As we conclude this series, we now will look at the art of selling into the mid-market.

6. Effective selling – Admittedly, it’s a massive challenge to align a Go-to-Market organization with the target customers and ecosystem of partners. Many large enterprise companies are very strong at having direct sales forces aligned on a one-to-one basis where they have a deep understanding of the account, a deep understanding of the industry and the core business processes. Hence, their solutions are clearly aligned with the customer’s business processes. Their organizations however are NOT aligned when they are in the one-to-many business model where the enterprise company doesn’t get to directly touch the customer – their ecosystem of partners evaluate customer needs, etc. However, this type of organizational transformation does not happen overnight. Software companies need to migrate from an organization designed to sell directly to large enterprises to a mix of direct and indirect sales, key account management and key partner management. Yet, there are very different organizational capabilities required to be in the business of direct selling vs. the business of partner management. This requires thought planning and balance to maintain the existing revenue stream from enterprise customers while nurturing the one-to-many partner relationships to effectively sell to the mid-market. (For more information on designing an effcient channel strategy, see The New Solution-Selling Paradigm).

When I finished my conversation with the enterprise software executive, we concluded that centralized, enterprise marketing organizations and consulting firms do indeed have a very difficult time understanding the complexities of marketing enterprise software to small- and mid-sized markets. Clearly categorizing those markets, effectively segmenting the mid-market customer, developing a clear “marketecture” of the partner ecosystem, creating clear business propositions to partners and effective value propositions to customers and, finally, wrapping these together with an effective mid-market selling machine, can go a long way to solve these challenges.

So now that we have correctly defined the mid-market, segmented correctly, defined the partner ecosystem and devised the business proposition that will appeal to them, we can now look at creating the right value proposition.

5. Once an organization has determined the unique partner business proposition, it must provide its ecosystem of partners with the unique and compelling Value Propositions that meet the needs of their end customers and align with the market structure and customer segmentation.

   This is easier said than done, and there are three areas that can really trip things up:

   1. A mismatch in the product or solution – how does an software company work with their partners to create effective solutions that meet the needs of their customers? For the small business market, a one-to-many type of solution is usually needed – called Commercial Off-the-Shelf software or COTs – but how do companies sell COTs when their customers are looking for vertical solutions? For the mid-market, the challenge is even greater when customers feel that they have unique business processes and specialized industry needs but they don’t have the resources to invest in customer solutions to meet these emerging needs. There are ways it can be done with technology today, including items like solutions-oriented architecture, collaboration and communities – but it’s hard to manage, requires flexible product development and extensive solution generation teams to manage so often there’s a misalignment of products and solutions by segment. (For more ideas on tailoring a program to appeal to solution partners, see Do You D-Gen It Alone or Get Some Help?)
   2. Challenges associated with pricing – because many enterprise software companies approach the mid-market as if those customers were also enterprise companies, the perception can be that their solutions are too expensive. On the flip side, if they had previously served small companies, and then try to address the mid-market, they can be perceived as cheap or as not understanding the needs of the market – because they’re used to pricing towards an out-of-the-box solution. Their pricing is then perceived as not relevant to the mid-market.
   3. Communication and messaging of the value proposition can also be out of alignment. Many enterprise marketing organizations hear from their field sales groups that the content they create does not effectively land in the field. Either the messaging is too high-level to effectively communicate with the customer sitting in front of the field sales rep, or the process is not effective and the sales rep cannot find, access and utilize the right information for the right customer at the right time.

Coming next: Effective selling and the big wrap up.

We have talked about correctly defining the mid-market and more effectively segmenting the customers in the earlier posts (see the First in this series and the Second in this series). Today, we will be exploring how to gain a better understanding of the partner ecosystem and correctly target business propositions.

3. Organizations often fail to fully understand their Ecosystem of Partners. They try to reach the customer through a broad ecosystem of partners, but don’t do a good job in differentiating between the different categories of partners – nor do they develop programs or materials geared to specific types of partners. For example, in the bottom tier of the mid-market, some partners may be geographically focused – they have a storefront, or an office that serves a local, regional customer base across multiple industries. Or they may only serve small companies in a specific broad category, like automotive. In the middle tier, partners are frequently categorized within a broad array of Value Added Resellers, Independent Software Vendors or Solution Providers. They can also be geographically focused. Finally, at the top, some partners can be nationally or internationally focused players such as large Value Added Distributors. Each type of partner, like the customers they serve, has very different needs, and the ecosystem of partners can vary greatly by size, geography and segment. (For more information on managing your alliances effectively, please see Improving Alliance Marketing).
4. Companies must also provide their partner ecosystem with the Compelling Business Propositions that will make them want to consider working with their firm. Most marketing departments understand the requirement that a value proposition clearly align with a target customer segment’s needs. On the other hand, few take the time to think through the financial, marketing, operational training and management needs of their partners and craft a business proposition that aligns with these needs, creating strong incentives for partners to work with your organization instead of a competitors. Needs can vary greatly depending on the various partner type – and different types of partners require business propositions tailored to each type. Ignore this, and partner recruiting and partner retention will become a painful drain of time and resources.

