CEO's Commentary on Sales Intelligence

Ken Allred's advice for sales, marketing & product management success

The More, the Merrier: Stakeholder-centric Win Loss (Part Three)

by , March 18, 2011


In recent blog posts (part one and part two), I’ve discussed Primary Intelligence’s adoption of a program model that is focused on a larger set of an organization’s stakeholders, rather than a single, traditional project manager/gatekeeper. In this model, we include all of an organization’s relevant individuals in the various stages of the win loss analysis program, including determining program objectives, gathering information, setting priorities, and utilizing results. This model not only improves the speed in which a win loss program is implemented and executed but also increases the relevance of the data and the likelihood that people will act upon the data.

Many companies, however, are not used to this approach and show concern when we suggest it to them. A dangerous tendency to avoid in your win loss analysis program is the “Mine!” attitude, or gatekeeper mentality. If you guardedly dole out the intelligence from the program and “protect” people from what buyers are telling you—you are hurting your program, regardless of your reasons for doing so. If you act as the gatekeeper to the intelligence because you view your win loss analysis program as “job security,” you are damaging your opportunity for career advancement. Over the years, I have seen the promotion of many individuals who ran their programs the right way, and they pointed to their win loss programs as a key catalyst in their advancement.

Two of the questions we get most often are ‘How do we identify which people in our organization should be included in the program’ and ‘How do we get that initial ‘buy-in’ from them?’ In this post, I’ll discuss some methods for identifying key stakeholders and some things you should be aware of in the process. In my next post, I’ll address the most effective practices our clients have used when approaching key stakeholders and getting their “buy-in.”

Who should you include?

A short answer to this would be “everyone who would benefit from the information,” but, in some cases, it is hard to know who those individuals actually are. Depending on your organization’s structure and the specific goals of the win loss program, your list of stakeholders could range from a few individuals to several hundred.

We have found that the best way to identify your initial stakeholders is to ask these three questions:

  1. Does this person have access to enough information to identify the most important concerns for their department or for the organization as a whole?
  2. Can these concerns be addressed or informed by data gathered from your buyers?
  3. Is this person capable of making meaningful changes in the organization’s strategies, products, or processes based on this data?

If the answer to these three questions is yes, then that individual would probably make a good stakeholder in your win loss program. After spending more than a decade helping hundreds of clients with their win loss analysis programs, we have learned that there are at least six primary roles within an organization that almost always meet these criteria. However, other roles could certainly be included as well—the key is to keep an open mind about the breadth of benefits a win loss program can provide.

The six roles that we identify as key stakeholders for a win loss program include the following (not necessarily listed in order of importance):

  1. CEO or product division head (the person with P&L responsibility for the product or solution)
  2. Product marketing leader
  3. Product management leader
  4. Sales leader
  5. Competitive intelligence leader
  6. Sales representative

Organizations that integrate (the key word here is “integrate”) all of these roles in their win loss analysis programs will experience the most return on their investment—the kinds of returns that would make any CEO giddy with anticipation. I have personally seen this time and again. However, this type of win loss analysis program is the exception and most certainly not the rule. Only 20 to 30% of companies implement systematic win loss analysis programs, and, in my experience, less than 10% of those integrate the key stakeholders identified above in their win loss analysis programs.

Companies that refuse to include the roles above will almost never experience the same level of return on their investment as companies who do. (I would go so far as to say you will never experience the same ROI, but I tend to get into trouble when I use absolutes like that). Those companies will still derive great value from their program, but they will be missing an enormous opportunity.

Seeing so much evidence has convinced me that including all stakeholders is critical to a program’s success. Because I know what it can do for clients and because I want to further motivate clients to fully participate, we are offering a substantial discount to clients that are willing to set up their win loss programs and include the six key stakeholders identified above from the beginning. It’s that important.

In the next post on this subject I’ll go over how to get stakeholder “buy-in” and get your stakeholders excited about being a part of your win loss program.

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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Eight Factors You Must Understand to Improve Response Rates

by , March 11, 2011


Performing win loss analysis research can be a challenge under the best of circumstances. The common challenges win loss analysis practitioners face every day include:

  1. Finding recent won and lost deals
  2. Selecting the won and lost opportunities to review
  3. Reassuring the sales team about speaking with their prospects (assuming you aren’t having sales reps perform the actual review—don’t do this!)
  4. Initiating contact with a busy executive (your buyer)
  5. Convincing the executive to spend 20 to 30 minutes with you to review their purchase decision

Given the limited sample size you are left with after navigating these challenges it is critical that you understand what your baseline response rates should be and the factors that will have a negative or positive impact on your response rates.

Deal Size

This is probably the single biggest factor we have seen that impacts win loss analysis response rates. The larger the opportunity size the greater the participation rates you can expect. Our experience shows that as deal sizes grow north of $1M you should experience response rates for wins of close to 100%. For losses we find nearly the same response rate, but you will get the occasional buyer(s) that indicates they won’t participate. For deal sizes less than $100K, we find that response rates definitely drop. We would expect participation rates of at least 30 to 50% for your wins and 20 to 40% for your losses (these are “baseline” participation rates as implementing certain best practices can dramatically improve these rates).

Nature of the Evaluation

Another factor that negatively impact your response rates are whether or not a true evaluation occurred (e.g. non-competitive renewal) and if you were seriously considered as a finalist. In addition, if your product is perceived as a commodity versus a differentiated solution, you will see your response rates suffer.

Evaluation Length and Date

If the evaluation took place more than six to 12 months ago, the buyer will not only be less willing to participate, but will have a hard time remember specific details about the engagement. Ideally, interviews should be conducted as soon after the purchase as possible, which can be done effectively if the sales group positions the interview process as the final part of their sales engagement with the buyer, and there is a proper process in place for submitting the details of the opportunity with the team conducting the win loss program.

The evaluation length can also influence response rates because buyers are more willing to take the time to provide feedback when the sales team has spent a significant amount of time working on the deal, regardless of the outcome. Typically, sales cycles that run between three months to a year have a higher response rate than evaluations that took only a few weeks. This also relates to the nature of the evaluation mentioned above, because the more complex the product or evaluation process, the longer it takes to close.

Messaging

Three key areas of communication need to be addressed in order to enable higher participation rates. First, as mentioned above, having sales leadership and reps on board with the process can make a big difference in your response rates as they can help in scheduling the interview and communicating with the buyer that a win or loss review will be done—setting expectations when they first start engaging with prospects that an interview will be conducted, regardless of the outcome.

Second, it is important to properly communicate your intent and the purpose of the interview with the buyers. If buyers feel the information will be used to improve your products, services, and relationships, they will be significantly more likely to participate.

Finally, once you have support from sales and your messaging is in order, how you approach the buyers to schedule an interview can be just as crucial. It is important to have a consistent, professional, and established method of contact. Make sure your approach includes proper follow-up and determines when a contact should no longer be approached about participating.

Geography

We have found that you can be successful around the world performing win loss interviews, but your response rates will definitely suffer in the Asia-Pac area, given cultural preferences for not disclosing sensitive information or speaking to people without a formal introduction. Cut your expected response rates in half for this area of the world. If the person speaks English, they may be more likely to do the interview, but you can’t really rely on this. Other areas of the world are generally similar to North America with a few minor exceptions (Spain, Italy and sometimes France can be difficult).

Conducting interviews with the use of a translator can be more cumbersome and will typically take longer, but this is a good option for buyers that feel they could best express their answers in their native tongue.

Titles

The title of the buyer can impact response rates as well. The higher up the executive ladder you go the tougher it becomes to secure an interview and the more important your approach and messaging become. It also becomes increasingly important to schedule your interviews, rather than rely on catching the buyer and conducting an interview “on the fly.”

