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Accelerating Growth: Overcoming the Chasms of Failure™ (Part five of a five-part series)

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Sustainable, ambitious growth is probably near the top of your priority list. But we all know it’s not easy to achieve, even with the right team and a great product. In parts two, three and four of this series, I offered some pretty dire warnings about what can go wrong as you work to reach that ambitious growth goal. You might find that your product plans or roadmap don’t quite match what your customers need (the Chasm of Failure to Deliver™) or that your people might not know how to keep the promises you’ve made to your customers (the Chasm of Failure to Execute™). The most dangerous of the Chasms of Failure is the one you fall into when you don’t really understand your customer well, or your understanding of the promises you make to your customer don’t match your customer’s understanding. That is called the Chasm of Failure to Focus™ and almost always results in internal chaos and wasted resources. But despite my dire warnings, there is a way out of the Chasms of Failure and back onto the path to growth.

Every company I’ve worked with — or, for that matter, seen — falls into at least one of the Chasms of Failure at some point, and sometimes at several points. What matters most is not that you’ve found yourself there, but that you know how to pull yourself out of it and get back on track.

In this final part of this series, I will show you how to identify the symptoms of each Chasm of Failure and offer some things to consider to get back on track. I don’t know your specific situation yet, but I’ll show you what other companies have done to succeed. Finally, I’ll give you a framework to help ensdure you’re firing on all cylinders and keeping all the parts of your business on track to growth.

Knowing the symptoms

Every company will find themselves in a Chasm of Failure sooner or later. Some of the symptoms by which you’ll know are common to all three Chasms of Failure, and others are specific. You may find you have unique versions of these, depending on your company’s business, structure and culture. Here’s what to watch for:

Symptoms of the Chasms of Failure

Symptoms common to all three Chasms of Failure
● Growth begins to feel much harder
● Sales reps are scrambling to find or save deals
● Marketing is desperate for new lead sources
● Customer retention starts to drop

Chasm of Failure to Focus

Chasm of Failure to Deliver

Chasm of Failure to Execute

● No two of your people have the same definition of your customer
● Confusion in the handoff from sales to customer success
● Dropping lead acceptance rate by sales
● Adoption rates drop
● Noticeable increase in customer dissatisfaction after a few months
● Large increase in support requests and escalations
● Salespeople promise anything to get a deal
● Increase in escalations to managers in sales and customer support/success
● Your team is confused about the right thing to do for your customer

Escaping the Chasms of Failure

Tactics common to all three Chasms of Failure
● Balance your focus among getting your Promises, your People and your Product right (see diagram below)
● Identify areas of disagreement or confusion, and clarify

Chasm of Failure to Focus

Chasm of Failure to Deliver

Chasm of Failure to Execute

● Know how your capabilities map to your customers’ concerns
● Be clear and precise on your promises to your customers
● Ask your customers, and make sure their understanding of the promises is the same as yours
● Ask your customers where the product doesn’t match expectations
● Examine your roadmap and ensure it matches your promises
● Ensure your capabilities can fulfill your promises
● Be sure the definition of your customer is clear and well-communicated
● Define precisely how every person on your team contributes to fulfilling your promises

Take a look at the earlier parts of this series for more discussion on what can happen in each chasm, and how to escape or avoid it.

I hope this will help you take an honest look at your challenges, and understand better why you are experiencing them and how to make your path to growth a lot smoother and faster.

Firing on all cylinders

I would like to see your company focused, executing smoothly and delivering consistently. But companies with which I’ve worked often focus on two main areas to try to make sure they are meeting customer needs and aspirations: First, they want to make sure customers are “delighted.” This usually involves surveys or, sometimes, direct interviews. Second, they try to measure customer trust. This is usually a binary measurement, meaning the conclusion is that a customer considers the company a trusted adviser or it doesn’t (trust is far more complex than that, as I’ll discuss in an upcoming series). But they miss most of the points on which they must excel in order to achieve the kind of ambitious growth I suspect you want.

Your Growth Roadmap

To achieve that level of growth, it’s important to look at each of the main areas necessary to succeed across each of the parts of your business that must fall into alignment.

Achieving focus means you must understand your customers well to create a strong relationship. Your product roadmap must be precisely targeted, and your people must have a map for the actions they will take to support that relationship

Executing well means you must make the right promises that match with your customers’ needs and aspirations. Your product must deliver on target according to your roadmap, and your people must produce consistent outcomes for your customers.

Delivering means your customers are invested in your promises and get excited about them. Your product must delight your customers, and your people must build and maintain the trust you have worked to earn.

Those last two items are where you are likely already putting in significant effort and are the ultimate measures of your success. But the hard work of getting all nine areas right is what you must do to achieve that.

I hope you’ve found some value and useful ideas in this series. If you’re interested in understanding better where you stand, what issues you might be able to avoid or how to build a trust-base growth strategy that will bring you to market leadership, please feel free to contact me.

I look forward to hearing your stories.