Coming next: Creating compelling value propositions.

Continuing in this series on why centralized marketing is failing in the mid-market, I will be discussing the failure to correctly define the mid-market and the pitfalls of “one-size-fits-all” customer segmentation (for a good angle on segmentation, see Needs-based Segmentation).

1. First, let’s talk about Market Sizing and Categorization. Enterprise companies frequently don’t take the time to fully define the mid-market category – and there are actually at least three different size tiers to the mid-market:
   • The top tier – these are large mid-market companies that are scaling rapidly – their needs are similar to those of enterprise companies – i.e. they have emerging IT organizations, sophisticated infrastructure, etc.
   • The middle tier – these are small, rapidly-growing companies with a need to focus on scale but don’t yet have the breadth or resources of the enterprise. They need solutions targeted to their needs, but can’t afford or support enterprise solutions that are highly customized, or that require ongoing management, training, etc.
   • The bottom tier – these are companies that until recently were small businesses, and are only just starting to put in place the capabilities to provide more robust processes and effective business management.
2. Many organizations take a one size fits all approach to Vertical Markets and Customer Segmentation. Centralized marketing will look at customer needs and then categorize customers in vertical markets at the broadest level – like automotive or communications or financial services. However, there are many differences within a particular vertical category. For example, a “discrete process manufacturer” can describe not only a milk farmer who has broad operations in the central part of the U.S., but also a machine tool maker or a metal bender. Even though all three manufacturers “fit” within the same market segment, they all have unique business needs, processes and issues. Automotive provides a good example of the importance of segmentation within verticals. When companies say they are targeting the “automotive market” what do they really mean? Are they targeting regional equipment manufacturers? Assemblers? Distributors? Electronics manufacturers? You get the idea.

Coming next: How to gain a better understanding of the partner ecosystem and making sure your business proposition is aligned with the needs of your partners.

We recently conducted a global Secret Shopper program for one of our clients. The primary objective was to understand how well a particular program was being executed by the channel to small business customers. Our client was both very pleased and somewhat shocked by some of our findings.

Our client had developed a program that would influence how both distributors and resellers marketed and sold a new product (for more information on product launch Best Practices, please see Four Pillars for Product Launch). Our client is quite sophisticated when it comes to channel relationships, so they gathered information from their channel partners, put together clear instructions, and provided training and support. And yet, the Secret Shopper assessment revealed several unexpected key issues that have caused us to take a much closer look at how programs actually manifest through channel partners.

The overall finding was that the new product being offered from our client was either:

1. Not even offered to us (the small business customer buying the product), or
2. Was offered reluctantly when we asked about it, and / or
3. Was presented to us incorrectly.

Why did this happen? In this case, we believe there were three fundamental key issues or root causes behind the underperformance of this channel program – the program was complex, the customer benefit was not clear, and there was a lack of alignment between vendor and channel goals:

Let’s look at this from the perspective of the channel partner:

Program Complexity

• Inertia. The vendor (our client) may have been gearing up for this new product launch for a long time. The channel partner (the person marketing and selling the new product to the small business customer) hadn’t given it a second thought. Now, all of the sudden, our client wants their partner to change? Change extends sales cycles, distracts resources, costs money, requires attention. Good luck.
• Confusion. Exactly how is the new product different from the older one? Has the channel partner (the person selling the new product) achieved a clear understanding of the difference between the old product and the new product? If not, the channel partner is likely to go back to the tried and true. The channel partner is going to sell what he/she understands.

Clear Customer Benefit

• Pride. Exactly what is the benefit of this new product to the user/buyer? Is there a clear value proposition that the channel partner can share with their small business customer to convince this customer that the new product is worth replacing the old product? The channel partner does not want to be accused of not knowing what he/she is talking about. The channel partner wants their clients to come to them because they know what they are talking about and they are recommending what is best to me, the small business customer. The channel partner needs to look good to the small business customer.

