Author: Josh Hardy



CURRENT SUBSCRIPTION CUSTOMERS WANT MORE VALUE — AND YOUR BUSINESS DEPENDS ON IT



Upselling subscriptions can be a win-win for both your organization — and your customers’ continued success. After all, with a subscription, your company and its customers join into a long-term relationship where value is continuously exchanged.

Yet value-exchange is a continuously moving target. As we have all experienced in the last few years, market and environment change can happen quickly. Old customer challenges and goals fall by the wayside for more-urgent problems or new requirements. This not only builds impetus for your selling organization’s product teams to keep enhancing your solution — but it also presents an opportunity as a seller to keep elevating the value you exchange with your current customers, while supporting sustainable revenue performance.

Upselling subscriptions can be a welcome bridge between your customer’s changing needs and your organization’s revenue. There is a trick, though, to up-selling subscriptions in a way that promotes that value-exchange. After all, Forrester research has found that B2B buyers believe only 8% of salespeople are focused on driving valuable end results for buyers. Never let your customers question your motives. Inspire and enable your sales teams to be part of the elite 8% of value-focused sellers. How? Add more value into your customer engagements with the Mereo value selling formula.

SUBSCRIPTION CUSTOMERS WANT CONTINUOUS IMPROVEMENT

According to a recent Gartner survey of 750 B2B customer stakeholders, customer improvement is nearly as effective at account retention as product success and service. And some research has found that a 5% increase in customer retention results in 25%+ increase in profits. Other studies have found that for every 1% increase in revenue retention, a SaaS company’s value increases by 12% after five years.

Growing existing customer business relies on your customer improvement activities and the customer’s confidence in your salespeople. Face it: Your competitors will be engaging your current customers with messaging about how your current subscribers could better meet their goals, better grow, better overcome their challenges with their products. Current subscription success and service with your subscription may not hold a candle to your competitions’ gusty promises of new and improved features and benefits.

It is up to your salespeople and account managers to help your customers not only realize the full business value from the subscription service they are currently using — but to help them proactively address other gaps where your organization can deliver more value.

ADD MORE VALUE TO YOUR CUSTOMER ENGAGEMENTS

The Mereo value selling approach transforms selling from a one-way barrage of pushiness to a two-way exchange of enhanced value and longer-term healthier customer scores. Here is how:

  1. Be your subscriber’s expert. Your salespeople and account managers need to step beyond being your subscription service expert alone. They need to also be experts on your customers to best serve them for mutual long-term success.
    What unique, valuable perspective can you provide for their business and / or market?
    How can you show your commitment to your subscribers’ success?
  2. Emphasize their current / future pains, risks and needed urgency to change. Most customers will remain in the status quo until they see the light of what could be and better understand the harm of remaining in their current state. Do not let your competitors beat you to the punch. Serve your current customers by emphasizing current gaps in their business — and how your higher subscription levels or additional features address these in valuable ways.
    What insights into new or forthcoming issues impacting their business can you offer?
  3. Paint a story of enhanced value and successful gains from your solution. Differentiated value messaging can help your salespeople drive meaningful customer conversations. Enable your salespeople and account managers with the skills and tools to best serve your customers with ways to improve their business with your subscription offerings and up-sells.
    How can your salespeople Seek to Serve™ customers with navigating alternative options to their current subscription?
    Is your solution easy to buy and access? Is it easy to adopt, and do customers have ample support in doing so?
    Do your subscription levels and their pricing models serve your customers as optimally as possible?
  4. Bring the proof. A client value story, use case, success story or point-of-view paper can compellingly address reservations your subscribers have toward elevating or changing their current subscription level. Enable your salespeople with relevant real-world stories to share with customers during these conversations.
    What insights can you share from other, similar subscribers’ shift to different subscription levels? What success did they realize — how and why?

BUILD THE FOUNDATIONS OF SUSTAINABLE REVENUE PERFORMANCE

Access the ultimate guide to pricing strategy principles and models to elevate your value selling during this inflated period and beyond. Unlock the expert pricing insights in Part 5 of the exclusive Elevating Revenue Performance With Solution Management eBook.

 

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Subscription Business Best Practices: Leveraging Customer Health Scores



Recently, I wrote about how to develop a customer health score to improve your subscription business renewals. Creating health score data is not enough. Businesses that succeed with their subscription offerings know how to best decode and leverage that data to improve customer service and retention.

