Comments (6)

By brantcooper, September 13, 2010 4:38 pm

I received a comment on the “Art of Customer Development Conversation” post regarding B2B Customer Development conversations and specifically, “how to navigate complicated customers where you’ll ultimately need approval from 3-5 parties while dealing with motivated saboteurs.”

The number one problem with Customer Development in B2B environments is that startups begin the Customer Development process too late.  The revenue plan has been sold to the board, the product is done or near-done, and a marketing launch date has been chosen.  Despite the increasing popularity of the LeanStartup “movement,” this is, IMO, still standard operating procedure for most B2B startups.  So having skipped Customer Discovery entirely, the company founders have neither validated their problem assumptions nor their proposed solution.  The board eagerly awaits first revenue and to that end, will even help hire the first VP of Sales in order to accomplish this momentous milestone of best-laid plans.

Welcome to the maze of complex B2B sales.  Did you think B2B sales was going to be straightforward; based solely on rational, business-savvy calculations?  Based on the bottom-line?  Most everyone recognizes that the B2C sales process requires appealing to consumer’s emotions.  But believe it or not, business buyers, influencers and users are human, too, and thus are not-exempt from emotional decision making.  Ego, hierarchy, competitiveness, fear, grandstanding, sycophantry join budget, market share, revenue, profits, risk, time, resources in the sale.

The “Status Quo Coefficient” represents that which you must overcome above and beyond the pain your product solves, in order to make a sale.

Pre-Launch Customer Development

If you are practicing Customer Development prior to product launch, then Blank’s The Four Steps to the Epiphany goes into great detail about how to discover and validate your understanding of the complex selling environment.  In less detail, but perhaps with more specific tactics, Vlaskovits and my The Entrepreneur’s Guide to Customer Development is a good resource for executing your Customer Discovery plan.

During Customer Discovery, you are not selling, so you are in a better situation to have “learning conversations” with prospective customers.  Your aim is to establish relationships inside businesses who are likely to be early adopters.  This means you must find your champion.  Your champion will help you understand who your saboteurs are and hopefully, how to navigate around them.  As you build your product and validate your vision with the champion, you empower him or her to sell you inside the organization.

Post-Launch Customer Development

These are tricky waters for the reasons described above.  If you have a sales team in the field, let them go.  If you have a VP of Sales unable to take a learning approach, let him or her go.  If you are fortunate to have a board that has bought into learning before (large scale) selling, perhaps you are able to hire a VP of Customer Development or utilize outside resources.

In 2005, Mark Leslie and Charles Holloway wrote a very #custdev-y paper, called the Enterprise Sales Learning Curve (.doc).  Leslie and Hollow describe the same failures of scaling sales and marketing prior to knowing how market and sell that led Blank to establish the Customer Development methodology.  I highly recommend this paper for B2B startup executives and investors.

Leslie and Holloway advocate hiring a “Renaissance” Sales person to practice Customer Discovery:

The “Renaissance” Sales Rep:    During the initiation phase we would like to hire an individual who is able to facilitate broad based learning by the enterprise.  This individual likely has a deep interest in the technology and in bringing together various customer departments with the appropriate representatives of the company.  The individual is extremely resourceful, able to develop his / her own sales model and collateral materials as needed.

Fundamentally, two approaches exist no matter who you bring on board:  1) go back to Discovery or 2) establish a painstaking process for winning your first five deals.  For a peek out how this approach might be developed, I highly recommend you read this comprehensive interview with Sean Murphy.

So what is it exactly, that you need to learn?

1) Validate Customer-Problem-Solution: No matter what stage your company is in, you need to validate that you have the right combination.

2) Do you have the “whole product?”  Or do you need partners, systems integrators, etc.

3) Identify the buyer’s process and corresponding business tactics.

4) Identify all the player’s in the process: user, influencers, economic buyers, decision makers.

5) What messaging and positioning messages resonate?

6) What does the corporate purchasing process look like?

Non product-specific answers you need:

Are you the decision maker?

Do you have budget?

Who also is involved in decision making?

Is this deal subject to other departments’ approval processes?

Are there compliance issues regarding this deal?

Can legal or purchasing nix the deal?

Do you keep a list of approved resellers/systems integrators?

Are there departments who might disapprove of a deal (are you adversely affecting another department’s budget)?

All things considered, what is the “typical” length of the approval process?

What other user groups/departments will benefit from a deal?

Will a successful pilot assuage naysayers?