Vendor & Channel Goal Alignment

• WIFM (What’s in it for me?). This is often the biggest channel breakdown, the creation of a clear and compelling business proposition for the channel partner to change everything that they are doing to get on board with a vendor’s launch of a new product. If the channel partner thinks it’s easier to sell the old product, and thinks they will get paid the same or spend less with the old product, why bother pushing the new product? Does the channel partner get paid more? Will his/her sales be easier? Will the channel partner’s costs go down with the new product? Will the channel partner be able to sell more of other products as a result? Is there huge demand for this product already? And most importantly, will the channel partner create stronger customer relationships because the small business customer feels that the channel partner is recommending a new product that is truly in the best interest of the small business customers operations?

So, what are the lessons from this?

Our client had already done an outstanding job of evaluating this new product program with an internal team. The client thought that they had a very robust understanding of the issues and challenges from their own perspective and indeed they had. Our client had created a detailed list of challenges with the product launch; the client had prioritized the list of challenges; and the client was actively working to fix these challenges in the order prioritized order of issues.

On the other hand, the client also realized that there were two additional perspectives that were critical to understand to determine the success of the new product launch – the channel partner’s perspective and the target customer’s experience. To fully understand these critical perspectives, we recommend 3 steps:

1. Channel Partner Perspective (to see more about what Channel Partners are thinking, see our recent study on the state of the channel )
   First, understand the channel partner’s list of what they perceive is working with the new program as well as the channel partner’s list of what is not working with the program.
2. Channel Partner Priorities
   Second, understand the channel partner’s prioritization of what are the most important things to fix and what are the items that are working best and why
3. Target Customer’s Experience
   Third, walk a mile in the end customer’s shoes. In this case, acting as a small business customer and buying product through the channel showed our client what it was really like from the perspective of their end customer to try to buy this new product. At times, it was a fantastic customer experience. During other times, it was bewildering or worse for the small business customer.

Do you know what your channel is really doing?

(Glenn Gow and Todd Keleher also contributed to this post).

Reaching the mid-market is a challenge for centralized marketing departments within enterprise software companies. Selling to the mid-market is very different from selling to large, Fortune 100 firms, and enterprise software companies regularly struggle to get it right. Messaging and value propositions that resonate with enterprise customers are frequently misaligned with mid-market customers pain points, and the transition from a direct sales model to selling via channels is quite complex (as Allan Adler explored in Resell vs Co-sell - What’s it all about?). The result is that lots of time and money is wasted from the fundamental lack of understanding of both customer and partner needs.

A marketing vice president at a well-known enterprise software company recently told me that he wastes about $15 million a year in addition to spending a quarter to half of his time re-purposing existing materials so they can be used by partners and the field organization with target customers.

Well, I had to say I understood. In my experience, most centralized marketing departments (in conjunction with their outside consultants) create marketing value propositions towards customers and business propositions towards partners that are aimed at the mid-market, but they never effectively line up with the true segmentation of customers or the true ecosystem of partners that deliver to those customers.

There are 6 reasons why this happens:

1. Failure to correctly define the mid-market
2. Broad and ineffective customer segmentation
3. Inadequate understanding of the partner ecosystem
4. Poorly targeted business propositions
5. Unappealing value propositions
6. Unproductive selling strategies

Over the next few posts, I will discuss each of these potential pitfalls and explore ways that the savvy enterprise software marketer can avoid them.

Margie Zable Fisher who runs theprsite.com wrote a great blog (that Guy Kawasaki posted on his blog How to Change the World) titled The Top Ten Reasons Why PR Doesn’t Work. I have been a management consultant for twenty years and I have delivered hundreds of successful strategy, planning and implementation project for clients. On the other hand, each of us have stories about real clunkers, the consulting projects that went south. Margie’s blog regarding PR deserves a corollary for consulting so here are the Top Eight Reasons Why Consulting Doesn’t Work

