There used to be a time when ads had to be written with hyperbole. ‘Amazing,’ ‘Miraculous’ and ‘Spectacular’ made common appearances in old print ads, usually in large bold letters. Add to that a few more impressive, flowery phrases and an image of a person with a wide-mouthed smile, and the product was almost as good as sold.

Selling meant singing nothing but praises, and getting customers to buy was the only end point for marketing efforts.

And then… it changed. Over the years, sales and marketing have become quite sophisticated due in part to evolving consumer behaviors and expectations. Today’s customers are not as so easily wowed by “smoke and mirrors”. It is not enough that marketers say their product is the best. Even ‘New!’ doesn’t work as well any more. We live in an over-saturated — over-messaged – marketplace. Nothing is really new, and every trick in the book has already been tried and tested. Smoke and mirrors, flowery words and calls to action do nothing except annoy consumers and make them ignore the product being promoted in that way. Of course, direct marketing and hard sells live on in the world of infomercials – but fundamental brand advertising has changed.

Now, selling means providing solutions, and the end point of marketing is something much more long-lasting and substantial than simply getting a single sale.

Developing an effective value proposition is the first step to effective sales and marketing. The principle entails sending targeted messages rather than making broad sweeping promotions. Instead of “Buy this now,” it should be “Here’s what we can do for you.” Customers want the respect and autonomy to obtain products and services at their own leisure and according to their own considered criteria. They also like knowing what’s in it for them. Ask yourself: Would you buy something simply because someone told you to?

Building brand loyalty can be considered a much higher priority than making sales. Sporadic deals won’t get the company anywhere in the long run. With a loyal customer base, the company can build continued success. It is a win-win situation for both sides, as the customers will be getting what they want while the company can streamline their marketing efforts and focus their marketing budgets to yield greater ROI on dollars spent.

• Does your marketing speak to long term benefits?
• Does your messaging meet your best buyers in their language?
• Are you counting on tricks and clever words to close the deal?

The story of David and Goliath is, of course, a classic Biblical story. Some of you might have heard it at Sunday School when you were kids.

The headline would read: “Shepherd boy defeats giant, using only slingshot and a few carefully chosen stones!”

The story is often told as a metaphor for the victory of the underdog — how a small, usually insignificant entity can overthrow the dominating opposition.

In the realm of marketing and sales, the Davids are small businesses while the Goliaths are big, established brands. The latter overshadows its little competitors by their sheer size and reach. Everyone knows about Starbucks, what to buy there and how much it costs. The same cannot be said for the local café down the other block.

Using Size as an Advantage

Sure, a small company may not have the same strengths as the ‘big guys,’ but that doesn’t mean it lacks other competitive strengths at all. A more compact scale can give a business a different edge over its established competition. Small businesses tend to be nimble and flexible, able to act fast and adapt to changes quickly. This can be a definite differentiator. The company must be able to exert some control over its market, however. It is one thing to cater to the consumer’s specific needs, and another to spoil them. If a small company modifies every single deal to meet specific customer requests, it may run the risk of stifling its own growth.

Pick Your Stones and Sling Well

Before David went out to defeat Goliath, he went off to a nearby brook to pick out the stones for his sling. For a small business to match up with larger competition, it should be able to pinpoint its unique selling points and position them well to draw in its audience. What does your small business have that the big company doesn’t? It can be anything from more affordable prices to an exclusive product offering. Or it can simply be that you are more familiar with the target market than the giant looming around the corner. Whatever it is, the best way to beat Goliath is by capitalizing on your own strengths.

Sharply defining your customer is a “starting block” for your go-to-market race.

• How many of them are there?
• What size?
• What is the published market research?
• Are there demographic and market research reports written on your target market?

In today’s sophisticated marketing world, you can’t go after a market without being armed with data – fortunately there’s lots of it.

