Acclaro Partners' Research and Strategy Weblog

Using Customer Research to Prospect for Sales Leads

Ask for the Sale?

For most companies, the business development research process typically begins at "ask for the sale" sstage.  But there are actually several steps that occur before we get to this point in the lead development cycle (see a new whitepaper on our website).  When you “ask for the sale,” be sure to demonstrate your superior knowledge of the lost account’s or prospect’s pain points (section 2 of the white paper).  Think about the opportunities to get your foot in the door (section 3), and be sure to tie those steps into your overall solution.  Be prepared to overcome specific obstacles (section 4).  Mention that you have done your homework and that you are aware that they have a budget (section 5), but that they may not be satisfied with all vendors they are currently using (section 6).  Try to demonstrate superior strengths in areas that are most important to this customer (section 7).  And finally, be sure the specific offer (section 8) is a solution to a problem or a step forward toward a strategic goal. 

Feel free to visit our website to learn more.

The Eight Pillars of an Effective Market Study

There are several elements that occur, or should occur, in every good market study.   Think of these elements as the foundation, the core infrastructure of the study.  And this foundation is constructed of eight critical pillars.  These eight components should be found in any market study. 

1.    Market Size

The first step in determining market size involves putting a border around the market and carefully defining what we are talking about.  We are not only concerned with what products or services are included and which are excluded.  We also need to be clear about which geographies are being covered, and which time period we are reporting on.  A market can be sized both in terms of units of production and in terms of revenue produced. 

 

2.    Market Growth

We need to be careful with labels on this aspect of the market study.  Are we talking about CAGR, the real growth rate over last year, a change versus the same time period last year, etc?  Growth can, and should, be reported in both currency and in units.  But growth can also be reported for a specific region, a specific product, segment, channel, or customer type, for example.

 

3.    Market Segmentation

Markets can be segmented by product or service, by channel, by market share, by region, and by customer type.  And there are countless other ways to segment a market.   Segmenting a market clearly is important because it shows the user of a market study more granular insights than would be seen with merely a top-level view of the market.  For example, learning that there are five types of customers and that one dominates is interesting.  But going one level deeper and revealing that the largest customer segment is also the most averse to paying a premium for rapid delivery is clearly more valuable.

 

 

4.    Market Trends, Dynamics, and Drivers

There are four basic kinds of market trends: political (governmental, regulatory), economic (financial), social (driven by consumer or customer behavior), and technological (innovations).  Market, customer, competitor, or supplier developments may come in the form of political, economic, social, or technological change.  Seeing (and predicting) these changes is important, because some changes will be positive in nature and some will be harmful.  For example, in the health care industry, understanding new health care reforms is critical to forecasting the future profitability of the industry.

 

5.    Market Opportunities and Threats

The fifth critical component of an effective market study involves taking a close look at the opportunities and threats of the market, customers, competitors, and sometimes even suppliers.  What is occurring that could present a benefit or detriment to the Company?  More importantly, what could occur within the foreseeable future that the client could steer its way around?  Changing regulatory environments, aggressive competitor strategies and movements, reducing customer reliance on outsourcing, supplier forward integration – these are all future threats to the current status quo of the market.  It is obviously essential to pick up, report on, and analyze the impact of, these market shifts.   

 

6.    Critical Success Factors

We must understand how to attain success in the market being studied.  Customers certainly will have some of the answers to this question.  How they choose suppliers, the purchase decision criteria that they use, is important to understand.  We also need to understand the competitor perspective on the elements that are required to be successful in the market.  Especially if the client is conducting the market study as part of a new market entry decision, it is valuable to understand the barriers to entry in the market.  Clients need to compare the critical success factors of the market with their own competencies, or the competencies they could easily attain, and decide if they are suited to play in the market.

 

7.    Customer Needs and Behavior

Assuming they are qualified to play in this market, clients will want to drill deeply into customer needs and behaviors.  A good market study will involve more than current customer interviews; it will include conversations with prospective customers and lost accounts, as well.  All three types of customers can reveal their unmet needs, buying behaviors, and impressions of the various suppliers.  Perhaps most importantly, the market study should reveal the degree of loyalty that customers have for their existing suppliers.