Don’t, however, assume response rates will always be higher with C-level executives. Buyers much lower in the corporate ladder may also be unwilling to participate because they are unfamiliar with debriefing processes, and so deserve equal attention when you are creating the messaging.

Roles can also have an impact on participation rates. Buyers in an IT role, for example, are typically more willing to provide feedback than buyers in the healthcare space, simply by nature of the fact that healthcare buyers are typically not working at a desk or are less accessible by phone.

The title or role of the person doing the interview can also influence participation rates. For example, sales should never be the ones actually conducting the win or loss interview. In fact, you’ll see response rates go down and misinformation go up if you have sales performing win loss analysis interviews. If you’re not having an objective third party do your loss interviews, you’ll want to make sure that you communicate very clearly that you will not be attempting to “re-sell” the buyer, otherwise your loss response rates will suffer.

Industry

The buyers’ industry could also impact response rates, given that in some areas—financial services, for example—transparency in the buying process is not as customary as other segments, such as manufacturing. Response rates will be pretty similar across the public and private sectors with the exception being when state law or policy prevents the buyer from doing the interview. In our experience, however, the majority of public sector entities are able to participate.

Survey Fatigue

Have you or others in your company been hitting the same group of buyers up for surveys or other research initiatives in the recent past? If so, this will drastically reduce the probability of them agreeing to do an interview with you.

The length of the interview you are requesting is also a consideration. In our experience, most buyers are willing to commit to about 30 minutes on the phone, and around 15 minutes with an online survey. Buyers with strong opinions or for complex sales processes will usually agree to more time once you reach 30 minutes, but others tend to grow weary of questions and stop providing meaningful information.

Real World Examples

A client in the financial services industry was looking to reach out to US-based C-level decision makers primarily in the technology, manufacturing, and healthcare space. The telephone interviews ranged from 20 to 30 minutes.

The client established qualification criteria for the program, requiring deals to be competitive (as defined by the sales rep in their CRM tool), more than $100k (usually averaged $250k), and have a decision date between 30 to 90 days ago. On average, the client’s sales cycle lasted two months and was for a differentiated service.

Prior to submitting opportunities to Primary Intelligence, the client’s marketing and competitive intelligence teams sent an email to the buyer explaining that the interview was intended to improve on the company’s sales efforts and product offerings. Buyers were called daily for four to five weeks, with a voice mail and email sent only once a week. After the interview was conducted, the client sent a follow-up thank you message to the buyer.

The client is currently enjoying an 84% participation rate and the buyers that do decline to participate are most frequently citing time constraints as the reason.

On the other end of the spectrum another client refused to acknowledge the key factors identified above and declined to implement the recommended best practices resulting in a win loss program with participation rates that were less than 10%.

Acknowledging and understanding these factors and how they will impact your program’s participation rates is the first step you need to take in order to improve your program’s response rates. In addition to considering these factors for your Win Loss Analysis programs, several initiatives can greatly increase response rates if you are targeting a group that is typically more difficult to interview. You can find additional information in my blog post “Double Response Rates for Your Win Loss Analysis Program.”

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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The More, the Merrier: Stakeholder-centric Win Loss Analysis (Part Two)

by , November 24, 2010


In my last blog post, I began discussing how Primary Intelligence decided to move away from a traditional “gatekeeper” model of delivering and disseminating win loss information and toward one that is more focused on a larger set of an organization’s stakeholders which can include key executives, product marketing, product management, sales management and the sellers themselves. In this new model, all relevant individuals in the organization are included, not only in determining program objectives but also as active participants in the ongoing development and execution of the program.

As a third-party provider of win loss analysis programs, there are obvious reasons why we love using this approach. However, there are just as many (if not more) reasons why the organization itself would want to do so. As you’ll see, there are a myriad of benefits for including a greater portion of stakeholders into your win loss program. Here are just a few:

Faster implementation & reduced downtime risk

Juggling a Win Loss Analysis ProgramIt can be extremely difficult to manage a win loss analysis program on your own, especially in a large organization. Information to run the program properly needs to come from numerous different sources—recent sales opportunities to study will need to come from sales or sales support, relevant product features to study will need to come from product management, competitors to focus on may need to come from sales management or product marketing, key strategic issues or priorities will need to come from executives, etc. Experience has shown us that if a single project manager at the organization tries to gather and maintain this information on their own, it takes approximately three times longer for the win loss program to get started than those programs where the relevant stakeholders participate directly in the implementation of the program.

In addition, when only one person is responsible for the win loss program, it introduces much more risk that the program will experience downtime as the project manager struggles to keep a consistent flow of sales opportunities to study while managing all of the other moving parts of a win loss program. However, when key executives and sales management stakeholders are involved it is much easier to keep a steady flow of the right opportunities to study and ensures that the program doesn’t experience downtime.

Increased relevance of findings

As we will discuss in more detail in an upcoming post, one of the keys of a successful stakeholder-centric win loss program is ensuring that you solicit questions, concerns and priorities from your stakeholders on an ongoing basis. In this way, you do not have to “guess” what is currently important to your stakeholders and sales representatives—you should solicit these individuals’ key concerns and priorities directly from the individuals themselves. Also, since your stakeholders were involved in the implementation of the program and have been fully briefed about the scope, methodologies, and objectives of the win loss program, there is less chance of receiving unreasonable or unachievable requests. Instead, you’ll be able to gather win loss data that is both obtainable, relevant and, most importantly, actionable.

Greater adaptability in the program

In addition to having more relevant data, programs with high stakeholder involvement also tend to be more agile than those developed by a single project manager or small project team. For instance, we encourage stakeholders in our win loss programs to periodically submit any current concerns or questions that could be answered, or priorities that would be applicable to the win loss program. In this way, the win loss interview or the types of sales opportunities studied can be adjusted on demand to better answer the concerns the stakeholders are experiencing right now. This transforms the win loss program from being a static, project-driven procedure to being a dynamic program that adapts to your organization’s changing needs and objectives.

Easier dissemination of information

By involving stakeholders early in the process, you can ensure that the members of your organization who will most benefit from the information you gather will actually receive it. This begins from the very start of the process, when stakeholders are made aware that the findings will be forthcoming—no more cases of “I wasn’t even aware that we had this kind of information!”

When win loss data starts becoming available, these informed stakeholders will be able to use it immediately without the project manager having to explain the entire win loss process and when/where the data was gathered. In other words, the win loss data can become “real-time” with no lengthy training or ramp-up time when the data become available. This is especially true if the organization uses technology such as dashboards or information portals to make the win loss analysis findings immediately accessible.

Increased opportunity for future funding

Regardless of what department you are a part of, it is important that your win loss efforts are valuable to your organization and that your program receives the funding it will require in the future. By involving key stakeholders, you will dramatically increase the opportunity for the benefits of the program to gain organizational visibility and with it, an increased chance for future financial backing. In programs where the win loss information is freely shared between stakeholders, it is not uncommon for us to see another department begin to fund a win loss program if the current sponsor cannot include it in its budget. Stakeholder involvement ensures that the win loss program is an organization-wide enterprise, not just a departmental one, and that the company as a whole will receive value from it.

In my next post, I’ll go over some of the best practices we have discovered for identifying key stakeholders for your win loss analysis program.

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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The More, the Merrier: Stakeholder-centric Win Loss Analysis (Part One)

by , November 23, 2010


Like most people, every so often I get in one of those moods to just sit back and reminisce. I was thinking today about how the end product of the research we do here at Primary Intelligence (our deliverables) have changed and evolved over the years, and what drove those changes. At first, we started off producing very traditional reports that contained extensive charts and tables with pages and pages of explanatory text, additional analysis, and recommendations, delivered as a PDF or MS Word document to the point of contact for our client. These reports were informative, comprehensive, professional in design and execution . . . and usually underutilized.

