Trust-Based Selling: Finding and Keeping Customers for Life (2015)
Chapter 9. Niche Selling
Lead with Something Unique
Attack him [the enemy] where he is unprepared, appear where you are not expected.
While this book is about developing trust with customers, trust can also be used to develop strategy. By understanding the trust you possess vs. the trust built by a competitor, you can start to formulate a game plan for penetrating accounts, messaging, and closing the business. The first major tactic in approaching new customers is putting relationship before opportunity. The second major tactic for approaching new customers or a new sales territory is to determine which product or service to lead with. Using the concepts of trust, I will develop a model that you can use to make this determination.
With all the talk about relationship and qualifying the customer, you eventually have to sell something. In the sales situation with Tom (the person who chased opportunities, had a large pipeline, but never closed a sale), the manager suggested that he learn about, and lead with, the company’s top selling product, the products that generate the most revenue, and solutions that are the most competitive in the IT industry. I will first point out why this is an incorrect strategy, then discuss the correct product selection.
The primary reason for this chapter is to determine which products or services to lead with. If you have only one item or service to sell, not all the concepts of this chapter will apply to you. However, there is a secondary value of this chapter, which is understanding your customer’s purchasing personality, and how you can use it to properly present the solution you are selling. If your company is bringing a new product to market, memorize this chapter.
To Whom Will You Sell?
Geoffrey Moore’s book Crossing the Chasm describes how to bring a new technology to market. He adapted this concept from research done at Iowa State University, which describes the acceptance of new products based on customers’ demographic and psychological characteristics. The original purpose was to track the purchase patterns of hybrid corn seed by farmers.
This model has been widely used. These concepts adapt to most sales situations. What you should get from this chapter is an understanding of personal buyer personalities, how they fit within an organization, and how you position yourself to get that first deal. In this chapter I adapt the methods for marketing new technologies to work in any selling situation..
The chapter’s conversation is built around this model (Figure 9-1).
Figure 9-1. Innovation adoption lifecycle curve
As you can see, there are five buyer personalities. The premise is that you must follow a logical specific progression for each type of customer in order to successfully introduce a new technology. This is called the innovation adoption curve or lifecycle. The area of the curve indicates the relative size of the market. Here is a brief summary of each personality type, including how they buy, and what they require.
The first category is the innovator or techie. The techie can be identified as the type of individual who likes to be at the early stages of a new product or service. This is the type of customer who just likes to be first. They have the first mobile phone, the first laptop, or the house in a new neighborhood. This is the type of person who reports software bugs. This report is made not out of frustration, but out of pride. They like to be recognized as helping define the final product.
In sales, the mantra is that customers buy in this order—you, the company, then the product. But in the innovator category, customers put product first. These people tend to be lower in an organization, but not always, as I will discuss later. Sometimes, meeting with an innovator might be your only way to get a foot in the door. But you must remember, this is a small number of people within a company, and typically their budgets are extremely small.
The second personality is the early adopter, or visionary. The visionary is the person who looks at a new product, and looks for ways to make magnitudes-of-order improvement in a process, or to their business. This personality type is viewed as a risk taker. Their ideas are grand. They like the big picture but get lost in the details. This buyer wants a working product; they want to implement the product, not trouble shoot it. They are more concerned with other things, like what this product can do for their company or career. In an organization they tend to be first-line managers, are younger, and are trying to move up the corporate ladder. Often, they are ambitious.
Next is the early majority, or pragmatics. This is the first of the larger markets. By definition, pragmatics tend to be very practical. They are not risk takers, but are looking for products or services that are proven, and will help the company make small incremental improvements to costs or revenues. They want a product that has been proven in the market. They want a product they can purchase, and the companies they do business with must have references. These people are very well respected. They tend to be tenured within the organization, and carry director-level titles.
Conservatives, or the late majority, are about the status quo. Conservatives purchase a product once it has become mainstream. The product is “complete,” tested, proven, and usually from the leading vendor in a particular market. From conservatives, you often hear statements like, “No one ever got fired for buying [insert big name here].” This type of buyer tends to be further up within an organization. They are tenured, but tend to have a “mitigate the risk” mentality of doing business. They are more interested in career preservation than career advancement. This is the largest group within a company, region, or market.
Laggards, I will not go into detail with laggards, since they are a small market, and it’s not necessary for the setup of our strategies. Laggards have an “old school” mentality; if it ain't broke, don’t fix it. For example, some still don’t see the need for a computer. “We always use manual ledgers; why would I need a computer?” This is an extreme example, but you get the point.