Most customer health scores incorporate a visual status system between green, yellow and red markers. Now that you are on your way to having all the right customer insights, let’s explore how you use that information into the future.

Decoding Health Scores

The common green, yellow and red indicators should be noted as just that: an indication of what you might expect. These health scores are not a definitive state of affairs. In all cases, further investigation is advised before taking big actions.

  • Green is the best-case scenario and means, based on the elements used to calculate the score, things look positive with your customer. Additionally, they are worthy of an exploratory conversation regarding expanding usage or products with you.Why should you not assume all is good? Even if usage is good, the product works and all things point to a renewal, other unknown business factors could be at play. What if the company was recently acquired and the champion will soon find a new solution to replace your solution? It happens, as do a number of other factors that are all impossible to take into consideration. So do not assume the green indicator equals an actual renewal sale.
  • Yellow is not a bad but cautionary indicator. When your customer scores yellow, your sales or customer support team should most likely outreach and explore how to improve value. Having a touchpoint and re-engaging the customer is one of the easiest ways to keep tabs on the situation and avoid your customer falling into the red zone.
  • Red indicates things are not looking great between you and your customer. The best bet is to group these and get involved in the discussions with your customer success managers and sales professionals to understand the game plan to turn these potential churn customers into renewing happy customers. The battle might be tough, but it should not be considered lost.

It is important to fully understand how to overcome health score assumptions, especially in regard to yellow or red scores. While health scores are important tips to your team — they require further investigation and nuanced consideration before action is taken.

For example, consider a customer that has a number of support tickets opened in the past six months. Depending on the weighting of these tickets in your overall health score criteria, this might seem negative and lead you to assume this customer is not happy. Yet, what if these tickets are just an indicator of a very active rollout and increase in adoption? Customer satisfaction oftentimes will relate more to how you respond to support causes than the actual number of them.

So understanding the sentiment from the support team becomes a critical element in truly understanding these statuses.

Using Health Scores

The use of a health score can be broken down into four steps. The steps essentially help you develop an informed and strategic action plan.

Leverage the data-driven insights you have collected from your customer data insights dashboard, discussions and other data sources to:

  1. Identify the current status. Do the indicators point to an at-risk renewal, a customer that needs attention or a potential for expansion?
  2. Review your findings with your company’s renewal team (sales, CSMs, product teams).
  3. Discuss risk mitigation steps, if needed, and who will own them.
  4. And lastly, when appropriate, based on prior steps, reach out to your customer, confirm budget, timeline, correct contacts and the intent for the continued partnership.

Elevate Your Subscription Service

Embrace a culture of service to elevate your subscription business model. Contact us for support. And download the free Complete Sales Organization Guide to Seek to Serve, Not to Sell™ today.

 

Learn How to Deliver Maximum Value

 

 



Renewals: A Key to Successfully Growing Your Subscription Business



Subscription business models rely on the long-term relationship between a business and a customer. Yet the health of this relationship is often revealed at the time of subscription renewal, which may be too late for your team to do anything about it. If the customer is happy and feels they are receiving fair value, they will continue the relationship. If not, they will churn or, in other words, they will leave your business.

Minimizing churn is key to your growth. In fact, in some industries, such as financial services, a 5% increase in customer retention produces more than a 25% increase in profit (Bain and Company).

The solution to avoiding churn is not trivial — but not rocket science either. Companies must gain a better understanding of customers’ propensity to churn well before the renewal anniversary. How? By leveraging customer data insights to develop a health score.

Understanding Customer Health Scores

A subscription business health score acts as a prediction tool for the likelihood of future customer actions — such as the likelihood of subscription renewal versus churn. This is not based on ESP but rather driven by data to which your company should have access.

Beyond subscription renewals, health scores can also help your company identify customers that are good candidates for expansion discussions, such as up-selling and cross-selling. Not every business is the same, though. And these expansion discussions require more sophisticated insights and strategy more common with Cloud-native companies that have advanced tracking capabilities. While it is important to identify what to push next in the customer journey — it is more important to do so at the correct time.

In addition to predicting outcomes, health scores should be used to help anticipate and reshape possible negative outcomes. Customer success teams can leverage this information to proactively reach out, offer relevant assistance and suggest new capabilities that proactively aid with adoption hurdles. In SaaS solutions, it is not uncommon for the product management and marketing teams to include built-in automated support such as emails that offer assistance, education or demos.