 

8.    Competitive Positioning

In addition to addressing who all of the relevant competitors are in the market, it is important to understand each of their strengths and weaknesses.  More than understanding the current capabilities of competitors, we want to understand the directions they are moving in.  Where do they see opportunities, and how are they positioning themselves to take advantage of these presumed opportunities?  What are the strategies to take them there?  Understanding where the real market opportunities and threats are, and comparing these to the intentions of competitors, reveals that some competitors are literally driving themselves off of a cliff.  Others are heading straight for the sweet spot of the market.  Understanding this is critical, because it then enables you to decide if you want to compete head-to-head against the smartest competitors, or position your company toward the white space of the market where there is far less competition.

 

Conclusion

Good market studies are not check-the-box exercises.  While they may have some common characteristics in their core foundations, they are not cookie cutter products.  The best market studies reveal far more than “answers” to these eight issues.  They offer options and recommendations to help clients position their companies as effectively as possible, given the newfound knowledge about customer, competitor, market and supplier opportunities and threats.  For more information about Acclaro's competencies in conducting market studies, click here.

Resolving Business Inflection Points with Facts

During periods of change, uncertainty, and transition, there is a need for actionable facts in order to make strategic decisions. 

Senior decision-makers in most corporations are unable to articulate the precise path the business must take to move from the point where the business is today to the point where the business needs to be in three years.  Connecting the dots between the current positioning of the Company and its desired future positioning rarely results in a straight line.  Most companies need to pick up a new skill, develop a new product or service, enter a new market, or change/develop/grow in some way that represents a branching out from the standard way of doing things inside the company.  There are likely to be unseen hurdles or obstacles in the way.  Facts, data, research is needed to ensure that the company is able to identify and steer clear of these obstacles and hurdles.  At the same time, the Company must zero in on what capabilities it will need in order to be a legitimate player when it arrives at its final destination.  The Company would not want to arrive at its desired destination (a new geographic market, for example), unprepared to compete against existing competitors, or unable to meet customer needs.

No company can effectively embark on a plan that involves the pursuit of numerous growth initiatives simultaneously.  Companies may be considering new acquisitions and joint ventures at the same time they are contemplating new market entry via new channels, product lines, or geographies.   These organizations are facing a period of uncertainty, change, or transition because of the newfound opportunities they are facing.  There is a need for fact-based insights to help resolve their uncertainties. 

Sometimes the inflection point involves an external threat or challenge which is thrust upon the Company.  Examples include a rapidly changing marketplace (or one that looks like it is ceasing to exist), a new competitive threat, changing customer needs that make customers less interested in your company’s products, or supplier forward integration that looks like it could create a new class of competitors.  What is the cause of the threat?  Is there a way to resolve the threat?    What are competitors’ plans, given the threat?  Are there opportunities surfacing as a result of the threat? 

Primary research, direct conversations with industry participants, can answer these questions.  The research should be conducted by an objective, third-party firm, experienced in gathering insights on privately held competitors and obscure, niche markets.

 

For more information, click here to see a white paper on this subject.

Competitive Strategies

The ultimate purpose of competitive strategy is to anticipate competitor moves and countermoves, and take the initiative to thwart the effectiveness of their plans.  There are several steps to enable your company to do just that.

The first step of competitive strategy is to develop a comprehensive list of competitors in your market.  Your competitors have a sense of others’ strengths and weaknesses, as well as their own.  We ask each competitor to identify and describe its unique capabilities, competencies, and/or value proposition to understand where its strengths lie, relative to other companies in the same market.  Similarly, we ask each competitor to describe aspects of its company and its competitor’s businesses that could use improvement.

We ask each competitor to reveal the opportunities and threats they see in the market.  We look for the clear paths to growth and profitability that competitors have already identified.  We may later determine that a particular competitor’s view of an opportunity or a threat is false, but first we need to identify all of the viewpoints.  The next step is to examine the intersection of strengths and weaknesses with the opportunities and threats identified.  Include detailed implications for your company in the analysis.  By comparing each strength and weakness with each opportunity and threat, implications will emerge for actions your company could take. 

We cannot start to develop competitive strategies in earnest, though, until we have discovered the actions that our competitors will be taking.  It is not enough to see the opportunities and threats that they perceive;  we must also strive to understand what they are doing about these threats, and how they are taking advantage of these opportunities.   We need to be able to plot the present and future state of the competitors. 