Top Secret Win Loss Report!In fact, we often found—to our horror—that the reports we sent to our clients would never get past our point of contact.  At best, the point of contact would take the data and analysis we provided, reconstruct it, and then disseminate small parts of it to those who they thought might find it useful. At worst, the information wouldn’t be distributed at all, as if the point of contact wasn’t interested in using the intelligence, but instead just wanted to collect intelligence, like it was a  stamp or a butterfly.  In some extreme cases, the individuals at the company who could most use the information (executives, sales managers, marketing managers, product management, sales representatives, etc.) didn’t even know we were doing win loss analysis for them.

These revelations were a definite wake-up call and emphasized the vital importance of including all relevant stakeholders in a win loss analysis program as early as you can in the program.  Even in the best of cases, where our point of contact would pass information along to others in the organization, those stakeholders were only the recipients of information—they weren’t involved in the process of uncovering the best win loss intelligence, or market evidence to meet their needs.

We quickly realized that it wasn’t just our deliverable that was the problem; it was how we were envisioning our client. We were looking at the client as a single entity (with the point of contact as its representative), rather than as a collection of diverse stakeholders, all with their own concerns, needs, priorities, and agendas. To reverse an old saying, we were too busy looking at the forest and not taking time to look at the trees.

To make sure this scenario never happens again, we have worked diligently to refine our methodologies, our client communication, our internal and external tools, and all of our deliverables to reflect a “stakeholder-centric” perspective. In this approach, all relevant individuals in the organization—whether you call them stakeholders, personas, influencers, or agents—are included, not only in determining program objectives but also as active participants in the ongoing development and execution of the program. While it does sometimes resemble a juggling act, this approach allows for a more dynamic win loss program that can adapt to changing organizational needs along multiple dimensions, as well as promote better dissemination of information and adoption of changes based on the findings.

Since this is an involved process, I will be devoting my next few blog posts to go into more detail about how to implement a stakeholder-centric approach to your win loss program and why this approach could be beneficial for you. Some of the points I hope to cover include:

  1. The benefits of a stakeholder-centric approach
  2. Identifying appropriate stakeholders in your organization
  3. Approaching stakeholders in your organization
  4. How to include stakeholders in the win loss process
  5. Developing deliverables for a diverse stakeholder audience
  6. Addressing potential concerns from potential stakeholders

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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Surveys and Confidence and Errors! Oh, my!

by , March 26, 2010


How many data points do you really need?

One of the common questions I am asked when discussing our win loss analysis offerings with companies is, “How many deals do I need to analyze before I can start using the data?” In the past, my response has always been that you will get value from the very first win, loss, or no decision that you analyze. However, because statistics teaches us about minimum confidence levels, confidence intervals, and margins of error, people often struggle with the idea that they can start leveraging the data from their win loss program from the very first data point.

Get away from the “survey” mindset

By just listening to the terminology that many executives use, it is obvious that many initially base their vision of a win loss program on their prior knowledge of market research or political polls. For instance, the term “survey” is often used to describe what is actually an in-depth “interview”. Unfortunately, this market research-based mindset often diminishes the usefulness of a win loss program and gives the false impression that the program will need hundreds (or even thousands) of data points to be accurate or useful.

Certainly, if you were to use a win loss program to try to determine the general buying habits of your buyers (or the populace as a whole), you would want to interview a large number of random customers in order to achieve a representative sample and a high level of statistical confidence. However, working with hundreds of companies over the past ten years has shown that the most successful win loss analysis programs do not try to cast such a wide net. Instead, they act more like a laser pointer that illuminates very specific information about very specific issues and questions. In other words, to get the most out of your win loss program, it should not be seen as a survey tool (which simply gathers information), but rather a decision-making tool and an early warning tool.

If you think that you can’t get value from your win loss program, or if you believe you can’t begin making decisions based on your win loss data until you achieve a statistically significant number of data points, you risk missing as much as 75 percent of the potential ROI you could achieve with your win loss analysis program. The key here is in understanding how and when to use the intelligence you are gathering through your win loss analysis.

The decisions executives and managers make

To determine how many interviews are needed for a win loss program to be effective in helping you with your decisions, it is important to understand the kinds of decisions you make in your organization and how win loss analysis can help you make better decisions. Professor Robert A. Harris, in his VirtualSalt blog, outlines three major types of decisions that individuals and organizations make: strategic, tactical, and operational.

Strategic decisions are those that determine the overall direction of an enterprise, product, or department over the long term. They also tend to direct and control an organization’s resources. Strategic decisions involve a high degree of uncertainty due to the scope and time frames usually attached to these types of decisions. Real-world examples of win loss analysis data helping clients make better strategic decisions include:

  1. Analyzing competitive losses indicates that buyers want a vendor with strong off-shore capabilities in two specific countries
  2. Competitive losses point to buyers having issues with the key contractual terms the client requires of new customers
  3. Buyers in both wins and losses describe a specific set of needs that aren’t currently being addressed in the market and warrant the development of a new product

Tactical decisions are used to help support or achieve strategic decisions. In other words, tactical decisions are made to help bring about the results that are envisioned in the organization’s overall strategy. As such, they tend to be more immediate than strategic decisions, and can be made at both the managerial and executive level, whereas strategic decisions are almost exclusively determined by executives. Real-world examples of win loss program data that led to clients making tactical decisions include:

  1. Competitive wins indicate that a key factor in buyers’ decisions was the presence of superior sales engineer support
  2. Buyers in competitive wins talked about specific sales messaging and sales collateral that helped them make their decision, while buyers in lost opportunities did not reference these things
  3. Buyers in losses cited over-confidence of their sales representatives and disparaging the competition as key reasons for non-selection

Operational decisions are everyday choices used to support tactical and strategic decisions. They help to ensure that daily operations go smoothly and that the tactical decisions are implemented. As the name indicates, these are usually made by managers, although they can also be made by executives in some cases. Examples of win loss program intelligence helping clients make operational decisions include:

  1. A buyer in a lost opportunity indicates that their sales representative did a very poor job in presenting the solution and did not seem to really understand how their product would solve the buyer’s problems
  2. A buyer in a won opportunity indicates that they were having trouble with communication and it was having a negative impact on their decision satisfaction
  3. A buyer in what the client thought was a lost opportunity indicates that they are still evaluating solutions and that they would like to hear from the client (this situation happens more often than you think)
  4. A buyer in a lost opportunity indicates that they didn’t select the client primarily due to a product feature the buyer thought was missing, but the client’s product actually had the feature the buyer wanted

The number of data points needed to support accurate decision-making increases as you move from operational (which is often immediate and one data point can be sufficient) to strategic, which may require a large amount of information to get a clear picture of the entire situation. For instance, deciding which paper supplier to use for your direct mail campaign (an operational decision) would probably not require you to interview clients on their preferences, but if you wanted to change the focus of your company from services to software (a strategic decision), it would be in your best interest to interview a representative number of your current clients to determine how they would react to such a change.

Win loss as a decision-making and decision support tool

From my experience over the last ten years, I have found that win loss analysis provides the most benefit at the tactical and operational level, although, certainly, it does provide tremendous insight at the strategic level as well. It just takes a little more time before you can start to lean on your win loss program when making those long-term strategic decisions.

A few months ago, I asked myself the question, “On average, how many potential operational decisions are presented to our clients in a typical win, loss, or no decision review?” In other words, how many opportunities for potential change (or no change) will a client be able to identify in reading a profile of a won or lost deal? I began a subjective, ad-hoc analysis to figure this out and help our clients understand the potential value of each completed opportunity analysis. Based on my analysis to date, for each win, loss, or no decision interview performed, you can expect to identify an average of ten operational or tactical decisions that can be acted upon.

