, which to ignore or postpone (and how to handle the fallout) — to best achieve the business goals of the company.

As Product Managers, as people responsible for “product success”, that’s ultimately where we have to focus.

It’s something I remind myself of regularly.

Saeed

Tweet this: Why customer needs don’t always matter http://wp.me/pXBON-1Ps #prodmgmt

My Interview with Josh Duncan of “A Random Jog” Blog

by Saeed Khan

Earlier this week, Josh Duncan of “A Random Jog” blog, interviewed me over Skype. He posted the interview on his site earlier today. We spoke about the issues in creating an effective Product Management organization.

Two things:

1. While the audio is perfect, clearly there was an issue with Skype on my end, as my video lags significantly creating some rather unflattering stills, while Josh’s video is fluid and clear. I blame my cheap, crappy, Canadian ISP, who shall remain nameless, but whose name can be spelled with the following letters:  R O G E R S (in that order).

2. I look like I’m half asleep in the video. Don’t know why, as I was wide awake.

Lessons learned for next time.

Also, for the most part we are discussing a presentation I gave at the recent ProductCamp Boston. That presentation is below.

Saeed

P.S. This is my 300th post on this blog. A small milestone after almost 4 years

Tweet this: Interview with @joshua_d on building #prodmgmt #prodmktg organizations. http://wp.me/pXBON-2oi

Worth repeating: What makes a relationship resilient?

BY ALAN ARMSTRONG

I spoke last week at a gathering of sales people, and we really dug in to the concept of power in relationships. Many of us feel power imbalances in relationships, but perhaps none more than a sales person.

Although the rewards can be high, many times sales people feel that the customer has all the power, and this can result in severe compromises in the selling process. (What is your average discount rate? How many times do you “throw in” free services to make a deal?)

In this post from 2010, I talked with executive coach and teaming expert, Michael Papanek, about a model for relationships that he calls “Resilient”. I am beginning to apply these same concepts to the relationship between buyer and seller, though when we discussed it last year we talked about the Product Manager’s primary relationships.

I think you’ll learn something from this discussion regardless of where you apply it, and I’d love to hear from you about your experiences. Enjoy.

- – - – - -

How much does your success rely on good relationships? And how good

are your relationships? In my experience,relationships can make or break a person, and I think that the quality of our relationships is overlooked when we consider the success of our product lines.

My friend and colleague Michael Papanek has developed a model called the Resilient Relationship. This model will help you understand your professional – and I would venture, your personal – relationships. Beyond understanding, Michael provides some strategies that you can use to make things better when relationships have gone wrong.

I interviewed Michael recently. Here is the conversation. (Download MP3).

Resilient Relationships with Michael Papanek

Please send us your feedback on this podcast, and ideas for future episodes!

- Alan

Becoming a Triple Threat Product Leader

Recently, I was in a conversation with an executive of a technology company. When I described my background, experience and capabilities in product management, he responded, “You’re a triple threat.” In thinking about product management and product marketing, what constitutes a triple threat?

Triple threats are often associated with sports or the performing arts. They’ve been described as:

As it relates to product management and product marketing, I believe the following definition best personifies what we should strive for:

You may be thinking, ‘”How can any person be an expert?” For starters, becoming a triple threat leader is a journey. It’s something that’s lived and experienced everyday.

What does it take to become a Triple Threat Leader?

From past experiences, observations, adoption and working with diverse product leaders, I believe the three elements include: Business, Innovation and Technology. Let’s take a look at each one.

BUSINESS

A key differentiation between PRODUCT manager and Product MANAGER as described by Saeed Khan in a recent post is the focus on “business or product.”

While many products people have an affection for technology or find a comfort zone, they are often apprehensive about venturing into the business side. For those who are concerned, this isn’t like being in an episode of the Twilight Zone. Whether you work for an organization or team that recognizes the value of your business capabilities, adding or infusing the business element is key.

In his post, “Seven Traits of Successful Product Managers,” Michael Shrivathsan shares that with a business orientation, “They understand how to identify market opportunities, importance of competitive differentiation, creating winning product strategy, pricing and promotion, partnerships, analyzing P&L statements, and so on.”

