LeadershipMessagingPositioningPricingProduct ManagementSaeedSalesSales EngineerStrategyWin/Loss Analysis

How to achieve, lose, regain and maintain Product/Channel fit

by Saeed Khan

In my post – Your most important customer is your sales channel – I wrote about the challenges, particularly in multi-product companies, of ensuring your sales channels are really doing the best job they can in selling your product.

Sales teams (both direct and indirect) have their sales targets and with the exception of teams dedicated to a single product, usually have few or no restrictions WRT how they must achieve their targets. i.e. they rarely have specific subtargets for individual products.

So the question arises:

How can you ensure your sales teams will focus on and sell your product, when they have choices on the products they sell and how they reach their sales targets?

To answer this question, I go back to what the VP of Sales told me in my very first job as a Product Manager, when I asked him about a problem I was having with the sales team. He looked at me and said:

Saeed, always remember that in the end, Sales people are “coin operated”.

I’ve never forgotten those words. At first though, his advice sounds somewhat denigrating. But how I’ve always interpreted it is that their behaviour is determined by how they are measured and compensated — on meeting (and ideally exceeding) their sales targets and how your product fits with their incentive plan!

Achieving Product/Channel fit

There was a time when your sales teams simply sold your product. Yes, they needed sales training. Yes, they called in Product Management when particularly difficult customers needed soothing. Yes, there were the fair share of challenges and lost deals, but overall, the sales teams saw value in selling your product. You had product/channel fit.

But how exactly did you get that fit back then? It was probably a combination of things such as:

  • a new product that addressed a clear customer/market pain point
  • clear positioning and messaging
  • few directly competitive products
  • corporate focus on the market segment the product addressed
  • minimal price pressure from customers or competitors
  • better overall economic conditions
  • and/or it was the only (or main) product in your company

In short, you understood the market, understood the needs of the sales teams, the sales teams were trained and not only understood the value proposition of the product, but also saw it as a means to achieve their sales targets.

And that last point is critical, because it means that your sales teams (or more likely a significant portion of them) will focus efforts on selling it.

Losing Product/Channel Fit

Achieving Product/Channel fit takes time and effort. But losing it can happen very quickly and suddenly. Your product may be delivering on it’s numbers for several quarters and everything looks good. But then you have a mediocre quarter, nothing disastrous, but maybe your product came in just below your quarterly target.

But no worry, the sales funnel looks strong, a couple of deals just slipped out a month or two. There are plenty of healthy prospects in the pipe and this quarter will make up for the small shortfall of the last. But as the quarter progresses, deals aren’t closing as fast as you’d expect, more deals are slipping out or not progressing, and before you know it, the quarter that should have made up for previous losses is a disaster.

This is not simply a bad quarter, but in all likelihood, you’ve lost Product/Channel fit!

Why? Something changed within the last few quarters that caused your sales decline. It probably started before your first weak quarter, but given previous history of good results, you didn’t notice it. And then WHAM!, that disaster quarter hit. And now as you look ahead, the next couple of quarters look very much at risk.

And just to be clear, this is not typically caused by product quality or defects. Those would be noticed very quickly based on your customer support cases. And this is not a case of a poor prospect funnel. You would have noticed that very quickly as well. Nope, from those two perspectives (product quality and lead generation), the world looks rosy.

So what are some reasons for loss of Product/Channel fit? In short, Sales teams have something better to sell and aren’t focusing on your product. e.g.

  • Your company released a new version of a big product and all the corporate (and sales) mindshare is focusing on that
  • There’s a mega-trend happening in the market (e.g. Cloud, Mobile, Social etc.) and your product doesn’t fit well in one of those, so it’s not considered “sexy”
  • Your company acquired a hot company a few quarters back, and now that the sales teams are all ramped up on its products, their focus is there and not on your product
  • While customer demand for your product is still strong, the market segment it’s in is commoditizing. The increased price pressure is a big disincentive for your sales teams
  • While there is demand for your product from potential users, the value proposition is no longer considered strong enough by management or the buyers and your sales teams are focusing on other “higher value” products
  • Your startup was bought by a larger company (hooray!), but now, your product is just one of a portfolio of products and once the honeymoon ended, the large sales force of your new employer left you for the next “big thing”
  • Your channel partners are now getting much better margins from an upstart competitor who suddenly seems to be getting traction

There are lots of reasons for losing product/channel fit, but in most cases, you can, very quickly do the research to understand where the problems lie and propose remedies.