How to Compile and Create Health Scores

Likely your business is already collecting and tracking a number of customer data points. For many companies, these health scores are made available via dashboards built internally or through third-party software solutions. These dashboards provide sales professionals, support teams and customer success managers quick access at the time of customer engagement, whether it be positive or negative.

Not everything is indicative of customer health, though, and some elements are more important to keep tabs on than others. The must-have five elements Mereo recommends tracking, each with its own specific weight, add up to an overall customer health status.

  1. Financial Health: Is the customer financially healthy?
  2. Contractual Health: How long have they been a customer? How much have they spent with you over the years?
  3. Relationship Status: Has your customer indicated happiness or displeasure through satisfaction surveys? Is there a known champion that has been there and always promoted your solutions?
  4. Adoption: Is your customer using your solution? This is easier to track for cloud solutions and quite difficult for on-premise term solutions.
  5. Interactions: Is your customer engaged in a current sales process, or have they reached out to customer support recently? How often have they had to open a case?

But keep in mind, these are just some of the common elements used by companies across many industries. This is not an exhaustive list, and each element does not tell a definitive story. Each unique subscription business requires its own unique customer health score criteria.

Customer Clues Beyond Health Scores

We can use the health score as a starting place and an indicator of how the subscription renewal might transpire. However, there are additional indicators that your renewal may not go well, such as:

  • What did the discounting look like for the last deal? Is there going to be a big price increase that they are not expecting?
  • Do you know how broadly the solution has been deployed? Are they adopting and using but not realizing the full value?
  • How critical is your solution to your customer’s day-to-day operations? The more critical, the more likely they are realizing value.
  • Is there a current upgrade or separate sales cycle underway?

The takeaway here is to use a data-driven approach (quantitative) and augment it with a little discovery work across your systems, counterparts and customers (qualitative).

Subscription Business in Action

See the power of a subscription model in practice. Learn how Mereo principals supported Ariba to ramp up revenue by transitioning to a subscription-based model.

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Embracing a Subscription Business Culture That Serves



Remember your first gaming console? For me it was PONG in the late 70s, followed by ATARI 2600 and a few different Nintendo consoles. I would save my money for the next big release and rush to the store to buy a game cartridge, and I would play it over and over until I mastered, completed or grew bored of the game.

Today games like Fortnite are free to acquire and they have no ending. They are continually updated offering new adventures, character skins and accessories that are within app purchases using V-bucks, the in-game currency that can be purchased with your real hard-earned money.

My nine-year-old son wears a “Will Work for V-Bucks” t-shirt, and he literally does work to raise money to buy the next weapon upgrade, to re-skin his character to LeBron James or Arianna Grande. He has subscribed to the Fortnite experience, and he is a repeat and happy buyer.

This experience generation compels us to think differently about our business and the culture needed to serve our customers’ evolving desires. Be proactive and embrace the subscription economy culture now.

A Greater Need to Seek to Serve™

The success of any company switching to a subscription business model hinges on enabling and ensuring customers continue to succeed with a service over time. This is the epitome of Seek to Serve™ and more vital than ever in the subscription economy. It requires more than a business model shift — it requires a complete corporate culture evolution.

It is critical that you evolve your way to thinking. With subscription-based service offerings the barriers to switching are often very low. To grow you must acquire new customers while, more importantly, retaining the ones you already have.

What happens if you do not meet these high expectations? 78% of customers will back out of a purchase due to a poor customer experience and directly put money in the pocket of competitors. Growth for subscription companies comes mostly from current customers. According to McKinsey, if you are not growing at 20% annually as a subscription business, you face a 92% chance of failure.

Yet business cultures cannot change overnight. They take leadership modeling, dedication, adoption and reinforcement. By understanding the core differences in mindset and responsibilities of a subscription business model from those of the past, your teams can come closer to adopting a business culture that will tap into the power of long-term customers.

Subscribe to a culture change to drive your sustainable revenue performance by reading on.

New Subscription Business Model to Inform New Culture

The modern subscription economy business model differs greatly from the software industry of old. Forget about your product or code. This new business model puts your customer at the center of your business and requires building experiences that they continue to help shape. Subscription models are based in value to the customer.

Who delivers that value? Who helps build experiences informed by the customers themselves? Everyone at your organization. This is not just the onus of your customer service or customer success teams. Everyone from front-line sellers to marketing professionals to solution management teams must contribute to building and protecting customer relationships.