At this stage of the game, you’re not necessarily looking at the way the market works, but simply defining the kind of company that your product or service most fits. Ultimately, it’s about knowing your customer. In every market segment, there are cultures, commonalities, unspoken rules of the game that exist in enclaves of the high tech, business and manufacturing worlds.

You need to know what these are. If you don’t have a feel for the people you’re selling to, you’re already at risk of falling further behind your competition.

While with a consulting firm focused on smaller business services firms, we worked with a small regional web design company with heavy specialization in user experience and interface design. As is typical for companies this size, they defined their customers primarily by geography – any business in their area needing help with larger web projects. Over a two-year period we helped them refocus on one particular market segment they had past success with – large, socially focused non-for-profit organizations.

While this was a positioning move, it was much deeper than just looking a certain way to a particular market – or choosing which mailing list to use. By focusing on the specific non-for-profit sector, they were able to start understanding the target customer’s culture, eventually adopting the language, pace and unspoken “feel” of the non-for-profit world.

They’re back on track, growing revenues and profits with a dedicated core of clients who view them as their specialist firm for web design and deployment in the non-for-profit field. In the same way, your understanding of your target customer will influence your marketing and the direct sales communication you have with them and the way you interact and serve them.

Adapted from the forthcoming eBook, “Know Thy Customer” by Jose Palomino

What level decision maker can you access?

If you want to sell to a specific type of company, you need to have access to call, talk and meet with the appropriate level of decision maker at that customer – whatever it takes to sell your product to them. Maybe you need to have access to CFOs of financial services organizations to sell your compliance solution.

While you may have many years and dollars worth of experience selling to financial services firms, you might find that you have no way to get your foot in the door of the C-suite, if your company never worked at that level before. That’s not to say that this marketing and sales capability cannot be acquired or developed – just that you need to know where you’re starting from and identify the gap as quickly as possible.

The “access” issue can go the other way, too. In the product development process, larger software developers often end up creating simpler versions that they try to sell “down market” to smaller customers. Yet, they don’t know the smaller customers (SMB) – the way they function, and what’s important to them. They often do not really know how to access this smaller customer (as in the Cisco example above).

It isn’t primarily a product issue – it is simply that a company that has been selling to Fortune 500 companies will face the same challenge connecting with decision makers in a $50 million dollar manufacturing company that a SMB focused company would have calling on GE. Movement – both up or down market – is possible and many companies manage to do it successfully. However, many more have failed or have had to make many learning runs till they got it right (e.g., Microsoft moving up-market in corporate IT with server software).

Access challenges run both ways: smaller companies face challenges selling to bigger ones, but oftentimes, bigger players can’t get small enough to sell to smaller companies or individual buyers.

Adapted from the forthcoming eBook, “Know Thy Customer” by Jose Palomino

New products happen in different ways.

You may have designed your product or service with a specific customer in mind. You may have also “backed into” the development of an innovative product, and now you’re looking for an actual market. I’ve been called into client situations (more than once) where they’ve already invested millions of dollars into a product and then ask me – “How do I sell this? And, who should we sell it to?”

Sometimes, the development of a new product doesn’t start with a specific problem. You might think, “these are my current customers, how can I expand my offerings to them?” In this case, you’re looking to leverage customers you have access to today.

Other times, it’s not clear what the application of a new product will be. Companies that create large business solutions often stumble across other applications and tools to support the primary product, and say, “…there’s got to be some kind of market for this.” This is often true of services that arise around a specific technical product. Eventually it becomes clear that the services can be bundled and sold.

Then there are product “accidents.” In the late sixties, a 3M scientist stumbled upon glue that was not sticky enough. In 1974, Arthur Fry, another 3M scientist was singing in his church choir and became frustrated with his bookmarks falling out of his hymnal. He applied some of the “not sticky enough” glue to his bookmarks.

We know it today as the “post-it” note. But back then, the question that needed answering was “Would anyone else buy it?”
Of course, the answer was and is – “yes – billions!”

Adapted from the forthcoming eBook, “Know Thy Customer” by Jose Palomino

Here’s the second example – one that still makes me smile.

