Over the past few weeks I’ve written about Tracey and Weirsma’s great book “The Wisdom of Market Leaders”. Last week we talked about companies who compete based upon “Customer Intimacy” (see below) and today we’re going to discuss those who compete on product leadership… from the sales perspective!
If you remember, your target market is smaller than you think because certain customers will want different things from their vendor. So, even though you may target “small to medium sized businesses with more than fifty knowledge workers in New England”, certain customers will want certain things from their vendor and other companies will want other things. You, as a vendor must decide upon which of these definitions of value you will compete, and thus organize yourself and run your business. As the authors so beautifully put it:
“If a company is going to achieve and sustain dominance, it must first decide where it will stake its claim in the marketplace and what kind of value it will offer its customers.”
The three types are:
- Companies who compete on “Customer Intimacy.” These companies appeal to those customers who look for “the whole product” and want a vendor who will understand their business and their needs. IBM and Nordstrom are such companies.
- Companies who compete on “Operational Excellence.” These companies appeal to those who look for the best price. McDonalds and Acer are such companies.
- Companies who compete on “Product Excellence.” These companies appeal to those who look for the latest and best products. Apple and Lexus are such companies.
So, what are the characteristics of companies who compete on product leadership? First of all, we are not talk companies who think of product leadership as a continuous line of product extensions. We are talking about products the market recognizes as superior, that deliver real benefits and allow people to do things in new ways; products that turn people’s heads and make their hearts beat faster.
Did you see the ruckus a few weeks ago around Nike’s new athletic shoes? (If not, look at this USA Today article. Certainly Nike qualifies as a company who delivers value via product leadership. In the technology world, Apple is certainly the company that qualifies.
Great product companies do not follow the market, they lead it. Forget about focus groups to tell them how to build products, they are usually so far out in front that customers don’t realize they needed it until they see it.
I had the good fortune to be around during the birth of Lotus Notes which truly was a new product and defined an entirely new product category, groupware. For the first few years Lotus Notes floundered. It was, in fact, a great application development development platform. The problem was, the customer didn’t have the ability to envision the future and frankly, the sales force wasn’t that good at it either. It wasn’t until the marketing people developed a couple of apps (sales force automation being one of them) that opened people’s minds to the potential. With these few examples in their bag, the sales force was enabled to begin selling, not an application development platform, but a tool with which an IT department could develop apps much quicker than in any other language or system.
More recently, a good example is Salesforce.com. But wait, you say, they didn’t invent sales force automation or customer relationship management, those had been around for ten years when they got at it. But, what Salesforce.com did was that they had a completely new way to sell it and to not (well, not a lot) to involve the IT department in the sale. They could go directly to the sales vice president or the CEO, and for many of them it actually was a new product introduction.
So, what do these companies have in common from a management perspective? Inventiveness, commercialization and market exploitation is what they have in common. (Talk about market exploitation, Nike’s new shoes sell for $220!) Management is decisive and risk oriented. They give their employees latitude to be creative and to explore new things. Failure is rewarded and they are not driven by procedure. By now you know that Google gives their employees one day a week to work on things outside their normal jobs.
But, since this is a sales blog. What is it about the sales team that has to be different than the customer-centric or operationally-centric company? In my mind sales people have the following characteristics:
- They know how to sell the vision. That is, they don’t sell on features and functions, they sell on what the product can do, how it will change the person’s life, how life will be different. The encourage the prospect to think of the product as a means to an end, not the end itself.
- They know how to have great discussions with prospects, but NOT about features and functions, about the prospect’s needs and desires; and, they know how to funnel them back to the company.
- They are great story-tellers. They know how to sell the vision; they know how to paint in the prospect’s mind a clear vision of the future.
- They are ruthless qualifiers. These people do not want to try to fit a square peg into a round hole. They can quickly assess whether there is a sale to be made. Lose fast is their motto and the worst thing in the world is to lose slowly, heck, most of the time they don’t even want to win slowly!
I am curious as to your thoughts on this. What other companies qualify as product leaders and what are the characteristics of great sales people?