Books I Recommend

Many companies have asked me, “How can we get from a lower quadrant into the “winner’s” quadrant?” For those of you unfamiliar with the “Quadrant,” it is essentially an interpretive visual representation of how a research analyst believes vendors are competitively positioned. Ordinarily, the highest possible level of X and Y attributes are used to visualize an entire competitive segment of a market. While with Meta Group in the nineties, I was asked to show the healthcare-based Interface Engine market on one slide, so used Vision and Execution as the X & Y axis designations to ambiguously position all competitive vendors in that segment. The lower-left quadrant represents vendors with neither a vision nor execution to warrant hope. The upper-left and the lower-right quadrants designate the hopeful vendors with only improved vision or execution (in the analyst’s perception) to eventually be in the upper-right, or “winner’s,” quadrant.  As much as this representation proved successful, the “quadrant” has been highly subjective and historically created by junior analysts unqualified with the contextual understanding to make such designations. Gartner has gone as far as to trademark their interpretations as the “Magic Quadrant.”  

I believe that any company should invest into buyer alignment disciplines (e.g., win/loss analysis, client satisfaction, prospect perception) in order to “prove” they are a market-driven company. Furthermore, the proof should not be subjective. Therefore, positioning a company by its unique and validated attributes (company and product) will enable a company to run a race that only it can win. Alternatively, a company can continue to position itself comparing its effectiveness of every day operational activities (e.g., support, product, quality, commitment), which, will ultimately lead to price as its undesired differentiation attribute.

An aligned vendor is able to change the criteria being used to affix the attributes within the quadrant positions. As a result, positioning validated product differentiation ranked against your company’s unique attributes will position you to run a race that only you can win. As long as a buyer alignment discipline can be credited for the selected attributes to be assigned the quadrant, a company is market driven. Furthermore, a company can uniquely position itself with its prospects and against its competitors.

To align a company, recent evaluators must score you and your competitor attributes before being in production (live) with the acquired solution or product. This is a critical step missing in many win/loss analysis initiatives. When completed correctly, comparing aggregate scores will reflect buyer perception of each company activities (e.g., demo, RFP, reference call) and attributes (e.g., innovation, flexibility, viability).  Claiming the most appropriate of the top 2-3 ratings in this comparison will give you your X axis attribute. Product alignment requires the compilation of a function commonality comparison. This comparison scores functionality expected by a prospect when acquiring your solution.  Score your functionality against that of your top 3-5 competitors using a scale of 0-1 with the following designations: 0-Function unavailable; .2-Function can be customized; .4-Function is available from a 3^rd party; .6-Partial functionality is planned or available via work-arounds; .8-Function is in Beta and GA within 3 months; 1-Available and part of standard deliverable. Aggregate the scores of each function against the total responses. If you score above 85% of expected functionality and competitors do not, this is validated functional differentiation. If competitors score high and you do not, this function needs to be addressed by product development. Select differentiated functionality that best validates your company and positions you with your prospects as your Y axis designation on the 4-square quadrant.

When completed, map your validated company attribute on the X axis of the 4-square quadrant against the differentiated product functionality on the Y-axis. It is critical to ensure that all cross-organizational departments (e.g., sales, marketing communication, customer service, product management) use these attributes to position your company and products.  Of course, this is an abbreviated and simplistic description of a more complex discipline. However, if followed, it will enable you to prove that you are a market-driven company and to reap the rewards of buyer alignment.

The Problem: Executives fail to prioritize or fund market-based validation to adapt sales processes with market changes!

Fewer than 1 out of 4 organizations conduct win/loss analysis with any discipline or regularity. However, organizations need empirical evidence of their sales performance and product positioning. Unfortunately, management seems to affix a low probability to the what, how and when of win/loss analysis. The reason for de-emphasizing win/loss analysis is usually that executives don’t understand the alignment between buyer perception and the quantitative benefits to their organization. This misunderstanding is confusing when you consider that the only way to understand buyer habits is to talk to them. Furthermore, win/loss analysis is not discretionary because validated buyer alignment is required in every decision made by marketing, product and sales management.