It is important to understand the various unmet needs of different segments of customers.  Comparing the needs of different segments of customers with the positioning strategies of competitors reveals that some competitors are positioning themselves in a no-man’s-land of white space.  They are effectively driving themselves off a cliff – where no customer needs exist.  Other competitors will be found clustered around the same small customer need that many of its competitors are going after.  As a result, they will all starve for lack of sufficient customer need.  The wise competitor observes where the competitors are positioning themselves, and where the customer needs are, and looks for the customer opportunities that are not being met by many (or any) of its rivals.

 For more information on competitive strategies, visit our site.

Human Capital Assessments

Acclaro Growth Partners conducts market, competitive, customer, operations, and management research.  Our management assessment is an analysis of the management team, and the team’s working dynamics.  An organization is only as strong or weak as its management team.  Management assessments are effective in providing input on the strength of the human capital in your organization. 

Why conduct a management assessment?  One reason to conduct a management assessment is to augment due diligence activities.  In purchasing a company, it is important to look at three legs of the stool: financial, market, and management.  If only two legs are strong, the stool may not be able to withstand the pressure, and may tip over.  Savvy investors do not accept at face value what management says about the financials or the marketplace.  These investors also take the time to assess management.  Other reasons to evaluate the management team involve restructurings and management changes, changes in corporate strategy, and in situations in which there is a significant problem (declining revenues) and no clues as to the root cause of the problem.

How do we conduct the management assessment?  Our team is comprised of partners who have worked for large corporations.  They have overseen rapid corporate growth and have nurtured start-ups into stable and profitable entities.  They are skilled in conducting in-depth, targeted interviews designed to elicit critical information.  The interviews are semi-structured to prompt frank, candid, open conversations.  A team approach is typically utilized.  Optionally, there are personality inventories which may be utilized to provide greater insight into the team dynamic and individual styles.

What are some of the typical issues that are discovered during the assessment?  Below is a list of issues that we often uncover in our assessments:

· Organizational structure – Is there a pattern of shared values and beliefs that provides members of the organization with meaning and rules for behavior?

· Culture – Are people, work processes, and resources deployed to achieve organizational goals effectively?

· Talent acquisition and feedback – Does the company attract and retain exceptional talent?

· Performance feedback – Is there a systematic or structured process to set performance expectations and provide feedback on a consistent basis?

· Communications – Is there a system in place to provide employees with timely information about business performance, plans, and strategies, in order to make good suggestions for improving the business and to cooperate in major organizational changes?

· Training and development – Does the company invest in improving the technical and managerial competencies of its employees?

· Compensation – Is there a corporate pay philosophy that rewards performance, and that employees perceive to be equitable?

· Leadership capability – Does the core management team have the requisite breadth of experience to understand its market and manage the company to the next level of growth?  Does the leadership style motivate employees to work toward the company’s strategic goals?  How deep into the organization does the leadership capability permeate?  Does management operate with integrity and ethics?

· Dynamics of power – Who really controls what happens in the organization?  How are power and politics used in the organization – self-serving obstacles to success, or pathways to effective decisions?

· Decision-making process – Are decision made by an individual or a group?  How is information collected and distributed?  How long does it take for decisions to be made?

· Human capital investments – To what extent has the organization considered the importance of policies, processes, and procedures that foster growth and development of existing employees?

· Vision – Are there organizational leaders with clear visions of the future?  Are these visions aligned?

Management assessments can reveal the answers to all of these questions.  More importantly, they can help focus the efforts of the board.  Which areas require immediate attention, and which are concerns that can wait?  Consider a human capital assessment for your organization or acquisition target.

For more information on human capital, click here

Competitive Intelligence for Private Equity Portfolio Companies

Over the past couple of months, Acclaro has fielded several inquiries from private equity groups curious about what can be learned about competitors’ operations. 

Competing in niche industries with few or no public companies as proxies and limited published market data, portfolio companies must operate somewhat blindly in their industry segments.  However, some private equity groups have encouraged their portfolio companies to utilize competitve intelligence practitioners.  They do so to augment their internal understanding of the competitive landscape, competitor capabilities, and most importantly, competitor intentions.

Most private equity portfolio companies have a narrow and shallow understanding of their competitors.  Those subject areas they do understand about competitors (e.g., revenue, product line, and core strengths and weaknesses) do not extend deeply into a range of finance, product or corporate strategy issues.

