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Succeeding with Solutions Customers want solutions But what's a…
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Created: Wed Jul 30 09:24:32 2008
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Succeeding with Solutions
Customers want solutions
But what's a solution, and how to make the effort worthwhile?
A Shirman Group White Paper
By Lilia Shirman
Managing Director
Companies- especially those serving other businesses - are looking for ways to combat
commoditization, raise their average deal size, and engage more senior, business-focused
decision makers. Many such vendors see solution offerings as the answer.
Unfortunately, many begin to stall almost immediately, with internal disagreements about
what solutions are, and how much to invest in creating them. Here's a simple guide to
help you move from mere marketing talk and solution selling to creating greater value for
customers and revenue growth for your company.
650-740-5065
www.shirmangruop.com
© 2008, The Shirman Group, Inc. All rights reserved.
What's a Solution?
In their enthusiasm to show value to customers, marketers often use the words "solution"
and "product" interchangeably. This obscures a very real distinction. A product
addresses a specific requirement, or the need to perform a particular task: Automate a
business process, personalize on-line campaigns, communicate with mobile employees.
A solution, on the other hand, addresses the driver that causes the customer to allocate
budget. Such drivers are often strategic imperatives such as improving customer
retention through more differentiated and intimate relationships, or scaling to handle a
higher volume of business while maintaining service levels and controlling cost.
To illustrate the difference between products and solutions, let's use mice. Not computer
mice. Live mice. Let's say you walked into the kitchen last night for your 1:00am snack,
and as you stared indecisively into the open refrigerator, you noticed the shuffling of tiny
feet along the wall and glimpsed a quick-moving shadow as the invader scrambled
behind the dishwasher. "Mousetrap!" you say to yourself, and make plans to purchase
one tomorrow. Placing mousetraps in every corner and sprinkling poison behind the
refrigerator will probably kill the mouse. Unfortunately, it will not keep new ones from
showing up. You need a solution, not just a couple of products.
Permanently eliminating rodent infestations may require a visit by a pest control service.
But that's just the beginning. To prevent future invasions, you may need to adopt a cat,
sprinkle the right (cat-friendly) mouse repellent around the house, change the way you
dispose of garbage, and adopt more stringent cleaning habits. You may need to hire a
cleaning service. It will be ideal if a trusted friend shares with you their proven methods,
and recommendations for their favorite cleaning service.
The solution is not one product or even a combination of products. It is a proven,
integrated combination of products, services, and expertise. Most importantly, its success
requires real commitment to substantial changes in behavior by you - the customer.
An example from the business-to-business arena
is the need to build more intimate customer
A solution is a proven, relationships. To that end, many companies have
integrated combination been purchasing web applications to improve
of products, services, customer's on-line experiences. An on-line
and expertise, and campaign management application that includes
requires changes in personalization capabilities is sufficient to add
customer behavior. product recommendations and user profile-based
content to an e-commerce site. But these
capabilities alone are unlikely to significantly
impact customer retention. To build stickier
relationships, a company must invest in analytics software and integrate the campaign
management application to dozens of other product and CRM-related applications.
650-740-5065 The Shirman Group www.shirmangroup.com
Chances are, the company will need the assistance of a system integrator (SI). The
company then has to educate and empower its employees to use information about
customers to build stronger relationships. The IT and Sales executives in charge of the
project may well turn to trusted colleagues to share their experience about similar
projects.
The table below summarizes the differences between solutions and products in terms of
common business challenges that technology vendors address. Products and solutions
differ in the scope of the problems they address and components they provide. The
resources and skill-sets required to sell them successfully are also widely different.
Moving from a product focus to the development and sales of solutions requires
significant financial investment, and the cultivation of new skill-sets within the
organization.
Table 1: Differentiating Solutions from Products
Product Solution
Integrated blend of products, services, and
Composition One or more products or services
expertise
Type of Need Specific requirement - the need to Strategic imperative the driver that causes
Addressed perform a particular task the customer to allocate budget
· Improve customer retention through more
differentiated and intimate relationships
· Automate a business process
· Scale to handle higher sales volume while
· Personalize on-line campaigns
Example Needs maintaining service levels and controlling
· Communicate with mobile
cost
employees.
· Collaborate in real-time across a global
organization
· Integration among components
· Rich feature set
Success Factors · Clear roles among solution participants
· Reliable performance
to Achieving · Adaptability of solution to evolving needs
· Rapid deployment
Benefits · Broad changes in buyer organizations'
· Simple, low-cost maintenance
behavior
Notice that the exact contents of a solution is less important than what it does for your
customers.
650-740-5065 The Shirman Group www.shirmangroup.com
Roles in the Solution Stack
To assess realistically the required investment and likely returns of offering a solution,
companies must first understand what role they would play. The role a company plays
within the solution stack will determine key decisions, including product development
investment, required sales capabilities, and alliance strategy. There are four participants
in a complete solution:
Orchestrators provide the thought leadership on
what comprises the solution, and typically own
the intellectual property to a substantial portion of
Orchestration is the
the functionality or capabilities that are core to
addressing the customers' needs. In enterprise most desired role,
software, SIs traditionally took on the role of but also the most
orchestrators. In recent years, the larger vendors risky.
have been creating solutions around their
software platforms, not coincidentally expanding
their own consulting capabilities. These vendors
have recognized that developing an ecosystem of completing and complementary
technologies makes their products more attractive for SIs to adapt and recommend.
