Here is a scenario I have witnessed time and time again while working with growing software companies. Once the product is half-baked, the company’s founders and top executives start drumming up business. Whether successful or not, at some point they bring in the “Professional VP Sales” – either to bring in the sales they could not close or to take sales to the next level and build a sales organization. Sooner or later, the VP Sales comes to the conclusion the sales people need more leads.
Up to this point, marketing was either non-existent or focused on creating nice collateral and web pages (aside from marketing strategy, which is a point for a different discussion). This is often where MarketCapture gets engaged with the company. Once the marketing heads are pointed towards lead generation, wheels start spinning, and leads start flowing in. Marketing is happy and proud counting the responses pouring in. Yet, when inquiring with the VP Sales, the CEO still hears the complaint “we don’t have enough leads”.
I will spare you from going through the finger pointing that goes on at this point, but these are typical growing pains. There are multiple points of failure in this scenario. What I would like to suggest is that many of these failure points can be avoided by more carefully matching sales and marketing capabilities with the company’s needs at each stage of its market maturity.
The Software Capability Maturity Model
A common model used to measure the effectiveness of a software development organization is the Capability Maturity Model (CMM). The model describes five levels of process maturity:
1) Initial: Few processes are defined, and success depends on individual effort and heroics.
2) Repeatable: The necessary process discipline is in place to repeat earlier successes on projects with similar applications.
3) Defined: All projects use an approved, tailored version of the organization’s standard software process for developing and maintaining software.
4) Managed: Both the software process and products are quantitatively understood and controlled.
5) Optimizing: Continuous process improvement is enabled by quantitative feedback from the process and from piloting innovative ideas and technologies.
(Source: Software Engineering Institute)
A similar model can be applied to the organization’s marketing and sales capabilities. Placed in the context of the technology adoption cycle, the model can become extremely practical. The result is a new model: Marketing Capability / Market Maturity Model. We will take a closer look at the first three of the five suggested stages, and leave the last two for later (you’ll see why).
Applying the Model
Stage one: Initial Heroics (getting the visionaries)
When companies at this stage approach MarketCapture to help them generate more leads, alarm bells start ringing in my head. In most cases, I advise the company to rethink its approach.
You do not want to start pushing leads into your sales pipeline before you have the resources and the process to handle them. Until you have secured your first few customers, you have not yet validated that your proposition has any value that speaks to the market. By definition, the vast majority of the responses you will generate from any outbound marketing effort will be too conservative to consider an unproven solution. There is no point starting mass production (of leads) before you have a working prototype (customer), a process, and the resources to convert these leads into real opportunities.
What can you do at this stage? How can you avoid failure point number one – failing to close the early deals?
Find the right heroes. While your sales guys may have the best credentials from past stints, they may not be the right people for this early stage. You are selling an unproven solution to a visionary; visionaries like working with other visionaries. I have seen it over and over again; the people who close the deals at the early stages are the solution people: sales engineers, the CTO, the founder.
It is not the fault of the sales guys. Unless you are either a genius or very lucky (or both), what you initially thought about the product and the direction of the company is probably not exactly what customers are really looking to buy. Being the hero also means having the guts to change, and it requires the visionary leadership of the company to have direct interaction with customers. If they are not personally trying to sell, they will always second-guess whether it is sales “inability to sell” or misaligned product positioning that is failing you. The role of sales at this stage should be limited to opening the doors for the real closers – the vision people.
There is no need to spend a lot of money on marketing at this stage. Marketing’s primary role at this stage is to communicate the vision. Since the vision is still fluid, you want to stick as much as possible to electronic communication that can be easily changed. Support the evolution of the message – it is a natural process.
At the same time, you can start positioning your company as a thought leader in this market. Show that you understand the business problems of your target customers. Establish dialogues around these business issues. It is never too early to start building your permission database so you can hit the ground running when you are ready to crank up the lead generation machine.
Stage two: Repeatable (from initial customers to bowling alley)
This is the most critical stage for your company, the point at which the market is watching whether you can translate your initial heroics into some level of repeatable success. Marketing has two goals at this point: number one goal is to make it easier to sell. The second is to help create repeatability by transitioning from attracting visionaries to selling into clusters of customers in specific business segments.
Once you have the initial customer base, marketing can start using this initial success to create the credibility required to get your outbound marketing to stick. You want to make sure your first customers are willing to tell the story (provided they are successful). You are going to give them a discount one way or the other, so at least get them to be your advocates in return.
At the same time, this initial success may present a challenge when it comes to crafting a repeatable marketing process. Your visionary customers have implemented the product in a variety of ways, some different from the originally anticipated. While sales may still take an opportunistic approach to get additional business from other visionaries, marketing should take the lead in creating repeatability by consolidating early customer experiences into a common vision, focusing on areas that best fit the company’s target bowling pins, and crafting consistent, segment-specific messages.
Stage three: Defined (in the bowling alley)
At this stage, the company is looking to leverage its initial success in one or two segments to expand into additional portions of the market. This is the time for marketing to step up lead generation efforts, but do it wisely. The bowling alley strategy requires marketing to take a “divide and conquer” approach, with specific messages and lead generation activities targeted towards each of the segments the company is going after.
Borrowing from the software Capability Maturity Model, measurement and optimization belong in stages four and five. Then again, market realities give us some very good reasons to adopt these capabilities earlier rather than later.
Reading Inside the Tornado and observing some late-nineties anomalies may lead you to view the bowling alley as a necessary but short passage on the way to the promised tornado. Reality is that your company might spend quite some time in the bowling alley. This is not necessarily bad, as long as you can keep the momentum and use this strategy for growth – slower than tornado, but growth nonetheless.
Embracing for a long journey in the bowling alley requires the entire company, marketing included, to become more efficient in the use of funds. This means not only managing according to budget, but also instituting marketing measurements and processes to optimize marketing effectiveness over time. Closing the loop between marketing and sales is required to ensure marketing is not only efficient but also effective.
Stage four: Managed (inside the tornado) and
Stage five: Optimized (Main Street)
As promised at the beginning of this article, we will not get into the requirements for these stages in this article. I will mention, though, that at these stages, the rules of the game change dramatically, and so do the roles and requirements for marketing and sales.
While much of the effort during the first three stages goes towards creating the market, the last two stages are more about beating the competition to capture the market that has already been created. During the tornado, it is a race to capture as much as possible before it ends; on Main Street, it is a slow wrestling battle to secure better positioning.
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Eran Livneh is the founder of MarketCapture (http://www.MarketCapture.com), helping software companies enter new markets, introduce new products, and increase market share. Eran is also the publisher of the MarketCapture Newsletter (see past issues and subscribe at http://newsletter.MarketCapture.com).
