Archive for the ‘category creation’ Category

Why User Activation Is Demand Gen. By Peter Zaballos

March 8, 2018

And why it’s super hard to measure

And it really is an essential component of demand gen. Essential.

Let me digress for just a bit.

Assume you’re zeroed-in on your category, your demand gen is solid and scaled, and now you’re creating a steady, growing stream of prospects to your sales team. And they’re closing them at a brisk pace.

As hard as all that was, now the real work begins. That solution to the problem you promised the prospect? It now needs to be delivered through the product experience. The very first time that new user signs on.

Saved DNA

I wrote about this in my blog post on conversion optimization of demand generation. That new customer found your product because of how it was marketed to them. The very first time a new customer experiences the product, it has to align with the value proposition your promised. So, how do you know if you’re delivering on that promise?

It’s super hard.

And it’s super important, because customer acquisition is pointless without retention. Jamie Quint explains this exceptionally well in a guest post on Andrew Chen’s blog, and goes further to highlight that retention is the core driver of virality. That means retention is a core driver of your…demand gen. Right. Full circle.

First of all, you need to look at each user in the context of a group of users called a “cohort” – usually this starts as the collection of users whose first experience with your product happened during the same timeframe (day or week typically). And you can see how the cohort segments into usage activity patterns – some will be super active, some moderately active, and some not active at all.

This can get you started, but doesn’t really tell you a whole lot. You really need to know two other “hard to define” metrics.

First – what constitutes a meaningful action for that user in their first session? That means you don’t just need to understand the core functionality of your product, but how that first time user is going to interact with that functionality to get something they consider valuable done. This is exactly where your product team and your marketing team should have a happy collision.

Didn’t your marketing start the acquisition process by trying to figure out what the exact words that prospect would use to describe their problem? At the very beginning of the customer journey? Well, now the product team needs to deliver the solution in the form of an experience, in terms that the converted prospect (now customer) will recognize as valuable. To them. Of course it’s not that simple (buyers may not be users, but buyers did buy solutions to problems your marketing team zeroed in on).

Second – how frequently will that customer be expected to use your product? You need to know this to establish the baseline of your entire measurement approach. Is it hourly? Daily? Weekly? You may think you know when you’re developing the product, but product design is focused on personas and assumptions about usage. Now you’ll need to check those assumptions through cohort-based analysis of real world people. Amplitude has a great blog post about figuring out how often people use your product.

And everything I just described is virtually impossible to measure with Google Analytics. That free tool is awesome for measuring website activity, but is architecturally incapable of measuring cohorts (believe me, my teams have tried, hard and GA is miserable at cohort analysis). There are some really exciting companies filling that void who have designed cohort-based tools specifically for behavioral product analysis. Amplitude is one – who offers a free versions that you can use to instrument your product and get plenty of data, and then of course have much more sophisticated capabilities you pay for.

Finally, retention is made up of “activating” a customer – making sure they have not just a successful first experience, but that they have a second successful experience and then ensuring long term customer “adoption.”

This is where Product owes an obligation to Customer Success to ensure that customers activate, and then the success team can drive long term adoption. So the product team should own understanding what value needs to be delivered in the first two uses of the product. This will take intensive focus on data, cohort behavior, and many, many iterations with the product design and dev teams. Customer Success should be a part of this process because they will need to take those two experiences and ensure they become hundreds or thousands, or more.

What’s worked well is to have a weekly meeting with Product, Product Design, Development, and Customer Success, where the product manager leads the analysis of usage, and the resulting product and resource development to ensure successful activation. You can think of this as a smooth handoff of customer accountability:

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In my last role the company had gotten to scale without any focus on product usage or product usage measurement. I was fortunate to have a whip-smart product manager who spent an entire year of these weekly meetings getting grounded in the basics, and bringing that cross functional team to have a clear and compelling understanding of what drove the first two experiences.

And bringing this back to where I started. Product activation is a critical step in your demand gen strategy. It’s why a lot of CMOs have responsibility for both product and marketing, and if not, it’s why CMOs need to have super tight and trusted relationships with their product colleague.

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Product led organizations build categories. By Peter Zaballos

March 6, 2018

Part four: Product has the obligation to set the tempo of transformation 

Every business needs to have a laser focus on the needs of their customers. Look no further than Amazon, who has a legendary, systemic, DNA around customers. Literally their customer obsession.