Customer Trust

The Important Lesson You’re Missing from the Facebook Data Debacle

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Facebook didn’t fail to protect user data in accordance with its terms of service. Facebook didn’t fail to make itself transparent enough so that users understood how their data would be used.

Facebook failed to keep its promises to its users.

This is the lesson you and your company can take away from this debacle. It’s vitally important to you because, while it’s really hard for most people to leave Facebook, I’m pretty sure it is not nearly as hard for most of your customers to leave you, should you break your promises to them.

How did Facebook break its promises?

To answer that, let’s start by defining a promise. We think of promises as commitments we make to other people about things we intend to do. But for a business, a promise is more than that.

A promise is made when a business commits to using its capabilities to meet a need or aspiration of its customer.

In the B2B world, this might look like something as simple as a marketing automation vendor promising its product will always get your campaigns scheduled and launched correctly, and tracked as you instructed. Or it might look like an intelligent system promising to understand your customer interactions to help you identify your happiest and least happy customers.

In the second example, if the system got it wrong enough of the time so it became unreliable to use as a basis for customer-related decisions, then it would be breaking its promise. I am not suggesting it needs to be perfect. But it does need to be consistent and reliable.

You make promises to your customers every day. Some have to do with your product or service. Some with how your people interact with and support them. Others might be about what you are going to do for them in the future. All these promises are important and are the reasons your customer bought from you in the first place. The quickest way to lose a customer is to break a promise you’ve made. The easiest way is to fail to understand what promises your customer thinks you’ve made.

Back to Facebook

Facebook’s core promise is to connect people to their friends and to things of interest to them (news, events, companies, etc.). Part of that promise is that, in exchange for doing this at no cost, Facebook will show you paid advertising, based on the data you provide.

That last bit is important. Most people know they are providing data such as their name, location and age. Most people don’t know they are providing information about their preferences, political views, browsing habits and so much more.

The promise of a free service in exchange for advertising is not a hard concept. Ad retargeting is. A spokesperson for Mozilla said it well: “Tech companies can’t expect most of their users to understand how their service works.”

That’s where Facebook went wrong.

Facebook works on the premise that, by publishing a terms-of-service document and making settings available to control use of personal data, every user will know exactly what it all means. That’s not even close to true.

In fact, most Facebook users think Facebook keeps their information relatively private, and that by having a password, only they can get to the data they enter. That’s also not even close to true. It’s even reasonable for any Facebook user to believe the persona information they enter is a kind of a public secret among them and their friends. Even many sophisticated Facebook users — ones who understand how an advertising-supported model works —  with whom I’ve spoken are surprised at how much data Facebook has shared, and how freely Facebook’s advertisers are permitted to use and distribute that data.

And there’s the problem.

The gulf between what Facebook thinks it promised and what its users think it promised is enormous. Facebook didn’t fail to live up to its terms of service. It didn’t fail to provide settings and promote them. It failed to understand what its users expected and how to act on those expectations.

We in the tech industry take a laissez-faire attitude toward our promises to our customers. Most EULAs say products are delivered “as-is” and make it clear they may not work. Most terms-of-service documents disclaim any responsibility for failure of the product.

That may protect your company legally. But it won’t keep customers. Remember my first rule of customer service?

“If you’re quoting your terms of service, you’re wrong.”

What you should do:

Talk to your customers. Make absolutely sure you know what they think you promised to them. Make sure they know you are, in fact, promising. Make sure there is no gap whatsoever between those understandings.

Then keep those promises. Consistently.

Because, if a Facebook-like debacle happens to you, you will probably not end up testifying before Congress. But you will almost certainly lose a significant number of customers.

To learn more about doing it the right way, check out my five-part series showing how customer trust is the key to growth.

Chasms of Failure

The Chasms of Failure: Growth Means Making Your People Successful (Part four of a five-part series)

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Growth plans are all-too-easily derailed, especially when the growth target is ambitious, leaving companies or products floundering in the Chasms of Failure™. In part one of this series, I reviewed some common growth tactics and why they might not go as planned. In parts two, three and this part, four, I discuss each of the three Chasms of Failure and how to identify what is going wrong. In the conclusion of this series, I will discuss how to identify and implement steps to help you recover and get your growth back on track.

In parts one, two and three, I reiterated a point I cannot overstate: Focus is the critical element of growth. I assume, for this discussion, you’ve already identified your target audience, you know their needs and aspirations, and you know exactly what promises you want to make to make their aspirations possible. Part three showed how getting your offering aligned to those promises is the next piece of the growth puzzle.

I’ll now shift to discussing the Chasm of Failure to Execute. If you’ve worked in any growing company, you’ve heard — probably quite often — that execution is the key to success. It is (it’s not the only requirement, but you can’t succeed without it). Achieving your growth plans is no exception to the rule that execution is critical.

Execution in this context, however, means specifically delivering on all the promises you have chosen to make to your customer. It’s not a set of tasks or a checklist of things you complete. Delivering on your promise means your customer has achieved what you promised they would by using your offering. If you want to make your customer a hero, you can’t count yourself successful until your customer is, in fact, a hero.