Today’s subscription economy culture requires companies to ask and act upon:

  • What do we need to do to build long-term relationships with our customers?
  • How do we shift the focus to outcomes versus ownership?
  • How do we invent new business models that derive more value from our products in the form of subscription services, and thus generate more recurring revenue for the business?

A Shift to Experience-Focused Over Product-Focused

By answering the questions above and integrating the core outcomes into your company culture, your company will start shifting from product-focused to experience-focused.

This requires an organization to change its approach across how it innovates, markets, sells, measures and operates.

Why does this all this matter? Because subscriptions are about the relationship and the value that comes with that relationship over time.

Being successful in this new economy requires that companies actively manage their customers during their engagement relationship to ensure that they are realizing the economic value of their purchase. Why? Because if they do not see the value, customers churn — leaving your service and go somewhere else. Long-term customers, now more than ever, are of the utmost importance to your business.

Embrace the Seek to Serve™ Subscription Culture

So how do you know if you are succeeding in the shift to subscription? As with any business, it is the realization of value creation. According to a recent McKinsey study, of the 20 most used operational metrics for subscription-based software companies, only four metrics had a high correlation to enterprise value/revenue multiples:

  • Annual Recurring Revenue Growth (Revenue/ARR) – reflects the company’s ability to drive topline growth
  • Net Retention Rate (NRR) – shows how effective the company is at driving growth in its existing base while keeping churn low
  • Last Twelve Months (LTM) median payback period – reveals how successful a company is at generating returns on its sales and marketing investment and scaling them as the business grows
  • LTM Free Cash Flow Percentage (FCF)- measures FCF as a percent of revenue and is used by industry watchers to determine value multiples

Embrace a culture of service now to elevate your subscription business model. Contact us for support. And download the free Complete Sales Organization Guide to Seek to Serve, Not to Sell™ today.

 

Learn How to Deliver Maximum Value



Transform Your Value Proposition in the Subscription Economy



The subscription economy is here — there is no denying it. Buyers are demanding the shift from B2B organizations as much as consumers are from B2C.

According to Gartner, “By 2022, more than 80% of software providers will change their primary business model from traditional license and maintenance to subscription models, regardless of whether the software resides on premises or in the cloud.”

While new solution providers are being created within this model, traditional software organizations not born in the cloud are taking the hardest hit. The transition from perpetual licenses to a subscription model is challenging, fraught with peril and affects a number of solution management and marketing aspects, including updating and enabling sellers with:

  • Value Proposition Messaging
  • Packaging and Pricing
  • Deployment Options

While this shift may cause short-term disruption—it also offers long-term sustainable revenue performance. Not only does this subscription model serve buyer expectations better, it also supports budget availability and flexibility (learn more at the end).

How can your product marketing and management teams and overall selling organization prepare for this strategic shift?

Remodel Your Value Proposition

Your front-line salespeople will need reprogramed selling methodology and tools. This starts with the value proposition messaging. Regardless if they are account executive, pre-sales engineer, or renewal sales professional, every salesperson in your organization needs to be able to engage in clear conversations about the differences and added customer value the subscription offering affords.

The value messaging must encompass the clear differences from the customer’s perspective.

Subscription Economy

PRO TIP! Companies that offer a hybrid option can hold a selling advantage over competitors that offer only cloud or only on-premise options. This flexibility allows a company to migrate their offerings over time as well as increased levels of security and flexibility.

Choose Your Deployment Options with Care

Next, with the overwhelming market “push to the cloud,” sellers need to understand deployment options. It is likely your buyer may favor one over another. Know these preferences and reasons.

Subscription Economy

Some buyers may prefer to maintain software on-premises due to a distrust in the cloud and in order to maintain full control, management and security. They might have complex integrations or poor local connectivity. Others might have legacy applications or regulatory requirements.

The cloud may be more attractive to others due to the more expert provider maintaining control and for greater accessibility. There is a lower cost to entry, and it may support customers who do not have core IT competency.

Hybrid deployment options provide the greatest level of flexibility and encompass the best of both worlds. This is increasingly common as a “step towards the cloud.” The shift to the cloud becomes a smooth journey versus what could be a leap into the unknown. This concept of Hybrid has expanded beyond just a mix of on-premises and cloud to include hybrid cloud approaches and multi-cloud approaches—offering the most flexibility to the buyer.