A few years ago I had an opportunity to speak with an Amazon exec about the business he was running and the priorities he had in building it. This business was a direct competitor to a business of Apple’s, and I noticed the Amazon exec was using both an iPhone and a MacBook Pro. I asked him, “why are you using products from your competitors, effectively helping fund them?” – his answer was disarmingly reflexive and sincere. He simply stated “why would it serve my customers better for me to use products that made me less effective at doing my job?”

MountEverest

What does this have to do with product led organizations?

Bringing a category to life and Amazon have the same customer focus.

I wrote earlier about when you’re building a category it’s important to not listen to your customers – don’t let them dominate your near term product priorities. You owe your customers the maniacal focus on your bold vision, and bringing that to life over time, not attending to their long list of improvements in their limited field of view.

Which means product will have complicated relationship with sales and customer success. Sales and customer success are faced daily with enormous input and demands about the here and now. And they should focus maniacally on how to win today’s prospect sale and ensure today’s customers get the value they were promised. But the product team needs to be super careful to include only the most critical few of those customer and prospect needs in the roadmap. The category is the high order bit here.

Your category gets built by bringing tomorrow’s promise to life. I’ve seen companies falter and stall when they take their eye off the category defining focus and shift it to the priorities of their sales teams or their customer success teams. Worse, if the next 90 days of your backlog is the only commitment to your roadmap, you’re never going to build a category. You need to have appropriate commitments to what needs to get done three, six, nine, and 12 months from now.

The product leadership needs to behave like the CEO of their product. That means to operate with a strategic purpose and context. Sure, they need to hear the near term need from sales and customer success, but like a CEO, they’re measured on their ability to perform today but also ensure the company realizes its potential. This is so wonderfully captured in Ben Horowitz’ now legendary 20+ year old essay, Good Product Manager, Bad Product Manager. If you haven’t read this. Do so. Now.

Focusing on the bold future can introduce some awkward dynamics to organizations not used to thinking with a category mindset. In a product-led organization, sales and customer success are going to feel pressure to keep up. They’re going to have to become capable and fluent in understanding the trends and priorities that make the bold product vision important. They will need to fully internalize why the category is strategic and important and be able to explain it to their prospects and customers.

In sales or customer success led organizations, the opposite occurs. The product team will need to simplify and reduce the vision and explain the plan using the terms of today. No matter how well you do this, you’ll never build a category. You’ll just hit a forecast. For a while.

I’ve heard some executives at tech companies use the excuse that “we can’t let the salespeople know about the roadmap, because then they won’t sell what we have today.” If that really is true, then that’s the tell-tale sign that the company in question is not a category builder. Because category builders have salespeople who are experienced and savvy enough to sell what you have today, and who can also convey the compelling nature of what is coming. And why buying today’s product puts that customer on a more compelling and secure future.

No one less than Steve Jobs understood this with his typical clarity. Observing that the difference between technology companies that function as sales organizations versus technology companies that function as product companies is that the sales-led organizations will revert to today’s product. They’re not wired to think about or develop big, bold new products.

Companies like Salesforce have mastered “product-led” organizational behavior. Just watch one of Marc Benioff’s keynotes and you’ll see him talking about capabilities that likely won’t be real for years, but speaking to them as if they’re here now. Their salespeople know how to straddle these two realities. They know that you’re going to be better off getting on the platform now and be better off over the years as the promises get delivered.

Product-led organizations build categories, and categories are the product of a bold vision that the marketing organization communicates and aligns the company around, and a product strategy that brings the category vision to life. And that’s good for your customers. Give them something they can’t envision. It’s never been a better time to be a technology company CMO.

 

Why conversion rate optimization is the most important role in marketing. By Peter Zaballos

February 26, 2018

And it’s as important as your product

Why? because conversion rate optimization is the function that reveals the truth of your brand, your product, your business. Holistically.

It’s where you have to think deeply about the problem your customer or prospect has, and the information path they will follow to find a solution. But it doesn’t stop there.

Many marketing orgs look at “conversion” as the final step. But it’s really the beginning of the customer journey. It’s when all that carefully crafted terminology has to be aligned to what the customer experiences with the product you just sold them. The customer journey is about delivering value. And having a happy customer come back. And bring their friends and colleagues.

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I was having a conversation with a senior exec at a successful cloud application provider last month, and they mentioned that they were having a hard time converting free trial users to paid subscribers. They were asking my opinion about what communications strategies I’d used in the past to boost these.

My first thought was, “you may be too late to do a whole lot about it.” If the content path that caused someone to find your solution – all those carefully crafted conversion junctures – did not line up with the first experience of the product, then you’re stuck.