Additionally, when product management and product marketing provides more business-oriented data and value, there’s an opportunity to lead vision, strategy and elevate sales and marketing with positioning that drives the business more than the product.

How Can I Get More Involved in the Business?

There’s numerous ways product management and product marketing can become involved. Here’s a list of things I’ve done or been involved in:

  • Define a new business opportunity (in business terms) and how it could be impact company success
  • Assess a complementary company for acquisition or partnership
  • Lead a team to define and communicate a product marketing roadmap
  • Review a company (not product) competitor and communicate your findings to sales leadership
  • Lead a discussion with sales discovering their knowledge of buyer and user personas

NOTE: In some of these examples, you’ll may need team, management or executive sponsorship.

INNOVATION

The next attribute of triple threat leaders is innovation. Jeff Lash, VP of Product Portfolio Management for Elsevier shared, “If you want to be a good product manager, build a portfolio of innovation initiatives. Though many frequently think of innovation as being dramatic and substantial, most innovation is less groundbreaking and more about refining current ideas, processes, and systems.”

Innovation is one area in product management and product marketing where your strategic thinking is needed and backed by your knowledge of markets, your business and rational thinking. While innovative ideas may surface from almost any area of the organization, becoming a triple threat leader means you understand, vet, prioritize and engage to ensure  the reality and impact of innovation initiatives are relevant and add value to the organization and company without interrupting strategy and roadmap commitments.

Backed with data that substantiates a plan to research and validate any innovation, product leaders dispel assumptions, refine or dismisses disruptive initiatives, and add a level of business and technology strength to innovation discussions.

How Can I Get More Involved in Innovation?

Getting involved in innovation initiatives is easier than you might think. While you may not have access to executive conversations, you can:

TECHNOLOGY

Understanding technology, products, trends and how they apply to problems people will pay to solve is the core of what product management and product marketing should do best. While product management is usually made up of technophiles who own and use every electronic gadget, software and tool available, many do not have an understanding of what problems a product solves, how it’s positioned, what the buying and selling process entails.

I believe every product management and product marketing person must have a sound understanding of the technology, but this must be backed up with an excellent knowledge of those non-technical aspects that bring credibility in conversations with those outside your building.

“One of the key things that separates Product Marketing from other forms of marketing is the depth of understanding of products/solutions.  This deep level of understanding is critical when it comes to working with customers” shares April Dunford. “Product management is a big job and often product managers can be so focused on feature development they can’t put themselves into the shoes of the customer when it comes to communicating why someone should buy.  Customers don’t care about features or technology or anything else that represents how you do what you do.”

How Can I Get A Better Understanding of the Products?

Depending on your background, experience and current product orientation, gaining a better understanding depends on what you need. If you’re technical, you need more strategic marketing or product marketing oriented knowledge. If you’re less technical, you may need a plan to improve your knowledge of the product(s). Either way, this will support your triple threat opportunities. Here’s a list of things you can do:

More Technical?

  • Connect with Sales Engineering or Services and join them on calls and listen to the positioning used with your product
  • Interview several customers to understand why they bought from you and what the buying process was like
  • Ask your executive sponsor to give you the elevator pitch about your product or service
  • Read the Gobbledygook Manifesto and apply its principles

Less Technical?

  • Connect with Sales Engineering and ask how they are on-boarded. Review any materials, videos and demos
  • Join the sales team on prospect calls and listen to how your product is demonstrated and positioned
  • Meet with the technical writing team and ask them to describe the most important features of the last release

Creating a Triple Threat Strategy

Becoming a triple threat product leader requires a personal strategy. Looking at the image above. Are their areas where you excel, are adept or even an expert? Take time to reflect and honestly assess where you are and what you need. Create a list of things you want to work on and socialize this with a mentor, manager or executive sponsor. Ask for their honest input and evaluation of your capabilities.

If you enjoyed the post, please share it through social media on Twitter or LinkedIn.

Tweet this: Becoming a Triple Threat Product Leader – a new post by @jim_holland http://wp.me/pXBON-2nN #prodmgmt #prodmktg #leadership

As always, comments are welcome and I recognize the vast knowledge of experience in the product management and product marketing community.