Customers in this category are usually related to the culture of the company. For example, buyers for a manufacturer of furniture will tend to be toward the back of the curve. But you do sometimes find a visionary working for a laggard company.
Laggard markets can be lucrative. In the IT industry, some customers hold onto equipment that is way past the support life of the manufacturer. So replacement parts become scarce and therefore expensive.
If you are in this type of market, just know that having a visionary message will usually be wasted on this type of buyer.
To fully understand the concepts around these personalities, consider these real-life examples.
Example: Techie in a Conservative World
My brother is in medical device sales. His company was introducing a new product that would reduce the need for some nasal surgeries. This device could be used in the doctor’s office. The cost-benefit to the doctor was huge. He could do this procedure, as stated, in the office. It would take 15–20 minutes versus taking hours at a surgical center. The profit to the doctor was the same when you compared the surgical procedure versus the in-office procedure. However, for the doctor, the true savings lay in opportunity costs. He saved hours of time that he could use to see (and bill) other patients.
Given this great advantage to help doctors save time and make more money, my brother set out with his product. His sales in the first six months were almost nonexistent, and so were the results of the company. The main objection was that the product was not proven. Doctors tend to be conservative. They wanted to see that this procedure had been done safely for years. They want to be sure there are no long-term negative effects.
The message about large improvements to the bottom line was aimed at a visionary buyer. But in the medical field, the curve is shifted more to the right. Even visionaries in the medical field tend to be more conservative since they are dealing with human lives. So, the visionary market is very small in medicine. As a matter of luck, my brother called on a doctor who happened to be an inventor himself. This doctor was a straight-up techie. This is the perfect first customer for new technology. This doctor, without references, went straight to his patients and started performing procedures. As mentioned, innovators tend to be lower in the organization. However, in this case the doctor owned the practice. During the course of the procedures he pointed out issues he saw, made recommendations for improvements, and had ideas for add-ons to this product. The message of increased billings for this doctor was of little value. He wanted to play with the latest technology.
Leveraging the success of this doctor, my brother was able to grow his business. Outside events helped as well. For one thing, the company was smart enough to listen to the early clients and make improvements to the product. A couple of doctors saw the business vision and the competitive advantage to offering this procedure, and they built huge practices specializing in this procedure. This led to a wider use of the product that could ease the concerns of the conservatives.
The intent of the example is to show the progression that a new product takes coming to market. In terms of sales strategy, there are few takeaways. First, understand where your product resides on the curve, so you can keep an eye out for customers who properly fit. Second, know your customer adoption personality. Third, tailor your message to match the person. When dealing with a techie, your message should be about the product, and what it can do. If you are dealing with visionaries, the messaging is more about massive improvements. When dealing with pragmatics, you want to talk about experience, the stability of the company, and the proven track record of helping customers. Lastly, when dealing with conservatives you must either have the leading product, or a good message about how you can enhance the solutions they already own.
Example 2: Selling “Conservative” to a Visionary Doesn’t Work
Here is an example of messaging from the other side of the equation. Early in my sales career I worked for Cisco Systems. If you are not in IT and do not know Cisco, they own 80% market share in computer networking. “No one ever got fired for buying Cisco.” Their message was something like this:
We have proven products. We have a huge R&D staff to keep ahead of the technology demands. We have 10,000 certified engineers. We have done proof of concepts with every technology on the market. Due to the volume of product we produce, we can offer competitive pricing.
How can you lose a deal with all this behind you? I did, and it was a large one. I had better pricing, a good relationship, and I listened to the business requirements. I actually helped the customer during the business planning. Plus, my product was more flexible than the competitors’. There was actually an investment protection program in place in case the technology changed. My competitor was shrinking, losing massive market share, and their R&D ranks were decimated. (Here is a quote from my customer about my competitor, “The one engineer who is working on this product has promised me he is staying with the company.”) What’s more, they were slightly more expensive.
How then did I lose the deal? Let me give you a bit of background on the prospective company and this person, and you tell me.
· This prospect was going to offer insurance through kiosks at a major retailer. They were the first company to deliver insurance in this manner.
· The owner of the company was young, and the company was growing almost too fast.
· The CIO, my main contact, was promoted from within. Just a few years before this, he was made head of computing because he knew how to operate both Apple- and Windows-based computers. Within four years, he was in charge of building out a 4,000-node network worth millions of dollars.
· The CIO liked to jump out of planes and scuba dive on weekends.
Why did I lose?
My approach was aimed at a conservative, but my buyer was a risk taker. The entire company was visionary. My competition played to the risk taker, the new technology, and the up-and-coming company (even though it was dying), and they assured him he could have access to the single design engineer. They risked their success on one person.