When you consider that each analysis is going to help you make an average of ten operational or tactical decisions, it becomes clear very quickly that you can realize great value from the very first interview of your win loss program. Just how much value does each of these potential decisions represent? Let’s look at an example: one of the most common operational decisions identified in win loss reviews are sales weaknesses for an individual sales representative that can be immediately addressed through focused training and/or coaching. If this training can help that sales representative avoid making the same mistakes in future opportunities, their individual win rate will improve. The impact of this one decision to help a sales representative with an area of weakness identified by a buyer could be in the millions of dollars, depending on the size of your sales deals.

If done correctly, every win loss interview performed will net key, actionable intelligence in such areas as:

  • What business needs are your buyers trying to solve?
  • What could you do to better serve your buyers’ needs?
  • What is the character and reputation of your company in the eyes of your buyers?
  • How well do your sales teams communicate your value proposition?
  • What are the strengths and weaknesses of your products?
  • What are the strengths and weaknesses of your competitors’ products?
  • How are your costs perceived in relation to those of the competition?

Last year, when I was reviewing some interviews we had done with our own buyers, I saw an issue emerge that definitely led to a better tactical decision. One of our respondents commented that their communication with Primary Intelligence was almost entirely with the salesperson and that they did not have sufficient contact with the Account Consultant who would be handling their program.  Since one of our strategic goals is to be a trusted consultant to our clients rather than just a provider of data, I realized that this was a significant issue. After getting the same feedback in two other interviews, I determined that this was not an isolated case and made the tactical decision to involve our Account Consultants and other subject matter experts early in the sales process. The results have been good, with our clients coming out of the sales process more informed and more committed to their win loss programs than we have seen in the past. This tactical decision was made based on three data points, but would have been entirely missed if we had not been performing win loss reviews on our own opportunities.

So, how many data points do you need?

The case I just described did not require many interviews or data points at all for the win loss analysis to have a positive impact—in fact, it only took one to begin the decision process. This example illustrates what we commonly see working with hundreds of clients. You can and will receive value from your win loss program from the very first opportunity that you analyze. And as you add more data points, you will receive further validation and discover important, new insights.

The point is this: since win loss analysis is a dynamic process, it can and should focus on those issues that are most important to you and your buyers. This means that, unlike a static survey, fewer data points are needed in a win loss analysis to reach the insights you need to make better tactical and operational decisions that will help you achieve your current strategic goals and overall success.

It would be a serious error to believe that you need to wait until you have a “sufficient number” of data points before you can realize value in your win loss program. Don’t make this mistake; begin analyzing and using your win loss data from your very first buyer interview and you will begin seeing returns much more quickly.

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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Increasing Sales with Buyer Personas

by , October 1, 2009


Buyer Personas based on Win Loss Analysis Data

Buyer Personas

Pragmatic Marketings Jim Foxworthy asked me recently, Is our objective in Win/Loss to learn what to build next, or to learn how to sell more of what we have already built?

We both agreed that win loss programs should be addressing both types of opportunities. However, more often than not, I see win loss programs focused more on what to build next rather than how to sell more of what they already have.

Jim went on to ask, Sales organizations obsess about their selling process (as they should), but win loss analysis keeps a team current to any changes in the BUYING process. And if you know the Buyer Persona and the steps they take to buy, wouldnt you want to mirror that to how you sell?

In recent product management discussions on Twitter, a few product managers commented that personas are usually an ineffective waste of time. This generated some interesting comments and in the discussion Gunjan commented that personas are just assumptions and hence dangerous unless real buyers and users help you prepare them and verify them.

Keep in mind that Buyer Personas are FOR sales primarily. Yes, they can be great tools in helping us make product-related decisions, but there is a tremendous need for accurate buyer personas in the sales process. Consider the following research observations from CSO Insights 2009 research:

  1. 50.6% of organizations agree that they need improvement in understanding where they should be focusing their selling efforts.
  2. Only 9.1% of organizations report that they are exceeding expectations when it comes to understanding which accounts to focus selling efforts on.
  3. More than 40% (41.2%) of sales representatives are not making quota.
  4. 61.5% of sales revenue is generated by top 20% of sales reps.
  5. 27% of organizations report that analyzing their customers buying process was a top sales effectiveness initiative.
  6. 20% of organizations report that revising their sales tools to match buyer needs was a top sales effectiveness initiative.

We can infer from the data above that there is a staggering need for accurate buyer personas based on real-world win loss data. In fact, we recently helped a customer uncover an astonishing revelation about their actual buyers (they have agreed to let me share this anonymously). They indicated that they targeted two key buyers in accounts they were selling to and that these were their primary buyers:

  1. C-level executives
  2. Sales leaders

With this information in hand, we analyzed their most recent 50 competitive wins. What we found shocked them, but uncovered a considerable opportunity to improve their sales effectiveness through the creation and implementation of accurate buyer personas.

When we analyzed their deals, we found that only 40% of their confirmed buyers fell in the two categories of buyer personas that they had previously identified (C-level and Sales Execs). The other 60% of their buyers fell into two other key buyer roles, with one of those roles making up nearly 40% of all of their actual buyers (as much as the other two roles they had identified as their primary buyers!).

Corner Pocket ShotThis is a lot like shooting for the corner pocket in pool, only to have your ball bounce around the table and unexpectedly go in the side-pocket. Youre pleased with the result, but the result occurred more from luck than skill. The opportunity for this customer was hugethey could create buyer personas for the newly identified buyers and train the sales force on how to effectively target these two additional buyer types.

This is just one example of how your win loss analysis program can help you build and/or validate conclusive buyer personas. There are numerous other key areas where you can leverage your win loss program to create compelling buyer personas that will not only help you with product-related decisions, but will resonate with your sales force and improve their sales effectiveness.

There are twelve key buyer persona elements that will help a sales person target the right people, align your product’s benefits with the buyer’s needs and help them do these things using your buyer’s language. Each of these elements can be found in your win loss data. These elements are:

  1. Buyers key responsibilities
  2. Buyers demographics (years of experience, typical team size, who they report to, etc.)
  3. Buyers organizational demographics (employees, revenue, industry, growth rates, etc.)
  4. Buyers description of their problems and needs (the problems you can solve)
  5. Your buyers buying process, in their words
  6. Understanding the time it takes your buyers to make decisions (your sales cycle)
  7. Buyers perceptions and expectations around the price of your solution
  8. What your buyers value most about your solution and why
  9. What your buyers identify as the weaknesses of your solution
  10. What your buyers see as missing from your solution
  11. Sales best practices (from the buyers perspective)
  12. Any additional potential buyer personas

The real power in this best practice is that it will improve the probability that you can align all of your resources (product development, management, marketing and sales) to focus on the right buyers, with the right problems, in the right accounts.

LearnSo how do these things help a sales representative? The best sales people in an organization are going to have a pretty solid understanding of this information already, but the other 80% of the sales force can get a tremendous amount of value from buyer personas built with your win loss data. A well written and researched buyer persona can undoubtedly help a sales person in both their prospecting efforts and with the deals theyre actively pursuing. Specifically, this information can:

  1. Help the sales rep target the right peoplethe appropriate buyers of your solution
  2. Improve the sales rep’s ability to uncover buyer problems and needs
  3. Boost the sales rep’s ability to speak the language of the buyer more effectively
  4. Improve the sales rep’s understanding of how your product helps these buyers
  5. Help the sales rep identify other individuals they should be selling to
  6. Enhance the sales rep’s knowledge of your buyers’ buying processes (more on this in a future blog post)
  7. Increase the effectiveness of sales strategies by refining them to align with what your buyers value most

Buyer personas that are based on data from your win loss analysis program will have much more credibility with your sales force (and the rest of your organization). Make sure that you reference the deals that you used to build the personas.

So how does all of this lead to more sales? If you can help 60% to 80% of your sales force better understand your confirmed buyers, whats most important to your buyers, and how they buy, could having this information help an under-performing sales representative win a deal they would have lost this year? Could it help them win two more deals? Run the numbers on the impact you could have on sales if your win loss analysis-based buyer personas helped sales representatives struggling with their quota close just one additional deal this year. It is a pretty powerful ROI story.