3 Product Marketing Lessons from Lady Gaga

by Prabhakar Gopalan

Tweet this: @PGopalan Product Marketing Lessons from @ladygaga
http://wp.me/pXBON-2nl #prodmktg #prodmgmt @onpm

Last week I went to a Lady Gaga concert, here in Austin.  It was part of her Monster Ball tour.  What a blast! At 9Million plus followers on Twitter, Lady Gaga is a phenomenon whether you like her music, her antics on stage, her bizarre costumes or not.  What can we learn from Lady Gaga? Here are three ideas I observed in the Lady Gaga marketing machine.

1) Create an outstanding whole product experience

The Monster Ball Tour Bus

Lady Gaga’s concert is not just about theatrics.  It is about a full on entertainment experience.  A Broadway musical wrapped in a pop concert format.  Rather than presenting a dozen songs one after another as most concerts go, she produced a thematic performance – there was dance, music (simple lyrics, that related to the majority of her audience), stunning stage production, but more importantly an entertaining story telling experience.  In the tour concert last week, it was about a group of friends going to the  Monster Ball and their experiences along the way,  reaching the climactic song at the Monster Ball.  It was an outstanding whole product experience.

How often do you have a product release that has no theme, but a bullet point list of something like  ‘New features in Version 2.3′?  Can you tie in those features into a release theme so it is useful as a whole product?  Or were those features simply a collection of items you had to pick to appease as many interests as you could? The choice for product managers is usually between delivering a thematic release or a feature filled release.  The former delivers an ‘experience’.  That latter falls flat ready to be ignored.

2) Connect with audience at multiple levels through multiple channels

A Lady Gaga fan in bubble costume

I was impressed how Lady Gaga connected with members of the audience at a personal level .  Between songs, two huge electronic display boards were live streaming tweets from the audience.  It was giving the audience a shared sense of community and engaging their participation.  Pre-concert, there was a costume challenge and selected participants were invited to the well/up-close to the performing artists.

During the concert, Lady Gaga pulls out a cell phone (mentions Virgin Mobile – sponsor) and makes a call to a ‘lucky’ fan.  The fan, who is in the audience, answers the call,  is in spotlight and gets invited to meet Lady Gaga backstage.  The fan tells Lady Gaga that her friend with whom she has come to the concert is also a big fan.  Lady Gaga extends the backstage invitation to her fan’s friend too.  How generous!   Not only that, Lady Gaga donates $25,000 to charity (matching donation from Virgin too) because someone answered her call that night.  Next she reads out a letter from someone in the audience who credits Lady Gaga for inspiring her.  Spotlight moves to the fan, fan gets invited to meet Lady Gaga backstage.  16,000+ audience goes gaga.

Theatrics aside, you can’t miss the obvious fact that Lady Gaga is trying to connect with her audience at a personal level.   If we apply that to product management, how often and in what ways do product managers try to connect with customers, and reward them for just being customers? (no sales call/no hidden agenda).  Saeed had a great post about visiting customers with no sales agenda last week.

3) Build and nurture your  tribe

Another Lady Gaga fan in costume

That brings us to the third point – building and nurturing your tribe.  Lady Gaga calls her fans ‘little monsters’ and herself ‘mama monster’.  (And they are all going to the Monster Ball.  How thematic!) By creating an identity for her fans, she has created a brand for her followers  – a tribe that her fans can belong to.   She didn’t build the 9M+ twitter following overnight. These are fans that are carefully nurtured and given plenty of legally free digital streams of Lady Gaga’s music to listen and enjoy (the free trial).  Lady Gaga  is constantly communicating/tweeting to let her fans know what she is up to, what she is thinking, where she is performing and thanking them for support.  It is a lot of effort and high degree of engagement with a large fan base, but the dividends are there to see.  How many product brands can match Lady Gaga’s effectiveness in building and nurturing a tribe?

In summary, here are three questions worth introspection if you are delivering a product – how can you create an outstanding experience for your customers with your product?  how can you connect with your customers in that experience, make them be part of it?  how can you build a loyal following, so the relationship is beyond a transactional opportunity?