In another case, I was with the same research firm, and I had a mid-sized renewal with a regional reseller of wireless services. I looked up their utilization, as in the prior example. The company never used any of our services. Not a good sign. As before, no utilization can mean you’re dead; it’s over – no renewal. For me, this was bad news. If I lost a renewal this big, we risked missing quota.

So I called and left voicemails – even sent faxes – urgently communicating, “let us help you figure out how our services can work for you. We can make this work.”

I had a week left before the renewal deadline. I called early mornings and late nights in hopes that I would get Lisa on the line. One early morning, a day before the due date, she finally picks up. “Is this about the renewal?” she asks nonchalantly. “What do we need to do for it?”

I explained that a simple signature on a renewal form is all that was needed. Lisa said, “OK, send me the paperwork, and I’ll sign and fax it back.” Like any seasoned sales professional, I bit my tongue, shut up and send the paperwork. I get it back, signed, in about five minutes.

At first, I didn’t get it. Then I realized: customers don’t always see you the way you do.

I thought I was selling a great, useful product and service. Lisa knew that our analysts wrote about the telecom industry. She wanted her company to be written up and well-covered. Lisa believed that analysts would give a more favorable spin to companies that were subscribers, though that wasn’t true at my firm and other reputable competitors. However, it was her perception. We were just a “PR spend” and she just wanted to stay in our good graces.

The overall lesson is this: Remember to prepare your go-to-market plan – while looking at the marketplace to find competitive advantages to exploit – with a real sense of the customer at the heart of your planning. Right or wrong, you’ve got to know why your customers want to do business with you. If you don’t know or understand their motives, you won’t know the quickest route to sealing the deal.

Adapted from the forthcoming eBook, “Know Thy Customer” by Jose Palomino

I want to share two simple stories to illustrate the same core issue:

First: Jane was the director of Knowledge Management at one of the major international consulting firms. She owned the budget for all of the firm’s market research activities, including contracts with Gartner, Forrester, Yankee Group and the like. What set our research company apart was our openness – we made our analysts easily accessible to our clients, in contrast to many of our competitors. We didn’t hide them behind an 800 number and a call screener and this differentiated us in the marketplace.

Jane’s account was one of my biggest contracts; I had a large renewal of a two-year deal, and if I missed it…well, you can imagine. I looked at their utilization (how often they accessed our research and contacted our analysts). They barely touched us. No one from the company was calling our analysts–and it was a large organization with nearly one hundred thousand employees.

I asked Jane why. She explained that her department charged back an allocated cost whenever anyone called one of our analysts. Jane’s organization was dividing the cost of the subscription and charging it to the departments only when they called us. Jane was charging departments over $500 an hour to talk to our analysts. Obviously, they didn’t want their budgets hit, so they avoided calling us.

I arranged to give Jane’s company an extra allotment of analyst calling hours for a specific time if her department didn’t charge back for utilization. Not surprisingly, utilization increased and many more potential users became aware of our value.

Lesson from above: you can have the most powerful value proposition – and an excited buying center, but other policies within the organization can undermine your success. Make sure you understand the way that your offering works its way through your customer – who is involved – there may be much more going on than you are aware.

In another case, I was with the same research firm, and I had a mid-sized renewal with a regional reseller of wireless services. I looked up their utilization, as in the prior example. The company never used any of our services. Not a good sign. As before, no utilization can mean you’re dead; it’s over – no renewal. For me, this was bad news. If I lost a renewal this big, we risked missing quota.

So I called and left voicemails – even sent faxes – urgently communicating, “let us help you figure out how our services can work for you. We can make this work.”

I had a week left before the renewal deadline. I called early mornings and late nights in hopes that I would get Lisa on the line. One early morning, a day before the due date, she finally picks up. “Is this about the renewal?” she asks nonchalantly. “What do we need to do for it?”