What?

Falling in the Chasm of Failure to Execute is often as simple as a lack of communication. Maybe you didn’t fully understand what the customer meant when they expressed a given need. Maybe your sales team understood it, but didn’t communicate it as well as possible to your customer success team, which then missed some key action. Sometimes, it can be a result of a failure to act, but lack of communication is often the thing that pushes you over the edge.

When you are in the Chasm of Failure to Execute, it will likely feel frustrating. You’ll see symptoms such as increasingly unhappy customers, or customers you thought were doing well suddenly complaining or leaving. Your teams may have no good explanation for the sudden unhappiness or may find blame in other teams, leading to finger-pointing. You will likely see lots of meetings to review problem situations, and your teams getting more and more frustrated with endless questioning. If you don’t pull out of this Chasm of Failure, you may find an increasingly political atmosphere and key departures.

The Chasm of Failure to Execute might look something like this:

A mid-size software company was trying to restart its stalled growth. Using the Growth Driver approach, they started by looking at current customers and other potential prospects, and chose a segment on which to focus. Interviews and market analysis revealed an area of frustration for potential customers that no one else in the industry was addressing. They looked at the concerns map, alongside the capabilities of the company, and developed the short list of promises they knew they could make that would also deliver significant value, completing the “Promises” section of the growth puzzle. Then they built the product and validated it with key potential and current customers. With these companies excited about what they saw, they had completed the “Product” section of the growth puzzle.

When the product came out to market, it was well-received with lots of excitement. But it didn’t sell. Prospects said it sounded good, but the company’s salespeople couldn’t explain how it would achieve their goals. Other potential customers said they had the problems the product was designed to solve, but they couldn’t figure out how the product would solve them. A few customers who tried the product said their technical support contacts couldn’t help them find their way through complex operations.

What underlies all these issues is that the people who were ultimately responsible for keeping the company’s promises did not have the knowledge or understanding of the promises and how the company would meet them to keep those promises to the customer. Salespeople didn’t know how those promises made their prospects heroes, and technical support people didn’t know what promises were being made or how the company intended to fulfill them.

The company started a series of hands-on trainings that put salespeople, technical support people and others who worked with customers in the role of their customer and helped them understand what the customer was trying to achieve, how and how the company’s product helped that happen.

As those trainings took place, there were fewer and fewer complaints, and the product started to sell more and more to happier customers.

The Way Out of the Chasm of Failure to Execute

This bears repeating: Knowing the promises you intend to make to your customers is always the first step out of every Chasm of Failure. It’s not enough to choose promises to make, you must constantly validate them with your customers to ensure you are delivering the value you think you are — and that your customers expect.

Climbing out of the Chasm of Failure to Execute means understanding that every single person who interacts with a customer in any way affects your company’s relationship with that customer — and how much they trust you. It may not be intuitive to train technical support teams on your customer’s every strategic business objective, but when they do have that knowledge, they can not only solve technical problems, but they can ensure those solutions help the customer achieve their goals. Getting everyone in the company to execute every single day on every single promise you make may sound hard, but it is also the focus, delivery and execution you need to keep your growth on track.

Having everyone in your company doing their job well makes for a job well done. When everyone consistently understands and delivers on the company’s promises, your customers will rave about their success — all because of you.

In the last part of this series, I will discuss discovering and making promises, building customer trust and how to scale your focus to become a market leader.

Chasms of Failure

The Chasms of Failure: Growth Means Delivering on your Promises (Part Three of a Five-Part Series)

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In part one of this series, I discussed some of the tactics companies use to create and maintain growth and the reasons those tactics don’t always work as planned: the Chasms of Failure™. In part two, I discussed the Chasm of Failure to Focus — the one that afflicts companies most often. In this post, I will discuss the Chasm of Failure to Deliver, how it happens and a path to recover. In the next part, I will discuss the Chasm of Failure to Execute, and in the final part of this series, I will conclude with insights on identifying when you have fallen into a Chasm of Failure and what to do if you have.

I noted in the previous two parts that focus is a critical element of growth. Now, I’ll shift from how to find your focus to what to do once you have found it. I’m going to assume you understand your target audience, you know what is valuable to them, and you know how what you do maps to what they think is valuable. I’m also going to assume you’ve done a good job of educating your team(s) and creating the processes to support fulfilling the promises you want to make to your target audience.

This Chasm of Failure is nearly impossible to avoid at some point in a company’s development. Falling into the Chasm of Failure to Deliver means that you know your audience and what promises you are making, and your people are ready to fulfill those promises, but you have missed at least some significant portion of what you are delivering — your product.

Keep in mind that your product is more than just a widget or bit of software. It’s everything you deliver. Everything that a classic marketer would call “product,” along with packaging, services, contract, terms and whatever ongoing support you will deliver, plus your roadmap and vision for the future, is included in what I define as “product.”