If a company has committed to a discipline of mapping their products and services to uniquely fulfill their focused buyer problems and needs, they are selling solutions. Furthermore, win/loss analysis is the foundation required to understand their buyer problems and needs. There are unique qualitative and quantitative benefits associated with selling solutions rather than just products or services. According to Keith Eades, founder of Sales Performance Inc. and author of Solution Selling, the benefits associated with selling solutions are that sales teams:

• Have a 20% higher win rate;
• Outdistance competition quota attainment by 25%;
• Avoid excessive discounting by a factor of 5;
• Have a 30-50% better sales forecasting accuracy.

Sales management is responsible for the sales cycle, so has the greatest opportunity for quantitative benefits from an organization’s investment into win/loss analysis. Oddly, fewer than 20% of organizations have a process to maintain sales processes with buyer evaluation processes. A common mistake is that win/loss analysis is conducted by the sales organization, not product management, with the goal of extracting the single reason why an opportunity was won or lost from a win/loss interview. The result is a one-word entry inserted into its CRM or SFM tool. The irony is that a sales person conducts the client interview using open-ended questions without a template. This causes defensive and cryptic responses with little validity or a means to measure results. In addition, the results are filtered by salespeople to preserve the reality of the sales cycle from management. In a sales performance study conducted by CSO Insights, 50 percent of sales executives wanted to improve their ability to adapt their sales process to marketplace changes. That said, a discipline that extracts performance data is needed to enable sales management to identify sales representatives requiring coaching and sales cycles requiring process improvement or refinement in order to improve quota attainment.

What is a sales organization’s ROI when adopting a win/loss analysis process with discipline and regularity? Validation from CSO Insights claims that the number of sales within 1-3 months will increase by 15% and turnover will improve by 9% when sales management reviews wins and losses with sales representatives. What the research does not present is how to continually collect validated sales performance knowledge used by the sales managers during the win/loss review. This diagnosis is the most critical data to the sales organization and it can only be collected via win/loss analysis. Therefore, if an iterative win/loss analysis process (e.g., training or outsourcing) could feed the sales management system with constant validated sales performance data, CSO Insights claims that 40% more organizations could identify salespeople who need coaching, quota attainment would improve by 12%, and 60% (my research discovered 80%) of organizations would obtain the discipline of win/loss analysis. Finally, win/loss analysis is not discretionary because it is the umbilical chord to buyer behavior. By instilling a disciplined diagnostic process at the end of each sales cycle, organizations can expect multiple qualitative benefits, such as:

• Identify salespeople requiring coaching;
• Product management will develop products meeting buyer expectations;
• Product management will train sales to articulate unique value and differentiation;
• Marketing management will articulate messages that uniquely fulfills buyer needs;
• Marketing management will harvest better leads for sales;
• Sales organizations will recite common value and differentiation messages to the market.

Most organizations would be happy with the above benefits. However, for executives requiring a quantitative return on any win/loss analysis investments, the following benefits are a direct result of deploying win/loss analysis processes:

• A 9% improvement in salesforce turnover;
• A 15% increase of sales within 1-3 months;
• A 12% improvement in quota attainment.

In summary, win/loss analysis is non-discretionary if an organization wants to be market-based or has the discipline to sell solutions. Still, qualitative and quantitative benefits exist to ensure that management raises the priority to fulfill the promise of win/loss analysis initiatives. With a minimal investment to instill a diagnostic interview process on the back-end of every sales cycle, company’s adopting the principles of win/loss analysis will outdistance their competitor’s sales quota, turnover, and closure rates. Most importantly, win/loss analysis ensures that your products, services or solutions are aligned with market expectations and that your messaging is articulated in a beneficial manner.

Problem: Baseless claims of being a market-driven company are substantiated by the lack of existing buyer alignment disciplines

In a recent State of Market-Driven Adoption Executive Poll conducted by SCAI, 83% of respondents claimed to be a “Market-Driven” company. However, many responses highlight inconsistencies in their claims:

• When asked to substantiate what “market-driven” means to them, most executives responded by citing activities with their “customers,” not prospects or evaluators;
• 57% have invested into sales process training, yet half believe that its only benefit was to provide a process for the salesforce;
• 83% have not invested into product management framework training necessary to include buyer validation (e.g., personas, demand, perception, needs, problems) into product development;
• 57% irregularly conduct win/loss analysis and 28% don’t conduct it at all;
• 43% are just beginning the process.