Will you sign a contract whereby you purchase upon a successful pilot?

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The method for obtaining this information doesn’t change significantly between pre- and post- product Customer Development:  You must establish deep relationships.  High-powered, “renaissance” sales people do this through “consultative” sales, whereby they learn what core problems the client needs solving and how they can work together to implement product that does the job.  Either way, you must find an internal champion and developing this relationship is typically a painstaking process that takes months to evolve.

The best way to find internal champions is through your network, no further than 1 link away (i.e., friends of friends).  This means reaching out to the friends, family, and colleagues of you and your co-founders, employees, board members, mentor, advisers, etc., for introductions.

As discussed in The Art of Customer Development Conversations, the answers you seek are not often the result of direct questions, but flow from conversations that grow deeper over time as the fit between problem and solution becomes tighter and trust among principals builds.

Comments (10)

By brantcooper, May 12, 2010 6:46 pm

I hope my PR friends won’t hate me after this post, but the point needs to be repeated:  Startups should not hire PR agencies.  It seems not a week goes by without hearing about young companies blowing huge wads of cash on “marketing” they’re not ready for.  Some entrepreneurs get in this fix because they fail to distinguish between PR and other marketing tactics.  They know intuitively or are told they ‘need marketing,’ but the first thing they think of is PR.  As I’ve mentioned before, PR <> Advertising <> Word of Mouth <> Social Media, etc.

Before you hire a PR agency or even consider PR, the first thing you need to understand is what you are trying to accomplish, what is your objective.  Second, you should consider whether that objective is right for the stage of your business.  If you are an early startup, pre Product-Market fit, or even pre “Sales and Marketing Roadmap,” you should not hire a PR firm.

Hiring an agency is wrong, because, generally:

• You do not need press releases
• You do not need a campaign blitz of articles and press mentions
• Your PR firm does not know how to do your customer messaging or positioning for you
• Your PR firm should be no where near your social media
• Most PR firms will tell you need all of the above, that they are the experts and you aren’t, and will try to charge you a retainer of at least 5K/month

You do not need press releases.

Do your customers read press releases?  Does anyone?   Press releases were originally intended to notify media of a newsworthy story.  In the high-tech world, releases have been so abused by businesses blasting trivial events on the one side and by media outlets writing “stories” that repeat the content without critique or judgment that the credibility of releases has diminished significantly.  And it’s getting worse.  Online releases are used not to provide notice to interested parties, but rather to generate external links in  order to boost PageRank.  If your objective is the latter, there are several online PR services that will accomplish your goal for a lot less money.

You do not need a campaign blitz of articles and press mentions.

An agency orchestrated analyst and media tour and blogger outreach program is called “awareness” marketing, is intended to create “buzz” about your product and company, and can indirectly lead to increased visits to your web site by prospective customers.  Hiring an agency to lead this effort is still the best way to go, because a good firm not only has a great rolodex of media contacts, but the principals have relationships with the media that mean increased credibility and better press.  The problem is that startups are not ready for the buzz.  You can only launch once and if you blow it, it’s blown.   If your selling process isn’t tuned to your customer’s buying process, if your target market segment isn’t finely tuned, if you product doesn’t provide enough value to retain users and you need to pivot, you’ve likely wasted your one chance at not blowing the Techcrunch bump.

Further, as you grow and learn more about the market, you want to cultivate your own relationships with key figures in your industry.  Since reporters and analysts participate in social media, access to them through your network without the assistance of a PR agency is pretty easy.

PR firms do not know how to do your customer messaging or positioning

I find this one particularly irksome, because PR firms often tout their ability to develop messaging and positioning.   And they can do a good job when targeting the media and analysts. PR firms do not know your products, customers, or competitors.  You do, so it’s your responsibility to learn what messaging and positioning works in your market.   The key verb here is learning. You should be testing your positioning through Customer Development interviews and A/B testing.  There’s a large pool of talented and creative people (including PR professionals) who can help you brainstorm concepts and wordsmith phrases, but outsourcing the effort to an agency is a recipe for bland, undifferentiated marketing-speak.  Further, wrong positioning, like placing you in the wrong market, could ultimately lead to your startup’s demise.