Completers offer niche products with a narrow scope of functionality that is critical
to the success of the overall solution. Completers ensure their position in a solution
stack by making the use of their product simple or better yet, effortless, along-side the
orchestrator's offering. They are likely to participate in the orchestrator's sales
process, or follow closely behind the primary deal.
Complementors provide products or services that enhance the effectiveness,
efficiency, or attractiveness of the solution, but are not critical. Complementors have
a tougher sell than Completers, as their offerings lie on the periphery of the solution.
Orchestrators will favor customer choice over any particular complementary vendor.
That means Complementors can expect to encounter competitors' products as
alternatives within the same solution. To leverage solution selling, Complementors
must enhance both their product and the customers' mindset to transform their core
offering into an essential part of the solution. Another words, they must transform
themselves (or the customers' perception of them) into completers.
Delivery experts are the companies who make the solution usable and easier to adopt
for the end-customers. In construction, they are the general contractors. In event
marketing, the event management companies play this role. Delivery experts have
relationships with all solution participants and the experience to know how best to
assemble them into the best possible solution. Not surprisingly, delivery experts and
orchestrators are often the same company.
Until a vendor formally creates and begins to sell a solution, the customer orchestrates
the solutions they need for their business. They collect and assemble the needed
components and develop expertise internally or via consultants. By taking over the work
650-740-5065 The Shirman Group www.shirmangroup.com
and complexity, the orchestrator creates significant value for the customer that reaches
far beyond the vendor's own products.
The position of orchestrator is often the most tempting. Orchestrators exercise greater
control over the evolution of the solution. Creating a solution positions the company for
a more strategic role with their customers and create closer relationships with top
decision makers. To orchestrate solutions successfully, however, requires significant
investment and a broad set of competencies within the organization, making
orchestration the most risky of all roles.
It is common for a single company to play more than one role. Even so, solution delivery
invariably involves inter-company collaboration. From the customer's point of view, a
successful solution will be one where the collaboration is so well-planned that the
boundaries between the participants are invisible.
Two Examples of Solutions in Business-to-Business Markets
Communication Service Providers (CSPs) offer a comprehensive package of
entertainment, data exchange, and person-to-person communication to form a
solution that meets people's need to connect to the world around them. The
solution includes complementary optional services, billing and account
management convenience, and assistance in the installation and operation of the
services. While functions such as digital video recorders, call forwarding, and
collaboration applications are currently considered complementary to the overall
solution, there is not doubt that just like voice mail or text messaging, they will
soon become completers, or must-haves. As these solutions emerge, so do
delivery experts companies who specialize in designing, implementing, and
even operating communication solutions for business customers.
Enterprise software platform vendors such as IBM and Oracle all offer industry
and use-case-specific solutions based on their completely horizontal (e.g.
industry-neutral) software. To create the solutions, they partner with other
software vendors for key capabilities such as content management, application
performance management, and analytics. Over time, they acquire completing
offerings to be able to offer more of the solution footprint on their own. As
orchestrators of the solution, the platform vendors also assemble ecosystems of
complementary technologies that include industry-specific applications such as
billing for telecommunications or risk management for financial services. Finally,
they rely on both internal resources and third party SIs to play the role of delivery
expert. Delivery experts are attracted by the complexity and breadth of these
solutions because of the vast revenue opportunity they present.
650-740-5065 The Shirman Group www.shirmangroup.com
Selecting Solutions
Its likely your products or services can contribute to multiple solutions and use-cases.
Once you've determined which role you are prepared to play within the solution
ecosystem, identify and prioritize the first solution to create and sell. The most obvious
candidates are the solutions for which your customers have been using your products
already. Before you size the addressable market and start forecasting revenue for these,
consider some other factors.
To assess the real size of the opportunity, look at the trends and developments that are
affecting your customers, and their need for your products. What significance do
customers assign to your products in the context of
the problems they are trying to solve? Is there an
opportunity to increase the importance of your Balance enthusiasm
products, or would it be better to address a different about market size
set of needs? Are new technology or business
with a realistic
models making the customers' existing solutions
obsolete? Other external considerations that assessment of your
impact the size of the opportunity are competitor ability to execute
behavior, regulatory changes, and emerging
business or technology standards. Internally,
assess the potential for expansion that the new
solutions would allow within existing accounts.
Though accurately sizing the opportunity is important, but looking it is not enough.