I explained that a simple signature on a renewal form is all that was needed. Lisa said, “OK, send me the paperwork, and I’ll sign and fax it back.” Like any seasoned sales professional, I bit my tongue, shut up and send the paperwork. I get it back, signed, in about five minutes.

(I’ll share another example in my next post.)

Adapted from the forthcoming eBook, “Know Thy Customer” by Jose Palomino

My favorite client also became one of my best friends. Tony was a Brooklyn-raised child of the Depression. He was an early IT professional – the kind that could talk about having programmed in IBM 1401 Autocoder language in the early sixties.

Tony took a chance on a self-taught PC programmer and hired me to manage “microcomputers” at a major financial services firm in the mid-eighties. He identified and affirmed my entrepreneurial spirit and encouraged it. I joined a truly great computer company because of Tony. A few years later, Tony brought me into his last job, where he helped me launch a new consulting firm.

All told, Tony touched my professional and personal life for nearly 20 years and several significant career moments. Tony has been gone for some time now and I miss him dearly still.

I remember being on the “buy-side” of many vendor meeting with Tony. If he felt the salesperson wasn’t respecting his intelligence – or if the rep wasn’t fully prepared… well, Tony wasn’t Brooklyn born and raised for nothing. He could cut to the main point and make an unprepared salesperson very, very uncomfortable.

However, I also saw something else – if Tony assessed that you were there to help – truly committed to finding answers that were mutually beneficial – then you would gain a fiercely loyal ally – a prospect that would go the extra mile to help a vendor close the deal.

I mention Tony in this discussion about customers to illustrate a simple point: in all of your planning for go-to-market, positioning and strategic advantage – don’t forget that at the heart of every business – every organization – you will find… people and relationships. The more strategic your offering is, the more this simple truth exerts influence on your go-to-market plans.

• People – not “organizations”, make business decisions. They make these decisions for many different reasons. Logic should and does win – often, but not always. And, it would be fair to argue that logic is used to substantiate an emotional decision – even big-ticket corporate purchases.
• Plans, message stacks and sales processes will fail you if you don’t infuse them with a sales culture that understands this truth.

Adapted from the forthcoming eBook, “Know Thy Customer” by Jose Palomino

You might want to look at the point in your launch cycle in which your company actually asks customers their opinion.

For example, a few years ago, BusinessWeek cited Xerox as typically developing products fully and then asking customers what they thought. Xerox has since refocused on customers from the onset in their product development timeline.

Stephen Hoover, vice-president of Xerox’s research and development hub commented, “The team had had a certain idea of what customers wanted. Going out and actually talking to them really changed that.”

The lesson here is not that Xerox experienced a “blinding flash of the obvious”, i.e., talk to customers before building new products. No, it is instructive in that it is easy for companies of all sizes and in all industries to approach markets from an “inside-out” mindset.

While customers are actually not the only influence on a marketplace, they are certainly the “hub of the wheel”. We forget this at our own peril.

Adapted from the forthcoming eBook, “Know Thy Customer” by Jose Palomino

“Understand that what is important is what’s important to the customer. That’s what we all get paid for in the last analysis: how does the customer buy, and why.”

Peter Drucker, quoted in:
The Essential Drucker: In One Volume the Best of Sixty Years of Peter Drucker’s Essential Writings on Management

Carefully crafted messages alone won’t sell your product or service. You must target your message for your best audience and via the most effective venues. While doing this you must continuously refine your position against relevant competitors in the marketplace.

To leverage your message to the greatest degree possible:

• really know your target market
• anchor your approach to market on an accurate competitive understanding, and
• carefully select and design your primary approach to enter your chosen market.

Think about your prospective market(s) within a framework of key questions and “points to ponder”.

Jot down some thoughts that you can discuss with trusted advisers.

Very few (read: none) companies fail because they knew their markets too well.

Very few (read: almost none) companies succeed without making knowing their customers their top priority.

So much of what’s out there today is old thinking. Not old marketing or old sales thinking. But rather, the “silo” approach which separates these functions as if they existed independent of one another.