Prabhakar

Tweet this: @PGopalan Product Marketing Lessons from @ladygaga
http://wp.me/pXBON-2nl #productmktg #productmgmt @onpm

Are you a PRODUCT manager or a product MANAGER?

by Saeed Khan

When you think about your job and the work that you do, how do you see yourself in the role that you fill? Are you primarily product focused (i.e. a PRODUCT manager) or primarily business focused (i.e. a product MANAGER), or are you something else?

Does your role match your view of what Product Management should be?

Product Management is still ill-defined in companies

At ProductCamp Boston I spoke to several people who seemed unhappy in their roles because their focus was defined as a strictly technical role, related to features and requirements. As one person mentioned, “the business people push us to fill the gap on the technical side of things.”

Another person described the role as “filler” — doing what other people don’t do. I asked, if that’s the role they wanted. The response was “No, but that’s the way it is.”

It’s no wonder that people outside of Product Management are so confused about what Product Management is. It’s because many of us in Product Management continue to work in roles that really have nothing to do with actual Product Management.

Being “filler’ is not the same as being “cross functional”.  And how can anyone measure the value of people who “fill gaps”?

I’m not criticizing the people in those roles — we all have to work and we can’t always choose the perfect role — but I think we need to be more vocal, speak out within our companies and educate the management on what Product Management is and the true value it can provide them.

We need both PRODUCT managers and product MANAGERS

And there’s nothing wrong with being a “PRODUCT manager”, IF you are part of a team.

i.e. your role is to focus more of your time on features/functionality and work with Engineering etc., but you work with counterparts (product MANAGERS) who focus on the business side of things, work with marketing, sales and senior management, and work to ensure that what is built has the maximum chance of succeeding in the marketplace.

If you are a “PRODUCT manager” but don’t have those kinds of direct counterparts, then you have to ask yourself if the work you are doing is for naught.  i.e. how well can you succeed in your role if the product you help build doesn’t have the proper business support to actually succeed?

How to change this situation

As I’ve said many times — Change is a process — and this situation is no different.

The first step is to acknowledge that this is a problem that we can address.  This change must come from us, because it certainly won’t come from outsiders realizing that they don’t understand Product Management or that there is a better way. We’ll have to tell them.

So, if you are in a situation where your role is ill-defined or where your company doesn’t understand Product Management, start by talking to them to help them understand. There are lots of resources out there (and here!) to help.

And don’t give up after that first conversation doesn’t get you anywhere. It most likely won’t. But after having multiple  conversations with your boss(es), — whether to let you talk directly to customers, or to focus more on business issues, or to define the role better so an actual team with differentiated roles can be created — like a slowly turning battleship, change will happen.

And don’t do it for altruistic reasons, like improving the status of Product Management. Do it for selfish reasons, like improving your opportunities in that company.  And who knows, maybe that change process ends up proceeding faster than you imagined.

What do you think? Is this a problem that needs to be addressed? And if so, what other ways can we address the problem?

Saeed

Tweet this: Are you a PRODUCT manager or a product MANAGER? http://wp.me/pXBON-2n1 #prodmgmt #leadership

Worth Repeating: Devil’s Dictionary for High Tech

by Saeed Khan

The Devil’s dictionary is a book created in the early 20th century by American Ambrose Bierce containing sarcastic, ironic and witty re-definitions of words. e.g

PAINTING, n. The art of protecting flat surfaces from the weather and exposing them to the critic.

Back in 2009, I took this concept and wrote a set of high-tech oriented definitions, entitled – you guessed it – Devil’s Dictionary for High Tech.

This is a repost of those definitions along with some modified and new ones to freshen things up a bit.

Which ones are your favourites? Let me know in the comments below.

Enjoy!

Saeed

———-

Agile: n. A philosophy of project management where long term planning is replaced by short term thinking.

Bug Scrub: n. A meeting aimed at deciding which product issues can be swept under the carpet without too many people noticing.

Cloud Computing: n: A nice alliteration for an externally hosted computing model, created by people who felt that the term “IaaS” was just too ridiculous to say in any professional setting.