Oops

Falling into the Chasm of Failure to Deliver is often a result of simple mistakes. Sometimes it’s a misreading of how your promises translate into product, sometimes it’s small things along the way that accumulate. It’s probably not that hard for you to recall a time you bought or used a product and had the reaction, “That’s not how I expected it to work.” That means somewhere along the road, from understanding what the customer wanted to actually creating it, something might have been miscommunicated, or maybe someone thought there was a better way, or something was interpreted differently by different people. None of these shows an inability to build for a customer, only a typical challenge of communication in any organization.

Building a roadmap for your customer’s future is also a challenge. The goal is, when you present your plans to your customers (or prospective customers), they react with a deep appreciation of how well you understand the future of their business. If you’ve been in product organizations long enough, you know how hard it is to get that right for the promises you are making to that customer.

The Chasm of Failure to Deliver might look something like this:

A small software startup I worked with put a great deal of effort into developing a deep understanding of their customer, what their customer considered valuable, how they liked it delivered, and how their businesses — and the value they needed — would change during the following two years. The company had very ambitious growth targets and chose to use one of the tactics I discussed in part one: adding more products. They looked at the capabilities their customers were requesting for the products and what they knew about their customers’ businesses. When I showed up, they had developed a plan that specified how long it would take to build all those capabilities and when each would be ready. They added to this new offerings, which would carry their own pricing and which they expected would become valuable to their customers in the following two years. The result was a laundry list of product capabilities and a schedule.

They had some success in selling current and future offerings to their customers, and they saw some growth, but they also found it was increasingly hard — and expensive — to convince the targeted prospective customers to sign on, and there were more and more onerous terms that those prospective customers would demand. They were in the Chasm of Failure to Deliver.

We discovered the cause of these challenges was that customers are always skeptical of product plans from small startup technology companies (often rightfully so), and when presented with a laundry list, the discussion quickly focused on how the prospective customer would be certain their particular needs would arrive on schedule.

We worked to resolve this by reshaping the roadmap. We made it into a story of how the customer’s business might develop and grow, what they would need to make that growth happen, and how this company would deliver those needs. In other words, the story we created focused on what the customer found valuable, what valuable promises the company would make and how the company would fulfill those promises.

As the sales team, supported by the product team, began to tell that story, sales became easier, fewer customers put their skepticism in the way of creating the envisioned future, and growth started to become easier.

The Way Out of the Chasm of Failure to Deliver

Knowing the promises you intend to make to your customers is always the first step out of every Chasm of Failure. It’s not enough to choose promises to make, you must constantly validate them with your customers to ensure you are delivering the value you think you are — and that your customers expect.

Climbing out of the Chasm of Failure to Deliver also demands an honest rethinking of what you are delivering and why. Looking at customer complaints can help, but it will only get you pointed in the right direction. Spending time fixing something to resolve every individual complaint will not get you to an offering that delivers on your promises. You have to take a hard look at what promises you are breaking in every case and why. Then you can reconsider how you are building your offerings to fulfill your promises.

Building a great product or a cool product or a leading-edge product is fun and exciting. Building a product about which customers rave, because it never fails to deliver value is the hardest and most rewarding product path of all.

In the next part of this series, I will discuss the Chasm of Failure to Execute. In the last part, I will discuss discovering and making promises, building customer trust and how to scale your focus to become a market leader.

Chasms of Failure

The Chasms of Failure: Where Growth Goes to Die (Part Two of a Five-Part Series)

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In part one of this series, I discussed some of the tactics companies use to create growth and some of the reasons those tactics don’t work as planned: the Chasms of Failure™. In this and the next two parts, I will delve into the three Chasms of Failure, discuss why they are dangerous, show how companies can easily fall into them, and explain how to avoid them and keep your growth on track.

I noted in the last post that the one thing you need for any growth efforts to work is focus. Focus is more than knowing what you do and sticking to it. Focus is knowing whom you do it for, why it’s valuable and what promise(s) it must fulfill to be valuable.

Focus requires that three elements of your business — Promises, People and Product — are in alignment and working toward the same goal.

The Chasm of Failure to Focus is the most common and the easiest to fall into. In simple terms, falling into the Chasm of Failure to Focus means you are delivering on your product plans, and your people are doing a great job, but you don’t know for whom or why.

Bright Shiny Objects

I sometimes call this the bright shiny object problem. You might have a business plan in place that defines your intended target market well, and says exactly what promises you make, to whom and why. If the discipline of focus is not embedded in your organization, however, it’s easy for your people to see opportunities outside the intended target market and start to take advantage of them. Those opportunities are certainly real and viable, but they are not in your target, and in this case, your people are, essentially, wasting time and not delivering on the promises you’ve already made.

The more common cause of failure to focus is either the lack of understanding of your intended (target) customer or the lack of any defined target customer at all. If your business plan says something such as, “We intend to serve any customer who needs the specific features our product has” — it won’t use those words, but it will be that ill-defined — then you don’t have a target customer. If your plans define your target customer by demographics or search criteria (e.g., some number of employees and use of a specific kind of technology), then you don’t have the level of understanding of your customer you need to create focus and ensure focus is embedded in your organization.