Transform Packaging and Pricing

The last critical element for the subscription economy shift entails packaging and pricing. If this is done wrong from the start, buyers will suffer numerous price adjustments and confusing changes. There are a number of approaches, but here we will examine four.

Freemium subscriptions are free but often provide limited capabilities in exchange for personal details and usage information. The longer-term goal is to convert users to paying customer. We are all familiar with software with this sort of model — think Adobe Acrobat or Dropbox.

Fixed price packaging offers a fixed price for a single product or bundle, a fixed set of features, and a fixed price per term. Amazon Prime is a great example with its annual pre-paid subscription for bundled services. It doesn’t matter how much you consume; you get it all for one standard annual price.

Tiered pricing offers a range of tiers or plans that afford “choice” in terms of packaged capabilities and user counts. The customer has the power to upgrade or downgrade as needs change. Think packaging such as “Standard/Basic,” “Advanced” or “Premium” like Netflix offers.

A usage or metered subscription option is a pay-as-you-go and only for what you use model. There is usually a minimum but no maximum. Pricing often is addressed in tiers with declining cost per usage unit as usage increases. This option leverages some of the tiered model while also depends on actual usage. Think utilities or transaction-based services (telecoms pay-per-minute or storage per gigabyte, ride shares per mile, per API calls for things like incorporating Google maps into your app).

Seek to Serve™ Your Target Buyers

Shifting to a subscription model is not just an industry trend. A subscription-based model will have a profound impact on how you sell and how well you sell. This model offers to serve both your target buyers and your selling organization with greater value.

The value your buyers will gain is emphasized with buying flexibility and accommodating buyer needs. With subscription models, they can expense your solution now either as an operating expense (OpEX) or as a capital expense (CapEx).

Traditionally, perpetual software purchases existed in the realm of CapEx purchases, which demands greater planning, scrutinizing and documentation as an asset. With a subscription cloud or on-premises term subscription, the expense is treated as usage rather than ownership. Therefore, the purchase can be made from a larger operating budget that is more flexible and can be applied against either CapEx or OpEx.

The value your selling organization will realize is the result of better serving your buyers. Your salespeople will have a greater opportunity to deliver more value to your clients — with pricing and packaging that offer greater flexibility than ever before. Over time, this translates to sustainable revenue performance.

See the power of a subscription model in practice. Learn how Mereo principals supported Ariba to ramp up revenue by transitioning to a subscription-based model.

LEARN MORE

 

subscription economy mereo

The Subscription Economy Is Here — and Your Buyers Demand the Shift



My last month’s bank statement puts me at seven … no 14 or more current subscriptions. I’m subscribed to Amazon Prime, Spotify music service, HBOMax, Netflix and Disney Plus TV and movie streaming, Dinnerly meal deliveries, home alarm, bi-monthly nutrition supplement deliveries, education mystery boxes for my son, news outlets, Office365, Adobe Creative Suite and a handful of outdoor magazines. There remain few areas of my life that are free from a recurring payment and dependable, on-demand services at my fingertips. And as a consumer, I wouldn’t want it any other way.

The subscription economy has arrived in full force, across all industries, markets and sectors. No longer are one-time transactions cutting it for a large majority of buyer expectations. And companies not “born” into the subscription model by design are struggling to embrace the shift — and reap the potential rewards.

Yet, the meal delivery and music and entertainment subscriptions that get a chunk of change from me every month face risk. The minute I stop finding any of these valuable, I can cancel. If I see a similar subscription service that promises more value, I can change.

The same risk exists for B2B subscriptions — and this is one of the greatest challenges Mereo has identified for B2B product, sales and marketing teams to consciously and strategically overcome.

How can you enable your salespeople with a subscription solution and differentiated value messaging that communicates and delivers real value to your buyers?

To answer this question, it is important to first understand why this shift is happening in the B2B realm — as well as the potential gains both your B2B organization and its buyers can realize.