PR firms do not belong any where near your social media

Big companies hire PR agencies to manager their social media streams, because they don’t want to screw up their brand.  It’s spin, baby, spin.  It’s used as a continuation of traditional one-way communication from company to consumer or as a new (mostly) one-way communication from consumer to company black hole.  This is likely not your social media strategy.  Your strategy likely is to belong to a community through active participation (in ways that don’t directly benefit you), and to provide value unique to you and your business.  You might retweet interesting articles that relate to your industry, answer questions unrelated to your business, or even give props to competitors who have done something positive.  Such activity requires intimate knowledge of your products, customers and community and you cannot expect a PR agency to have that level of knowledge.

Most PR firms will tell you need all of the above, that they are the experts and you aren’t, and will try to charge you a retainer of at least 5K/month

PR agencies are in a tough place.  Online PR resources; reporters, analysts and influential bloggers easily accessible to businesses; decreased use of traditional (e.g., print) media; and a legacy of a high-priced retainer fee structure portents poorly for traditional agencies.  Hence the move to make their case as the natural purveyors of social media marketing.  For the reasons given above, however, I beg to differ.

Which isn’t to say, you should never do PR.

At Eric Ries’ Startup Lessons Learned conference last month, I participated on the Customer Development panel and we were asked if PR was ever justified.  While moderator Sean Ellis and fellow-panelist David Binetti rightly pointed you shouldn’t do PR campaigns, as I discuss above, I mentioned that there are ways to use PR activities in “small” ways to help you achieve discrete objectives.  Low-level PR can help build an “expertise reputation” for a Founder without compromising the company.  Low-level PR might help you access specific industry contacts who you feel may be early adopters. The distinction here is that you’re not trying to build “buzz,” but rather are taking discrete steps to achieve a defined objective within the context of the stage of your business.  For these tasks, you can do them yourself or you might hire a PR consultant and pay them by task or by hour.

Finally, some believe that buzz is required to raise capital.  I don’t know, but I have a hard time believing that’s true.  I do know that I’m not sure I would want money from someone who could not see through the ruse of manufactured buzz.

Comments welcome!

Comments (1)

By brantcooper, November 26, 2009 12:07 pm

Three beautiful words. When used together, one of the most wonderful — if not most underused — phrases in our lexicon. Am I being hyperbolic?

Modern culture dictates that we claim to know, so we spend a lot of time knowing stuff. We expend much effort displaying our expertise.  If we personally don’t know something, we rely on designated “experts,” who tell us they know (despite their unimpressive track record). We know where the stock market is headed. We know how countries will respond to “liberation.” We understand the ins and outs of other cultures. In relationships, we do not hesitate to state unequivocally the others’ thoughts, intentions and motivations. At some point in the past, we have “known” the world is flat, the sun revolves around the Earth and that spontaneous generation exists. Collectively, we know both that “God Exists” and that it doesn’t. We know that the people in our tribe are more intelligent, moral, and civilized than in theirs. Of course, they say the same thing.

Everyday, millions go to work knowing what their customers need and know how to market and sell to them.  Getting feedback on business plans from a “panel of experts” is often an exercise of pure bloviatng.  Executive teams sit at conference tables playing “pass the conjecture.”

Einstein wrote about a lack of knowledge being the key to learning.

Continue reading “I Don’t Know” »

Comments (5)

By brantcooper, November 18, 2009 7:04 pm

I don’t know who is more exasperated, entrepreneurs flummoxed by marketers or me, upset that another entrepreneur has been flummoxed by marketers!

People, language is for communication and marketing terms, abused as they are, fall somewhere within the scope of language.  To communicate you need to learn the terms.  To practice marketing or to hire a marketer you need to grasp some basics. Please.

Marketing Help Rule 1.

(<> means “not equal to”)

Blogging <> PR <> Brand <> SEO <> Logo <> Advertising <> Tagline <> Messaging <> FaceBook <> Positioning <> Twitter <>Lead Gen <> [Enter mktg term here]

Marketing Help Rule 2.

Trust me, you don’t need all the marketing tactics listed in Rule 1.

Marketing Help Rule 3.

The right marketing tactics for you, right now depend on WHO your prospective customers are and WHAT stage your company is in.

Marketing Help Rule 4.

All Marketers have a core competency (or two).  Regardless, (almost) all Marketers will sell (almost) all marketing services.

Marketing Help Rule 5.

You need marketing to grow your business.  And more likely than not, you need or will soon need help marketing.  Admit it.

For a moment, forget everything you know or think you know or have heard about marketing.  Start with a clean slate.

Now imagine you are a new customer of a particular product or service.  You just finished buying.  You are a bit giddy: Continue reading “Entrepreneurs: Know Thy Marketing!” »