The Chasm of Failure to Focus might look something like this:

A mid-sized software company I worked with saw some success in a very broad, not-well-defined market. They decided to use one of the tactics I discussed in part one: more campaigns. They designed and ran more advertising and promotional campaigns. They ran those across more and more media, finding more ways to reach their own lists and the lists they bought.

They had some success. Part of the reason for success was there were specific segments of the market they were addressing who found exceptional value in their offering. But they didn’t know which segments those were. As you might guess, as the number and frequency of the campaigns increased, the return on those campaigns, in terms of engagement and revenue, dropped — slowly at first, then faster as time went on.

When we were able to put into place a strong definition of a target market, develop a specific set of promises, and focus their people and product around fulfilling those promises, suddenly their return on campaigns went up, even when running fewer campaigns. In addition, the value of those customers (measured in revenue) increased, and retention rates decreased.

The people, who were naturally skeptical that thinking smaller helps you grow bigger, started to see the success, and they got better and better at maintaining focus and fulfilling customer promises.

The Way Out of the Chasm of Failure to Focus

In order to create focus, you have to define well what you are choosing to focus on. This is never easy, as it involves the very hard choice of not focusing on something else that seems promising. It’s also important to understand there is not one right choice. There might be several excellent candidate markets in which to focus. But in order to accelerate and scale growth, you need to make the hard choice to focus on one.

That’s not all. Once you make that choice, you must gain a deep understanding of your target customer. Not just their demographics, but their challenges, needs and aspirations. You need to know what keeps them up at night and what delivers personal wins. You need to gain an understanding of the concerns they tell only their most trusted advisers. Then you turn that into promises on which you can deliver, fully and consistently.

Once you know the promises you will make, your whole team can learn to focus on fulfilling those promises. That creates the focus you need to accelerate growth.

In the next two parts of this series, I will discuss the Chasm of Failure to Execute and the Chasm of Failure to Deliver. In the last part, I will discuss discovering and making promises, building customer trust and how to scale your focus to become a market leader.

Chasms of Failure

The Foundation of Sustainable Growth (Part One of a Five-Part Series)

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If you are CEO or CMO, growth is at the top of your priority list. You and your team are putting a lot of your time, effort and money into creating plans to fuel your growth and then into executing those plans.

Companies I’ve worked with typically attempt to create growth in one of three ways:

More Campaigns

One approach to creating growth is to increase the number or breadth of the campaigns your marketing team is running. You can contact your current list more often, buy or develop new list(s), segment your list and run more targeted campaigns, and run a range of test offers to a selected group. More approaches to this might include targeting your current customers for upsells or referrals, or finding grassroots ways for people to self-select onto your list(s).

More Sales

If you have the pipeline to support it, you can add more salespeople and possibly close more deals. If you don’t, or you don’t know if your pipeline will support it, you can add BDRs, SDRs or other pre-qualification methods to see how much you can squeeze out of your current pipeline. You can even expand your internal or outsourced direct contact campaigns, such as outbound calling.

More Products

Upselling and cross-selling are often reliable ways to create additional revenue from your current customers. You can add products to your line, extend your product line or even introduce entirely new but related products to convince your customers you can add more value and that they should spend more money with you.

All of these can work. But the question I put to companies who think just expanding efforts will increase sales is: Will this increase your sales enough to reliably and regularly hit your growth targets?

I can almost see you shaking your head.

The good news is any of these (or combinations) will work well — when you have built the foundation for rapid growth. The one thing you need for any growth efforts to work is simple:

Focus.

I didn’t say it’s easy. Achieving the kind and level of focus you need to make your growth possible and sustainable is not easy. It probably means a change in how you operate, how you direct and incent people, and how you make hard decisions. But getting to growth means building your tactics on top of focus.

Focus means a narrowly targeted aim at one particular type of customer. In my last post, I discussed how best to understand your current customers to ensure they keep coming back. This is the exact same approach to use to understand your prospects and how you can best meet their needs.

Step one: Promises…

And the most important step in creating focus, is making and keeping the right promises to a specific type of customer. This means using the Concerns Mapping™ approach to develop an understanding of what your prospects need from you, then mapping that to your current and planned capabilities. It also means making the hard decisions to not spend time, effort and resources on anything other than your chosen target prospects.

Once you know which promises are valuable and which you can keep:

Step two: People…

Is ensuring everything your people do is in the service of keeping the exact promises you chose to make in step one. This requires not only ensuring you have the right training, processes, technology, etc. in place, but also that you and your team are not distracted by the proverbial bright shiny objects that may look like good opportunities, but cause you to lose focus and fail to deliver on your promises.

Once you have your people ready:

Step three: Product…

Means making sure your offerings (products and services) are, in fact, delivering on those promises. More than that, it means your future plans and your product roadmap show your prospects how you are going to fulfill the promises you are making now and into the future. Your prospects should clearly see their business in your roadmap.