These results maintain that one of two possibilities exist: 1.) Companies have fallen prey to unsubstantiated “me to” claims in order to be perceived as equal to their competitors who are performing market-based research; 2.) Executives are confused about how to create a cross-organizational market-driven culture.  The answer is that both are true. Dwindled budgets have forced organizations to take shortcuts and it is easier to claim something than it is to prove it. The problem is that products, services and solutions will not keep up with market demand if diagnosis of sales positioning, perception of company / solution differentiation, and reality of the vendor’s “buyer need/vendor solution” equation is not monitored, measured and improved. Moreover, ignoring market-based perception and measurement disciplines will only invalidate any claim to “market-driven” to potential buyers and will be used by competitors as an edge or advantage.

Who is in Charge?

The top two responses by market-driven companies were split between the CEO and CMO (28% each) as to who was in charge of cross-organizational market-driven initiatives. 14% say the President is in charge and another 14% claim that no one is in charge of market-driven initiatives. When asked who is in charge of sales, marketing and product management, 57% said the CEO and 29% say the President, while 14% claim the COO. In order to be successful, the reality is that market-driven responsibilities must be shared and job-based performance must be paid upon its successful execution. Furthermore, market-driven processes should be driven by the CMO and monitored (and funded) by the CEO.

“Voice” of the Buyer

43% of executive respondents claim that the sales organization is currently the “voice” of the buyer, but 29% believe that they should be. More commonly, 43% say that product marketing is the “voice” of the buyer and 43% believe that they should be. Finally, 14% say that marketing communications is the “voice” of the buyer, but that executives should be. Historically, sales organizations have held the distinction of being the “voice” of the buyer. However, “market-driven” companies will relinquish this distinction to product marketing for cross-organizational initiatives to maintain buyer alignment. In the absence of product marketing personnel, product management should be the “voice” of the buyer.  Some larger organizations have enabled the Business Development function with understanding the buyer, yet the most new-age companies have created a liaison individual, called the Sales Enablement Officer, to ensure that buyer alignment is achieved and maintained.

Fox in the Hen House

71% of responding executives claim that their only sales performance diagnosis is represented by a CRM housing sales-facing data. Yet, the only diagnosis that is updated into these systems is the one-word reason that an opportunity was won or lost - no “actionable” data on buyer behavior. Usually, the responsibility is that of the sales representative and the reason given is price, product or lateness to the opportunity. This is not valuable or unbiased data. As Einstein said, “The significant problems we have can not be resolved by the same level of thinking with which created it.”

Also, a CRM is a cross-organizational means of maintaining data on a customer, but is not effective with sales-facing prospect knowledge or as a diagnostic tool.  Likewise, a sales forecasting management (SFM) tool functions only as a sales process monitor and a closure projection tool. Finally, to be a “market-drive” company a post-decision interview (win/loss analysis) process is necessary to gather evaluator-based knowledge. As such, this content requires the use of a non-CRM, non-SFM, easy application exchange in order to input, maintain, retrieve and evaluate sales cycle performance, competitive positioning and other sales-facing content.

Cross-Organizational Adoption

71% of executives claim that their cross-organizational efforts to understand their buyer “needs work” and another 14% are “somewhat satisfied.” This trend simply points to the nascent or fledgling efforts underway in most organizations to understand their buyer. Furthermore, there is an industry void of cross-organizational models that instills an iterative process that continually validates, monitors and quantifies the buyer’s perception, needs, problems and processes.

A “market-driven” company is a company that measures and continually aligns its evaluator, customer and prospect needs, problems, processes and perception with its own development, positioning, sales processes and solutions. The buyer-based disciplines must include an iterative process to quantitatively measure improvement in all four areas. As such, a company can not be a “market-driven” company unless it maps buyer knowledge extraction initiatives to development, positioning (competitive and messaging), processes (sales cycle) and solutions (products and services).