No amount of in-app or email or chat communications will fix that. You might make the bad situation a bit better, but you really need to see this as a continuum of your brand promise. It’s what creates the words that draw a prospect in, and the experience they have with your product.

Like with almost everything today you get one shot at establishing trust and a relationship. Whether you’re a marketer or a product manager. And as a marketer you’re ultimately marketing a product experience. So there’s got to be tremendous coherence and alignment between what you market and what happens the very first time that former prospect becomes the user of your product.

Activation is different from retention. Retention looks past that first experience and presumes activation. Activation is converting the promise of a solution into…an actual solution to a problem. Retention is ensuring that the solution is durable, compelling, and lasting.

So if I were to pick one discipline that a marketing org should master it’s conversion rate optimization. Above any other. It’s the moment of truth for your business. It’s measurable. It quantifies your ability to deliver value to your customers.

And this is why it’s awesome to be a CMO and to be responsible for Product and Marketing. Because you are accountable to the business for ensuring the brand promise gets delivered. Everywhere. Every time.

CRO

 

Category creation – Why a messaging pivot is frequently essential. By Peter Zaballos

February 19, 2018

Part Three: The fallacy of “Everything is working, we just need to tell the story better”

So your CEO has articulated a bold vision of what is possible for your customers. Fundamentally different from what they have today. A change so dramatic they can’t imagine it. But you can.

This all got written down. And these words matter. A lot. They didn’t come easily or quickly. At the beginning they were directional, not precise. Intensive scrutiny and many iterations produced the exact set of words that describe the change you envision, and the category you’re creating.

Now you shift your focus to putting those words into action. And those words will inform and bring to life the go-to-market orchestration that will position you as the leader, the creator of this new category. They will inform the demand generation, the events, the company communications and training, and most important, the experiences customers have when they use your product. Let’s call this your category story.

The category story is the collection of words and visualizations that tell the market, your customers and prospects, and critically your employees about your role in bringing the bold future to reality. It’s the core creative idea that fuels any of the forms of the media you will deploy.

A SpaceX Falcon Heavy rocket lifts off from the Kennedy Space Center in Cape Canaveral

The story can and should live in lots of people’s hands. It’s what gets amplified through marketing. Evangelized through events and workshops. It fuel’s the virtuous circle of adoption. It informs every step of the buyer’s journey. It creates the triggering events that makes someone open to switching from what they’re using now, to the future you inspire them to join.

The reality is that a lot of companies formalize their category vision after they’ve shipped their product. After they’ve sold it. After they’ve figured out how to create demand.

When I was a venture capitalist, I lost track of the number of Series B and Series C financings I was pitched where the CEO would sheepishly admit that they’d “shipped their demo.” It worked well enough to get traction and funding. And that part of the next financing was to finish and fix what had gotten them started.

So a lot of companies need to make this pivot to build their category while running their existing business. With demand gen working. Salespeople selling. Customers using the product. Going back to what I wrote in Part One, category creation is for the bold and means you’ll need to make some pretty scary choices to leave the familiar past behind to realize the category’s potential.

It’s crucial that you amplify the category value proposition. Not the tactical value prop that got you here. The chief warning sign that’s you’re falling into that trap is believing…

“Everything is working we just need to tell the story better.” 

But that’s the wrong story. The old story is made up of well thought through campaigns and tactics, but without the purpose of creating your category dominance. The old story may produce near term success, but it sure won’t build your category.

This is the “make or break” juncture for the business. You can certainly amplify the tactics that got you to where you are today. Increase the paid search budget targeting potential buyers of today’s tactics. Scrape for more organic visitors by tuning the search performance of your pages to the value prop of today. Train your salesforce to sell what got you to where you are today.

You’ll just dig the hole you’re in a lot deeper. You’ll acquire customers and partners who aren’t aligned to your category vision. Who won’t evangelize it’s potential for you. Whose product and service feedback will be a distraction from your category progress.

So when I’m asked by executives and CEOs about how to scale their growing business and how build awareness of the role their solution plays in the market, I always go back to “what is your category and how is that aligned with your growth campaigns?”

This is where the CMO’s marketing organization needs to carry the responsibility to transform words into bold actions. If you start from anything else, you’re applying bandaids to a wound that won’t heal, and will instead get worse. And more bandaids won’t fix that.

With category alignment you can build kickass marketing campaigns. Your events will bring your ecosystem together and send them off evangelizing your value. Your paid search and your organic search will be aligned and fill your demand gen funnel.  The C-suite at your prospects will see the value in standardizing on your solution.