Getting back to theory, Moore’s contribution to this model is the introduction of a break in the adoption model. There is a challenge between the visionary and the pragmatic, or the chasm. The pragmatics and decision makers of the company require references and referrals. These referrals can either be internal or external to the company. The problem is that early adopters of the technologies, the techies and visionaries, are not considered good references. The pragmatics view them as flakey, and their opinions are not valid.
The answer to this dilemma is niche marketing. For the purposes of this book, I call it niche selling. Niche selling is addressing a customer’s need that is not addressed by a current vendor. Alternatively, you may have a product that addresses a specific need that does not involve much risk or investment. Niche selling is a powerful strategy for a new salesperson. You need to find a unique offering in your product or service line that your competition does not address.
Looking back at Tom’s example, what did management do up front? They trained him on their big ticket, best-selling items, and their most competitive product set. Tom’s challenge was manifold:
· Technology that is hard to replace at the customer.
· Dozens of other competitors in that market.
· Incumbents who have the customer’s trust.
Tom would have been better suited if he were trained on products or services that were new to the market, or unique to the vendor. Your goal should be to sell to a customer base where there is not an incumbent.
Trust in Niche Selling
When you’re competing against a trusted competitor, you are looking to build your trust and find a weakness in the competitor’s trust equation. If you lead with a niche product or service, you have a capability that is unique. You may not have demonstrated the capabilities or results yet. But since you are dealing in an area in which the incumbent cannot offer a solution, their trust meter for that specific solution is diminished. For that solution, the incumbent still has proved they are dedicated to the customer, and have good intention, but they do not have the capability or results for that solution. Always start by assuming the incumbent is fully trusted. So in this case, the incumbent trust meter moves to this level, as shown in Figure 9-2.
Figure 9-2. Lower incumbent trust due to lack of product offering in a needed area
When you are actually competing with an incumbent who did not bring unique values to the forefront, trust in the incumbent is degraded some. This comes in the form of showing a customer a new way to use their existing products, or solutions, that they did not think of. The incumbent can be hurt in the dedication and possibly intent elements. The incumbent is assuming that business will flow their way, and their approach to helping the customer comes into question (Figure 9-3).
Figure 9-3. Lowering incumbent trust due to less than stellar customer service
You lowered the competition’s trust profile without once being negative toward your competition. All you did was present an area where they are not capable.
During half time of a football game, the teams go to their locker rooms and you reevaluate the game plan. The first place you look is where you are having success, or where you can exploit a known weakness in the opposing team. If you are drawing up a play on the whiteboard, you would first attack the weakest link in the defensive line. Look at attacking the incumbent the same; where are they weakest? The defensive line for the incumbent looks like Figure 9-4.
Figure 9-4. Relative trust strength of incumbent vs. non-niche and niche products
If you have limited trust at the beginning of the sales cycle, your best play is moving toward the right of the line. Going head-to-head against a competitor with similar products is your toughest route. Even if you believe you have a solution with some better capability, you can see your situation does not improve much. The next trust meter shows a situation where you introduce a solution to a customer; a solution a competitor has, but has not discussed with the customer. The first niche trust meter shows a niche product that may replace, complement, augment, or possibly change a competitor’s solution. The last situation is by far the best. You find a new product that is important to the customer, and they have no incumbent in that area. You are competing on a completely level playing field, or, ideally, you are the only team on the field.
Why Niche Selling Is Effective
Selling where there is an incumbent vendor shrinks your window of opportunity. Using the 48-month purchase cycle mentioned before, you might hit the window perfectly within the four-month sales cycle, but probably not given the 8% chance of hitting it. In reality, if they have a vendor for this type or purchase, your window is much smaller. If you happen to catch your competition sleeping, and can define the solution for the customer, your true window is maybe one month, or a 2% chance. If you hit the window perfectly despite the odds, you have an 80% chance of becoming the vendor they use just to keep the other vendor honest.
Now look at niche selling. You understand the customer issues around which you will position your product. You understand that being new, you need to establish trust, so your first deals might be smaller. When you position a new need to the customer, you create an entirely new purchasing cycle because this is a new concept. There is no incumbent. Your chance of engaging in a conversation that is open minded, not clouded by competition, is 100%. This method eliminates the window-of-opportunity concept. There is no cyclical purchase established for this particular product. You eliminate the need for perfect timing and lower the influence of competition. If your competition does offer the same solution, you put your competition in a defensive position with the customer. “Why didn’t you tell me about this new product/service/technology?”
Example: Putting Niche Selling to the Test
Let’s take a look at this strategy in a company’s effort to bring a new technology into its portfolio.
