(Stephen Parker, VP Market Research)
I offer this as a simple tag line to the malaise that many businesses find themselves in when it comes to positioning their Cloud offerings. With all the hype about massive market opportunities offered by the unlocking of geographical constraints it is not surprising that the natural approach when looking at Cloud is a top down view. This leads to a vision based on a massive market that can be served by a standardised offering that must surely be capable of at least a 5% penetration. However experience shows that this approach has not been successful.
And why? Because as the title suggests these “vanilla” solutions are so bland that whilst they may have some initial appeal to many they do not address an “essential” need in the customers mind that is sufficient to overcome the natural inertia of “do nothing” and hence fail to sell in the anticipated volumes.
The challenge when offerings are focused on “products” is that it is then the responsibility of the customer to make the connection between what is being offered and their business needs. Given that your average small business (SMB) is not technology focused, this means that the connection is often not made and although the “products” could address a real business requirement the customer does not buy.
So if this does not work what alternatives are there? The one I will discuss here looks at niche segmentation and reference selling.
The key to this approach is to:
- Identify groups (niches) of customers who have a common set of business challenges that can be clearly defined
- Clarify the target persona within the niche who will be the focus of the sales process
- Create a set of go to market messaging that uses business language to appeal to the needs of the target persona
- Ensure that you have also addressed the blockers that create change inertia
- Use customer references as your key tool to expand within the niche and to related niches
(This will often start by carrying out a segmentation exercise on your existing customer base).
An example of a persona need could be:
“I am so busy I sometimes forget to follow up on customer quotes and hence loose business, which is really frustrating. It would be great if an automatic reminder could be sent to my mobile phone, including the quote document, so that I can follow up wherever I am.”
The products that are used to address this need might be MS Exchange, Sharepoint (with workflow) and a data enabled mobile (smart)phone. However these are now relegated to a secondary part of the discussion. The key is that the customer sees you as the only person who can solved their problem. At this point the “products” and pricing of the competition become irrelevant. We are entering a Blue Ocean (http://www.blueoceanstrategy.com/)
A concern expressed is that this approach means that you are addressing your offerings to smaller groups of customers than your overall target. This often pushes people during the planning process to create ever larger niches to satisfy the need for a “big number”. However this defeats the purpose of a niche approach and leads us back to the “vanilla” offering scenario.
A more consistent approach is to consider how you can use the successful execution of sales to a niche within your own customer base to grow to a wider market. With references demonstrating your capability and success within the niche, you can now start selling into the much larger national market for that niche and even internationally. There is also the option to use these references of success to target other related niches. Although these will be sufficiently different to warrant their own niche, they should have enough in common that they can identify with the related niches experiences and therefore accept the references. For example lawyers to accountants.
The message here is not a new one, but sometimes it appears as if we are all too ready to forget…….
“The focus must be on meeting the customers needs and addressing their concerns, NOT selling technology”