Regaining Product/Channel fit

Once you realize you’ve lot the fit, the step is to find out exactly what happened. And the best people to talk to are people in your sales teams. But do some analysis first. Look to see who is having success with your product. Talk to them first, and understand why. Are they just better informed about your product? Do they position it better? Are they selling it in conjunction with other products? Are there specific verticals or geographies or usage scenarios that help them succeed?

Learn their secrets first, so that you are well armed with success stories, and then talk to those who are struggling with or are not selling your product at all. Talk to them and find out why. For those struggling, is it an education issue, or is it something related to territory? Or are the simply not very good sales people?

And for those who are not selling your product, find out why? Is it not worth their time, or do they not understand it? Maybe they are newer to the company and were not part of the sales training you did for your product.

Next do the same with some channel partners if you sell with an indirect model. Their reasons for success or lack of it may be different than those of your direct sales teams.

Finally, if you don’t do it already, (and many of us don’t), conduct some Win/Loss analysis on customers from the last few quarters. It’s important to do both Win and Loss (and not just Loss) because reasons for winning are not always as cut and dried as you might expect. i.e. it’s not always because the product is fabulous and it delivers tremendous value and will help the customer be successful. šŸ™‚

I guarantee that you’ll learn as much from the Win discussions as you will from the Loss discussions.

As you speak to these people, make sure you probe into specific areas such as pricing, positioning, value proposition, economic and budget realities etc. Look for patterns across the discussions. Pull out the little nuggets of insight that can help re-position or re-price or re-define the value proposition.

Once you’ve collected the data and identified the root cause(s), devise a plan to remedy the situation.

If, for example, a reason for decline in your product sales is due to the sales teams focusing on a new (released or acquired) major product, see if there an attach strategy you can use to ride the train of that major product and be pulled along as part of the deal. i.e. show them how they can “upsize” their deals by adding your product in.

Maintaining Product/Channel fit

Once you’ve regained Product/Channel fit, put some on going activities into place to ensure it doesn’t happen again.

Look at the activities you performed to regain the fit — the conversations you had, the analysis you did etc. Maintaining Product/Channel fit is simply taking those activities and performing them continuously, good quarter or bad.

Here are some suggestions to follow. Every quarter:

  • Regularly validate and revalidate that the sales teams understand the high-value usage scenarios of your product, are positioning it properly, and are speaking to the right people within the prospects’ organizations.
  • Around mid-quarter, contact a few sales reps with opportunities that will likely close that quarter and have a short conversation about the opportunities. Listen to them describe the prospects, the use cases, how they positioned the product etc. and ask them about any challenges they see in closing the business that quarter.
  • If your company holds QBRs (Quarter Business Reviews), make sure you attend them. Try to get on the agenda (even 15-30 minutes is a helpful) to discuss your product, opportunities, challenges etc. That face-time with the sales teams is invaluable
  • Monitor the “No Opp” ratio of opportunities of your product in your SFA system. This is the ratio of valid opportunities that eventually areĀ  changed to No Opportunity (or equivalent) by the sales team. If the ratio is growing or is significantly larger than other products, you may have a problem
  • Monitor the overall time to close for opportunities. i.e. the time from when the opportunity was verified/qualified until it closed (Win/Loss/No Opp). If you see anomalies compared to other products, investigate and find the root cause
  • Keep in regular contact with Sales Consultants and listen to their input about your product. SCs will give very honest and valuable feedback about why your product is not succeeding.

There are many other activities you could do to maintain Product/Channel fit. The objective though is to have an ongoing communication process with your sales channels, identify potential problems early and enact remedies when the problems are small.

To paraphrase a famous quote — continuous vigilance is the price of product success.


P.S. As much as things like product features, requirements, working with Engineering etc. are the center of a lot of discussion on what Product Managers do, it’s this kind of work — ensuring product alignment with sales channelsĀ  via pricing and win/loss analysis, repositioningĀ  etc. — thatĀ  is where PMs can deliver the significant value and impact product success the most.

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