Last week I took part - together with 30+ senior sales and marketing executives from the technology sector - in an excellent discussion hosted by Richard Eldh of Sirius Decisions on the topic of sales and marketing alignment.
The audience included experience of everything from early stage start-ups to mature market leaders – a spectrum I’ve written about in a recent blog about "The Jungle, the Footpath and the Highway".
Crossing the Chasm Revisited
Richard offered an idea which I’d like to develop here, because I believe it lies at the very heart of making intelligent decisions about sales and marketing strategy. In fact, the Sirius perspective is that it provides the essential foundation for all sales and marketing efforts.
I imagine anyone in high tech will be familiar with Geoffrey Moore’s characterisation of technology markets as evolving from early adopters and then crossing the chasm (with varying degrees of success) to address mainstream and - ultimately - laggard buyers.
New Concepts, New Paradigms and Established Categories...
Sirius presented the idea of the “demand spectrum”, and identified three categories – new concepts, new paradigms and established markets. For reasons that may become apparent later, I've tended to use "established category" for the latter.
As you’ll see in a moment, it’s clear that the behaviour of both buyers and sellers changes significantly between demand types, and that making the wrong assumptions – or choosing the wrong strategies – can wreak serious damage to an organisation’s sales and marketing effectiveness.
I’d like to offer my interpretation – drawn from experiences and observations of a growing number of B2B clients – as to how the idea of the demand spectrum can and should drive sales and marketing strategy.
New concepts are truly disruptive product or service offerings. They either solve a new problem which has so far been unrecognised by the market or – perhaps more likely – open up a potentially important new opportunity. Budgets are unlikely to exist – they will have to be created. The solution category is unlikely to be widely recognised – so educating the market is critical.
Without obvious reference points in the market, vendors introducing new concepts have to fire the imagination of their potential prospect champions, who will almost always be forward thinking executives for whom the new concept will help them achieve a breakthrough goal. It’s hard to achieve this without effective issue and thought leadership of a world without reference points.
My take? Without existing category reference points, the potential market needs to educated - or more accurately inspired - about the potential of the concept to help them address a critical business goal.
New paradigms offer innovative ways of addressing an already recognised problem or opportunity. Unlike new concepts, with new paradigms at least some of the reference points exist – the category of problem is already understood and accepted as important by the market place. It’s the way in which the problem is solved that is innovative – perhaps bordering on the disruptive.
One of the best examples of the introduction of new paradigms is CRM delivered through software as a service, exemplified by Salesforce.com. CRM was already seem as an important function, albeit one that often cost too much, took too long or failed to deliver the promised results. With this as a reference point, Salesforce were able to show that their distinctively different approach delivered dramatically better results.
My Take? The market did not need to be told about the problem – they needed to be educated that there was, in fact, a better way of solving it.
The third group - established categories - represents the vast majority of product and service offerings. The problem that they solve is well understood, and they fall within a well-recognised and clearly defined category of solution, so there is no need to educate the market on the need for the solution. But because of this, the market is also crowded and fiercely contested.
Vendors are milling around in the market, all trying to steal market share from each other. The question is not whether the problem needs addressing, but rather when to solve it (urgency) and which vendor to solve it with. It seems to me that vendors in this market have two choices – to either out execute their competitors in a head to head battle, or to outsmart the opposition.
My take? If you're not already the category leader, I’m a great fan of the second approach - helping your prospect to rethink the problem in a way which de-commoditises the situation and differentiates you as a vendor in a meaningful way.
Where do you sit on the spectrum?
So – where are your products or services positioned along the demand spectrum? Are they new concepts, new paradigms or established markets? And are you consciously tuning your sales and marketing activities accordingly? If not, what's holding you back?