1. The target audience for the consulting work is not understood
   When clients and consultants are not clear on the target audience for the output of a project, consultants fail. The basic tenant of good marketing is to have a clear understanding of your target segments and their needs and focus your inbound and outbound efforts on meeting these needs. The same holds true for consulting projects. Both the client and the consultant need to understand: who will “consume” the results of the work; how they will “consume” those results; and how they want to receive the results so that they can most effectively act upon the recommendations
2. “What we’ve got here is failure to communicate.”
   This quote spoken by “The Captain”, the imperious prison warden played by Strother Martin, near the epitasis of the movie Cool Hand Luke sums up the most common reason that consulting projects fail. Every consulting project requires some basic blocking and tackling including: scheduled status reviews with all key stakeholders participating; clear lines of communication between consultants and clients; an understanding of how (email/voicemail/blackberry/etc) each participant likes to communicate and receive communications; a well understood process to escalate when things go bad; a mutual agreement and commitment to have open and frequent communications. Yet life can get in the way and when consultants fail you can usually look back and find that the basic communications mechanisms were not in place or functioned poorly
3. It is not clear when the project is complete
   One of the most obvious and overlooked imperatives is to clearly define when you are done– to the extreme satisfaction of both the client and the consultant. Consultants and clients fail when they agree to ambiguous work products like “a completed model”, a “global market sizing”, an “industry evaluation.” These terms are so vague that it is highly likely that consultant and client have a different view of what they will deliver and when they are done. When consultant and client hold these different views in their mind the chances of success decrease dramatically.
4. Client did not understand what they bought and Consultant did not understand what they sold
   How often do clients have a clear understanding of exactly what they will get when a consulting project is finished? Conversely, how often do consultants have one 30 minute meeting with a client, develop a detailed proposal, get approval to begin work and still have no idea exactly what the client wants? I have often tried to show clients exactly what they will get at the end of a project either by sharing the deliverable of a very similar project while extracting the confidential information before sharing. However, frequently, consultants and clients enter into a project each with a clear picture in their mind of exactly what they will get or deliver and yet neither makes the time to put that picture down on paper so the other can say “yes” that is exactly what we are doing.
5. The explosion of “Credenza-ware” — failure to land the project with someone who will use it
   When consultants create a final work product that sits in a beautiful binder on the shelf of the client, never to be opened again, that is called “credenzaware”. Credenzaware adds no value to any except Acco who produces the binders. Consulting projects that have the fewest tangible results are often completed with the prettiest color, bound, large-volume reports with densely packed text, the exhaustive analysis and some of the most clever insights. Yet if consultants and clients often fail to land the report for success by determining who will received the report, how they will use it, when they will use it, why they will use it and what the results will be from this use.
6. Expectations greater than budget
   Sometimes what the client wants or needs is much greater than what they can afford. What happens? Sometimes consultants agree to maintain scope but within the reduced budget (I call this consultant value destruction). This leads to a model where the consultant has agreed to do work that does not make sense for them economically. Alternatively, the consultants agree to accept the scope and take it out on their team through evening and weekend work.
7. Measurements of success not clearly defined
   Simplistically, consulting projects have three outcomes: insight, a plan, or tangible results. Yet clients and consultants are often really bad at identifying and measuring the results of the project. If the project is a research study then the results will be insight such as go/no go decisions on markets, customers, products, opportunities etc. If the project is planning, the tangible result is an implementable plan. If you cannot implement the plan, the project failed. Finally, implementation projects can and should be measured based upon the tangible results delivered such as increased revenue, reduced costs, lower risk and costs of capital etc. Nonetheless ROCI “Return on Consulting Investment” is not a frequently considered metric; what a shame.
8. Unclear commitments
   The book The Secret is a runaway success partly because it takes the concept of the power of positive thinking and turns it into life commitments. In consulting, the law of attraction holds equally strong implications. When clients or consultants do not make clear commitments to: proactively participate in project meetings; define timeframes to deliver or review work; provide feedback; communicate; determine when the project is complete; understand what was bought and sold; create useful deliverables; align consultant and clients business needs; define and measure ROCI; consultants fail.

I receive two or three emails every day that say something to the extent of “I use Linked-in so you should join my network?” Many people must be blindly checking “Accept” to these emails and perpetuating the idea that having many people in your “network” equates to some form of value. Today, I received the king of all LinkedIn Invitations.

I am not sure if this a web joke by a university sociologists to test whether there is any true value to social or business networking; or do people simply act in a herd mentality and accept as valuable anything sent to them regarding networking. This email I received is amazing; John Arse is happy to recommend me to people he knows and I can add John Arse to my network!!

The message that Mr. Arse sent did not create any value proposition to me. For social and business networking to be of value, the network needs to do the same as any provocative marketing activity; the network needs to understand the needs and wants of the participants in the network and it needs to offer a value proposition that aligns with the needs and wants of those participants.

Like every other generic LinkedIn email I get, John neither took the time to think through what my needs and wants are from LinkedIn, nor did he offer me any value proposition to join his network. I do not see what value he is offering to me to recommend me to the people he knows. If John Arse recommends me to the people he knows, is that good for me? If Mr. Arse had proposed that we have common interests and we could share our learnings about those common interests, or if Mr. Arse had suggested that we have common business pursuits and we might each benefit working together, I might have responded “Accept” to his LinkedIn invitation.

Alas, there was either one blatantly obvious value proposition that I could not turn down or a horrible tragedy in parental naming that leads people to blindly “Accept” Mr. Arse’s invitation. How many people have the honor of having a Jack Arse in their Linked-In network?!!