Just-Right Conditions Driving a Boom in Subscription Service Offerings — and Buyer Expectations

Three macro forces are responsible for driving the subscription economy:

  1. Digital transformation is changing how products and services are consumed in all industries. The pace of technology — thanks to cloud, mobile and social — is opening up new possibilities for how products are delivered. This has only been further fueled and accelerated by the unique distant engagement requirements as a result of the pandemic.
  2. B2B buyers expecting B2C benefits. As consumers, we increasingly value access and outcomes over ownership. We want the freedom to use services anytime, anywhere. We crave the latest technology, product model or version update. Our expectations have continuously been reset to a new higher level with each new and improved digital experience. B2B buyers are individually, first and foremost, consumers. They get subscriptions. They know what potential value they offer and can spot any holes in yours. And they can also identify value when you accommodate their shifting solution preferences with long-term outcomes-focused commitments.
  3. Accelerated growth. B2B organizations are facing significant growth targets and challenges alike. Past industry powerhouses are being outpaced by “cloud native” companies that were built from the ground-up on these changing customer demands. To scale, they must adapt their offerings to meet customer buying expectations. They must rework their entire business approach to find new ways to reduce costs and improve efficiencies. Market valuation and subsequently market investment has shifted to favor those that are successful in delivering recurring revenue streams from subscription services.

According to recent Gartner research, “By 2022, more than 80% of software providers will change their primary business model from traditional license and maintenance to subscription models, regardless of whether the software resides on premises or in the cloud.”

Buyers Will Subscribe to Value

The “subscription economy” is not just a fancy buzzword or gimmicky pricing play — it is a business model built on the long-term relationship between a seller and a buyer. 

The notion of relationship here is extremely critical — more so than ever before. In the subscription model shift, we are leaving a product-centric, one-time transactional focus behind. We embrace a buyer-centric relationship mindset, one that demands the full embrace of a Seek to Serve, Not to Sell™ strategy.

As a seller, you must continuously keep your buyers’ needs, expectations and current experience feedback in check — and prepare to make adjustments that follow their lead. You have to continue to seek out ways to differentiate your value from your competitors and truly solve your buyers’ problems, as they evolve over time.

In most subscription setups, the buyer holds the power to easily cancel because they no longer are finding value or because they see more value from a competitor. B2B subscription sellers need to strive for “stickiness” by keeping up with current and evolving buyer pains — and solving them for real valuable outcomes.

Subscriptions Deliver the Potential of Equal Value

When done well, a subscription service can and should return value to both buyer and seller. Sellers already should have an expectation to earn the value they deliver.

For many B2B buyers, these gains are often aligned to:

  • Lower barrier to entry
  • Faster time to value
  • Flexible finance options
  • Simplified and predictable expenses
  • Overall improved relationship with the provider

For the B2B seller, the benefits come from:

  • Predictable revenue streams
  • Visibility into future income
  • Improved customer retention
  • Easier cross-selling and upselling
  • Increased long-term customer value

Subscribe to the Unbeatable Seek to Serve™ Approach

Is your B2B organization seeking to shift to a subscription offering — or to infuse long-term relationship value into current offerings? Mereo has the proven tools and frameworks to help your teams shift to a subscription model while:

  • Embracing renewable value by keeping a pulse on your buyer pains and desired gains.
  • Identifying any gaps with an expert objective outside third party.
  • Aligning that value and its differentiated messaging across all departments.
  • Delivering that value to your buyers, for long-term sustainable revenue performance.

Contact us to learn more about our approach and recent winning client outcomes.

 

 



Striking a Sustainable Harmony of Innovation Between Customer- and Market-Driven Forces



Every organization is caught between the tug of customer-driven demands and market-driven forces. And the scary truth is that many leaders ignore one half of the equation, in favor of short-term revenue gains — to overall organizational detriment.

It is so prevalent it has become cliché: Companies typically embrace “The customer is always right” and “It costs more to acquire a new customer than to keep an existing customer” sentiments well. Yet, what if a customer does not or will not represent your overall buyer portfolio? What if the customer your organization hones in on here and now is not indicative of where the overall market is headed — or what tomorrow’s buyers will need? Is your product innovation strategy reliant on your customer’s ability to be innovative?

In other words, is it possible to be too customer-focused?

You can probably already guess the answer: Yes. Many organizations today focus solely on the customers they serve and fail to keep up with the market as a whole — and thus fail to realize sustainable revenue performance.

Should you stop listening to your customers? Absolutely not. Rather you need to carefully balance individual customer requests with a broader market point-of-view. Rethink your customer as a subset of your target market — not the inverse. And get all the closer to striking a balance of a customer- and market-driven harmony that will feed ongoing profitable growth.