So what do you need to do to get started?

In order to build a good foundation for accurate buyer personas, we recommend, at a minimum, talking to buyers of the last 20 deals you won or lost. Keep in mind that it is important that you try to get an equal weighting of the deals where you won and where you lost. In preparing your win loss interview instrument, be sure that you incorporate the 12 key buyer persona elements Ive identified above.

If you would like to see an example of a buyer persona written using our win loss analysis data, drop me an e-mail.

Defining and validating buyer personas through win loss analysis is a convincing and important best practice that every organization should be doing.

Is your organization following this best practice?

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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Double Response Rates for Your Win Loss Analysis Program

by , September 23, 2009


Imagine that you’ve just learned that a prospect has elected to go with the competitions solution instead of yours. Your sales team did everything they could to understand the prospects needs and build the relationship. Your product managers and marketing executives provided excellent support as well as thorough well-thought out responses to all the prospects product-related questions. The demonstration of your solution went exceptionally well. Management was actively following the opportunity, and everyone thought you were going to win. The deal was an important one because of who the prospect was, or the absolute size of the deal, or the industry the prospect was in, or a combination of these things.

Now everyone wants to know why you lost.

Your prospect just selected the competition, and youve been tasked with calling the decision makers to find out exactly what happened and learn everything you can about why they chose the competition.

You spend the next three weeks leaving messages, but they dont call you back, or you catch them live on the phone, but they don’t have time to answer your questions. Now what?

One of the constant challenges that we face in the execution of win loss analysis is maximizing response rates or participation rates. That challenge is even greater in this type of market research because sample is limited and you only have a finite number of competitive wins and losses you can study. If we aren’t able to get them to participate, it is a missed learning opportunity that we cant necessarily duplicate.

The example above is probably one youre familiar with if you are involved with your companys win loss program. The question becomes, How can we increase our response rates?

Introduction NoteAt Primary Intelligence, we spend a lot of time and resources addressing this very question. There are quite a few things we do to increase participation rates for our customers, but one of the most important practices we have identified is to create and utilize what we call introduction notes. These are notes that introduce why you want to talk to the decision maker and what you are hoping to accomplish. While the content of this note is very important to improving response rates, who this note ultimately comes from can be even more important than the words you use . There are three potential options when it comes to deciding who the introduction note will come from:

  1. From a key executive (higher the better, with CEO being best)
  2. From the sales representative responsible for the deal
  3. From you

To successfully implement this practice, you will need to choose which of these three options will work best for your situation and then create two introduction note templatesone for your wins and one for your losses. If you analyze your no decision deals, you will want a different introduction note for that as well.

The introduction note really helps remove the surprise attack feeling that decision makers can get when you are cold calling them to do a debrief of their purchase decision. Cold calling a decision maker is a lot like the solicitor that knocks on your dooryou open the door expecting someone you know and instead get a complete stranger that wants to wash your windows or aerate your lawn. Surprising a decision maker is a sure way to kill response rates for your win loss analysis program.

There are five key elements to include in the introduction note that you will send on behalf of an executive, the sales representative, or yourself:

  1. Introduce the executive, the sales rep or yourself at the beginning of the note
  2. Introduce the purpose of the e-mailto understand how you can improve
  3. Ask them to be candid and forthcomingwe learn the most from our mistakes
  4. Identify the amount of time youll need for the interviewbe specific and honest here
  5. Let them know when you plan on calling to schedule the interview at their convenience

Even though there are a lot of elements you need to include, it is important that you keep your note brief and to the point. For these notes, straightforward information and a simple request will be your most persuasive argument.

Introduction Note from Key Executive

This is your best option for improving participation rates. You can send the e-mail on behalf of the executive, but you will want the executive to understand what youre doing and have him or her sign off on the processas they could get replies from decision makers and they will need to be in a position to respond to those replies. C-level executive sponsorship will do wonders for increasing response rates, with the CEO being the best possible option.

This approach is easiest if you have a direct executive sponsor. You will be sending the e-mail on behalf of the executive you ultimately get to sponsor your efforts. This way, you have complete control over the process and your efforts wont be held up by the executives busy schedule.

When you have an executive sponsor, you will want to emphasize to respondents that they can reach out to the executive if they have any questions or concerns. Make sure your executive is prepared for this situation, as it can really have a positive impact on decision makers when they see your companys commitment to them and improving your solution to meet their needs.

Introduction Note from Responsible Sales Representative

If you cant get an executive sponsor, the next best solution is to involve sales in the win loss analysis process. An important distinction here is that the sales rep responsible for the deal should not be doing the interview with decision makers. Decision makers will filter out information they perceive to be negative if the sales representative is the one doing the interview with them. See my post on sales-derived versus decision maker-derived win loss analysis for more on this topic.

In order to get sales support, you will likely have to overcome some natural anxiety that the sales representative will have with you contacting the people they were selling to. You will want to reinforce that this process is to identify areas for improvementto help them sell moreand not a witch hunt. Dont be too hard on your sales repsimagine how you would feel if someone said they were going to come in and analyze how you were doing your job. Its natural for them to feel some discomfort, but once they see the results of your efforts and how you intend to leverage those results, this discomfort and anxiety should fade away.

You will want to send the e-mail on behalf of the sales representative so that you can control the process, although we have quite a few customers that have their sales representatives send the introduction notes directly. A sales representative introduction note differs in a few ways from an executive introduction note. You will want to add the following elements to your sales introduction notes:

  1. Reinforce that you are not trying to re-engage the sales process (applies to losses and no decisions)
  2. Make the request for a debrief a personal request on behalf of the sales repleverage the relationship the sales person has with them

Introduction Note From You

If you are utilizing this method it means that you werent able to get executive sponsorship or sales support in your efforts to review why you are winning and losing. Dont worry, you can overcome this lack of sponsorship and sales support by pressing forward and gathering actionable data that you can share with both executives and sales. Utilize the data to accomplish your objectives, but dont be selfish with it. Share the data with everyone you think could benefit from it, including the CEO (trust me, these guys are ALWAYS interested in why you are winning and losing), product management, product marketing, sales support, sales management, marketing, and sales representatives. In our experience, it only takes sharing a couple of reviewed opportunities (especially losses) before both executives and sales will recognize the value of the intelligence and get on board with the program. However, this cant happen if you arent sharing the dataIve seen too many cases where this valuable intelligence isnt shared across the organization.

The most important thing to remember about introduction notes that are coming from you is that you are letting the decision maker know why you want to talk to them and removing that surprise element. Practicing this will improve your response rates, but your real goal is to upgrade your program to the executive-level introduction notes or the sales representative introduction notes.

Sample Introduction Note Templates

Over the years, Primary Intelligence has created many of the three types of introduction notes I described above. We have spent a lot of time and effort in creating notes that will elicit the kind of response we need to be successful. If you would like a template for one of these introduction note types, send me an e-mail with the template you are interested in and Ill send you a sample of what were currently using to help move you along with this best practice.

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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More on Product Management Metrics

by , September 8, 2009


This post continues our ongoing discussion about product management metrics. To catch up on the discussion thus far, youll want to review Saeeds post on product managements mandate and my post on two examples of key product management metrics. The lively conversation about product management metrics got me thinking about good metrics and bad metrics and how to tell the difference.

There are four key aspects we should use to evaluate a potential metric:

  1. Do product managers have influence on the factor being measured (Do they have enough control over the factor to significantly affect it)?
  2. Is the metric a predictor of success?
  3. Is the metric actionable?
  4. Can you tie compensation to the metric?