Market data shows that capturing the anticipated value from a merger is difficult and rare. Despite strong financial and strategic rationale, only 50% of all mergers create positive returns. Fewer than 20% of all mergers create substantial returns.

I have identified 6 common pitfalls that destroy shareholder value by contributing significantly to poor results:

1. Failure to focus on the end game – the targeted quantifiable value of the merger
   1. Most companies do not measure the achievement of specific quantifiable benefits throughout the integration process.
   2. Most companies focus on process goals and objectives and are shocked to find, at the end of the day, that a successful process has led to an unacceptable financial or strategic result;
2. Failure to deal with value destroyers - Customer turnover, employee attrition or falling productivity, can quickly devalue the business while attention is focused on the integration;
3. Proliferation of initiatives - Too many post merger initiatives distract the organization and drain energy from those initiatives that truly drive value;
4. Lack of clear responsibility for the integration
   1. Failure to name a leader with authority and responsibility to shape the processes and make decisions can paralyze merger integration initiatives
   2. Lack of an approach to escalate those decisions that go beyond this leader’s authority creates conflict or stagnation;
5. Slow or no action around the inevitable tough decisions which are best handled quickly and decisively;
6. Poor transition between the planning and executing stages of the integration.
   1. Most companies fail at fully integrating their acquisitions.
   2. Years go by and fundamental processes and systems remain unconsolidated, leaving significant value on the table.

I wrote an article in 1999 entitled “Mobile Data: We’ve Been Here Before” predicting that the deployment of mobile and wireless data in businesses would replicate the deployment of the PC in the enterprise. I noted that in the early 1980s, personal computers began populating desks of accounting and marketing executives, often without the knowledge or involvement of the IT department. Then, the PC battle began between the end-user’s desire to customize their desktops and IT department’s desire to limit the number of configurations offered and supported throughout the enterprise. Over the next decade, efforts were made to integrate the standalone PC into the enterprise’s technology architecture. These efforts gave end users the independence they sought and the IT department the control and discipline the organization required.

Eight years later, as anticipated, there are many custom wireless solutions developed for enterprises that have broad field services, fleet management, warehouses, points of sale etc. IT departments have planned for and effectively managed these custom solutions which are part of the core processes of enterprises such as UPS, Fed Ex, AT&T, WalMart, Hertz and others.

At the same time, IT departments in enterprises, mid market companies and even small business are starting to make rumblings that it is time for standardization of the mobile messaging device just like we saw standardization on WinTel in the 80s. As an example, Crimson Consulting is finding the costs of managing multiple devices across multiple carriers and platforms becoming unwieldy and we are developing a standardization policy for all mobile messaging. Our Partners and employees have been considering purchases of devices such as Windows Mobile 6.0, Blackberry’s, Nokia Intellisync and Good Technologies based messaging devices to access corporate email, calendars, contacts and other enterprise data. Our IT department is beginning to feel the inundation with the threatened tidal wave of new devices, new mobile messaging platforms, and new applications and the resulting complexity of purchasing, configuring, managing, servicing and replacing the broad array of solutions.

The time is right for companies offering mobile solutions like Microsoft (a Crimson Client) with their newly released Windows 6.0 to aggressively position based upon Total Cost of Ownership or even better ROI of their solutions. These mobile solution providers can help their enterprise customers to plan a more effective approach to manage this explosion of next-generation mobile messaging devices now, to manage the proliferation of disparate devices, applications, operating systems, platforms and other solution components that have been propagating through business and that IT departments are stuck supporting.

I anticipated that without careful planning and management by IT departments, the mobile data genie would be out of the bottle. Eight years later, IT departments are finding find themselves, once again, playing catch-up as they search for ways to provide deployment, management, security, structure and interoperability for all mobile messaging devices hitting the corporate firewall or POP3 server.

Mobile messaging is reshaping the way people interact with corporate data. But there is a tremendous amount of complexity behind the scenes, and IT departments are bearing the onus of sorting out a rational and economic corporate policy for mobile data device purchases, deployment, activations, maintenance, repair and replacement. As I anticipated eight years ago, this entails more than merely doling out wireless devices across the board. With complexity often comes the potential for inefficiencies and higher costs of doing business. The real challenge, then, is to mitigate these inefficiencies early on by devising an approach that balances corporate wireless standards to reduce unnecessary complexity with local user flexibility.

Mobile messaging companies such as Microsoft, Good, Nokia and RIM are all in a position to begin developing their messaging and value propositions to reduce this mobile complexity through standardized corporate solutions.