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"Marketing" writ small

A long time ago, in a place far far away (called Redmond Washington) I learned the skills of planning and launching products.

  • The 4P’s – product, positioning, promotion, and packaging. 
  • Distribution strategy – retail, OEM, web

… and so on.

I don’t have an MBA from a fancy business school. In fact, I revel in my geekiness. This is stuff I learned from some of the smartest people I’ve ever had the good fortune to work with.  Brad Chase, Jonathan Roberts, Rich Tong, Bob Foulon, and many others.

When Andy Abramson says that the reason so many innovations die is marketing, of course, he’s right.  The scope of “marketing” is huge, though.  And while Andy is right in saying that large organizations spend a lot of money on marketing, small organizations can do well with limited budgets.

Let’s begin with market research.  Andy says:

To continue the sell in vs. sell through point, to sell through means you need to know thy customer. To know thy customer means to conduct two types of research.

A. Primary, meaning you do it for your company directly with the customer segments and

B. Secondary, meaning you review what is publicly available from sources that matter and apply it.

Now, in the days I ran the Windows CE Product Planning team, we would use primary market survey tools like large scale random digit dial surveys, conjoint analysis, customer surveys, and focus groups.  We had subscriptions to every analyst firms work that mattered as well.  It was a simple matter to give a call to Instat, Forrester, or Gartner, and just ask a question.  I had a $2.5 million annual budget for research alone. 

You don’t need to spend that kind of money.  There are a ton of ways that you can find out information.

  • Customer visits.  Get out of the office and go visit some customers, or some potential customers.  Watch how they work.  Ask what problems they have.  What do they like about how they’re currently doing things, and what do they dislike.
  • Customer advisory councils.  Pick ten of your best customers, and ask them to join a product advisory board.  Bounce your ideas off them as they come to you.
  • Email surveys.  Write a piece of email, and send it to 100 or so of your best prospects and customers. You can’t do any statistically valid segmentation research with such a small survey group. However, you can get a small enough confidence interval with 100 responses that the segment as a whole produces a statistically valid result.  So, keep the survey short.  Ask four or five questions, no more.
  • Web surveys.  I have a $20/month survey monkey account.  Go check it out.  You can use it to survey your existing customers and prospects, or new customers and prospects.  And it’s just $20/month. The price is right!
  • Eat your own dog food.  Eating your own dog food means that everyone in your organization is using your product.  When that happens you will find all kinds of unusual bugs, usage problems, and new use cases. You also turn the entire organization into evangelists for your products.  If everyone in your organization isn’t using your product, then get them doing it!  It will help enormously.
  • Head to the store.  Want to find out what real people think about your products?  Head down to the local electronics store (if you’re in the tech business), find a sales rep and pose as a customer.  Find out what they try to sell you and how.  Note how many facings the competitions product has on shelves.  Look at the packaging, and try to estimate their cost to produce it (hint: it’s likely just cardboard, and CD’s, so this is pretty easy…)
  • Mall intercepts.  That’s right.  Lurk in the mall with a clipboard, stop people, and ask if they will help you by answering some questions.  If your services aren’t consumer services, then lurk in places your customers frequent. For example: it seems that everyone who flies carries a Blackberry. I’ve done “market research” for Talk-Now in airplane seats (now there’s a captive audience), and airport lounges. 

Bottom line, there are many ways you can do effective market research without having to spend a bundle of money.  Effective research will help you find the need and be customer focused.

Speaking of customer focus, Andy bemoans the lack of “customer centricity”.  He says:

The products that get launched today are so non-customer centric it’s scary. It’s not that consumers wouldn’t want to buy and use them, it’s just that they have too many challenges learning how and just give up.

How do you take a new product to market? By putting it in the hands of thousands of people in one-on-one and focus groups to find out what they think and then boil it down to where it is plain dumb simple to use. I don’t know how many of the executives in the emerging VoIP plays have ever done a real focus group in their lives, or spent time selling to the public, but I do know that Level3 has done just that to enable their clients, mostly the Cable MSOs, to know more about what their customers want and it shows. Cable VoIP sales are up vs. the other guys, and Level3’s stock is up. Someone at Level3 should give Cynthia Carpenter a huge raise for that study alone as she quarterbacked the project under the now departed to Verisign, Charlie (Two Buck Chuck) Meyers.

