There’s a lot of talk in product management and product development circles about Customer Development.
Customer Development is an iterative process of learning by working closely with potential customers to better understand their needs, and feed that knowledge back into the product development process. As the process moves forward, a clearer picture of the ideal customer emerges, and the findings of the process help refine both the product and the marketing approach.
While I’m not a fan of the actual term “Customer Development” — the process is a logical one and is what is well understood as a core part of what is more generally (and traditionally) called “market validation”. i.e. understanding the profile of your (initial) customers, their needs, wants etc. and ensuring that what you are building maps well to those needs.
And while this process is good for understanding external customers, it’s does nothing to help you understand your internal customers, and in particular, your most important customer OVERALL — your sales channel.
Sales channels are complex
Let’s face it, as much as some of us my begrudge having to deal with certain personality types in sales, without the sales channel (direct or indirect), even the best products will go nowhere.
With the exception of the smallest of companies, with a single product and a small, hungry and dedicated sales team, it’s critical to understand how to effectively leverage your sales teams and partners to maximize revenue for your product. In most companies though, where there is more than one product sell, or with channel partners (e.g. resellers, integrators etc.) where they definitely have multi-product focus, you can’t simply assume they love your product as much as you do and see the bright future and limitless opportunity for it that you do.
Sales finds the path of least resistance (to quota)
Keep in mind that sales people are compensated on selling and hitting or exceeding their sales targets, and they will look for the path of least resistance (or least effort) to do that. And, given the choice, if that path means ignoring your product or your target market and selling something else to someone else, they will do exactly that!
This is not at all a criticism of sales people, but simply a reality of how they are measured and compensated. Having said that, not all sales people or sales channels are alike. Variables such as previous experience, reputation, network of contacts, vertical or industry focus, sales style and strategy, compensation plans, geographical and territory challenges, personal objectives and more come into play.
Do you have product/channel fit?
So think about this. Every time a new release or new product is being defined, how much time is spent early on, in trying to map the best way to deliver this new product (or release) to market? And I’m not talking about a generic launch plan here. But instead asking questions like these:
- How have the channels themselves changed (since the last release) and how will that impact our go-to-market success?
- Do we understand their objectives and challenges when selling this product, and how can we help address them?
- Can we better align our go-to-market plans with their primary focus areas and achieve joint success?
- Do we have to change our approach to our channels — perhaps change our go-to-market strategy — given the changes in the company (or market)?
You’ve probably heard of the term “product/market fit“. It is a term coined(?) by Sean Ellis of Lean Startup fame. It describes state in the early life of a startup or new product, where you’ve identified a set of customers (with common characteristics) that react positively to the proposed product. i.e. would likely buy it.
It takes work to get “product/market fit” and a lot of time and effort can be spent getting to that state. Yet how much time is spent understanding product/channel fit? i.e. to ensure that your various sales channels will react positively to new product (or new release). Do you have answers to questions like those above? Have you analyzed how well your new product will be received by sales? Will it be top of mind with them? Will they push it at the expense of another product they can sell?
The curse of the “shiny new object”
Now you may be wondering if this is really that important? i.e. aren’t sales people paid to sell the company’s products? Haven’t those VARs and SIs been working with your company for years, building up skills and expertise in the product. Why would they not want to take on the newest release?
First of all, no sales process is perfect, and so there is always room to improve how a product is sold. This is just part of good execution. But there is something bigger to consider. It’s all about mindshare.
And here’s a simple example to illustrate. If your company acquired a hot new startup 6 months ago, and your sales teams are now being incented to sell it, and from their perspective it looks like a winner; how do you think that will impact their focus on your product, which seems a lot less shiny and new than it did immediately before the acquisition (say 7 months ago).
The same holds true for any indirect channel partner. They are not static. Their management teams are looking for ways to grow. They are looking at new technologies, new market segments etc. Maybe they also want to resell that new acquisition your company made? Or maybe they are looking at new emerging technologies to invest in. Maybe version 3 of your product doesn’t look like it has the growth potential to meet their targets.
You have to sell to your sales people first
The point is, you have to SELL (and resell) the VALUE of your product to your channels, because they have choices – that path of least resistance — in how they reach their targets. They may not buy your product the same way your customers do, but they definitely have to make an investment in it — and not somewhere else — if they want to learn about it, train their people on it, and take it to their customers/prospects
And that investment — think of it as portfolio management on their part — is regularly under review. And if your product doesn’t have the right (product/channel) fit from their perspective, they may reduce their future investment or remove it altogether.
So, what can you do, to ensure you maintain and in fact, optimize product/channel fit?
I’ll talk about that next week. 🙂
Saeed
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