Everyone has an opinion when it comes to product investment priorities and marketing spend priorities. Answer these two simple questions and those priority decisions get a lot easier.
- Where will short term revenue (this year) come from?
- Where will longer term growth (after this year) come from?
If the answers to these questions take you straight to product discussions, STOP!
Product and marketing priorities have to be influenced by external forces if the desired result is a single set of top-down initiatives that won’t change with the wind.
Most B2B product companies, however, attempt to establish strategic priorities at the product level and quickly become frustrated because it’s next to impossible to achieve any level of consensus given the many perspectives and opinions related to each product and its market potential.
In most B2B organizations, multiple products target the exact same markets. When those products are managed, marketed and sold as separate entities, it fosters many differing views of the same markets.
For example, the financial services market may be seen one way by sales based on the pipeline, another by marketing based on the trade press, and yet another by client services based on customer conversations, and so on. Throw in a few conversations with executives, investors and the board for good measure.
It creates an environment where every discipline thinks its view of the market is the correct one, and that thought process drives separate agendas that lead to constant competition for R&D, marketing and sales resources. It can easily escalate to a series of never-ending political battles that take an organization in too many directions, causing it to ultimately misfire on its growth objectives.
The Easier Way to Prioritize: Market Segments First, Then Products
There’s an easier way to answer the above questions that will establish a single set of top-down priorities and align the organization to a common agenda that maps directly to its corporate goals. It begins with market segments and ends with products.
Consider the same questions rephrased in context of market segments first, then products.
Which market segments will drive the majority of short term revenue (across the entire product portfolio)?
The answer to this question will dictate the allocation of marketing resources that best drive revenue from the existing product portfolio plus any new offerings due to be released in the near term. Instead of marketing individual products, the “market segment first” approach helps organizations articulate their strategic value to each market segment at a higher level with segment-specific messages that speak to the strategic motivations of buyers in each segment.
Product value propositions serve as proof points to the segment value proposition for each market segment. This approach not only gets you out of the feature wars with competitors but it also makes the value story much easier for marketing and sales to communicate in a credible manner, and credibility can be the one differentiating factor that ultimately improves your win rate versus the competition.
Which market segments offer the best opportunity for longer term growth (across the entire product portfolio)?
The answer to this question will dictate the product investment mix required to deliver the highest value solutions to the most lucrative market segments going forward – call it a portfolio strategy. This approach will all but eliminate the competition for resources across product teams because at any point in time, certain products will be far more important than others in creating those high value solutions.The portfolio approach is as simple as answering three questions:
Which market segments offer the best opportunity for growth across my entire portfolio over the next 1-3 years?
For example, financial services, telecom service providers, tier 1 retail, etc? The key to successfully quantifying the opportunities in each lies in using consistent techniques and methods that create apples-to-apples comparisons across market segments.
What operational areas are customers investing in strategically to support their own goals?
For example, call center training, retail store staffing, IT outsourcing, etc.
What specific solutions can I deliver to align with the strategic spending priorities in each market segment?
For example, on-demand training modules that help customer service reps quickly learn the onslaught of new products and services…to improve the call center customer experience and ultimately improve profitability by reducing the cost of operating the call center.
By first prioritizing target markets then defining critical solutions for those markets, the products required to deliver those solutions automatically rise to the top of the investment priority list by default. To maximize the economies of scale in your product design and development efforts, add other important or nice-to-have enhancements to the products that are already undergoing major development, since they’ll require design and testing efforts anyway.
If your product and market strategies too often turn into competitive battlefields where every new idea or opportunity keeps the organization in a constant re-planning and re-prioritizing mode, contact Proficientz and learn how our B2B Product Management Framework and Product Portfolio Management Training Programs can help you create one agenda and one set of priorities that maximize short term revenue from existing products and drive longer term growth with higher-value solutions.