The companies I’ve worked with to implement this model describe their growth efforts before developing focus as driving a broken-down car and fighting to keep the wheels from coming off. Several have described those same efforts after developing focus as sledding smoothly downhill.

Creating the focus needed for sustainable growth relies on all three of these pieces — promises, people and product — coming together. It is tempting (and easy!) to work on only one of those and assume the others will fall into place. This causes the company to fall into one of the Chasms of Failure™ (in red in the diagram above) and is the most common way growth efforts derail.

This is part one of a five-part series on building the foundation for growth. In parts two, three and four, I will discuss the three Chasms of Failure™, how they derail growth, how companies fall into them and how to successfully avoid them.

Customer Success

Five Levels of Rethinking Recurring Revenue and Retention

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Many B2B businesses either have shifted or are shifting to some form of recurring revenue business model. When they do, one of the first things they learn is that renewals by current customers are just as important as — and often more important than — initial sales. If the customer doesn’t stick around for, typically, three to five years, then you’ve lost money on them.

But renewal rates seem to be stuck. Companies I work with are ones that have been trying to increase their renewal rates through a variety of tactics, but none seem to make much of a difference. They need to significantly increase renewal rates to achieve the growth their investors demand and their team wants.

These companies usually rely on two approaches to maximizing renewals. The first is an activity-driven approach, usually focused on adoption. The intent is to determine which activities your customer performs with your product that tend to lead to renewal and then to build a program to encourage your customers to do more of those activities. The second is a conversion-driven approach, where you ask customers for renewals, maybe making special offers for early renewals or upgrades, and expect a percentage to accept your offer. This is very much like your demand-generation process, where you expect a given conversion rate from a marketing offer.

Both of these are good approaches, and they work. But if you’ve spent time trying to improve your renewal rates, then you probably have that gnawing feeling in the back of your brain that wonders why this is so hard and why it takes what seems to be either a patchwork or a Herculean effort to make any significant uptick in renewal rates.

If this sounds familiar to you, you’re missing something: You’re not paying attention to what your customers really needed in the first place. You’re probably working with each customer on a plan for what you think they define as success, which is typically a list of activities you’ve developed that you think, statistically, lead to renewal.

But renewal is not the same as a successful customer. We have all become so programmed to define success as a collection of metrics that we miss out on what we really mean by being successful.

What customers really want

I’ve heard any number of marketers and salespeople say to me that customers buy only two things: cost reductions and revenue increases. You might even hear the (highly coached) customer attest to this in case studies. But this is not what the customer really wants.

To build a strong relationship with your customer and ensure they renew year after year, you need to understand both their concerns at every level and the kind of relationship your customer needs to have with you.

Note that concerns in this context are not worries. Concerns mean the things with which your customer or its people, are concerned with, think about and hope for.

The model I use with my clients surfaces customer needs, concerns and aspirations in five different ways. It looks at the questions you are asking and about your customer’s business and how you are addressing the concerns and aspirations you identify. This model is based on a model of understanding concerns written by my good friend Jennifer Kenny.

Key QuestionIssues AddressedCustomer PerceptionRelationship Level
What makes their day?Are you helping them make a difference in their company?
Are you delivering personal wins and turning your customers into heroes?
You are fulfilling both their personal goals and their company missionTrusted adviser
What are their outcomes?Are you helping them achieve outcomes?
Are you making their plans come to fruition faster or better?
You are making their outcomes better and helping them fulfill their promisesPartner
What are their responsibilities?Are you helping them do something better, faster or more cheaply?
Do you help them improve their day-to-day processes and activities?
You are improving their work and making them more effectiveCredible source
What are their tasks?Are you helping them achieve outcomes?
Are you making their plans come to fruition faster or better?
You are simplifying their lives and making their work easierTransactional
What’s broken?Are you solving a critical problem?
Are they not making enough revenue?
Is a key process broken?
Once the problem is solved, your customer really needs little interaction with you.Commodity

When you use this model, it’s important not only to understand what your customers need, what they are concerned about and what their aspirations are, but also what you can actually deliver. You will not be a trusted adviser to all your customers. Some companies will be transactional with all of their customers. Most will have customers at every level of relationship.

When you understand your customers at this deep level, and you know how you work best with them, you then have an approach to creating, building and maintaining relationships that will lead to renewal year after year after year.

Customer Trust

The One Mistake that Derails Your Company’s Growth

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You have a pretty ambitious growth target. You’ve put together a strong team, as well as a great sales and marketing plan based on industry best practices. Your offerings are ready to go. And you launch your campaigns. Everything looks good, and the outlook is rosy.

A few months later, you’re scrambling. Everything worked as planned, but prospects are not hitting your funnel nearly as fast as you thought they should. Your pipeline looks pretty anemic. And you’re missing your growth targets up and down your pipeline.