Competitive Analysis: v. The act of simultaneously underestimating your competitors weaknesses and overestimating your own strengths.

CRM system: n. A database full of opinion and incomplete information used as a key source of input for managing relationships and creating sales projections.

Customer Council: n. A small # of Strategic Accounts whose influence on product futures is proportional to their budgets.

Customer Development: v. a startup’s search for early customers whose minimal needs are only matched by the startup’s current minimally functional product.

Easter Egg: n. Hidden code invoked by secret means that pays tribute to the awesomeness of the application’s developers

First Customer Ship: n. The phase in which a small set of eager customers, unbeknownst to them, join the QA team.

Freemium n. A pricing model used by people when they haven’t figured out how to build something that all customers would pay for.

Heroics: n. The Sales Methodology most often cited by salespeople as their reason for winning big deals.

iPhone: n. A wildly popular touch-screen based mobile device that consistently ends calls when the user accidentally touches the screen with their cheek during a call.

Lead generation: v. The art of finding people interested enough in a product to give their names and contact information, but not interested enough to actually buy it.

Marketing: v. The art of getting others to believe exaggerations about you that you likely don’t believe about yourself.

Market Sensing: v. The fine art of talking to others to understand how your bosses perceive the market.

Minimum Viable Product: n. A set of product functionality that can best be described by the following phrase: “Well, it’s the least we could do.”

Nightly Build: n. The overnight compilation of all new bugs introduced the prior day.

Post-mortem: n. A post-release process improvement meeting whose findings are usually ignored until the subsequent post-mortem.

Pivot: n. A change in company strategy enacted to appease the upset Board of Directors who approved the prior failed strategy

Positioning: v. The dying art of strategic puffery used to gain a place of residence in the minds of generally uninformed prospects.

Product Issues: n. The reason given by the sales team for a lost deal when the competitor’s aggressive price-cutting was not the issue.

Product Management: n. A strategic forward-looking department in a company mandated by lack of adequate staffing to focus on short-term tactical activities.

Product Roadmap: n. A highly-speculative document of little substance but much value, especially during negotiations with Strategic Accounts.

Product Vision: n. An idealistic future view of a product typically derived while in a state of Utopia Myopia.

Refactoring: v. The act of completely rewriting working code to enable hypothetical improvements to be made to it sometime in the future. A favourite task of most software developers.

Release Candidate: n. Like a political candidate, far from perfect, but likely to annoy the least number of people.

Release Date: n. The day before the first installation or licensing bug is reported by a customer.

Requirement: n. A statement of need by a Product Manager, seen as a loose suggestion by Development, and as a firm commitment by Sales.

Research Firms: n. Companies that provide CYA services to buyers via simple diagrams and expensive reports. Also applies to Management Consultants.

SAAS: n. Same Applications Available by Subscription

Sales: v. The art of turning leads into gold.

Sales Club: n. A disincentive program for non-sales employees who make significant contributions but aren’t likewise rewarded with a trip to an exotic location.

Sales Forecast: n. Proof that throwing darts can be used for more than simply deciding which stocks to buy.

Sales Kickoff: n. 3 nights of intense inebriation mixed with 3 days of intense sleep deprivation. Some business transpires.

Sales Methodology: n. Once implemented, allows a company to believe sales people will actually follow a standard process. See Heroics.

Social Media: n. An electronic communication medium aimed at “connecting” people with each other while simultaneously minimizing actual human contact.

Social Networking: v. The opposite of anti-social networking.

Software Architecture: n. The technical underpinning of software systems and the chief roadblock to making major improvements to them. See also: Refactoring.

Strategic Account: n. A customer with lots of money to spend, usually on things that are not core to your business. Often a member of a Customer Council.

Software upgrade: n. A work creation program for the Technical Support team.

Tablets: n. small, sophisticated touch sensitive computing devices, whose primary purpose is to allow temperamental birds to seek revenge on harmless looking pigs.

Technical Support team: n. The group with the most customer and product exposure but with the least say in customer and product decisions.

Trade Show: n. A gathering of like-minded people all seeking knowledge of the best free giveaways on the show floor.

Undercut by Competitor: n. The most common reason salespeople cite for the failure of Heroics.

