Traditional research methods – including win/loss analyses, voice of the customer, etc. – don’t usually identify actual problems that customers are trying to solve.  The information is mostly limited to existing offers, revealing little about how customers actually derive value from them.  Then there are the non-product-focused techniques, like focus groups or anthropological research.  Unfortunately, analysis of this type of information often involves a level of “inference,” which means that the resulting insights are open for speculation.  As one might expect, interpretation discrepancies so early in the NPD process can lead to disappointing new product launches.

Let’s see how the marketing team at Reynolds & Reynolds (R&R) is able to overcome these two shortcomings.

First, R&R implements a rigorous methodology, surveying their customers to understand their:

• Jobs – individual activities that combined make up a business workflow
• Desired outcomes – measures of success when completing a job

This allows R&R to move away from a product-centric perspective towards a focus on their customers’ goals and success metrics, giving them a better understanding how their customers actually value their offerings.

Next, they survey their customers again to filter those desired outcomes by importance and satisfaction to identify which are important but underserved.  These then become focal points that align the solutions innovation community, streamlining the NPD process.

The results? In what was considered to be a highly saturated market segment, R&R’s first implementation of the jobs-outcomes methodology was extremely successful.  They uncovered nearly 400 high-importance, low-satisfaction customer goals, leading to a sevenfold increase in the number of solution-worthy opportunities.

Talk about a way to make your customers work for you!

MLC members, to learn more about how R&R did all of the above, read the full case study here.

This post was written by former colleague Andrew Kent of the Sales Executive Council. Visit the original here.

In my previous post, I argued that the conflict of interest between energy & utility companies and their customers makes these companies’ business models unsustainable. In short, the more efficiently customers use energy, the less money energy suppliers make—and customers won’t remain in the dark forever.

The solution, I believe, is to stop selling stuff (kilowatt-hours, therms, or joules) and start selling outcomes (light, heat, and motion). Indeed, one forward-thinking utility company recently shared with us their new Commercial Teaching pitch that focuses B2B customers on the money they could save from energy efficiency building retrofits, and off the price per kilowatt-hour.

It’s a compelling pitch, especially in deregulated markets. The customer saves money off its energy bill (the payback period is typically just 3-5 years), and the supplier picks up a new account.

But while energy investments make economic sense, customers have been surprisingly slow on the uptake, frequently rejecting energy projects that are in their economic self-interest.

For example, a contact in the green building industry warned me that most decision-makers are unreasonably skeptical of energy solutions, due to a lack of case studies proving they work, and the inherent difficulty with quantifying energy savings (i.e., external conditions may cause energy use to increase, even though that increase may be less than it would have been otherwise thanks to energy saving projects.).

Therefore, just as in any case when a customer is not thinking about its business properly, the burden falls on Sales to reframe how customers think about energy use.

To successfully shift to outcomes-based selling, marketing and sales leaders in the industry should develop Commercial Teaching pitches and train sales reps to do four things differently:

1. Reframe energy as a service, not a commodity. Teach customers that what matters isn’t the price per kilowatt-hour, but rather the outcomes a customer can achieve at a given level of energy spend. This might mean producing the same output using 20% less energy, or improving their brand by switching to cleaner (though more costly) energy.For example, Schneider Electric, a major player in all things energy, refers to itself as the “global specialist in energy management,” not “a leading energy technology provider.” The emphasis is on how customers use energy, not the technology itself.
2. Challenge customers’ investment filters. We often assume that top executives are always experts, but the CFO Executive Board (a sister program of MLC) found that CFOs typically apply investment filters that fail to accurately capture the true potential of energy investments. To counter these flawed assumptions, commercial teaching pitches should correct four CFO mistakes:
   1. Underestimating the total impact of energy projects (e.g. reduced compliance risks and maintenance costs)
   2. Disregarding future energy price increases
   3. Prioritizing speed of payback over total savings potential
   4. Ignoring the lower risks associated with energy savings compared to other investments.
3. Build innovative deal structures that move CAPEX to OPEX. SEC has found that star sales managers innovate on deal terms to work around customer obstacles. In energy sales, this typically means some form of performance contracting, which is becoming more feasible than in the past due to the falling cost of measuring energy use. Performance contracting is especially helpful when the obstacle to a deal is lack of capital or a principle-agent problem (e.g. the party who pays the energy bill does not own the building).
4. Agree on the method of measurement before closing the deal. Many customers remain skeptical of energy projects, not because they don’t save energy, but because savings are hard to precisely quantify. To avoid fighting over results retroactively, make sure customers agree on how their energy outcomes will be measured before any paperwork is signed. The desire to remain consistent with prior commitments is a powerful psychological motivator to agree with the results you find.