The four criteria above can help you evaluate any metric you may be considering and give you an idea of their potential effectiveness. Unfortunately, there is such a thing as a bad metric, and there is a very real risk to your strategic objectives if you measure the wrong thing. A bad metric will cause you to focus on the wrong thingsyou may be successful in that metric, but you will ultimately miss the mark. However, a good metric that meets the criteria above can be a powerful motivator and an incredible tool.

There has been a lot of debate that if a person doesn’t have complete control of the thing being measured they shouldn’t be held accountable for itor it shouldn’t be a metric used to monitor their success. While I agree that the more control a person has over the thing being measured the better, my experience has taught me that if the person can exert significant influence on the thing being measured, even if they don’t have complete control, it can still be a fantastic metric if the other three factors can also be met (actionable, predictor and compensation tied to it).

After the influence test, the next important test of a metric is to ask yourself if performing well in this metric will lead to success 100 percent of the timeis the metric a predictor of success? If you can perform well in a given metric, but still fail at your strategic objective, then you need a better metric.

The third key test of a metric is to ask yourself if you can determine specific actions to take based on the metricis the metric itself actionable? Can you look at a metric at any given point in time and see specific actions you can take to improve in that metric? If you can’t, the metric isn’t actionable and you need a better metric.

And the last test, and one of my favorites, is whether or not you can tie compensation, or a portion of compensation to the metric. This isn’t absolutely a requirementthe other three tests are the most important when it comes to identifying good metricsbut if you can tie compensation to the metric, “you’ll be cooking with gas” as a buddy of mine likes to say.

In my experience running Primary Intelligence, we have implemented, monitored and then discarded so many different metrics for every role in the organization that it would be difficult to list them all. The one thing I’ve learned from this exercise is that internal metrics (activity-based), while interesting, will never measure up to external metrics (results-based)the metrics that directly measure, without ambiguity, our progress towards our strategic objectives. In the case of product management, we have already defined the strategic objective as “optimizing the business at a product, product line, or product portfolio level over the product lifecycle.”

In my previous post, I recommended two potential metrics we could use to measure our effectiveness as product managers:

  1. Product performance versus customer problems
  2. Product performance versus competitors’ product performance

I’m still inclined to use these two metrics because I believe they meet the four tests described above, they’re results-based metrics, and they have significant impact on the three drivers of revenue:

Revenue Drivers Product Performance
A prospect’s likelihood of purchasing our product The probability that a customer buys our product directly correlates with how well they perceive our product will solve their problems
A customer’s likelihood of renewing, or purchasing more of our product The probability that a customer renews with us directly correlates with how well our product actually solves their problems
A customer’s likelihood of recommending our product to a friend The probability that a customer recommends us directly correlates with how well our product solves their problems

I also believe that these two metrics are relatively easy to monitor using product management activities that are already (or should be) part of our process: talking to customers and evaluators.

This is the approach that I am using to set these metrics up for our own organization:

  1. Identify the key problems/business needs that our product solves for our customers
  2. Identify the product features that solve, or help solve, a specific customer problem (repeat for each key problem)
  3. Ask the customer to rate our performance in those features (talking to customers)
  4. Ask the customer to rate our performance and our competitors’ performance in those features (talking to evaluators)
  5. Track these metrics over time (probably quarterly)

The first step is probably the most important, as we have to make sure that we’re solving the right problems for our customers the problems they’re willing to pay for. For each key problem we want to solve for our customers, we need to identify the major features, or feature categories that help solve this problem for our customer.

For example, one of the key problem categories that we solve for our customers is their need for actionable, real-time competitive intelligence. Now that I’ve identified this problem, I have to examine our product for the key features that help solve this problem. The partial list that I came up with looked like this:

  1. Real-time competitor SWOT analysis
  2. Role-based CI dashboards
  3. Reporting capabilities
  4. Competitor pricing analysis

Once I have the key features identified, I am ready to measure the performance of our product in solving this specific problem for our customers. I do this through two types of interviewing:

  1. Talking to customers through customer satisfaction interviews or impromptu customer interviews
  2. Talking to evaluators in recent competitive wins and lossesour win loss analysis program

Performing this analysis can lead me to create a flow chart based on our performance scores that looks something like the following:

Product Performance vs. Customer Problems

Additionally, I can create a similar flow chart to compare our performance versus each of our primary competitors’ product performance that would look something like the following:

Product Performance vs. Competitor

Let’s ask the tough questions about these two metrics now:

Do we as product managers have enough control or influence over these two areas we will be measuring? I think we do. Do others affect these metrics? Absolutelybut I don’t think that should be used as an argument against these metrics because our mandate as product managers is to build products that solve problems customers are willing to pay for. Sales, marketing and support all play important parts in this, but product managers really are the foundation. If we have the foundation right, we can help fix sales, marketing and support problems that may be negatively affecting our metrics.

Will these metrics predict our success in optimizing our products over the product life-cycle? I think they will. The better we are at solving problems customers will pay for, the higher these metrics will be and the more likely we will be to meet our strategic product management objectives.

Can I look at these metrics and immediately identify specific actions to take to improve them? I think we can. The great thing about these metrics is they immediately identify both risks and opportunities that we can act on.

Can we tie compensation to these metrics? As the CEO, I can tell you that these are exactly the type of metrics I would want to tie compensation to.

The key to implementing these metrics is making sure that I am carefully aligning my product managers to focus on the most important thing they can do to impact our businessanalyzing and improving how well we are solving our customers’ problems.

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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Two Key Product Management Metrics

by , September 4, 2009


Saeed, in his blog post at On Product Management, posited the question, why is it difficult to measure the value and contribution of product management? To help us focus on the right metrics, he defined Product Management’s mandate as:

“Product Management’s mandate is to optimize the business at a product, product line, or product portfolio level over the product lifecycle.”

This is a great question and his definition of the Product Management’s mandate really got me thinking.

Webster’s definition of “optimize” is to make perfect, effective, or as functional as possible.

That means that the product manager’s mandate is to make the product as perfect (or effective) as they possibly can. If we then define a “perfect product” as completely solving our customers’ problem, I think we can start to think of creative ways to measure how well were accomplishing this mandate.

So, what are some of the ways we could measure how well we are solving our customers’ problems?

Product features or internal performance benchmarking? While I do think that measuring the internal aspects of product management is important, I would propose that measuring the actual results of product management is much more vital.

How about how much revenue the product is producing? Product revenue is certainly a result of our efforts in product management and certainly a good thing to monitor, but it probably isnt the best way to measure product management performance, as there are so many factors that are beyond the control of a product manager: sales process, sales channel, sales effectiveness, marketing strategy, marketing budget, etc. All of these factors will have a significant impact (negative and positive) on product revenue.

Good Metrics for SuccessInstead of looking at these, I would propose two key metrics to measure your effectiveness in achieving the product optimization goal:

  1. Your product performance versus customer problems
  2. Your product performance versus competitors’ product performance

The first metric allows us to measure how well our solution is solving our customers problems. It will also allow us to identify gaps in our features and identify areas that need improvement all in an effort to “more perfectly” solve the customers’ problem.

The second metric is important because it allows us to see how well we’re doing as product managers in making sure our products are superior to the competitions’ products. This is only important insomuch that we define being superior to the competition as being able to solve customers’ problems better than the competitions’ solutions.

Measuring the first metric without measuring the second is a lot like a sprinter running a race and never checking in to see where the other runners are during the racethey just keep their eye on the finish line. You can still win races this way, but its a lot easier for your competition to sneak up and overtake you if you’re not monitoring their progress. You can be sure they’re keeping their eye on you.

If I’m measuring and monitoring these two areasthe ongoing results of my product management effortschances are the other things like product revenue, market share, sales enablement and bottom-line results are going to be meeting or exceeding expectations.

Im really looking forward to Saeeds follow-up post to see what kind of metrics he comes up with. What do you think? Are these two metrics that product managers should be monitoring? Or, are there others that are more important for determining the perfection of your solution?