The fact is that they are as dependent on one another as nutrition and exercise are for improving someone’s overall health. In companies looking to achieve revenue and market share goals, overall company health is simply the ability to impact a specific market – as close to plan as possible.

When Marketing “bakes” the big ideas of positioning, pricing and placement, Sales has to face off with real people who say “yes” or “no“.

…and yet, in company after company, sales execs and sales management are to be “seen and not heard”, like little children at a long-ago Thanksgiving gathering.

So who knows what works with real prospects and customers? Who can shape the message to yield “yes”? Direct Sales is across the table from the very people Marketing wants to reach. So why not just let sales decide the message, pricing and positioning strategy? Well, because it would be like lettting the kids cook Thanksgiving dinner – you’d get chocolate turkeys and ice cream salads – in other words, you’d get the opposite problem: a myopic, current view of reality vs. a longer term vision of the reality you want to create.

The answer then is KISS simple: talk to one another; test the ideas you have with the people who have to deliver the message; and then, respect the strategic view and toolset of those who craft messages, etc.

In short: recognize that your company’s “Revenue Health” is dependent on “Nutrition” (Marketing) and “Exercise” (Sales) working together on the same plan.

Enjoy dinner.

For those of you who’ve read my “She’s right again” blog posts, you know some of the big lessons I learned around the “dot-bomb” era. But like all harsh lessons, just learning the negative is not enough. What really matters is what you do about it.

Well, since I wasn’t going to write new laws, solve world peace (no Nobel for me) or invent a new machine – I was left with looking at what I’ve been looking at for a long time: business models and go-to-market methodology (I know, sounds exciting!)….

From my experience, came a sincere desire to figure out “what happened?” and “what could be better?”

I wanted to discover and give voice to something new. A better way to bring “an idea who’s time has come” to the marketplace. I knew that the notion of “new”, “exciting” and “useful” as essential dimensions of a value proposition had to have operational implications. Nothing substantive would change if all that changed was a “tag line”– as important as that is.

Great ideas would still fail to attract an audience – money and energy wasted.

Not only money and energy wasted – but also an old way of doing things. What else needed to change? For over 50 years, companies involved in complex or big-ticket sales have dichotomized “developing the message” and “delivering the message”. Even companies that derive the majority of their revenue from their direct sales channel rarely ask their sales teams, “What’s happening out there?” – relying instead on traditional market research and industry experts.

Is this a wrong practice? Marketing experts are not typically sales professionals and the converse is usually true. That wasn’t the issue nagging at me. What was “off” was this: why not take advantage of the intense customer-facing resource that is your direct sales force for real-time market intelligence?

Marketing owned message delivery in all venues except direct sales. In other words, the marketing function “owned” the website, marcom and other communication vehicles, except that which happend in the sales interview. So – marketing contribute to the “what” conversation at the strategic level (as in “what are we? who do we serve? what makes us different”) and could shape a message – a value proposition statement – and control how it manifested in advertising, marcom and other public delivery – but stopped short of providing real and specific guidance for direct sales.

Salespeople usually have to synthesize and deliver the messages found in marketing collateral and given by corporate and product marketing to prospects.

I believe this state of affairs can be – must be – radically altered.

How would your go-to-market program look if message development – that is – identifying what is new, useful and exiting about your product – were purposefully connected with your sales team’s message delivery? Why should message design end before entering the sales department?

Likewise, why ignore the wealth of immediate and grounded marketplace insight – the thousands of hours of conversations between your salespeople and customers?

While these questions have been asked in other quarters – thay are not asked that often – and not enough to change common practice. I’ll take a deeper look at this in another post.

Meanwhile – what do you think?

Do your sales and marketing folk truly collaborate? Do they share insights and idea?

People often ask me, “Jose, how did you get started on this path?”