Energy management is a new field for most customers, and one in which they often make poor business decisions. By following the above guidance, sales leaders can make themselves indispensible partners both to their own companies’ growth and their customers’ bottom lines.

If you believe that what is happening to the news industry may be playing out in these other industries, marketers should be fundamentally reconsidering the role of brands and therefore the way they do branding.

To boil down the Economist’s 14 page report on the news industry into six bullets:

• The era of mass news from early 1800s to about 2005 was a historical anomaly—news before the early 1800s was much more “atomized” (news came from social connections, vitriolic pamphlets printed in small runs, and from chatter at the local coffee house)
• In the past 10 years, the news scene has returned to an atomized state—the Internet and social media blew apart the mass news model by dropping production costs, commoditizing news and thereby dramatically increasing suppliers of news, while putting mass news outlets (newspapers) out of business
• The upshot: consumers of news (once again) fracture their attention across many more news sources than they used to.
• While consumers have many more news sources to choose from, they also suffer from a torrent of information coming from different sources.
• There is an opportunity for third parties to relieve this pain, and serve as filters and curators of the huge supply of news.  The best bloggers do this well (Andrew Sullivan and his blog the Dish is one of my favorite examples).  It also points up a new role for journalists and editors—many of them should shift their focus from generating the news to a more curatorial role, navigating the torrent of news and stitching together select news atoms into coherent and compelling narratives for consumers

So, why would any of this affect the role that brands play?  Well, if you step back and look at what is happening to select categories, a similar story is playing out (six bullets here, parallel to the bullets above).

• Before the rise of mass production and mass brands, consumer goods and services were provided by an “atomized” set of suppliers (think pre-Industrial Revolution cottage industries)
• In the past few years, the rise of social and mobile technologies are commoditizing many products (consumers can easily find lowest price and can easily source substitutes) and are injecting a huge dose of discoverability into consumers’ shopping, whereby they receive recommendations for brands or goods they never would have known about before
• The upshot: consumers are fracturing their walletshare across many more adjacent substitutes.  These aren’t lower priced, carbon copy substitutes for goods they regularly buy; these are substitutes that fulfill a need in a slightly different way.  Part of their value is that they aren’t mass produced—they are unusual or different or off-the-beaten path.  Here are recent examples that I’ve observed as a consumer:
  • My wife shops the Etsy bazaar to find a more unusual pair of earrings instead of going to the mall with the same old shops for the masses;
  • On the street in Chicago recently, I saw a sheet of paper taped to a lamppost with a QR code on it, advertising how a local artist can customize your shoes with special paint and a unique design—maybe consumers spend money here instead of adding a 25^th pair of name brand shoes to their collection;
  • My wife buys me a beer tasting class as a birthday gift instead of the usual name-brand apparel (see my previous blog post that spells out how Groupon is a breaker of consumer buying routines, much at the expense of mass brands).
  • In sum, mass brands in many categories suffer from a thousand tiny cuts as consumers fracture their walletshare in ways like these.
• While consumers now have many more options against which to allocate their (depressingly fixed) walletshare, they also suffer from a torrent of choices in what they could buy.  Our recent research on the consumer decision path suggests consumers are suffering from cognitive overload as a result of all this buying choice.
• There is an opportunity for third parties to help consumers deal with this pain, by serving as filters and curators to help them navigate this greatly expanded choice set.  Many entities are edging into this role already:
  • Google is using algorithms to help consumers find apparel they might like (see www.boutiques.com);
  • Some consumers are relying on their social networks to play this role;
  • Individuals are playing this role, oftentimes celebrity tastemakers (which may help account for the popularity of some celebrities on Twitter);
  • And new hybrids are arising, like Flipbook, that weave together social and algorithmic filters.

I’d argue the more powerful of curators won’t be algorithmic—they’ll be humans or have a very strong human component.  That’s because humans are better (for now, at least) at weaving together coherent and compelling narratives to make sense of these choices, and go beyond the cold buying guide.

The humans behind brands could well play this role.  In my next post, I’ll unpack what makes for a great curator, and why I think brands like Tory Burch are charting the path for a new model of branding that is better suited to categories that are dealing with a re-atomized marketplace.  Just like the news industry.