The Mereo Formula to Achieving Customer- and Market-Driven Harmony

How can an organization achieve any balance, let alone the right harmonic balance, between customer-needs and market-insights?

When product managers and product marketers have been asked what it means to be customer-driven, we have received a range of responses from solving needs and pains, to listening and engaging. They were focused solely on keeping customers happy with solution enhancements. Not a bad goal.

When the same group was asked what it meant to be market-driven, their answers propelled them forward into scaling the business, growing, diversifying and differentiating solutions. These were longer-term and more-sustainable focuses. They were not dependent on a single customer group, putting one’s “eggs in a single basket.”

Customer-Driven Activities Market-Driven Activities

 

Bespoke Solutioning

Needs/Pains

Customize vs. Configure

Process Improvement

Customer Satisfaction

Responsiveness

Listening

Client Point of View

Thought Leadership

Quality

Flexibility

Engagement

Price-Conscious

Value-Focused

Scale

Growth

Productized Offerings

Configurable vs. Customized

Competitive Intelligence

One-to-Many vs. One-to-One

Resource Optimization

Adaptability

Differentiation

Proactive

Innovation

Industry Engagement

Market Research

Trend Integration

Is this all to say that a market-driven strategy is best? No, not at all. Truthfully, companies can find short-term success by focusing on either a customer-driven or market-driven approach. Both approaches are valuable in and of themselves. Both can drive short-term revenues. Yet, when the other side of the equation is long ignored, risk increases and any external threats can topple successes that had been eked out. Worse yet, you can lose your edge, which can cause your products (and growth) to stagnate.

The best and most successful organizations tap into a harmony of customer- and market-driven strategy. What is this balancing act then? While it differs for each organization, the Mereo customer- and market-driven harmony formula can support your leadership in building formal product management processes to ensure both forces are holding equal attention and weight in organizational decisions and actions.

You must understand your customers as an aggregate and you must be monitoring the external forces in the market such as trends, regulations, competitors and even more unforeseen shifts such as the pandemic we are experiencing now. By marrying market, customer and sales insights with competitive intelligence and portfolio analysis, you can align these inputs against your corporate, solution, go-to-market and financial strategies in a market requirements document.  This provides guidance to your product strategy and roadmap, and can be translated further into a statement of direction that can align and direct your outbound go-to-market teams.

customer and market-driven

Applying this formula to your organization will increase the longer-term sustainability of your business and its revenue — and your employees and shareholders will join your customers in their overall satisfaction.

A Disappearing Tale of Customer- and Market-Driven Harmony

For every successful organization that upheld this harmony, there are dozens that failed to pivot and keep up with changing market dynamics: Blockbuster, Circuit City, your local taxi service, RIM (Blackberry) and Nokia.

In my personal career experience, there sits an early organizational example of market-forces gone ignored that I will never forget; it was loved by those of us who had the privilege to work there. Yet, this organization has been forgotten by many others. This is the story of CompuServe.

For those of you who do not remember — before the internet was really a thing, people went “online” through a service called CompuServe Information Service or CIS for short. CIS provided access to online communities and forums, publications, databases and entertainment. There existed no easy Google or Bing search browser. This was prior to being able to create individual online personas and/or branded digital presences. CIS was around in fact before most households had a computer, let alone knew the joys and powers of high-speed internet.

CIS served the traditional business user who was fine to be known by an obscure numbered username that started out as 70,xxx… and who was okay with paying for online access per minute or per hour. Yet, while the market was evolving and PCs were making their way into more households, web browsers like Netscape were taking shape and the growing user profile switched from businessperson to spouse and child. CIS missed this shift as it continued to deliver excellent service to its business users.

On the other side of the market, AOL focused on the future of the market and the new audiences that it would attract by building entertainment content rich in color and graphics, delivering CDs in mass mailings to homes around the world for easy installation and signup, flipping from hourly charges to unlimited monthly plans, and giving people the opportunity to be known as FancyCat1000@aol.com. AOL’s pulse on market trends enabled them to rapidly surpass CIS in subscribers and value. And ultimately CIS was sold to AOL in 1997 and was slowly decommissioned over the next 12 years. The story for AOL followed a similar path decades later as the internet we know today took over.