What happened

If your company is like most these days, the entire company is looking at you — the marketing leader — to explain why things have gone awry and how to fix them. After all, marketing’s job is to drive the pipeline, right?

If you’re like most marketing leaders, you take a look at your campaign. Was the message right? Did we miss something in the design or execution? Then you look at your process. Is there something keeping an interested prospect from taking whatever action you were hoping they would take? Did you fail to follow up? Did sales drop the hand-off of the lead from marketing?

The mistake

Your problem isn’t your sales people. It’s not your marketing people. It’s your customer.

That’s right, the problem is your customer. In my previous post, I wrote about building a better persona to get a better understanding of your customer (you all did that, right?). If you did that, then the next three steps are:

  1. Decide, based on what you know you can deliver, what specific concerns and aspirations your company can fulfill for your target customer.
  2. Decide what promises you will make to your prospects that they understand will fulfill those concerns and aspirations.
  3. Then, build your position and your message around those specific promises.

When you do that, every prospect that receives your message will understand instantly how you will help them and whether they need that specific kind of help. If they don’t, they are not your target customer, and you can comfortably let them go. If they do, they will be interested and will enter into your funnel quickly and easily — and of their own accord.

If you don’t get your target customer definitions, position and message right, you are marketing to no one. You are putting a bunch of messages out into the market in the hope that they will resonate with someone who will then call you. Your metrics for this type of effort (often called “spray-and-pray”) will be below your industry average, and you will be left wondering what went wrong.

We, as marketers, put a lot of effort into the process of marketing, including campaign design and the underlying technology. But marketing is still, fundamentally, about knowing what your target customer wants and needs and delivering that in a way that makes them feel like you’re doing magic for them.

If your marketing isn’t yielding the results you expect or want, the problem is not how you’re doing marketing or sales. The problem is that you don’t know — at least not well enough — who your customer is and what you can do for them.

Go back to the drawing board. Get your target customer, position and message right. Your pipeline and your company will thank you.

Customer Trust

Drop the Persona. Market to a Person.

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Nearly all the marketers I meet seem, in some way, obsessed with personas. Personas are convenient little tools that describe some set of attribute of a hypothetical — and supposedly typical — customer that are intended to allow everyone in the company to understand this customer and what they want.

If you’ve spent time talking with me about personas, you know exactly how I feel about them: I hate them.

No, I don’t hate the idea that there should be an understanding of the customer, and everyone should be able to see what it is. That’s necessary for getting teams aligned and driving market growth (see my discussion on this in my previous post).

I hate the idea because most of the marketers I meet use them as crutches — and not very useful crutches at that. I hate that most marketers try so hard to be specific and complete in their description of “Finance Francine” that their list of things “Francine” cares about are either redundant or useless in creating messaging that will convince the hypothetical “Francine” to spend non-hypothetical money.

Have you ever seen a list like this:

“CEO Chuck” cares about:

  • Increasing revenue
  • Increasing profit margin
  • Meeting set revenue and profit goals
  • Not losing revenue
  • Not losing profit margins
  • Increasing net income

OK, I’m going a little overboard, but you’ve seen that list. The problem you see with it is that it’s redundant. I see that and something far more dangerous to your marketing:

The list is meaningless.

If the person working on personas in your organization makes lists like this one, you probably don’t ever look at them for anything you do. If you do look at them, I’d ask you whether they help you target content, create advertising or email campaigns or even inform sales scripts.

A good test for whether you have a useful persona is whether your average sales rep can use the language in the persona document to describe how you help your customer and the prospects on the other side of that table (or other end of that call) respond with “Yes!! That’s exactly what I need!” How often does that happen to you?

So what do we do about this? How do we get a useful understanding of the people to whom we are selling? (And yes, if you’re selling to businesses, you’re still selling to people)

Focus on the person.

It sounds easy, doesn’t it? Well, it is, but then again, it isn’t. They say understanding other people and building relationships is hard. When you are selling any kind of offering, you are building a relationship with another person (or people), and it’s exactly as easy and hard as with anyone.

What’s the key to getting this right?

In an earlier post, I wrote about the importance of knowing how you and your offering make a difference in the lives of your customers. There are three steps to making this an integral part of your marketing:

  1. Understanding your customer’ needs and aspirations — most importantly, the ones they don’t articulate
  2. Understanding what needs and aspirations you can enable
  3. Understanding how you help your customer meet those needs and achieve those aspirations

Revisiting “CEO Chuck,” here’s how this might work:

Chuck runs a small software company. Chuck is trying to solve the disconnects within his organization. He knows that if product, sales and marketing could stop arguing and get on the same page, it would be easier and smoother to generate leads and grow the sales pipeline. His demand generation leader says the biggest obstacle to getting prospects into the pipeline is knowing how to effectively find the right kind of person to whom to deliver messages. His investors are breathing down his neck about meeting sales targets and showing some eye-popping PR stories. His engineers are bugging him about prioritizing new features and bug fixes, and claim they can’t understand what they should be doing first — it all seems important.

