Strategy. Innovation. Brand.
Branding: Why Buy Eyeballs That Won’t Buy?
Got any money?
I used to work for a CEO who liked to go to cocktail parties. When he introduced himself to people, he often mentioned the fact that he was the CEO of XYZ Corp., the well-known B2B software company. People looked at him blankly and said, “I’ve never heard of your company.”
The next morning, the CEO would inevitably call me to complain: “People have never heard of our company. I’ve told you this before. When are you going to fix it?” I typically responded with a question or two: “Does the person you met want to do business with us? Do they want to buy something?” The answer was always no. “So why”, I continued “should we spend money to communicate with them? What’s the return?”
I’m surprised by how many CEOs want their company to become a household name, even though most households will never buy from them. This is another subtle difference between B2B and B2C companies. With a lot of B2C brands – Coke, Nike, Levis, Red Bull, Amazon — virtually any household anywhere in the world could possibly become a customer. So it makes sense to become a household name by spending hugely on advertising and sponsoring high visibility events.
B2B companies, on the other hand, usually have much more defined markets. In the last major B2B company I worked for, Lawson Software, we could identify approximately 30,000 companies in our target markets, in our geographies that might actually buy from us. We put them all in a database, made some educated guesses about when they might buy, and starting contacting them. We kept sifting through our data to improve our probability rankings and contacted high probability buyers frequently.
For me, it didn’t matter if Lawson was known in every household. It mattered a great deal if we were known by the 30,000 companies that might actually buy from us. That’s where we invested our marketing development dollars and targeted our lead generation campaigns. If you work for a B2B company, I’d advise a similar approach. If that means that people at cocktail parties don’t know who you work for … well, take a brochure with you.
Branding: B2C versus B2B
Most of my client are business-to-business (B2B) companies. They make things — mainly software — that help other businesses perform more effectively. Some of my clients want to emulate the “flashier”, “sexier” communications of the business-to-consumer (B2C) world. They ask, “Why can’t we be cool like the consumer companies are?” My answer is that they can be totally cool but they have to remember the differences between B2B and B2C branding. A B2C company can deliver emotional, product-centric messages. While a B2B company can also play on emotions, it needs to do more. It also needs to deliver a logical, financial message and many more company-centric messages. B2B requires a more complicated branding strategy.
The first big difference between B2B and B2C is when the benefit is delivered. In the B2C world, the benefit is often delivered at the same time as the purchase decision. You buy a soft drink (purchase decision), you drink it, and you immediately get the benefit (sugar high). In the B2B world, on the other hand, the benefit is often delivered months after the purchase decision. That’s certainly true in enterprise software. Your messaging still needs to convince the buyer that the product is right. But it also needs to convince the buyer that your company will effectively deliver the benefit many months later. Thus, you need far more company-centric messages than a B2C company would.
The second big difference is the number of decision makers. In B2C, it’s often one person. I don’t need to call a committee meeting to buy a soft drink. In B2B, on the other hand, many buyers get involved. Years ago, I learned a “buying influence” model originated by the Miller Heiman consulting group. According to Miller Heiman, there are three buying influences: the user buyer, the technical buyer, and the financial buyer. In the B2B world you need specific message for each group. To learn about these messages, take a look at the video.
Redefining the Elevator Pitch
An elevator pitch should be a brief statement of your value proposition that makes the recipient want to learn more. You’re supposed to deliver it in the span of a normal elevator ride. It should be just enough to open the (metaphorical) door and get you invited in.
May I ask you a question?
It’s a good idea to have an elevator pitch. We’re all pressed for time and most of us don’t want to sit still for a long-winded, detailed presentation. But so many of the elevator pitches I’ve heard lately seem to get it backwards. The pitches are about me rather than about you.
It’s always better to talk about your audience rather than about yourself. That’s true in a speech. It’s true on a date. It’s true with elevator pitches. If you want to sell a watch, don’t talk about the watch. Talk about how it feels (to your audience) to wear the watch.
When time is brief, we often default to talking about me rather than you. It’s easy — I know more about me than I know about you. So how do you avoid this in an elevator pitch? Simple. You start by asking a question. That puts the focus on the other person. He or she can actually help you deliver the elevator pitch. You get a double benefit. While you deliver the elevator pitch, a few insightful questions can also qualify the customer.
You can learn the technique in the video.
Innovation and the Installed Base
How could God create the entire universe in only six days? He didn’t have to worry about an installed base.
Need to upgrade to Universe 2.0?
It’s fairly easy to innovate technically when you don’t have customers. You can adapt new technologies or new ideas without fear of alienating current users. Once you have customers, you have to pay attention to their needs. That includes the ability to upgrade seamlessly from one generation to another. Your customers feel that they’ve paid you money for a long time so their needs should dominate your planning. That may mean that you have to slow down new releases of your product to help your installed base tag along.
Think about it this way: which company is more innovative: Apple or Microsoft? Most people would say that Apple is far more innovative. But which company takes better care of its installed base? By and large, Microsoft has. When Microsoft releases a new operating system, they actually test to determine if old applications will run on the new platform. Apple is much quicker to dump the old stuff to keep the new stuff coming. The latest example is the new plug for the iPhone 5. If and when I upgrade to the iPhone 5, I’ll obsolete half a dozen perfectly good cables that no longer fit. That’s irritating but it may well get me into new technologies that work better than the old.
So do innovation and good customer care always conflict with each other? Not necessarily. Your fundamental commitment to customers is not that you’ll help them to move from release to release. Your promise is actually simpler — that you’ll stay in business to continue to serve your customers. I’m a veteran of a number of companies that no longer exist. Our customers were totally out of luck — they got nothing. Much better to give your customers something new — even if it entails ripping out the old — than it is to give them nothing at all.
When is it acceptable to ship an innovation that disrupts your installed base? I think there are two answers: 1) When a new technology emerges that allows you to provide much better solutions at a lower cost. You need to hop to a new platform to take advantage of the change. I saw this happen in the transition from host-centric to client/server software. It’s happening again today with cloud computing and mobile platforms. 2) When a competitor is shipping a solution that will disrupt your relationship with your installed base. Better to disrupt your own base than to let someone else do it for you.
And, how do build innovative new solutions while also maintaining and developing your traditional, bread-and-butter products? It’s not easy. The best answer I’ve seen is the ambidextrous organization which you can read about here.
Grover’s Weekly Reader – 1
The best articles I’ve found in the past week (or so):
True progressivism — an economic agenda that reduces inequality while not stifling growth. A middle way that just might work. From The Economist. Click here.
The re-branding of Mitt Romney as Mitt the Moderate in the Financial Times. Click here.
Presenteeism — do people who show up at the office fare better than those who work at home? The Economist says they do. Click here.
Will universities get Amazoned? How online education could wreck the hallowed ivy halls. By Nicholas Carr, the man who wrote “IT Doesn’t Matter”. In Technology Review. Click here.
How Jesus’ wife found her man in The New Yorker — a very funny story. Click here.
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