A reseller entered into a new contract to sell a large manufacturer’s products and services. This manufacturer had a very broad portfolio in the IT industry, including servers, storage, networking, management software, and back-office software. Each of these product areas was supported by separate divisions of the manufacturer. They pretty much had everything you needed to run an IT shop. Yet the reseller was struggling in its first six months of engagement with this manufacturer. When we consulted with the reseller, we started by asking how they had engaged, what they had been trained on, who they had relationships with at the manufacturer, and so forth. Then we analyzed their pipeline.
Eight months into this new relationship, the sales teams across the reseller’s five regions have done account mapping, training, and some joint sales calls with the manufacturer’s server and storage teams. Servers and storage in this industry are highly competitive—in fact, the most competitive. Products are almost commoditized in these markets. Moreover, the products tend to be in sensitive parts of their customers’ businesses, making them technically hard to replace. They are also on long purchase cycles, meaning that only a small percentage of their customer base is in the market at any one time. The reseller also faces competition from other resellers who also sell this manufacturer’s products. They cannot simply position better features of the product. With these larger purchases, the sale teams were most likely competing against a seasoned sales professional who “owned” the customer relationship. Even when the customers are “in the market,” they typically stay with incumbent technology.
Across five regions, they had 25 salespeople, and after eight months, they had a total of 10 deals in the forecast. The total revenue in the forecast was $1.7 million. We did not even bother to qualify the forecast based on their relative trust strength against the incumbent.
Our next step in the consulting process was to bring together the sales leaders from each organization. We asked the manufacturer to briefly review their product portfolio. We were able to identify a niche product that could be sold to a few different titles within an organization. We then looked back at the forecast and saw that two of the ten opportunities were with this product; this was without any focus on this niche product. We chose two regions at the reseller to roll out this strategy.
1. First, the reseller trained the sales teams on this niche product. Training was focused, and not scattered across the entire product portfolio. There was a simple story that both junior and senior salespeople could grasp.
2. They developed a marketing program that would bring customers to lunch-and-learn events. The promotion of the lunch-and-learn was focused on the issues customers face that this product solved. They did not focus on the product. With this focus, the sales and marketing teams were able to drive great attendance to the events. Over 50% of the attendees were net new clients to the reseller or the manufacturer. This is the power of focusing on issues that customers face.
3. After the lunch-and-learns, follow-up sales calls were conducted with the attendees.
The results were impressive. Remember, they conducted the events in only two of the five regions. In 37% of the time, 3 months versus 8 months, the company grew the number of opportunities 240%, from 10 to 24. The revenue in the forecast grew from $1.7M to $4.4M. 75% of these deals were in a “confident” stage. The interesting part of the scenario is that the niche product opportunities went from 2 to 7. That means the other opportunities, in the larger volume categories, increased from 8 to 17. The goal of the niche was to gain access to the customer and then have broader conversations, and that is exactly what happened. With these results, the manufacturer stepped up and paid for marketing events in the other regions. The other divisions of the manufacturer saw these results and were willing to put in money for marketing events, even though the niche product was outside their division.
Niche selling works because it gives every advantage to penetrating a new account. First, it increases the rep’s chance to gain access to a customer. Next, it reduces the chances the rep will be going head to head against an experienced, incumbent competitor. Last, if you have a large product portfolio, it allows your company to focus training for new salespeople, and it gives a specific focal point for marketing to assist the sales team.
In this chapter, I assumed that you have a choice in products or services. If you do, pick something unique. If you do not have a choice, hopefully your offering is unique. If your offering is not unique, try to find a unique application of the product or service that has not yet been discussed with the customer. If it is not unique, at a minimum make sure your messaging is in line with your buyer’s adoption personality, or job title.
The power of this strategy is that it does not require one ounce of sales training, or sales skills improvement. It can be done in a conference room with management. And, you can get the entire organization focused on supporting penetration of new accounts. It’s a matter of simple physics. If you can apply the same amount of force in a smaller area, you generate much more pressure. If you push on a piece of paper with your hand using 20 pounds of force, nothing really happens. Now take that same 20 pounds of force, and focus it on the tiny area of a pencil tip. You will punch right through it. If you use marketing, events, cold calling, and training all focused on one niche product, you get the maximum pressure in penetrating new accounts.
Now that you are prepared to engage with the customer with a proper online presence, sales training, product training, an effective elevator hook, and you have picked a solution to lead with, we have one more element of trust to discuss which is slightly outside of business. The most trusted people are people with power or authority. Most sales people—the bottom 80%—give up too much personal power the moment they walk in the door. We will explore that in the next chapter.