Usability: n. The first thing customers experience and virtually the last thing developers think about.

Utopia Myopia: n. The condition of only seeing ideal outcomes and ignoring all other data. The opposite of analysis paralysis.

Voice of the Customer: n. the collective needs of a broad subset of existing customers, usually drowned out by the individual needs of a small set of important prospects

Waterfall: n. A project management methodology that keeps project managers in the spotlight, while simultaneously keeping virtually everyone else in the dark.

Win/Loss Analysis: n. An unnecessary analysis as Wins are due to sales rep Heroics, and Losses due to Product Issues and being Undercut by Competition.

Saeed

Tweet this: @onpm Devils Dictionary for High-Tech http://wp.me/pXBON-2mN #prodmgmt #innovation #agile

A tale of two companies: The discounter and the price leader

Tweet this: New post @OnPM: “The discounter and the price leader” by @AWArmstrong http://wp.me/pXBON-2mq #prodmgmt #sales #negotiation #strategy #price

By Alan Armstrong

On Monday I met with two companies with very different approaches to price and margin. One company’s sales team said:

“one of our strengths is that we are so flexible on price.”

They view it as a differentiator that they are willing to get the business at almost any price.

The other company has a list price that is clearly higher than their competitors, and they will not discount. Period. In fact they agree to “most favored nation” clauses with some customers and partners that prevent them from discounting with other customers and partners.

Now, lest we prematurely dump all over Company #1, there really CAN be an argument for both strategies. Company #1, the discounter, is using price to capture market share, and if they are the low cost provider, that is a legitimate strategy. However I know a little about their business, and I suspect that increasing margin would actually be very good for them. (As a SaaS company, they have significant COGS, and sacrificing on price can destroy the gross margin. Which is usually very bad. But not always!)

Further, I believe they could significantly increase their margin. To do that they will need to identify differentiators that their buyers care about. (So many tech companies describe differentiators that fly right past their buyers. The only differentiators that matter are the ones that help your buyers in significant ways.)

But more interesting was the meeting with the price leader. This company trains its reps from the day they sign on that they simply may not discount. Every rep from their company knows it, and they just do not have that discussion with their clients.

Sound unrealistic? Let me tell you a story from one of the deals we just discussed.

The set up: Products look the same to the decision maker

Sue, the Chief Medical Officer, has two one-hour meetings to review offerings from two competing companies. In the room are 20-25 of her colleagues from hospitals across the medical system. She concludes that the products are roughly the same. However, Company B (our competitor) has a product that the doctors like and is less expensive over 5 years. The decision is easy for her: We’ll go with Company B.

Company A doesn’t give up that easily. Working with champions internally, they suggest that to really understand the differences, the hospital needs to spend more time with each vendor. It’s not the products that matter so much, it’s the engagement model. The hospital agrees. However, when they agree to spend this time, they tell Company A that they can only do so if Company A will discount. Company A’s price is $190, and the buyer is asking for $150.

And so the stage is set for negotiations.

Company A has a policy to never discount. They are so committed to this policy that they have entered into legal agreements preventing them from giving new customers a better price than some of their existing customers. There may be other more colorful words for such behavior, but we will call it “confidence”. We like this behavior very much.

Company A goes into their corner to discuss. They decide that this customer has two things that they really want.

First, they are moving to a new platform that Company A wants to test out, so they would be an ideal beta site. Having this client as a beta site is worth something to Company A and requires resources from the customer, so there is a real flow of value to Company A.

Second, this customer has just been acquired by a large medical system. The medical system represents about 15 other hospitals, all who will need Company A’s product or one like it. The medical system is evaluating but moving very slowly. A foothold in this hospital represents a “beach head” that could set up an incumbent status across the other hospitals. This has value.

Furthermore, Company A knows that if it sells to the whole hospital system, the price to this one hospital would be more like $120, so $150 would be a good price anyway.

With this positioning in mind, Company A enters the negotiation (seller):

Seller: We have discussed your situation, and are prepared to consider your request for a lower price. However, before we can do so, we will need something from you in return.

Buyer: What did you have in mind?