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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7 Steps to Identifying & Validating Market Problems

by , September 1, 2009


Market ProblemsThis week, we kick off our series of blog posts focused on showing how win loss analysis can help you become an expert on your market and gain a deeper understanding of the problems inherent in your target markets. Pragmatic Marketing teaches that the Market Problems activity is the cornerstone of their framework, defining this activity as discovering problems in the market by interviewing customers, recent evaluators, and untapped potential customers, as well as validating the problems identified to show their pervasiveness and impact on your market.

New product failure rates are high. Studies indicate that we can see new product failure rates of nearly 90 percent. A study done in the food industry showed that the failure rate for new products was between 70 and 80 percent, but that the U.S. Top 20 food companies were enjoying a success rate of 76 percent for their new product introductions, while the other 20,000 food companies had only an 11.6 percent success rate for their new products. The biggest difference between the top 20 and the bottom 20,000? The lack of market research.

Studies also show that a third or more of a companys revenue is likely derived from products that did not exist five years ago. There is no question that if a company is to grow and survive, they have to be able to create and launch new products, or at the very least enhance and upgrade their existing products. Take a look at Motorola, a company that led the cell phone industry. At its peak in 2000, Motorola had a market cap that was 8 times larger than their market cap today. Motorola has been struggling for the last couple of years; in fact, their last new cell phone product launch was in 2004. The market has changed tremendously over the last five years, and given the current state of the company, its pretty safe to say that they havent been listening to their markets.

I just realized I used the word product nine times in the preceding two paragraphs to describe the landscape that is product development, management, and marketing. The truth is, it isnt about products. People dont buy products; they buy solutions to their problems. In The Business Battlecard, author Paul ODea quotes Harvard Marketing Professor Theodore Levitt to illustrate the importance of understanding your customers pain:

People dont want to buy a quarter-inch drill. They want a quarter-inch hole.

If we want to create value for our customers, ensure our products success, and secure our companys future, we have to understand our customers needs and problems better than our competitors. There is really only one way to do thatwe have to talk to our market, and more specifically, the decision makers in our target markets.

Based on the new product failure rates that I quoted earlier, we can assume that most product development and management is done using activities performed inside the companyi.e. founders and executives drive product development based on their experience and gut, while occasionally checking in with customers. This is typically the place where everyone has to start when we are creating a new product, but at some point (the earlier the better), the process needs to change from an internally-driven development process to a customer-driven, external process.

Listen to Understand Market ProblemsIn order to create a customer-driven product development process, we must be consistently listening to our market to identify and validate the key customer problems that our solution will solve and measure how well our solution is solving those problems. Pragmatic Marketing defines three groups within our target markets that we need to be actively listening to:

  1. Existing Customers: this group includes customers that recognized they had a problem and purchased your solution to solve that problem
  2. Evaluators: this group includes both your customers (competitive wins) and those customers that have selected your competition (competitive losses)
  3. Potentials: the group of potential customers that havent purchased your type of product, but have tried to solve the same problems through internal efforts

Over the last decade, we here at Primary Intelligence have spent countless hours figuring out how to best listen to the second group identified by Pragmatic Marketingthe Evaluators. Based on that experience, we have found the following seven-step process is an effective methodology for improving your understanding of your markets problems:

  1. Make sure you are asking questions that will reveal the problems the customer is trying to solve.
  2. Before you begin gathering and evaluating our win loss data, write down your target markets three to five most important or pressing problems.
  3. Examine demographic information for the recent wins and losses you are going to interview in order to make sure they are in your target markets (you dont want to identify market problems for markets that you dont want to be in).
  4. Perform the win loss analysis and gather the data.
  5. Build a repository of the problems identified and validated.
  6. Analyze the data to identify problems you may have missed. You also want to validate that the problems you wrote down are real for your markets and not problems that you hope they have.
  7. Remember that identifying market problems and validating those problems is a program and not a project. You want to build this process into your weekly/monthly activities to make sure that you are able to stay on top of your markets

STEP ONE: Ask the Right Questions

Make sure that you have your questions prepared before you perform the interview with the decision maker. It will be tempting to just pick up the phone and wing it, but being prepared with the questions you want to get answered before-hand will dramatically improve the probability that you will accomplish your objectives.

Based on our experience, we have found that you need to ask the following questions to both identify and validate market problems:

  1. What were your business needs that prompted this evaluation?
  2. What were the primary reasons you selected the winning vendor over the other vendors you evaluated?
  3. What were the primary reasons you did not select the other vendors you evaluated?
  4. What could the vendors you didnt select have done differently to win your business?
  5. What could the winning vendor have done differently to better meet your business needs?
  6. What did you value most about the vendors solutions you evaluated?
  7. What were the biggest solution weaknesses you identified based on your business requirements?
  8. What important features were missing from the solution?

There are also several quantitative questions that will help you validate market problems and quantify how well your solution is solving those problems, but Ill need to save that for a follow-up discussion to try to keep the length of this post down.

The first question (what were your business needs that prompted this evaluation?) is your money question when it comes to identifying and understanding your target markets problems. In our experience, the other questions will also identify and validate your customers problems. They wont do it consistently, but they will regularly give you insight into whats important to your customers and why. All of this translates into how well youre solving your customers problems and helps you along the path of becoming stronger experts on your target markets.

STEP TWO: Write Down Your Target Markets Problems

An important part of this ongoing process is validating what you currently think about our customers problems as well as qualifying the impact those problems are having on our customershow important is it to our customers to solve these problems?

An interesting exercise that you can do in conjunction with this is to send an e-mail out to others in your organization (sales, operations, executives, etc.) and ask them what they believe the top three problems are that you solve for your customers, and ask them to rank them in order of importance to the customer.

In preparation for this article, I reached out to our sales, operations, and executive personnel and asked them to identify the top three problems we solve for our customers. I asked them to rank them from most important problem to least important problem. I then took the responses and weighted them to come up with the following list of problems our organization believes we solve for our customers:

Top Three Problems We Solve

According to Us
Weighted Importance
Better Competitive Intelligence 41
Understanding why they win and lose 30
Sales Process (SWOT) 24
Better understand target market needs 14
Understanding market perceptions 11
Improve sales performance and win rates 8
Product (SWOT) 7
Marketing program and messaging effectiveness 7
Identify previously unknown areas of improvement 4
Non-biased win loss analysis & expertise 4
Identify sales best practices 4
Better understand buying process 4
What happened in this deal? 3
Disseminate W/L intelligence throughout organization 3
Identify sales training opportunities 3
Understand pricing impact on decisions 3

You will notice that the list above isnt necessarily organized as problem statements. However, organizing things in this way allows us to figure out which category of problems are most important to our target markets. This is perfectly acceptable, as long as you have a deep understanding of the problems your customers are facing and youre able to articulate them using the same words your customers use. The trap that you have to be careful of here is taking a short-cut and falling back onto your benefit statements instead of really dissecting the problems as articulated by decision makers in your target markets.

For example, when one of our decision makers was asked what business problem they were trying to solve when they selected our solution, he responded, We need to gain specific competitive insight on [One of their competitors]. They have been beating us with greater frequency and we need to figure out how to counter this. We can see that this is clearly a Better Competitive Intelligence category problem. In contrast, the following response really belongs in the Better understand target market needs problem category:

We need to get to a more refined understanding of our markets so we can figure out why there is a gap between what we think customers should be spending and what they actually are–we need to find out why this delta exists and use this information to make changes to our go-to market strategies, our product plans and perhaps even our business model.

According to this internally-derived list, the top three problems that I should be looking to validate, in addition to trying to identify new problems, are Competitive Intelligence-related problems, helping customers understand why they win and lose, and helping customers understand the strengths, weaknesses, opportunities, and threats in their current sales process (Sales Process (SWOT)).

