Are you selling an Oven or a Cake?

By Subraya Mallya - October 2013 | Topics - Product Management

An oven, no matter how good it is can just be a shiny object. Its value is realized only based on the cake that comes out of that oven. The cake in turn is dependent on the recipe, the ingredients you use and how you cook the cake. A cake bought from a bakery, on the other hand, is ready to be consumed and enjoyed right away. What has an oven or a cake got to do with Software Products?

Product companies sell a variety of solutions ranging from ready-to-use products(i.e. cake) such as CRM, Project Management that anyone can use  to complex products (i.e oven) such as Business Intelligence, Performance Management that need specialists to realize its stated value proposition . As Product Managers, based on where your product falls, a Oven manufacturer or Baker, you should expect different paths to success. The way you build the product, market it and sell it should be completely different.

Product Roadmap

If your product is a Cake: Your product roadmap should be focused on end-customer. The goal is to build value-added features that will help customers succeed in their business, i.e increase their revenue or increase their margins or at worst reduce cost. Build a product is that intuitive and has a very low learning curve (no training needed). You should interact with your customer directly and seek to know their challenges and product usage.

If your product is an Oven: You product roadmap should pay special attention to building the necessary tools/technologies not just for the end-user but also for the value-chain players like data providers, industry domain experts, consultants. In a way, you have a tiered customer structure – the value-chain players and the end-customers. The intermediaries (i.e. value chain players, system integrators) will play a significant role in delivering the value that customers seek from your product and hence it becomes an imperative for you to meet their needs as well.

Marketing

If your product is a Cake: You will do well to get more people to get to your site through your inbound marketing efforts and then showing them videos, screenshots and signing them up for webinars for more detailed illustration of the product. A Freemium model that will allow prospects to try your product on their own before they make their decision would be the tried-and-tested model for these kinds of products.

If your product is an Oven: Your marketing should highlight the process and the value delivered cumulatively by your product and various players in the value chain. Your targets for marketing campaigns are not just the end customers but also the partners who would see themselves participating in that value-chain. Paint the picture through which the partners can see themselves benefitting from the relationships. Create Case Studies, Value Statements, Buyers journey maps etc. clearly highlighting the role of partners in delivering the value promised to customers. Create toolkits, guides, workflows and tutorials to empower your partners. In the initial stages don’t expect your partner to spend on marketing. It is going to be your dime. More about marketing strategies if you depend on channel for your sales in a separate post  in future.

Sales

If your product is a Cake: Your sales process is standard. Lead generation followed by nurturing to culminate in a sale. Let Marketing drive large portion of the customer acquisition process and sales only needs to close. Move as much of the cost of sales to marketing as you can. You will be able to articulate the value created by product much better with customer references to boot.

If your product is an Oven: You are more likely to get traction in a channel sale as much as you would going direct (assuming you have a professional services arm). Try and align your sales force with the partners so you can help them sell more. Bring deals to your partner and be a partner-first organization. It is easy to be tempted to do direct sales (to the chagrin of your partners) but resist that. The investment you make initially in making the partners feel – that you are keeping their interests in the forefront, will yield results down the road. Think three-legged race. Check how companies like Intacct have done it successfully.

Support

If your product is a Cake: Support is a quintessential function in a company. A satisfied/happy customer is one customer that you will not loose. A happy customer is one who might bring in new customers. Think of it this way -Every time a executive/user of your application changes job, you are going to get free mindshare in their new company – all this in return for the excellent support you provided in their previous job. In addition to making your product easy-to-use, complementing that with a easy-to-access support will help company reduce the churn.

If your product is an Oven: Think of support in this case as a drip system. You are training the trainer. By enabling your channel with adequate training you are impacting the success of the end customers. As with marketing, create support collateral that addresses the needs of the value chain partners. Conduct Open houses, free training, webinars that educate partners around the best practices in implementation, designing metrics to track effectiveness of the product and handling customer objections/constraints.

Many companies spend cycles doing things as if they are selling a cake when it is otherwise. The sooner you realize your true identify the sooner success will come to you. Rather than expecting the customers to come around, you make accommodations in the way you function as a company.

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