Seller: You are on the new platform, and we would like you to be a beta tester for our integration with that platform. There are certain requirements about being involved in feedback sessions, reporting bugs that you find, and sometimes you will run into bugs and have to work around them. We will of course support you very closely as you do this.

Buyer: I think we would consider that.

Seller: Also we would like to showcase your implementation to the wider hospital system that just acquired you. This would mean writing up your experience into a sort of case study, and having you speak on our behalf to the CMOs in other hospitals.

Buyer: (After checking internally) Yes, we could consider that.

Seller: In that case, we would be willing to give you the product for $140. (Which was below the request of $150, but above the bulk price of $120 and above the competitors price which we think is about $125-135.)

This allowed them to get to the next step, which was the day-long proof of concept.

Second try: Differentiate or die!

In that meeting, Company A brought in experts who guided the evaluation team through a set of fairly complex decisions and actions. This was expertise not offered by the competitor, and not understood by the CMO in the 1-hour product demos. Company A had suddenly differentiated its offering, not based on its product, but by giving its customer confidence in achieving the customer’s goal based on the hand-holding from Company A.

Post-game analysis

Company A won the deal. The negotiation and selling work in this example is text book. The only thing I would improve is to somehow communicate this value in the initial 1-hour presentation to avoid all the later expensive negotiation. While this is textbook sales and negotiation strategy, I don’t see this behavior very often in a sales rep much less a whole sales team. I’ve interviewed about 250 B2B buyers in the past 2.5 years, and it is much more common to just discount our way to the deal. Such practice is cultural and can be very hard to change.

To change this behavior requires two things:

  1. Most important, it requires a culture like the one demonstrated by Company A.
  2. Negotiation skills and courage on the part of the sales reps. The second part is fairly straightforward and can be learned. But the first part (culture) comes from the top. Your company’s approach to price and discounting becomes like a fingerprint that everyone recognizes and expects.

As I said at the outset here, it is perfectly legitimate to be the “low cost provider” if that is in fact your strategy. Michael Porter describes this as one of the three distinct strategic positions in a market. But beware. If this is not really your strategy, discounting is a costly path, and hard to reverse.

Here’s how you can help the sales team

Product Managers and Marketers can help avoid discounts in one specific way: Study differentiation from the perspective of your buyers. Interview your wins, not just your losses. You wins will tell you what set you apart, and once you hear it enough times you can replicate it and improve your messaging across all engagements.

Good luck and send me your comments! (Email me)

Tweet this: New post @OnPM: “The discounter and the price leader” by @AWArmstrong http://wp.me/pXBON-2mq #prodmgmt #sales #negotiation #strategy #price


Open Question: What is stopping you from visiting customers?

by Saeed Khan

At ProductCamp Boston this past weekend, Steve Johnson of Pragmatic Marketing asked a very simple, but telling question during my session.

He asked the other attendees:

How many of you have visited customers in the last year…without a Sales agenda?

It seemed like a fairly straight forward question.  Surprisingly, only a couple of people raised their hands. One person raised his hand, but then lowered it as Steve added the “without a Sales agenda” phrase.

Travel budgets are tight, we know that. And many of us are tied up with firefighting in the office. But if we’re not getting out of the office to develop market understanding and bringing it back into the company, then who is? And ultimately, what value are we as Product Management professionals delivering to our companies?

Here are the questions

1. What is stopping you from getting out of the office and visiting customers, partners etc. to gain insight and develop market authority?

2. And for those of you who don’t have this problem, what solutions can you offer others to help them get more interaction with customers/partners and build deeper market insight?

Leave your answers in the comments section below.

OR if you want to maintain your anonymity, click this link and give your answers via the form. I’ll summarize any responses and post them back on the blog in the near future.

I look forward to hearing from all of you.

Saeed

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6 ways to improve the job interview experience

by Prabhakar Gopalan

Tweet this: @PGopalan Improving the job interview experience http://wp.me/pXBON-2lS #prodmgmt #jobadvice #jobsearch #careers

In the last two weeks, I covered searching for a job and 5 tips for interview success.  In this post, I will cover best practices for interviewers.

