Category Archives: Marketing

Don’t Let Product Management Turn Into “The Roadmap Guys”

Posted on September 30, 2017 | 3 comments

At many enterprise software companies product management (PM) ends up defaulting into a role that I can’t stand:  The Roadmap Guys*.

Like a restaurant with one item on the menu, the company defaults into ordering one thing from product management:  a roadmap pitch.

  • “The VP of PM is in Boston and Providence this week, can she visit some customers and do a few roadmap presentations?”
  • “Hey, there’s a local user group in NY this week; can PM do a roadmap pitch?”
  • “There’s a big customer in the executive briefing center today; can the PM do a roadmap?”
  • “As part of our sales cycle with prospect X, we’d love to get PM in to discuss the roadmap.”
  • “We’ve got a SAS day with Gartner next week, can PM come in a present the roadmap?”

You hear it all the time.  And I hate it.  Why?

From a sales perspective, roadmap presentations are the anti-sales pitch:  a well organized presentation of all the things your products don’t do.  Great, let’s spend lots of time talking about that.

From a competitive perspective, you’re broadcasting your plans.  If you’re presenting roadmap to every prospect who comes through the briefing center and at every local user group meeting, your competition is going to learn your roadmap, and fast.  Then they can copy it and/or blunt it.

But what irks me the most is what happens from a product management perspective:  you turn PM into “the talking guys” instead of “the listening guys.”  Given enough time, PM starts to view itself as the folks who show up and pitch roadmaps.

But that’s not their job.

PM should be the listening folks, not the talking folks.  Just like sales, PM should remember the adage:  we have two ears and one mouth; use them in proportion.

Wouldn’t the world be a better place if we changed the five previous bullets as follows?

  • “The VP of PM is in Boston and Providence this week, can she visit some customers and observe how people actually use the product?”
  • “Hey, there’s a local user group in NY this week; can PM break off a small focus group to ask customers about how they use the product?”
  • “There’s a big customer in the executive briefing center today; can PM come in and interview them about their impressions on evaluating the product?”
  • “As part of our sales cycle with prospect X, we’d love to get PM in to discuss what specifically they are trying to accomplish and how the product can do that?”
  • “We’ve got a SAS day with Gartner next week, can PM come in and hear from Gartner about what they’re seeing in the market and in their interactions with customers?”

So every time you hear the word “roadmap” in the same sentence as “product management,” stop, pause, and think of a better way to use the PM team.  Sure, there are certainly times when a roadmap presentation is in order.  But don’t default to it.  Keep your PM team listening instead of talking.

# # #

* I’m using “guys” here in a gender-neutral sense like “folks.”

3 Comments

Posted in Management, Marketing, Product, Startups, Uncategorized, VC

Dear Marketing: Stop Putting the Template Ahead of the Story

Posted on June 13, 2017 | 1 comment

I’ve always thought that if marketers wrote newspapers, the famous New York Times headline of August 8, 1974 would have looked like this:

nixon1

Instead of how it actually looked, which was:

pinsdaddy-richard-nixon-resigned-as-us-president-40-years-ago-this-week

What’s the difference?  While both of the above presentations are structured, the newspaper doesn’t let the template get in the way of story.  The newspaper works within the template to tell the story.

I think because marketing departments are so often split between “design people” and “content people,” that (1) templates get over-weighted relative to content and (2) content people get so busy adhering to the template that they forget to tell the story.

Here’s a real, anonymized example:

agf1What’s wrong here?

  • There is a lot of wasted vertical space at the top:  all large font, bolded template items with generous line spacing.
  • The topic section gets lost among the other template items.  Visually, author is as important as topic.
  • There is no storytelling.  There is effectively no headline — “Latest Release of Badguy Product” takes no point-of-view and doesn’t create an angle for a story.
  • The metadata is not reader-first, preferring to remind Charles of his title over providing information on how to contact him.

But there is one, much more serious problem with this:  the claim / rebuttal structure of the document lets the competitor, not the company, control the narrative.

For example, political affiliations aside, consider current events between Trump and Comey.  Like him or not, Trump knows how to control a narrative.  With the claim / rebuttal format, our competitive bulletin would read something like this if adapted to the Trump vs. Comey situation.

Competitive Update:  Team Comey
Trump says:

  • Comey is a coward
  • Comey is a leaker
  • Comey is a liar

But, don’t worry, our competitive team says: 

  • Comey isn’t really a coward, but it is interesting that he released the information through a colleague at Columbia Law School
  • Comey isn’t really a leaker because not all White House conversations can be presumed confidential and logically speaking you can either leak or lie, but you can’t both at the same time.

Great.  What are we talking about?  Whether Comey is a leaker, liar, or coward.  Who’s controlling the narrative?  Not us.