Your company's ability to execute will make or break the success of your solution, and is
a critical assessment in allocating solution development resources. Ability to execute
includes such factors as:
Availability of success stories and references from marquis accounts
Sales interest and acceptance of the new solution
Appropriate sales skill-set, or your ability to invest in training and specialist resources
Alignment of the solution with existing partner and SI solutions and plans
Internal consensus and willingness to allocate resources among service and support,
R&D, alliance, fulfillment, and other relevant organizations
Capabilities of channel partners to sell the solution, especially in channel-dominated
geographies
Review these execution capabilities in order to narrow your list of potential solution
areas. Only when the top candidates for solution development emerge, take the time and
effort to dive into detailed market sizing and revenue forecasting. By doing market
sizing and revenue estimates too early, you may overlook a lack of key execution
capabilities.
650-740-5065 The Shirman Group www.shirmangroup.com
Balance Opportunity and Ability to Execute
in Prioritizing Solutions
Opportunity Internal Intelligence
Customer interest & needs Customer references
Market trends / spend data Internal stakeholder alignment
Competitive analysis Strategic partner alignment
Regulatory changes Sales rep and channel capabilities
Short List
Validation
Detailed Market & opportunity sizing analysis
World-wide sales and channel validation
Customer validation and feedback
New Solution
Solution Success Factors
Many companies underestimate the investment and challenges of launching solution
offerings. Initially, some view a solution as simply a different marketing approach to
existing products. While this may get some traction initially, customers quickly
recognize that there are missing pieces and that the company is overpromising on results.
A vendor who marketed a solution while still offering a product will find that previously
satisfied customers turn to larger, more horizontally integrated vendors to meet raised
expectations. To prevent customer defections, businesses must be ready to complement
marketing spend with investment in sales skills, new alliances, and product
enhancements,
A company that has made the commitment to orchestrate a solution will balance many
internal requirements. Ignoring any one would mean the solution will fail to reach its full
potential for revenue and account penetration.
Select the use-cases where the solution can provide the greatest value, and which
customers see as critical to their success.
Identify all the relevant decision-makers and influences for your solution. They are
likely to be different than the people who made decisions about individual product
purchases.
650-740-5065 The Shirman Group www.shirmangroup.com
Determine what functionality is critical, and how to make the solution most readily
usable by customers. The solution will evolve over time, so for the initial phase,
zero in on the core solution components. At the same time, begin to develop a
roadmap for the capabilities and partners that you will want to add later.
Form the required alliances, starting with completers and implementers, and finally
complementors. Be sure to explicitly define each partner's expectations from and
contributions to the solution. Agree on ownership of the intellectual property
surrounding product integration and responsibilities for various levels of customer
support. Ensure that you have clear rules of engagement for sales opportunities and
that both sales organizations are aware of them.
Articulate concrete value of the complete solution, and back it up with deployed
customers success stories. Talk to customers about the measurable impact they seek
from a complete solution. Be sure to closely track the business impact of pilots and
early deployments. Test your reasoning about benefit and ROI claims with customers
to ensure its believable and credible.
Align all key solution participants around the value message.
Assess the capabilities and skills of your existing direct sales reps and channel
partners. Be prepared to provide the education and tools to enhance these skills. To
drive early sales and continue the transfer of skills and expertise to the sales force,
provide specialist with in-depth solution and domain expertise. These specialists
must have two objectives: help close solution deals, and educate sales reps to be
capable of selling the solution independently.
Go to market in phases to balance investment and return. Begin with a well-defined,
small group of accounts, and expand after a minimal number of these have been sold
and deployed. Rushing to a broad market too quickly, and without adequate
references, experience, and processes in place can frustrate both your sales
organization and customers.
Expect a learning curve and actively manage the solution's evolution
Conclusion
Solutions are not a panacea for invigorating revenue growth or raising margins.
Nonetheless, for many businesses participation in a solution can creates significant
benefits and opportunities: They are a useful tool in gaining the attention of new, often
more powerful, decision-makers. By focusing the discussion on value, solutions
command higher average sale price, and raise average deal size. Because they create
opportunity for an ecosystem of partners, solutions turn that ecosystem into a virtual
expanded sales force. Solutions help gain a foothold with new customers who may not
have given attention to a narrower offering. Most importantly, they give companies the
opportunity to address the buyer's most essential needs, transforming their relationship
with customers from vendor to trusted advisor and thought-leader.
650-740-5065 The Shirman Group www.shirmangroup.com
About The Shirman Group
The Shirman Group helps technology companies identify and pursue opportunities for
revenue growth. Companies looking to expand into new industries, more deeply engage
with new audiences, and leapfrog the competition with new business models turn to us
for creative ideas and tangible results. Shirman Group clients include industry leaders
like Symantec, BEA Systems (Oracle), Intervoice/Convergys, and CA, as well as select
new technology ventures. More information about The Shirman Group and our clients is
on-line at www.shirmangroup.com
© 2008, The Shirman Group, Inc. All rights reserved. The Shirman Group and TSG are trademark of The Shirman
Group, Inc. All other trademarks are the property of their respective companies. Information is based on best available
resources. Opinions reflect judgment at the time and are subject to change.
650-740-5065 The Shirman Group www.shirmangroup.com