Here are my 6 tips for conducting a professional interview:

1) Introduce yourself first

Have you gone to an interview where the interviewer has your resume in hand, but you know little about the person you are talking to?  Extend the simple reciprocity of sharing information by giving your candidate your background information – what you do, how long you have been with the company, and where you came from, what your experiences are.  If you are really professional you’d arrange for your recruiting coordinator to send a brief biographic sketch of the interview team to the candidate ahead of the interview, just as you were able to obtain a resume of the candidate before hand.

2) Time it right

Two things about time – a) Please show up on time.  “I’m running late because I had another meeting” is a lame excuse.  b) Lay out upfront how you are going to interview the candidate and how much time you have for the whole interview.  Giving a structure to the interview helps the candidate understand how to present information to you and when the interview is going to be over.  Here’s a bad example – A Director of Products at a famous startup (then, not anymore)  showed up 15 mins late to the interview and cut off the candidate at 15 minutes into the interview and said that was all the time he had.  Why bother interviewing when you are so unprofessional?

3) Test conceptual knowledge not tool familiarity

Lot of hiring managers get hung up on things like  ‘do you have experience with Omniture?’, ‘do you have experience with Eloqua?’ and so on.  In stead of testing the candidate on the understanding of underlying marketing concepts, they get tool specific.  The result is poor use of the 60 minutes interview time on something that can be learned from a Youtube video versus understanding broad concepts in product management/marketing.

4) Test problem solving ability versus experiential knowledge

Instead of asking “what did you do in your previous job?”, make it interesting for both the candidate and you by setting up a problem solving scenario.  Come up with interesting/real product management scenarios and ask how the candidate would go about solving that situation.  Here’s an example – We are not doing well on our newly introduced product.  What would you do to improve sales?  This is a typical business problem.  See how the candidate approaches this problem.

Is the candidate structuring his analysis by identifying drivers for sales, coming up with hypothesis on what could be wrong and testing those hypothesis against data?  Is this how you solve problems or do you go about doing things mechanically? (the “been there, done that” attitude would be something like this – “oh, I’ll just come up with a creative marketing campaign, do more sales training and if possible give a price cut”).  The problem with experiential knowledge is that it is always based on assumptions that may not necessarily be true anymore to the case you have at hand.  Clear out the experience ego, and start picking apart the problem from scratch.

5) Hire for culture fit

You may have the brightest candidate, but if he is not a good fit for your organizational culture then that’s no good.  There are candidates who are driven, will perform independently and need little managerial oversight and there are those that are process driven, will do exactly as they are told.  One is not necessarily better than the other.  The smartness is about figuring out if the candidate you are about to hire will fit into your organization not because of his abilities but because your culture will make the candidate happy in the long run.  The job interview isn’t the place for under promising and over delivering.  Be truthful and honest about what your culture really is – if it sucks, admit it and let the candidate make the decision to join or not.

6) Give room for questions

Definitely leave room for questions.  Few interviewers really give time for the candidate to ask meaningful questions.  Some are uncomfortable about answering questions because the information may be of an order of sensitivity not ready for sharing.  In that case, get an NDA (non disclosure agreement) signed and let the candidate ask you detailed questions so he gets the benefit of understanding the business better or what situation he is going to get into.  Some think it is a one way process where interviewer gets to ask all questions, and then there’s the customary “We are at the top of the hour, I have to run to another meeting.  Do you have any questions for me?”.  Open yourself to just as much as you would want the candidate to disclose.  You’ll get to know the candidate better by letting the candidate ask you questions.  When your candidate sends you a thank you note, offer to answer any questions they may have as follow up.

The job interview isn’t about  the interviewer testing the candidate for a set of skills in a checklist.  It is about the candidate finding a bigger purpose (mission and values of the company) than what he can do just as an individual, and to answer that the interviewers must prove they are worth working with, not working for. Treat the candidate like how you’d like to be treated.  Stress tests are for endurance training drills in the gym.  Not for professionally conducted interviews.  Remember, you might end up working with this person very soon.

- Prabhakar

Tweet this: @PGopalan Improving the job interview experience http://wp.me/pXBON-2lS #prodmgmt #jobadvice #jobsearch #careers