Compound Marketing Group Blog

As a business-person involved in running a successful multi-product business, at one point or another you might have found yourself in the following situation: Companies that sell to other companies (B2B marketers) develop products to meet the needs of individual target market segments. These markets are often defined by particular departmental use-cases, i.e., meeting a need that the marketing department has, or the finance group, or the sales team, etc. All good.

At some point, what often happens is the company/solution provider starts to cover so many bases (segments) in the client base that it becomes obvious that a more integrated (compound) approach presents itself as an opportunity. Rather than take a piecemeal approach to the client – selling it point solutions here and there – why not present a more integrated or combined offering? Perhaps you feel it’s time to become a true strategic partner to your clients, rather than simply a provider of individual products. Bringing that combined offer to market successfully is what this article is all about.

Step 1: Agree on goals/targets/outcomes

It is important to define exactly what are you trying to achieve with this effort. Some possible outcomes might include:

• Increasing customer stickiness/retention (under the premise that the more elements of your offering they are using and the more widely they are using it, the less likely they will be to leave).
• Grow your “share of wallet”. Chances are, your client/prospect has limited and defined budgets for how much he can spend in the domains you cover – at least in the short/medium term. Taking a larger share of that budget is a driver of revenue growth.
• Leverage your installed base. Companies with a significant installed base for one element of the (to be) combined offering can use that as part of an effective and relatively inexpensive “land and expand” strategy to get the entire solution into that client. It’s almost always less expensive to expand an existing client than to gain a new one.
• Attract new customers. If the value proposition is clear (see below) then there can be a significant attraction towards buying “whole product solutions” that meet an entire category of need vs. just partially addressing that need. An combined offering is more likely to be a whole product solution which will attract new customers that might not have considered the offering before in its component pieces (especially if pricing/packaging is set correctly).

A key element here is to quantify all these goals against current operating metrics and then measure the outcomes. The success of any initiative like this should be clearly defined and readily measurable, otherwise it’s impossible to know whether the effort was worth it. And it will take a lot of effort, so the ROI will have to be clear.

Step 2A: Break down internal silos

This is the hardest step in this initiative and the one most fraught with danger. Organizational change is always hard. It is likely that, in order to ensure the success of its individual product lines, your company has organized itself, put reward structures in place, and set team and individual goals that are focused and do not at all take into account the success of a combined approach to customers. Failure to address the silo issue aggressively will guarantee the failure of this initiative.

The hard work of leadership begins here, and it must start right at the top. The CEO has to clearly build alignment with all stakeholders that this is the way forward for the company. Then actions need to be taken in terms of organizational structures, compensation plans, and goal setting to ensure that all key players are aligned. Half-hearted measures will never work because – as the saying goes – it’s impossible to be half-pregnant. Either you are in, or you are out.

[This is not to imply that the marketing/sale of the individual, component products must end. Far from it - there will be many prospects (perhaps the vast majority, initially) who are truly only in the market for one particular component of your offering. Clearly you must make it easy for that prospect to discover the value that they are looking for. But, at the same time, it is important to build the awareness that - when the client is ready - you can offer much more than an individual point solution and that it will be easy for the prospect to engage with you as more of a strategic partner. This is the essence of a successful "land and expand" go-to-market strategy - more on that in a future posting.]

Once executive leadership has demonstrated commitment, then constant communication needs to flow down and throughout the organization so momentum is maintained (and continually increased). Old habits die hard and the temptation will always be to go back to what worked so well in the past. Assigning someone as the clear executive sponsor of the initiative will also be critical to building momentum when all the reasons it is “too hard” or “seemingly impossible” start to crop up. Get the people/organization/structure right and the rest will follow.

Step 2B: Create integrated positioning, pricing, and packaging

Okay, so everyone is aligned. Chances are that you’ve already begun this next step because, without a compelling positioning statement for the integrated solution, it will be impossible to build the internal support necessary to break down the silos. (That’s why these steps are listed as 2A and 2B.)

