We’ve come to learn a lot over the years we’ve been performing Win-Loss and market research interviews. In each engagement we come across insights that are surprises for both us and the organizations that sponsor our studies. Here are three real gems that keep coming up. It’s potpourri time. Let’s do this!
Word of Mouth Is Waaaaaaay More Important Than You Think
“How did you first learn about company XYZ’s solutions?” is a standard question for us during Win-Loss interviews. Mainly because companies want to know how prospects first find out about them. As Nate Smith noted in a recent study “Now, 77 percent of B2B purchasers won’t even speak to a salesperson until they’ve done their own research first, and they might be performing as much as 90 percent of the journey on their own.” Go team inbound! Indeed, these days, most B2B tech companies spend tremendous amounts of time and money to build, optimize, and advertise compelling content on the web, all in an effort to answer those questions for prospects making purchase decisions.
And yet our experience has shown something different. The vast majority (>85%) of people we interview cite either a recommendation from a colleague or experience using a solution in a prior job at another company as the primary way they become aware of a vendor’s solution. Can you believe it? True non-sales oriented thought leadership content is also cited, but it’s seriously in the minority. Thought leadership content helps reinforce a vendor’s credibility and capabilities, but that happens after the vendor has been already been discovered via some type of word of mouth referral.
Price Will Always Be the Major Factor in Perception of Value
One of the topics that is often covered in our interviews with customers and prospects is how they perceive the value of a vendor’s offerings. Marketing teams spend a tremendous amount of effort to craft and test value equations to support the sale of their offerings. As Seth Godin noted in a great article What Your Dog Knows About Marketing:
“Harvard marketing professor Theodore Levitt famously said, “People don’t want to buy a quarter-inch drill bit. They want a quarter-inch hole.” The lesson is that the drill bit is merely a feature, a means to an end, but what people truly want is the hole it makes. But that doesn’t go nearly far enough. No one wants a hole. What people want is the shelf that will go on the wall once they drill the hole. Actually, what they want is how they’ll feel once they see how uncluttered everything is, when they put their stuff on the shelf that went on the wall, now that there’s a quarter-inch hole. But wait… they also want the satisfaction of knowing they did it themselves. Or perhaps the increase in status they’ll get when their spouse admires the work.
Following on this, let’s consider price in relation to prices available from competitors. This stands even for competitors with less functionality and capabilities. Unless the vendor’s offering is truly strategic, in the customer’s eyes, price will always be the major factor in perception of value. Truly, we often hear from our customers that their buyers and prospects do not assign significant weight to price. But the market feels differently. From your perspective as a seller, supporting value equations (industry reputation, experience in customers’ business domain, etc.) are used to justify premium pricing, but to be clear: there are limits to pricing that buyers and prospects will find acceptable.
Customers REALLY Care About Their Use Case, Not Your Solution
Consider for a moment your entire product-as-solution.
Your solution may offer up to five key types of functionality or more. But what happens when they only care about two of those functions? Well, they’ll evaluate value on the basis of those two key functions, not all five. Thus, utility of the solution matters in context of the specific use-case. If a competitor offers the two functions they will use on a regular basis, that customer will focus on the value of those functions alone. We often hear in interviews that a significant amount of effort has been spent by both the prospect and the sales team before discovering a minimum mandatory technical requirement for the prospect. Don’t make this mistake!