A one-time review of the competitive landscape is not enough.  The functional understanding described in this white paper can certainly not be achieved in one study.  The portfolio company needs to build up a baseline understanding, with help from a third-party consulting firm with expertise in competitive intelligence.  This baseline understanding should be updated annually, probing both more deeply into known areas, and broadly into areas that are not yet understood.  Over time, a portfolio company will be able to anticipate competitor’s moves and make bold decisions understanding in advance how the competitors will or will not respond.

 

 

Discovering Customer Unmet Needs When "There Are None"

Organizations differentiate by identifying customer unmet needs through innovation and value added services even when the customer conveys “we do not have any unmet needs.”

Many companies incorrectly assume they understand the needs of their customers.  Others are slow to innovate and are comfortable providing the same products and services year after year.  However, the best organizations discover ways to identify unmet customer needs and turn them into opportunities.  By truly identifying customer unmet needs, organizations increase the opportunity for improving profitability and market share.

Why Do Customers Communicate They Do Not Have Any Unmet Needs?

When asked, customers routinely indicate they do not have any unmet needs.  They may have needs and are not communicating them, or they may have needs that are not clear or realized at the present time. 

  Customers’ current needs are met by other suppliers.

  Competitors may be providing solutions or services that you are not offering.

  Customers only want to share positive feedback with their suppliers.

  The customer may have needs they are not even aware of, that can only be be met though supplier innovation.

  The customer’s business is changing and the customer may not even understand their changing needs.

  Customers may recognize their need, but not want to rock the boat or complain to their suppliers and see price increases.

The Solution

The solution is to fully understand the purchase decision factors as well as the overall business strategy of the firm.  This includes talking to different internal stakeholders as well as external contacts. 

 

The key is getting the lost customer to communicate the details behind their decision to change vendors.  The best way to get the customer to reveal unmet needs is to utilize the services of a third-party research firm.  Ideally, the firm is highly experienced in “blind” conversations with customers, prospects, and lost accounts.  Acclaro Growth Partners is such a firm. 

Visit our website.

Examples of Strategic Research-Based Consulting Projects

After years of working on strategic research assignments, we recognized that a comprehensive list of project types would be helpful for clients and prospects.  There are nine types of strategic research projects that we have conducted.  Reviewing this list may help you in determining of you have a strategic research need, and how to describe the need to ensure a strategic research firm is focused on the appropriate task at hand.

New market entry Go/No Go support -- Assessing the size, growth prospects, opportunities and threats, critical success factors, trends and dynamics, customer needs and competitor capabilities and intentions can be extremely helpful in making a decision about whether a new market is worthy of entry.

Market map.  Particularly helpful for a CEO who is new to the organization and the industry sector, a market map provides a detailed primer on the landscape of the marketplace, customer segments, competitive positioning, market opportunities and threats -- as it all stands today. 

Prioritizing channel partners for quick wins and growth – We research and report on the down and dirty of which trade shows to attend, which journals to buy, where to promote and advertise, how to influence and build the brand for the marketplace, which partners to seek alliances with, etc.

Developing a three year plan with goals, tactics, milestones, champions, accountabilities – We create a tactical roadmap designed to fulfill the strategic goal(s) of the company or business unit.  After conducting external research, in tandem with management, we offer analysis, options, and recommendations.  After discussing our recommendations and managament's ideas, we collaboratively develop the actionable plan for management to execute over time.

Evaluating an existing business plan and suggesting improvements –   We have evaluated, after conducting extensive external research, the elements of the company’s existing strategy using simple evaluation criteria.  We then offer up recommendations of our own to augment this strategy. 

Prioritizing market segments for growth – No company can, or should, pursue every segment with equal energy.  We determine which product, end-use, or application segments represent the greatest opportunities for growth.

 

Prioritizing customer segments by geography, product area, or channel -- Extensive qualitative feedback from customers on expected purchase volume levels, loyalties to existing suppliers, unmet needs, switching costs, and purchase decision criteria can be quite helpful in deciding where to focus sales resources.

 

Merger/Acquisition Market Due Diligence -- We evaluate the target's marketplace to determine its attractiveness, their customers to determine loyalty, and the competitors to understand their capabilities and intentions.  In the end, we offer a "thumbs-up" or a "thumbs-down" on the attractiveness of the acquisition or merger target.