Here’s a better way to approach this document where you rework the header and metadata, add a story to the title, recharacterize each piece of the announcement on first reference (rather than saying it once “their way” and then challenging it), and then providing some broader perspective about what’s happening at the company and how it relates to the Fall17 release.

agf2

This is a very common problem in marketing.  It comes from a lack of storytelling and fill-in-the-template approach to the creation of marketing deliverables.  Avoid it by always remembering to put the story ahead of the template.

Just likes blogs and newspapers do.

1 Comment

Posted in Communications, Marketing

The Role of Professional Services in a SaaS Business

Posted on March 19, 2017 | 16 comments

I love to create reductionist mission statements for various departments in a company.  These are designed to be ultra-compact and potentially provocative.  My two favorite examples thus far:

I like to make them based on real-life situations, e.g., when someone running a department seems confused about the real purpose of their team.

For example, some police-oriented HR departments seem to think their mission is protect employees from management.  Think: “Freeze, you can’t send an email like that; put your hands in the air and step away from the keyboard!”

I think otherwise. If the HR team conceptualizes itself as “helping managers manage,” it will be more positively focused, help deliver better results, and be a better business partner — all while protecting employees from bad managers (after all, mistreating employees is bad management).

Over the past year, I’ve developed one of these pithy mission statements for professional services, also known as consulting, the (typically billable) experts employed by a software company who work with customers on implementations after the sale:

Professional services exists to maximize ARR while not losing money.

Maximizing ARR surprises some people.  Why say that in the context of professional services?  Sales brings in new ARR.  Customer Success (or Customers for Life) is reponsible for the maintenance and expansion of existing ARR.  Where does professional services fit in?  Shouldn’t they exist to drive successful implementations or to achieve services revenue targets?  Yes, but that’s actually secondary to the primary mission.

The point of a SaaS business is to maxmize enterprise value and that value is a function of ARR.  If you could maximize ARR without a professional services team then you wouldn’t have one at all (and some SaaS firms don’t).  But if you’re going to have a professional services team, then they — like everybody else — should be there to maximize ARR.  How does professional services help maximize ARR?  They:

  • Help drive new ARR by supporting sales — for example, working with sales to draft a statement of work and by building confidence that the company can solve the customer’s problem.  If you remember that customers buy “holes, not bits” you’ll know that a SaaS subscription, by itself, doesn’t solve any business problem.  The importance of the consultants who do the solution mapping is paramount.
  • Help preserve/expand existing ARR by supporting the Customer Success (aka, the Customers for Life) team, either by repairing blown implementations or by doing new or expanded implementations at existing customers.  This could entail anything from a “save” to a simple expansion, but either way, professional services is there maximizing ARR.
  • Help do both by enabling the partner ecosystem.  Professional services is key to enabling partners who can both provide quality implementation services for customers and who can extend the vendor’s reach through go-to-market partnering.

Or, as our SVP of Services says, “our role is to make happy customers.”

I prefer to say “maximize ARR without losing money” but we’re very much on the same page.  Let’s finish with the “not losing money” part.  In my opinion,

  • A typical on-premises software vendor drove 25% to 30% gross margins on professional services.  Those were the days of one big one-shot license fees and huge multi-million dollar implementations.  In those days, customers weren’t necessarily too happy but the services team had a strong “make money” aspect to its mission.
  • A typical SaaS vendor has negative 10% to 20% gross margins on services (and sometimes a lot more negative than that).  That’s because some vendors subsidize their ARR with free or heavily discounted services because ARR recurs whereas services do not.

I believe that professional services has real value (e.g., I’ve worked with several amazing services teams) and that if you’re driving 0% to 5% gross margins with such a team that you are already supporting the ARR pool with discounted services (you could be running 25% to 30% margins).  Whether you make 0% or 10% doesn’t much matter — because it won’t to someone valuing your company — but I think it’s a mistake to shoot for the 30% margins of yore as well as a mistake to tolerate -50% margins and completely de-value your services.

16 Comments

Posted in HR, Management, Marketing, SaaS, Startups

Tagged

The Dogshit Bar: A Memorable Market Research Concept

Posted on March 1, 2017 | 4 comments

I can’t tell you the number of times I’ve seen market research that suffers from one key problem.  It goes something like this:

  • What do you think of PRODUCT’s user interface?
  • Do you think PRODUCT should be part of suite or a standalone module?
  • Is the value of PRODUCT best measured per-user or per-bite?
  • Is the PRODUCT’s functionality best delivered as a native application or via a browser?
  • Would you like PRODUCT priced per-user or per-consumption?
  • Rank the importance of features 1-4 in PRODUCT?

The problem is, of course, that you’ve never asked the one question that actually matters — would you buy this product — and are pre-supposing the need for the product and that someone would pay something to fulfill that need.

So try this:  substitute “Dogshit Bar” (i.e., a candy bar made of dog shit) for every instance of PRODUCT in one of your market research surveys and see what happens.  Very quickly, you’ll realize that you’re asking questions equivalent to:

  • Should the Dogshit Bar be delivered in a paper or plastic wrapper?
  • Would you prefer to buy the Dogshit Bar in a 3, 6, or 9 oz size?
  • Should the Dogshit Bar be priced by ounce or some other metric?

