Product promise and laying a foundation for future sales

A client of mine was launching a platform that helped energy brokers run their business.  For the sake of confidentiality, lets call the platform "ED".  He asked that I consider how he could introduce a new product into a highly competitive existing market.  Think about it…new product introduced to an existing market.  Sound familiar? It should.  Igor Ansoff provided this framework out a long time ago (1957) when Harvard Business Review published the Ansoff Product Growth Market Matrix.  The matrix shows which growth strategies businesses can undertake and helps them consider the risks of their chosen strategy.

So what growth strategy makes sense for ED? I’ll cut to the chase and tell you.  ED would fall into the Product Development category - new product entering an existing market.  There are several implications to pursuing this growth strategy, but let’s assume it’s a go and move to what really matters (i.e. getting brokers to use the platform - sales).  So how does ED convince brokers that it can “manage all aspects of operating as a broker/agent” and that the platform is “so good that it would be foolish to operate without it”?  Let’s break this down into bite-sized chucks and see if we can get some answers.

“manage all aspects of operating as a broker/agent”.  Ask yourself, “What does this really mean?”  To understand the operations of a broker you first need to understand broker behavior. Over the past months ED has spent a considerable amount of time understanding the needs of brokers.  During this period ED has also observed broker behavior as well.  Understanding the behavior is important because once the behavior is documented we can determine whether or not the behavior supports complex or simple operations.  We may intuitively know the answer, but it’s always helpful to work our way through the thought exercise.  Here is a high-level view of broker behaviors and the associated tools used and interactions during each behavior.   Put simply, this is the foundation of broker operations.

Note: You may need to increase your view to 200% to read this chart : )

Why is this important?  Well you can use it to develop marketing interactions within the product, but we can tackle that in a different post.  This is important to sales because it helps us determine a sales distribution approach to lay the foundation for future sales.  A sales distribution approach is primarily determined by the solution and marketing complexity.  When analyzing this chart one can quickly conclude that a broker’s behavior is very tactical and in many cases simple.  With the exception of selling, the broker’s behavior is full of administrative duties…and very simple ones at that.  What make the job complex is the management and coordination of these tasks.  However, relative to ED sales efforts this simplicity means the platform and marketing doesn’t need to be complex.  Both the platform and the marketing of it should be simple…at least in the mind of the consumer.  This means we can consider an online distribution model.  See the graph below:

This distribution selection model is taken from Paul Weifels ‘ book The Chasm Companion: Implementing Effective Marketing Strategies for High-Technology Companies.  In short, Paul argues when selecting a distribution channel the solution complexity and marketing complexity should be proportional. If the product is easy to use, then it should be easy to buy.  If the product is complex to install, then it will be more difficult to support, and therefore will require a more complex distribution channel.  The five key factors to consider when evaluating a distribution channel are: 1) market size and variation in customer profiles, 2) cost of the distribution channel, 3) type of product, 4) Degree of risk and control, and 5) flexibility.  Grab the book and read more.  With regard to ED, the ideal distribution channel is probably somewhere between online and retail.  Perhaps a hybrid of the two although I’d substitute retail for telesales.  This would keep customer acquisition cost (CAC) low and manageable.

Now onto the platform being “so good that it would be foolish to operate without it.”  Ok, how will the prospect know that ED is the most amazing product and he can’t live without it?  Well, ED could tell the prospect over and over until he believes it and eventually buys the product.  Or ED can simply give it to him for free and let him use it for a specified amount of time.  Again, this is not a new concept.  Salesforce changed the game in 1999 when they launched and a month later had five corporate customers.  The kicker was Salesforce didn’t charge the customers a dime.  The subscription was free in exchange for the customers’ feedback/input into the design phase as Salesforce moved from beta to full launch. 

This approach helped Salesforce tailor a product that delighted their target customer.  But more importantly it gave them a quick start because all five beta users were more than happy to become paying customers as they longed for Salesforce’s full functionality.  Salesforce continued this model by allowing prospects to use the product for free to understand and internalize the value delivered.  By the time they heard from a Salesforce sales rep they were ready to become paying customers because they had already experienced to value of the solution.  There are some risks associated with this approach.  Read this brief case study about how Salesforce secured their first customers.  ED should consider expanding its beta customers to somewhere between 5 – 8 range.  In addition to increasing the beta group, ED also needs a defined approach to let prospects experience the platform for a specified time.  The trial period should be followed by aggressive conversion tactics (phone calls, short online conversion funnels, testimonies, etc). 

We covered a lot in this post, let’s se if we can summarize in a few sentences.  ED is a new product entering an existing market which necessitates a product development growth strategy.  This is already occurring today.  It’s imperative that energyDesk build a simple and powerful product using the input of beta customers throughout the design/development process.  This is the only way the platform will address the needs of target segments and adequately handle broker operations by replicating their existing behaviors.  Given the platform’s simplicity, the marketing of the platform should be simple as well so as not to confuse the customer. But more importantly, this solution/marketing balance warrants something similar to an online customer acquisition approach supported by telesales once the product is fully launched.  Prior to outbound sales calls ED must develop marketing tactics to get the platform into as many broker/agent hands as possible…and do this at no charge to the customer.  This is how ED should lay the foundation for sales given the promise of the platform.

Agree or Disagree?  How would you go about laying the foundation for future sales?