 

Help solve an external market, competitor, customer, or supplier "problem "-- Solving large-scale problems, that are not going away on their own, often requires facts and analysis.  We identify the opportuniites and lessons to be learned from a dying market, a major lost customer account, or a formidable competitive rival.

Considering each of these nine examples, are there situations or scenarios that your company is facing that could benefit from external strategic research?  If so, feel free to call Kit Lisle, our Managing Partner on 703.860.3355 with any questions or comments or feel free to contact him via email: kit@acclaropartners.com 

Our web address is www.acclaropartners.com

Organizing Sales Assets for Maximum Effectiveness

Primary research, which for us means telephone conversations with customers, competitors, and other market experts, can be extremely useful in determining how to orient salespeople.  Whether your salespeople are organized by geographic regions, product types, end-use markets or application areas -- primary research will result in cold, had, facts to help you decide where to apply more and fewer resources.  And doing so, will help you take advantage of opportunities you would otherwise be likely to miss.

From a geographic standpoint, suppose you have sales assets spread throughout Europe, haphazardly covering the continent largely based on where these salespeople happen to live.  Wouldn't it be nice to know that customers in the Benelux countries are most likely to have a high need for your product.  Or that customers in Scandinavia not only have a need, but place "Price" as very low on their hierarchy of purchase decision criteria.  Or that customers in Poland feel ignored because there are no suppliers nor sales reps appropriately serving that market...These kinds of insights, combined with the knowledge of where competitors are active, and where customers have relatively low interest levels, can be quite helpful in helping you decide where to allocate your sales resources.

And if your salespeople are organized by product area or end-use application area and not by region, it can be equally important to conduct primary research.  Rather than reactively assigning salespeople to product areas that have historically high levels of demand, proactively place salespeople where demand is on the increase.  The best way to do this is to have a qualified, objective, third-party develop insightful, dynamic, two-sided conversations with customers.  The issues to address with these customers, prospects, and lost accounts include unmet needs, trends and dynamics, purchase volume expectations, switching costs, purchase decision criteria, and so on.  Comparing the opportunities across major product areas will enable you to decide where to allocate more sales resources.

Similarly, if your sales team is organized by end-use application or end-use market served, you will want to conduct primary research to address these same issues -- unmet needs, trends and dynamics, purchase volume expectations, switching costs, purchase decision criteria.  And you will compare the presumed opportunities of each end-use application or market served.  The most exciting ones are obviously where you will apply more sales resources.

Applying sales resources based purely on historical sales volumes is worse than looking in the rear view mirror.  You may be missing out on opportunities in which the customer locks in a relationship or prefers a sole-supply situation.

Primary research results in the quantitative and qualitative insights that enable you to allocate sales resources proactively to take advantage of current, and future, customer requirements. 

High Level Retail and Consumer Trends (Based on 2009 Projects)

Considering our retail and consumer project experiences in 2009, we came up with a list of five trends that seem to be fairly pervasive.  Two concern retailer expectations for consumer product suppliers.  And three involve opportunities that retailers are seizing on their own.  Below we share with you our observations:

Retailers are increasingly relying on vendors for category management – A concept that Wal-Mart started decades ago is now the norm rather than the exception across almost all retail channels.  Retailers recognize that their vendors have their fingers on the changing pulse of the consumer in their category far better than they do.

Retail store layout changes are far more dynamic than in the past – Floor plans are changing more quickly than ever to accommodate emerging niches such as wellness, organic, convenience.  Numbers don’t lie and retailers will do anything to optimize their sales per square foot.

Green vendors are in demand – Green is rapidly becoming a critical attribute in almost every consumer category.  Expansion of ingredient labeling is bringing it to the forefront.  Supply chain optimization to reduce your carbon footprint now a major talking point.  Watch Earth Day 2010 as an indicator of this trend….

Consumer price sensitivity has professionalized store brand management – Generic store brands are bigger than ever.  Retailers are hiring top guns from consumer package goods companies to build their store brands and are using the same branded consumer product goods rigor to do it.

China is now more than just a source of cheap product – With US consumption in the doldrums, and western Europe not much better, many consumer product companies and retailers are looking east for growth.  While expectations are modest, getting the experience early is expected to generate leadership over the long run.

For a more detailed examination of the issues, to think through implications for your company, or to pose a question, simply give us a call or send an email.  Kit Lisle is the Managing Partner, and can be reached on 703.860.3355 x105 or by email, kit@acclaropartners.com