Now let’s say you are selling some kind of marketing product to Chuck. You could tell Chuck your offering increases revenue, and you’d think that would be important enough for him to buy it. But let’s say your offering could help get the pipeline process unified between sales and marketing, and make sure they both have at least common numbers, account information and the like. You could then offer Chuck a solution to at least part of the sales and marketing friction problem, making his pipeline move more smoothly to help grow revenue.

Some marketers will see that as a more specific and, therefore, smaller offer. It’s not. It helps solve the problem your prototypical customer thinks they have. It makes sure you can deliver something they think is valuable to them and that makes a difference in their lives. And if you do it successfully, I am pretty sure they will tell their friends and colleagues you made a whole set of challenges go away.

This illustration is an over-simplification for the purposes of keeping this post readable. But the point of doing this exercise — and doing it well — is you get to understand your customer as a person, not as a hypothetical profile.

And when you stop making claims to personas and start making promises to people, you can start delivering real value and changing their lives.

creativity

The Path to Growth: Five Stages of Position-Product-People Alignment

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For nearly any business, growth happens when you know your market, and have your product and your people aligned to the needs of that market. For young companies, such as the technology startups with which I work, this alignment can make the difference between a future IPO and shutting down the business.

Exceptional growth requires expert navigation

As companies start and grow, they begin to discover not only their own expertise, but more importantly, their market, its niches and segments, as well as its quirks, needs and wants. I think of this as navigating the discovery of a new land, full of opportunity and fraught with danger. Finding the path to growth is challenging, but the closer you get to your particular path, the more rewarding it becomes.

The path to exceptional growth is the precise alignment of your product (and capabilities), your position (the needs and wants of the market) and your people (their execution of your processes.

Most businesses go through five stages of alignment:

Typical Revenue RangePosition-Product-People Alignment
>$50 millionAcceleration
$10 million–$50 millionNavigation
$5 million–$10 millionMap-Making
$1 million–$5 millionDiscovery
<$1 millionSuspicion

I’ve outlined this for a typical technology startup, but this can apply to any business or product line.

Suspicion

When a company is just starting out, the founding idea comes from some knowledge that a handful of potential customers may need something like the product being contemplated and a founder’s belief she can address that need differently from how it is being solved now.

The market is unknown territory. Whether there are more than a few potential customers is unknown. Any knowledge of a path to growth is nothing more than a suspicion. The product is brand new, so it is still trying to find the needs with which to align.

Discovery

As the company starts to sell products and find customers, it has also found a wider range of ways its product meets the needs of a wider range of customers. There may be little consistency from one customer to the next, but they all find the company has something that meets some set of needs.

This stage of discovery is an important step for every company. The company learns some of what is possible and can start to consider which of the many types of customers will suit it best.

At this stage, there is still very little alignment among position, product and people, as the company is trying to do everything it can to meet the needs of any customer who shows up. The most common cause of failure at this stage is a product that is not growing to meet these diverse needs, meaning the company can’t deliver on its promises.

Map-Making

The company has now become more adept at finding customers, and finding ways to discover and meet their needs. While there may be little consistency as to these needs from customer to customer, some commonalities are beginning to appear.

These areas of commonality are the segments and niches in the company’s market. Knowledge of these shows the company what will work best for its own strategy and objectives, and will eventually help it better understand how to compete with direct and indirect competitors.

This is where alignment becomes critical. As the company learns where it can be most successful, understanding the needs of that segment and how the company can meet them differently from what has come before becomes critical to continued growth and advancing to the next stage.

The most common causes of failure at this stage are either not seeing the emerging segments making it hard to focus, or not continuing to build product that meets the needs of the coalescing segments, again causing the company to miss keeping its promises.

Navigation

The company has seen success in one or more segments and must now choose to focus on one at a time. Exceptional growth requires thinking smaller. Let me repeat, as this is not always intuitive:

Exceptional growth requires thinking smaller.

Focusing on one position in the market — one set of needs, met in a differentiated way, in one segment — allows the company to build a product, train its people and develop processes to focus on demonstrated success — and start to repeat that success. This repeatability is the key to scale.

The most common cause of failure at this stage is not aligning product and people with the chosen position — the needs of the customers in the company’s market segment. This is lack of focus, one of the critical elements of exceptional growth.

Acceleration

With product and people aligned to position (market needs), the company is seeing an increasing number of customers, as well as a decrease in the effort it takes to find a customer. The repeatability inherent in focusing on a chosen position allows the company to scale its operations and delivery in a very precise way.

This same repeatability allows the company to define segment after segment and pursue them in the same way that it pursued the initial segment, creating another layer of scale and accelerating growth.

The most common cause of not being able to achieve this scale is not getting the people and processes in the company aligned to delivering the needs of the chosen segment(s), causing the company to stumble in execution.

Understanding your market and how you can meet the needs of the customers in that market in a different and differentiated way is the foundation of creating exceptional growth for your budding business. Once you get your position right, precisely align your product and your people to that position, and you can find your unique path to exceptional growth.