STEP THREE: Select Recent Wins and Losses to Review and Qualify Demographics

You want to examine the key demographic information of your recent wins and losses to make sure that they fit within your target markets. The best sales professionals and managers will tell you that there really are only two reasons you lose a deal (versus the more commonly voiced, but generally incorrect, reasons of price and product):

  1. You shouldnt have been in the deal in the first place (your solution wasnt a good fit based on the customers needs)
  2. You were outsoldthe competition did a better job selling than you did.

Because walking away from any deal is a very difficult thing to do for a sales representative trying to make quota, you will have losses in your database that are not in your target markets. It is very important that you do your best to remove these from the list of competitive wins and losses you will be using to perform your win loss analysis.

STEP FOUR: Interview Decision Makers

To help with best practices when interviewing decision makers, I went to our team of account consultants, the folks that spend at least half of every day talking to decision makers, and asked them for advice they would give. They provided both some best practice dos and donts that will help you improve your interviews and response rates:

Do these things:

  1. Pre-notify the responsible sales representative that you will be doing a win loss review on the deal.
  2. Let the sales representative know that you will share the results of the review with them so that they can learn from the effort as well.
  3. Ask the sales representative to notify the decision maker that you will be calling to do a debrief on how they made their purchase decisionthis will improve response rates significantly. Its important that you craft an e-mail message for the sales representative to send to the decision maker that emphasizes the following:
    1. You are not calling to try to win them back, or re-engage the selling process (this applies to your losses).
    2. You are calling to get their feedback so that you can improve your solution and sales processes.
    3. You are in product management and not sales.
  4. Listen. Listen. Then listen some more. There are really only three situations where you should be talking:
    1. Youre asking the interview questions.
    2. Youre asking a follow-up question.
    3. Youre answering a question about one of the questions you just asked.
  5. Keep the interview conversationaldont sound like a call center survey.
  6. Always know their title, correct spelling of their name and gender prior to the call. Only verify information with them (e.g. I have your title as CFO. Is that the most accurate title?)
  7. Make sure you have follow-up, or delving, questions prepared beforehand for each of your questions so that you can get actionable feedback
  8. Smile while you interviewit comes through in your voice
  9. Thank them for providing candid and informative feedback, especially when the feedback might be considered negative for you, at appropriate times in the interviewthis will encourage them to continue to provide candid feedback.

Dont do these things:

  1. Dont go into the interview with a predisposed view of what happened in the deal.
  2. Dont lead person you are interviewing, or ask leading questions. For instance, dont ask Did you reject the solution because the price was too expensive for you? Instead, ask something like, Why did you not select the solution?
  3. Never assume that you know the answer to a question because of their responses to previous questions.
  4. Dont interruptthis will be a challenge because they will say something that you can answer, and you will want to jump in and respond to what they just said, but if you do, you will miss out on critical information.
  5. Dont frustrate them with an overly long interview; keep your interview as succinct as you can and be mindful of their time constraints.
  6. Dont try to solve all of your problems in one interview.
  7. Dont add your own opinion or additional commentary to their responses.

STEP FIVE: Build a Repository

While individual win reports or loss reports are very important to understanding your target markets problems and how well your solution addresses those problems, having a database that you build over time will allow you to validate these problems and identify important trends in the market problems that your solution addresses.

When trending or aggregating information from a group of interviews, keep the following in mind:

  1. Try to maintain the integrity of your marketsif you are interested in more than one target market, try to separate your interviews into groups that each fit a single target market and do a trend analysis for each group.
  2. When trending, having an equal mix of win reports and loss reports will help avoid positive or negative bias in your overall findings. Being able to see how performance differs between wins and losses will also help pinpoint areas of greatest impact.
  3. Remember that certain questions work better for determine overall performance (e.g. performance ratings) and some are more individual-based, making them better for identifying a range of best practices (e.g. an open-ended question asking how the vendor could better serve the customers needs).

STEP SIX: Analyze Stated Customer Problems

Once you have our database set up, you can get to the fun partfiguring out what problems are most important to your target markets and how your solution can help them solve those problems. To help illustrate this, I analyzed ten recent opportunities that evaluated Primary Intelligence (6 wins and 4 losses) to identify the market problems that caused them to seek a solution. The results are very interesting, especially when you compare them with our internally-derived list of customer problems that we solve:

Top Three Problems We Solve

According to Our Evaluators
Weighted Importance
Better Competitive Intelligence 13
Improve current win loss program 12
Non-biased win loss analysis & expertise 10
Understanding why they win and lose 10
Product (SWOT) 5
Sales Process (SWOT) 4
Better understand target market needs 3
Understanding market perceptions 3
Marketing program and messaging effectiveness 1
Disseminate W/L intelligence throughout organization 1
Improve sales performance and win rates 0
Identify previously unknown areas of improvement 0
Identify sales best practices 0
Better understand buying process 0
What happened in this deal? 0
Identify sales training opportunities 0
Understand pricing impact on decisions 0

Keep in mind that this is only ten recent opportunities; however, we can immediately see that we missed an important market problem from our internal listevaluators indicated that improving their current win loss program was one of the most important problems that was driving them to look at our solution.

Identifying and ValidatingThis process allows me to understand the big picture for our target markets, and analyzing the way each customer communicates their problems gives me fantastic insight into areas that we can/should be focusing on to better meet the needs of our customers. It is comments like the following that help me frame the newly identified customer problem of improving a current win loss analysis program:

“We were doing our own loss reviews, and we were finding that we were not getting good, actionable information from them. Then we found out that Primary Intelligence’s services were available and saw that the level of information was much deeper than we were able to get by doing our own loss reviews. We felt doing our own reviews internally wasn’t as deep because it wasnt our area of expertise.”

“We were trying to gain a more robust process. We were strapped for resources in-house and we were looking for a solution that would allow us to be able to touch more deals than we currently touch, and therefore get a bigger wealth of information as to why we are winning and losing. We have an internal process, but we think we are getting rote answers. We had not gone with a third party ever before.”

We can see that while they definitely want to improve their current win loss analysis programs, our customers are framing this problem around the idea of deeper information, actionable information, wealth of information, etc. These, then, are the real problems underlying the stated problem of improving their current win loss programs.

Analyzing the data in this way helps me understand the problems and their impact, but just as important is the fact that Im able to get a good feel for which problems are most important to our target marketsthat is, which problems are the ones our customers are willing to pay to solve.

The importance ranking that we did internally was quite a bit different than what actually resulted from listening to evaluatorsas you can see when we look at the top ten problems side-by-side:

Top Three Problems We Solve

Evaluator Ranking vs. Internal Ranking
Evaluator Ranking Internal Ranking
Better Competitive Intelligence 1st 1st
Improve current win loss program 2nd -
Non-biased win loss analysis & expertise 3rd 10th
Understanding why they win and lose 4th 2nd
Product (SWOT) 5th 7th
Sales Process (SWOT) 6th 3rd
Better understand target market needs 7th 4th
Understanding market perceptions 8th 5th
Marketing program and messaging effectiveness 9th 8th
Disseminate W/L intelligence throughout organization 10th 14th

STEP SEVEN: Make Market Problem Identification and Validation a Habit

Remember that win loss analysis isnt a project; its a program. Your recent evaluators are one of the best places (if not the best place) you can go to validate the problems you believe you are solving with your solution.

The things that influence and drive your target markets are fluid and always changing. If there is one constant that we have seen analyzing purchase decisions over the last ten years, it is that markets will change. The problems that you are solving today, while important, may not be the most important problems your customers need you to solve tomorrow. If you are not listening, you can bet one of your competitors will be.

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About the Author: Ken Allred, Founder and CEO of Primary Intelligence, is a thought leader in SaaS-based sales intelligence, analytics and sales enablement solutions. He is committed to the optimization of sales, marketing and product management teams through the implementation of advanced Sales 2.0 intelligence solutions.

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