That’s the kind of foundation durable leadership can be built. Category leadership.

Category creation and the value of not listening to your customers. By Peter Zaballos

February 15, 2018

Part Two: Your vision is strategic, your customers’ vision is tactical

In my earlier post on category creation, I touched on how critically category creation depends on a bold strategic vision owned by the CEO. And that vision gets taken to market through a product that delivers a fundamentally different experience and value to customers from what they have today.

This is hard because your customers live in the world of today. With the product you have right now. That’s what your salespeople sell, and your customer success teams support.

But creating a category is about delivering something so much better than “today.” Ambitious, bold companies learn to live with and take advantage of the ambiguity separating today from the bold future you see possible.

Spot Mini opening door

And given the role the product strategy plays in creating a category, a disproportionate responsibility falls on the product and marketing teams. As a result, there are some subtle but critical factors a CMO needs to take into account.

First, do a 12+ month product plan.
Creating a category involves envisioning a future your customers can’t see. But you can. So fundamentally you are creating a product strategy – a framework that extends from today into the not so distant future.

This means, if you’re using Agile, you look out 12-18 months and understand what are the core capabilities you’ll need to figure out and master. How many of those require foundations to be built now? Work back from those to your field of view 6-12 months from now, and the deliverables will be clearer. More specific. The dev and product teams will have a clearer sense of what is straightforward, understood and what is hard, unknown.

Now look at the 3-6 month timeframe. Here you should have a pretty clear sense of scope and difficulty. The iteration in thinking between 3-6 month windows and 7-12 month windows will likely reveal some dependencies and challenges.

Finally, you can think through what the next six sprints need to look like. Here you’re going to be fairly specific about use cases, personas, and technical scoping.

Every two weeks get everyone together and review where you are on the journey. Both with what has shipped, and what customers are telling you. Customer feedback is essential to checking your assumptions on the 3-6 and 7-12 month release plans. This is super important, and plays into the next two sections below.

If you don’t think Agile works this way you’re wrong. Here’s an awesome podcast from Command Line Heroes laying out Agile and why it’s suited for what I describe above. Agile isn’t about two week fields of view. It’s about rigor and discipline about what you’re doing every two weeks, and how you’re doing it. To have working software validate assumptions, or invalidate them.

Second, don’t listen to your customers
Does this contradict what I just said above? No. Your customers are helping you validate assumptions about your vision. What you don’t want to listen to is their long list of things they wish were better with the product you have right now. Category creation is about bringing something fundamentally different to market.

Customers want what they can see in front of them to be better notdifferent. They see what is sitting right in front of them. That’s what your sales people sold them. That’s what your customer success teams support.

When building a category around a bold vision of what’s possible, the sure sign you are losing your way is to devote most of your time into making your existing product better. And if you listen only to that or let customers drive more than 10-20% of your backlog or dev capacity making the product better, well then you’re not building a category.

Worse, driving your product priorities around “better” means you’re ensuring you will be competitively vulnerable. Then you’re really just building a business around your competitors. Because they too can listen to customers about today. About chasing better, not delivering different. If you focus on better, you’re building an product line that is structurally vulnerable to competitors. You’re solving for now. Not the future.

Third, test your roadmap
With the majority of your roadmap devoted to bringing your category to life, you can now devote your customer engagement to testing your category assumptions. Which also means testing whether or not your vision for what is possible is truly compelling.

Testing your roadmap with customers is a way to make sure your 3-12+ month release plan has integrity. It can confirm or question the validity of your core platform and functionality assumptions. It’s about being inherently curious. Being a voracious learner, and where being an optimist and not a cynic finds a comfortable home.

So that means being super hard core about why your roadmap, working all the way back to the next sprint, is creating and testing the building blocks of the future. The different. You may be shipping a “better” feature that customers care about today, but is there a way to build that “better” improvement in such a way that it also helps inform your progress towards “different?”

At every step along the way. From today’s standup to next year’s category-defining product launch has to be threaded through “am I staying focused on different?”

Go into this not being burdened with what you see today, and instead be driven by an optimism of what’s possible.

Your category vision should invigorate you, your team, and your company every single day. Your category vision should invigorate your customers and entice your prospects. Your product strategy brings all of that to life.

That’s the real role of being a CMO. Ensuring your very talented product and dev teams have struck the right balance around delivering on the strategic vision of different and not getting distracted with today’s noise of better.