That is – they want to know how I started Value Prop and more importantly – what my “journey” was to get here. Well, it’s a long journey – but I think the recent catalyst or turning point was a moment about 7 years ago…

I came home to New York City, after several days at our corporate headquarters. It was late on a weeknight in April 2000. Excited as I entered my house, I woke up my wife, and sat her down. “Honey – we’re worth fifteen million dollars!”

Our company had just taken on some strategic partners and a capital infusion – and our investment bankers had just told our management team what they felt our company was now worth. This was shaping up as the single greatest day of my business life.

Calmly, even gently – she asked, “Can we spend any of it now?” Sputtering, I answered, “not yet, but…” and then my voice trailed off. All my nagging doubts became real for me in that moment. I knew the company and many like it had become so focused on positioning, strategic alliances and other marketing imperatives – that the notion of actually delivering something of value was often put on the back burner.

She was right (of course!) – we couldn’t spend any of it.

A year or so later, I left the company – owed a lot of money (never collected, naturally) – dazed and confused.

What happened? How could we be in the executive dining room at one of Wall Street’s most prestigious investment banking firms one April – and missing payroll twelve months later?

By this point in my career, I was an experienced entrepreneur. I had worked inside and for Fortune 500 companies – I had multi-million dollar sales experience and I was unique – with a strong background in marketing, sales and technology – seemingly well equipped for the intense revolution in business services that was shaping the global economy at the turn of the new millennium.

We had worked with some of the world’s largest automobile, furniture, education and legal services companies – all looking for a guide through now unfamiliar territory.

Our board had seasoned senior executives and venture capital veterans. The stars, moon and – it appeared – Wall Street had lined up behind us – ready to make us all very rich. Looking everywhere – it seemed – others were making fortunes.

Why not us? I asked.

Well – I’ll continue this tale of woe and wisdom earned soon…

Both Sales and Marketing have precious knowledge that becomes even more valuable when it is exchanged—and costly when the exchange of information doesn’t take place. Have you thought about how your employees can work in a salesmarketing plane?

It’s true that successful integration of the sales and marketing functions is difficult. Salespeople claim that marketers are out of touch with customers, while marketers argue that the sales force is too focused on meeting the needs individual customers just to win a deal. The balance between a focus on the overall market verses the individual customer is a difficult equilibrium to achieve.

Even assuming that marketing has a high degree of accountability to revenue (which they don’t always have), their decisions are made with quite a different time horizon than sales—before and after products are rolled out. In contrast, the sales time horizon is now. Naturally, this breeds some degree of tension. Both parties are looking at the same set of facts, but assessing them quite differently.

Yes, both views are critical for each function to do their jobs, but it’s the sharing of these views that is most valuable for companies. No one says it’s going to be easy, but encouraging this integration and alignment will pay off.

Just like everyone else, I held my breath. Would the economic bailout bill pass through congress?

Wherever you are on the political spectrum, and however you think this immense challenge should be addressed, September 29,2008 was a momentous day. The Dow took its 17th largest dip ever (777 points), and world markets soon followed.

And… you have something to sell. Probably, if you’re reading this blog, a busines product or service.

Is it the end? Should we all pick up our toys and go home?

Look at it this way: the US GDP is around $14 Trillion Dollars. That’s 14,000,000,000,000 (I think I got all the zeroes). If it contracted 10% (a DEVASTATING amount) – it would leave $12.6 Trillion.

My point? This is the largest, most vibrant and resilient economy in the history of the world.

Businesses will still need to buy supplies, material for production and CPA’s to file (increasingly depressing) tax returns. It won’t ALL be over – no matter how bad it gets.

What will likely change, from a sales and marketing point of view, is this: Radically Increased Selectivity.

That is, buyers (business and consumers) will become very cautious with every dollar spent. They will become demanding in terms of price and bundled services – and they will want to know “why is yours better?” and “how will it benefit my business?” to a much greater degree than ever before.

If you sell something – get ready to make a case as if every sale is being presented to the Supreme Court. Get ready to prove your value – more than at any time in your business life.

What else will change (beyond the obvious of credit tightening)? Let me know what you think.