So before drilling into all the details that product management can obsess over, step back, and ask some fundamental questions first.

  • Does the product solve a problem faced by your organization?
  • How high a priority is that problem?  (Perhaps ranked against a list of high-level priorities for the buyer.  It’s not enough that it solves a problem, it needs to solve an important problem.)
  • What would be the economic value of solving that problem?  (That is, how much value can this product provide.)
  • Would you be willing to pay for it and, if so, how much?  (Which starts to factor in not just  value but the relative cost of alternative solutions.)

So why do people make this mistake?

I believe there’s some feeling that it’s heretical to ask the basic questions about the startup’s core product or the big company’s new strategic initiatiave that the execs dreamed up at an offsite.  While the execs can dream up new product ideas all day long, there’s one thing they can’t do:  force people to buy them.

That’s why you need to ask the most basic, fundamental questions in market research first, before proceeding on to analyzing packaging, interface, feature trade-offs, platforms, etc.  You can generate lots of data to go analyze about whether people prefer paper or plastic packaging or the 3, 6, or 9 ounce size.  But none of it will matter.  Because no one’s going to buy a Dogshit Bar.

Now, before wrapping this up, we need to be careful of the Bradley Effect in market research, an important phenomenom in live research (as opposed to anonymous polls) and one of several reasons why pollsters generally called Trump vs. Clinton incorrectly in the 2016 Presidential election.

I’ll apply the Bradley Effect to product research as follows:  while there are certain exception categories where people will say they won’t buy something that they will (e.g., pornography), in general:

  • If someone says they won’t buy something, then they won’t
  • If someone says they will buy something, then they might

Why?  Perhaps they’re trying to be nice.  Perhaps they do see some value, but just not enough.  Perhaps there is a social stigma associated with saying no.

I first learned about this phenomenom reading Ogivly on Advertising, a classic marketing text by the father of advertising David Ogilvy.  Early in his career Ogilvy got lucky and learned an important lesson.  While working for George Gallup he was assigned to do polling about a movie entitled Abe Lincoln in Illinois.  While the research determined the movie was going to be a roaring success, the film ended up a flop.  Why?  The participants lied.  After all, who wants to sound unpatriotic and tell a pollster that you won’t go see a movie about Abe Lincoln?  Here’s a picture of Ogilvy doing that research.  Always remember it.

ogilvy

4 Comments

Posted in Marketing, Research, Uncategorized

The Evolution of Marketing Thanks to SaaS

Posted on February 9, 2017 | 4 comments

I was talking with my friend Tracy Eiler, author of Aligned to Achieve, the other day and she showed me a chart that they were using at InsideView to segment customers.  The chart was a quadrant that mapped customers on two dimensions:  renewal rate and retention rate.  The idea was to use the chart to plot customers and then identify patterns (e.g., industries) so marketing could identify the best overall customers in terms of lifetime value as the mechanism for deciding marketing segmentation and targeting.

Here’s what it looked like:

saas-strategic-value

While I think it’s a great chart, what really struck me was the thinking behind it and how that thinking reflects a dramatic evolution in the role of marketing across my career.

  • Back two decades ago when marketing was measured by leads, they focused on how to cost-effectively generate leads, looking at response rates for various campaigns.
  • Back a decade ago when marketing was measured by opportunities (or pipeline), they focused on how to cost-effectively generate opportunities, looking at response and opportunity conversion rates.
  • Today, as more and more marketers are measured by marketing-sourced New ARR, they are focused on cost-effectively generating not just opportunities, but opportunities-that-close, looking all the way through the funnel to close rates.
  • Tomorrow, as more marketers will be measured on the health of the overall ARR pool, they will be focused on cost-effectively generating not just opportunities-that-close but opportunities that turn into the best long-term customers. (This quadrant helps you do just that.)

As a company makes this progression, marketing becomes increasingly strategic, evolving in mentality with each step.

  • Starting with, “what sign will attract the most people?” (Including “Free Beer Here” which has been used at more than one conference.)
  • To “what messages aimed at which targets will attract the kind of people who end up evaluating?”
  • To “who are we really looking to sell to — which people end up buying the most and the most easily – and what messages aimed at which targets will attract them?”
  • To “what are the characteristics of our most successful customers and how can we find more people like them?”

The whole pattern reminds me of the famous Hubspot story where the marketing team was a key part forcing the company to focus on either “Owner Ollie” (the owner of a <10 person business) or “Manager Mary” (a marketer at a 10 to 1000 person business).  For years they had been serving both masters poorly and by focusing on Manager Mary they were able to drive a huge increase in their numbers that enabled cost-effectively scaling the business and propelling them onto a successful IPO.

hubspot

What kind of CMO does any CEO want on their team?  That kind.  The kind worried about the whole business and looking at it holistically and analytically.

4 Comments

Posted in IPO, Management, Marketing, SaaS, Startups, Strategy, VC