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product manager

What solution effectiveness is made of: 5 vital product manager traits



Products and services are the lifeblood of any organization. And the men and women who don the title product manager or product marketing manager must uphold the lofty tasks of creating true value for their target buyers — and delivering on it. Product manager traits matter. It takes a certain person to do this well. And their success, as I have witnessed in my 25+ years of product experience, is often not predicated on typical qualifications such as educational and experience levels or even subject matter expertise. Rather, at the end of the day, for a product or solution manager to be successful, it comes down to what is inside a person’s head and heart — I am talking their:

  • Leadership prowess
  • Communication effectiveness
  • Execution and follow-through
  • Curiosity and growth
  • Drive

Let us explore what makes a successful product manager tick through these 5 product manager traits >>

Leadership prowess

The following product management traits all contribute to what it means to be an effective leader in this role. Yet, leadership looks and feels differently for a product manager.

As a product manager, your leadership is tested constantly as you attempt to align and drive the organization toward a set of goals, whether that be a simple enhancement or a major market launch. You did the work to set the strategy and vision — yet you face hurdles ahead because, while you “own everything” and are often “the one butt to kick” you really “own nothing,” as the key players in your success do not report directly to you.

Knowing this is half the battle because your approach to the team will make or break you.  Respect your cross-functional team members, engage them often, encourage creativity, celebrate your wins — and, most importantly, learn from your failures because you are all in it together.

Communication Effectiveness

Buy-in is at the heart of everything a product manager does. Truly effective communication, though, actually starts with listening. This is vital among product manager traits. Hear out your customers, your market and your constituents inside and outside of your business. Actually listen to what they are saying and let it sink in. Allow these voices to influence the decisions you make moving forward.

Your ability to effectively convey your strategy, vision, priorities, requirements, value propositions and results will determine your internal and external successes. Most important, though, is your ability to communicate in a manner to address and influence change. It is inevitable at some point your timelines will slip, features will drop out or you will completely change direction from a prior plan. Do not wait until you are hard-pressed. Build influence and trust by communicating often, clearly and with your audiences’ interests in mind.

Execution and Follow-Through

People rarely are able to both effectively set strategy and drive execution. Yet these are the onus of a product manager. I often have said to past teams, “Strategy without execution is just a pile of slides — don’t be a pile of slides.” Instead, we would strive to be team #GSD (get stuff done), and, with leadership driving the follow-through, that is exactly what we did.

Unfortunately, today’s business world is fraught with those who can generate ideas or opinions at an alarming rate — yet who fail to follow-through on the actual work, or even know what it takes. The product manager is responsible for meeting or exceeding expectations, yes. But there is a fine line of setting a fantastical goal and a realistic goal. Ask yourself: What really can be achieved? Set clear goals aligned to the strategy. Measure progress. Hold yourself and others accountable to the plan.

Curiosity and Growth

There is no doubt that curiosity leads to personal growth and learning. But it is also a critical component in relationship-building — which is vital as a product manager. It is impossible to have all the answers or to be an expert in everything.

By being curious you seek to understand. Internally, this curiosity conveys to your cross-functional team that you are interested in them, their expertise and their continued growth — simply put, that you value them. Externally, your curiosity shows your customers that you are listening and open to evolving your offerings to support their changing business needs. This in turn builds trust, and relationships deepen.

Yet the language for being curious is not often in use today. So get used to saying phrases that admit you do not, in fact, know everything. Seek to understand by asking “Why?” or “So what?” or “Tell me more…” to elevate your knowledge and your relationships.

Drive

Success is rarely accidental, and this could not be truer for the product manager who “owns everything” yet “owns nothing.” Product managers are often considered “drivers” or type A folks because they generally set high goals, never give up and make sacrifices to ensure their job gets done on time or ahead of schedule. Meeting expectations is never the end goal — a successful product manager aims to exceed them. This all screams accountability, and product managers must also apply this intentionality to holding their cross-functional teams accountable as well.

This unrelenting drive, coupled with the attributes mentioned above, generate exceptional product managers. The risk for all high-achieving product managers, however, is burnout. How can you avoid being the best product manager without suffering this?

  • Do not shoulder it all.
  • Set realistic objectives.
  • Leverage your team.
  • Elevate and realign quickly when plans change for whatever reason.

In reality, sustainable revenue performance banks on more than these five product manager traits. And not every product manager must be exceptional at each. Yet, you need product managers with a mix of these traits on your team. As a product manager, you must embody these values and characteristics. With a good dose of each of these, your solution management strategy will support sustainable revenue performance.


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Solution Management