Moreover, in any environment, risk left unspecified turns into uncertainty, which is still risky, but worse. When I go to Vegas and sit down at the roulette table, I know the chances that little ball lands on the colored pocket I select is only 1 in 38. When I go to bed at night and my neighbor upstairs drops one shoe, I wake up to the uncertainty of not knowing whether or when the other shoe will drop. The time I stay awake in anticipation is longer, thus more frustrating.

Many companies believe that emphasizing positive differentiators is the key to winning business. This is true but insufficient. We forget that for the most part success is simply the absence of failure, as opposed to of the celebration of pure technical genius. It is this less inspiring definition that requires marketers to be able to focus on risk as much as they do their value proposition. With the economic recovery in slow motion, you cannot afford to let your prospects and customers wake up to the realization that their supplier may or may not be there when issues arise with their purchases. Worse still is the tendency of many companies to get tongue tied when asked what the underbelly of their offering looks like.

Our survey data shows that not only do risk conversations matter, it matters how you convey that information to customers. In a set of scenario questions fielded this year, we asked real business customers to assess their willingness to pay for hypothetical products that differ only in terms of how their risky aspect is presented. Here’s what we learned:

Quantify risk clearly, and give customers certainty when possible. Customers who know they have a clear 20% chance of losing a defined dollar amount (in this survey, $10,000), instead of more vague supplier uncertainty, are willing to pay nearly $1,000 more for the same product that saves them 10k with a 80% chance.

Let them hear risk information from a trusted source. In China there is a saying, “buyers may regret, sellers never do”, meaning that sellers can take advantage of buyers but never the other way around. Our survey indicates that Indeed, when we looked at who does a better job at conveying risk and consequent solution, “a customer of your preferred vendor” increases the likehood to purchase by as much as 10% over “a sales rep of your preferred vendor”.

Address risk by offering service. Every risk is a business opportunity and few things assuage customer fears better than the promise to be there when things go awry. Zappos doesn’t promise to be the cheapest or that the shoes they sell will always fit, but the 365 day return policy plus free shipping both ways got many loyal fans. I don’t have their data, but I’d be surprised if many people really take Zappos up on their offer and return stilettos a year after purchase. It’s the goodwill that matters more.  Similarly, Rolls-Royces’s “Power by the hour” airline engine maintenance contract freed customers from the vexation of finding and paying for repairs. Rolls-Royce may be above the bar already, but it’s their ability to find business where there existed complaints which made them exceptional.

Have you ever let understandable business and product risks turn into festering uncertainty that sliently drove your potential customers to look elsewhere?  What have you done to address the risky aspect of your offering to your customers? We’d love to hear your thoughts. Leave me a comment or email ykang@executiveboard.com .

(The following is a guest post from David Sroka, President and CEO of Point of Reference, a customer referral program provider.)

The marketing department in B2B firms is typically responsible for producing “evidence” of satisfied customers in the form of case studies, quotes, press releases and videos. This customer content has plenty of uses and users, but arguably, the heaviest consumer is the sales force. Like other marketing “investments,” there’s an imperative to make decisions that garner the biggest bang for the buck. So how should the marketing department decide how to spend its finite budget when it comes to sales-accelerating assets like customer content? Start by considering the current range of available content relative to where it’s needed in the sales cycle. For instance, press releases and one-page success stories are perfectly appropriate early on in the sales cycle, but less meaningful and effective in the middle to later stages.  Full ROI case studies, often 5-10 pages in length, are overkill for the early stages when buyers are merely tire kicking.

To provide a framework for this approach we created a tool to help you link various content types to various sales stages:

Regardless of the sales methodology used by your organization (Miller Heiman, SPIN, etc.), the concept is the same. This graphic represents the full spectrum of the sales cycle (early stage in the lower left, late stage in upper right) and assigns both granularity and candor of various types of content. Based on the average form/format of the various content types such as case studies, press releases and video testimonials, we’ve placed them where they are most likely be used because it’s where prospective customers are most likely to find them relevant.

The goal of the following exercise is to help level-up the largest percentage of the sales team that isn’t in the top performer group by making them more effective at providing buyers what they need, when they need it. What would the impact be to the company if a mere 15-20% of the mediocre performers moved up a notch? Big!