Amen.  This is the model pioneered by the early tech industry giants.  Microsoft is famous for “three tries to get it right”.  That three step process is a badge of honor in my opinion:

  1. Put the product in customers hands.
  2. Listen to what they say about it and fix their problems. 
  3. Look at how they use the product and design smarter and better features that will allow them to get more done with it. 

You can do the same.  In fact, you can do a whole lot better because you’re not saddled with Microsoft’s distribution model.  Use the internet and release your products to the web, instead of a channel. Release early and release often should be your mantra.  At iotum, with Talk-Now, that’s exactly what we’re doing.  Every two to three weeks you will see improvements coming to market based on what we learned four to six weeks ago.  At some point we’ll slow this down, but right now it’s reaping rewards in the form of features requested, and bugs identified.

Andy also says that the internet is a lousy distribution vehicle.  He writes:

Distribution—the web is a lousy distribution outlet. I repeat. The web is a lousy distribution outlet.

The web is a great marketing channel for awareness and serves as a wonderful delivery vehicle via download or for order entries and sign up. So you ask, why isn’t it a great distribution outlet for everything? Well for starters it’s a lousy way to interact with consumers who have questions. FAQ files only frustrate the masses and you have to know exactly the right words to use the search tools.

Now compare this to going into a specialty retailer.

For starters when I’m in a specialty store I can get questions answered in real time from people who should have some product knowledge (okay CompUSA is the exception but they are a big box store without any specialty vs. Frys or Best Buy which actually trains people as product specialists.)

Most online services want the customer to email and then WAIT for a reply. Or worse, you call up, and experience what we all now accept as normal. A call to some outsourced service provider in some foreign land who doesn’t even know what day it is, let alone have the basic level of product knowledge of a web page that does.

Compare this to QVC, HSN or even going to a Costco. There you get answers and you get service and it happens more often than not, almost right away.

The web is a great distribution vehicle in the early stages of a product.  The web is also a great distribution vehicle to reach a core audience of enthusiasts.  It’s just not a mass market vehicle, which is Andy’s point. 

Netscape pioneered the prototypical web distribution model.  They generated an enthusiast movement on the internet, and then moved to preloading Netscape Navigator on PCs. Every software application since has tried to follow this model. 

Here’s the rub.  Preloads generate users on a scale that is unimagineable when compared to the web, but no manufacturer will do it without proof of customer demand.  In the VoIP world, no network operator is going to incorporate your new service without either (a) a boatload of primary research to prove that there is demand or (b) direct proof in the form of direct sales from you. The same is true of mobile operators and handsets.   It’s this two staged approach that companies must attempt. Unfortunately, the very first thing that any VC who isn’t schooled in consumer marketing will ask of you is whether you can simply go to distribution immediately.  The danger of this approach is that without proven demand you will get a small percentage of the real value of your products from the distribution channel.  

The simple way to think about distribution is that distributors break bulk, and carry credit.  They don’t add any marketing value beyond breadth.  Distributors cost money.  If you don’t have the volume to warrant going to a third party distribution channel, then don’t focus your energy there. 

Andy also believes that retail is still important:

Building retail distribution takes money. But having retail distribution will make you money. I’m continually amazed how clients and companies we interact with won’t spend one day looking at how to get their products to retail, and yet will spend months trying to figure out how to optimize their web sites for higher Google rankings. Believe me. Selling services in 10,000 convenience stores sure made a lot of money for the calling card folks, so one has to wonder why no one is really pushing VoIP in Radio Shack or at the independent cellular stores let alone selling new services at 7-11.

Darn right.  Although Andy, Vonage, Packet8 and SunRocket are all in retail with some very savvy retail people pushing those products.  It could be their products that are the issue…

Retail marketing, and large scale direct-to-end-user marketing are all very expensive.  These are strategies to be used at the point where the product is refined, demand is proven, and all that’s required is fuel to be added to the fire.

Marketing is often an afterthought in the go-go world of the valley where the focus is on shipping… anything. It’s more expensive to repair problems later, though, than it is do it right in the beginning, and it doesn’t take a lot of money or effort to do it right at the start. 

{ 2 comments… add one }

  • Melany February 6, 2007, 6:08 am

    Hey Alec,

    Thanks for this refresher!

  • bob foulon May 21, 2007, 5:17 pm

    can you believe i’m still here!!! we need to catch up my old friend.

    btw- thanks for the compliment. (;

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