At its simplest, a positioning statement generally contains the following:

For <target market>,

<solution> is the <category in which it competes>,

that <competitive advantage>,

so that you can <customer benefit>.

You can believe this because <proof point>.

It continues to amaze me how few products/solutions have a clearly defined and widely understood positioning statement. Having said this, it is somewhat understandable because getting this right is really hard. On the positive side, the process of getting this right should probably involve many key stakeholders and therefore can be part of the silo busting that I discuss above.  Nothing helps enroll people in change efforts better than having them involved in creating the plan.

As part of setting positioning it can be very helpful to agree on the core personas that make up this new, combined target market. From there, understanding the user journeys that each of these personas take in order to accomplish their objectives can be highly informative as to what the position of the combined offering should be. Of course, this work is also extremely useful in future product development to enhance the combined offering and will also become important later in perfecting all the various go-to-market implementation details.

Following that is the task of setting packaging and pricing. Building the business model for an integrated solution combining many elements is much more complex than simply adding up the prices of the individual elements. In some cases, the price of the combined offering will end up being less than the individual elements – unless the value of having them integrated together is truly compelling and takes the solution into a whole new realm of value. If the value is less about product synergies and more about simplifying the purchase and ownership experience, then pricing of a combined offering will likely be under some pressure.

Whenever possible, try to involve the “voice of the customer” when doing this step. While classic “market research” may not always be timely or within budget, another alternative is to test market the combined offering in a geography that is insulated from your primary markets. At the very least, ensure that there are significant flexibility and pre-arranged fall-back plans in place in case the new approach does not resonate as clearly or as quickly as intended. Having said that, resist the temptation to give up too early or easily – organizational forces and historic momentum are probably not in favor of this new combined approach and so you must be prepared to weather some adversity.

Step 3: Get ready to sell

Goals are set, plans are ready, some early market feedback is in – now is the time to bring it all together. Chances are that you already have a significant installed base using at least one of the individual elements of this new, combined solution. The obvious path of least resistance is to go after them and leverage your existing (hopefully positive) relationships to upsell to the new, complete solution.

The first thing to do is to complete a detailed account review for each significant client. Make a map of all the various touch-points and relationships that exist between your company and the target company, across whatever products they might have purchased in the past. Tools like LinkedIn and Jigsaw can be extremely helpful in mapping out a complete view of potential organizational stakeholders that may not have had a direct relationship with your company in the past.

Ultimately the goal is to build out a complete strategic account plan. As noted above, many account management organizations use Mindjet maps to make this happen, and then track activities relative to this client in Mindjet as well (often linked into a CRM system like salesforce). Building and maintaining this living document is the key to integrated account management, which is even more important when you are selling a complete, combined solution and not just individual products.

Of course, supporting the sales process must be effective marketing communications. Ensuring that the value proposition is easily understood on the website and via all marketing/sales materials will be critical. (It is also possible you have a self-serve sales model in which case marketing and sales are virtually the same thing.) Finally, don’t forget the back office – usually a model change such as this will require significant prep work to ensure sales are able to be recorded and accounted for correctly.

Step 4: Go!

With all this prep work – it’s now time for the fun to begin! An overriding theme should be simplicity. Providing a combined/integrated, cross-organizational solution should make it easier for your customers to understand, purchase, implement, use, and reorder than it was previously. If bringing things together has results in making any element of the customer experience more complex, then it’s time to go back to the drawing board.

As a Forrester analyst noted during a recent conference on customer experience, “If the customer is your boss, then the voice of the customer is your performance review.” You should always be attending to the voice of the customer, but at the initial stages of launch you need to be hyper-vigilant in this regard. Be ready, be agile, and have backup plans in place in case things don’t all go according to plan (as they rarely do).

The Economist noted recently that, “The product is the outcome, not the goods.” In other words, your customers are not really buying your combined solution – they are buying the results that solution delivers. Focus on the customer, provide real value, and you will take your business to the next level.

Blaine Mathieu