With that concept in mind, here are five steps for fine tuning your content production strategy:

1. Survey the sales team- find out where they’re using existing content types in their sales cycles today, and where there are gaps in what they need
2. Inventory the current customer content library
3. Identify historical gaps in both types of content and sales stage coverage
4. Factor in future needs (e.g., new product launches, new target industries, etc.) for the next 6-12 months
5. Set production goals to fill the gaps and meet demand

Another important consideration in your strategy should be managing the currency of your content. Regardless of how good of a job you’ve done mapping to the sales cycle, if the content is outdated (e.g., references retired products, historical economic conditions mentioned, etc.) it simply won’t get used. So set a firm review and archive policy as part of your end goal.

Things change. Be prepared to re-survey the sales team about every 6 months to determine how you’re executing on the gap filling exercise. As you take care of the foundational gaps you can become more specific when asking about needs (e.g., specific industry or product segments). Over time you’ll find that your investment in content development will be more relevant and better utilized and that translates into a boost to the top line.

MLC members, for a great example of a successful customer reference program, check out how Qwest created an online database of video and audio customer testimonials – shaving 4 days and 20 FTEs off the sales cycle in the process.

This post was written by Amy Gallo for our Finance and Strategy Practice.

Everyone complains about their boss from time to time. In fact some in the U.S. consider it a national workplace pastime. But there’s a difference between everyday griping and stressful dissatisfaction, just as there is a clear distinction between a flawed manager and a truly horrible boss.

Difficult bosses come in lots of different flavors. Your manager might be overly controlling, giving you little to no autonomy. Or perhaps she rarely shows up at the office, doesn’t give you direction or feedback, and has no idea what you do all day. Bad bosses may be insecure, incompetent, or simply new and inexperienced. First-time managers are often more likely to hinder than enhance employee performance and potential. A 2005 study by CEB’s CLC Learning and Development Roundtable found that nearly 60% of first-time managers underperform in their role.

Working for a bad boss has a large effect on your work experience. Managers have a direct effect on how you perform and whether you want to stay in your job. They are the conduit between you, the organization, the team, and your job. This goes both ways. Not all bosses are bad of course and great bosses can inspire people to do more. CLC Human Resources found in its research Managing in the Downturn: Four Imperatives to Drive Employee Innovation and Performance (for CLC members) that managers are increasingly important for improving discretionary effort: the impact of manager quality on whether employees go above and beyond the call of duty has jumped by 50% since the recession began. On the flip side, bad bosses sap motivation, kill productivity and drive everyone crazy.

If you work for someone you wish you didn’t, consider this:

1. If it’s truly bad, speak up and/or leave: If you have a boss who is harassing you, bullying you or violating other workplace laws and policies, document as much as you can. If you feel you can have a direct conversation with your boss, then do that. If not, then take your case to HR or your boss’ superior. If nothing is done, you need to ask yourself if you want to continue working for a company that tolerates such behavior; it may be prudent to move somewhere that will treat you better.
2. Accept it don’t fight it: If you’re dealing with more run-of-the-mill incompetence, there are other things you can do. Don’t continually rail against your boss. Accept that he has flaws and that you need to work with them. In fact, there may be ways that you can help compensate for them. It is always in your best interest to help your boss achieve his goals. Find out what he cares most about and focus your efforts on making him successful.
3. Commiserate: One of the most helpful things you can do is seek out corroborators among your peers or others in the company. This will allow you blow off steam by venting with others who understand the situation. You can also rely on these alliances to help you develop strategies for dealing with the situation. Perhaps someone else has figured out how to approach your boss when she’s in a bad mood, or to circumvent her if she continually gets in the way.
4. Adapt where possible: It may be not be that your boss is truly a bad manager but that he is a bad fit for you. Take a good look at yourself and see if there are things you can change about your own behavior that will make the working relationship easier. Remember the goal is to succeed not to be right.
5. Look after yourself: Working for someone difficult will take its toll on your health as well as your productivity and performance. Since many people spend more time with their manager than they do with their spouse, it’s helpful to take breaks and carve out work time when you don’t need to interact with the boss. This may be a lunch break outside of the office or a side project that allows you to work elsewhere in the company. Also, bad management can be contagious; if you are being micromanaged you are more likely to try to control those around you. Try to stay true to your own values rather than succumb to passing on bad behavior.

MLC Members, check out our Talent Management Topic Center for our best tools and insights on increasing marketer performance and engagement.