Building Tomorrow's Products Requires Listening to the Market

By Barbara Nelson August 09, 2007

This is the first part of a three-part series exploring how we listen to the market to become experts in what they need. The first article shows how product managers should listen to potential customers, the inactive members of our market who have not bought our products or our competitors' products (and are not looking). The second article discusses finding and listening to evaluators. The third article covers ongoing communication with our existing customers. By listening to all three types, product managers become "experts on the market."

Although product knowledge is important, spending time listening to the market is where the real learning takes place, and the quicker you become acclimated, the more value you add.

What is your comfort zone as a product manager? Is it the product? The technology? The competition? The customer? When you first became product manager, how did you get up to speed on the job? Unfortunately, many new product managers gravitate toward their comfort zone: the product. They learn about "the product" by reading the user guides and brochures, going through the tutorial, attending formal training, surfing the Web, and sitting through product demonstrations on sales calls.

Although it is important for a product manager to learn the product, it is imperative for you to get out into the market as soon as possible to learn what's going on there. Your objective in listening to the market is to become a market expert. This series of three articles will focus on how to become a market expert by listening to 3 constituents in your market: customers, evaluators, and potential customers.

Let's define the 3 groups within our market.

Customers--At some point in time, members of this group realized they had a problem to solve and bought your product to solve the problem.

Evaluators--This group recognizes they have a problem to solve and are actively looking to solve a problem with your product or your competitors' products. This is where your sales channel spends its time during the sales cycle.

Potentials--This group is within your identified market segment but they have not bought your type of product (from you or your competitors) and are not currently looking at these types of products.

Most companies think they listen to the market. What they typically do is listen to the noisy 20% of the customers and "listen" to evaluators during sales calls. (Actually, they are busy "talking" most of the time, not really "listening.") They rarely (or never) listen to the third group, potentials: those who have not bought the product and are not looking. The danger in only listening to noisy customers and active sales leads is that you might build products that only appeal to noisy customers and active sales leads. You might have some initial success, but eventually, the size of the market you have "created" is not enough to support your business. The future of your product (and your company) lies in also understanding the quiet 80% of your customers, knowing why evaluators buy from you or why they bought the competitor's product (through win/loss analysis), and learning why "inactive" potentials aren't looking and haven't bought anything.

For each group, we must learn:

  1. Who are they and how do we find them?
  2. What are we trying to learn?
  3. When do we listen?
  4. Where do we listen?
  5. How do we listen?

It is important to balance your visits with all three groups in the market to get a good perspective on the market and where your company fits. We need to use a different process to listen to each group to get the information we need.

In the first part of this series, we are going to focus on listening to potentials because this group is most neglected.

Who are potentials and how do we find them?

Sales sometimes call hot leads "prospects." The group we call potentials are those in our market who have not bought one of our types of products and are not currently looking. Think of them as inactive prospects.

Your first objective is to find potentials and set up an appointment to visit them. If you have additional resources to assist you in getting the appointment, use them. But don't outsource the appointment itself.

Source

How you find them

How to engage them

List

Talk to your direct marketing group and ask, "If you were to send a direct mail piece to our market segment, what list would you use?" This is the list you would start with. Then, remove customers and anybody in the sales pipeline (evaluators). What you have left is potentials.

Call them--"I am a product manager for XYZ company. I am researching how to deploy our development resources over the next year." If you have domain expertise, say, "I used to do what you do. I am trying to learn what has changed since I was a [job title]."

Trade Show

Trade shows are usually targeted to a market segment (such as construction), a technical platform (such as Linux or Windows), or a type of problem to solve (Customer Relationship Management or CRM). As a product manager, you might already be signed up to attend the trade show. Talk to the trade show coordinator and make sure you will have time at the show outside of the booth.

In the booth--ask qualifying questions. Sort visitors into customers, evaluators (these are the "hot" leads we give to sales), and potentials (they might be tire kicking or just want the tchatchke). Contact the potentials when you get home ("You stopped by our booth. I know you aren't currently looking but I am a product manager ..." [similar script as above]).

Work the show--go to the pretzel or coffee stand. Start up a conversation with other attendees. "I am a product manager?"

Conference

Speaking engagement--collect business cards

Go to sessions. Listen to the questions from the audience.

Contact people who came to your session."Remember me? I'm the one that gave the speech at XYZ conference. Can we meet?"

 After the session, "That was an interesting question you asked. I'd like to learn more ..."

Trade Association

Join the local trade association for your market segment (usually vendors can join as associate members). Go to the meetings.

At the meeting, get to know the members. Make sure they know you are not a salesperson, but that you are a product manager trying to learn more about your market.

Executive Introductions

Ask your executives to introduce you to executives at other companies in your market.

These are the decision makers. Don't abuse the introduction by taking too much time. (Below is a discussion of what you're trying to learn from decision makers.)

Friends & Family

Ask your friends and family if they know anybody in the markets you serve. You might find a friend of a friend who is the perfect candidate. Ask for an introduction.

Get to know people at your kid's soccer games, at cocktail parties, anywhere groups of people meet.

People you meet personally or through a mutual friend are usually the easiest to engage. This is the method many sales people have used for years to "cold call" prospective customers.

What are we trying to learn?

This is qualitative market research. Essentially, you are trying to learn how they are surviving without your technology. Why haven't they bought your product or your competitors' products? Is it because:

  • They don't know about you?
  • They have a slightly different problem?
  • They have a dramatically different problem (where you need to re-architect the product)?
  • They don't have the problem?

Until you know why they haven't bought, you won't come up with the right solution to get them to buy in the future.

Once you get the appointment, learn about the key players. For complex business-to-business solutions, there is usually a decision maker, key user, and technical reviewer. It is important to listen to each of these players.

Decision Maker--What keeps him or her up at night (not just in context of what you do). You are competing not only with your competitors, but also for mind share and resources against everything else the decision maker has to deal with. If the final decision maker is the CEO, you are competing with both internal and external forces over which you have no control. The CEO can decide to spend money on internal infrastructure systems, more personnel, benefits, office space, security, sales, marketing, development, services, (and the list goes on). Why should he/she buy your product? What kind of ROI is he/she looking for? If you focus your business on solving critical problems, your product will be more likely to be recession-proof.

Key User--What problems does he or she face every day? This is the person for whom you will be building the solution. But keep in mind, the problems might not be large enough that the decision maker will pay to solve them.

Technical Reviewer--This person can veto the decision if it doesn't meet the technical expectations, but generally this person isn't choosing which solution to buy. If the solution is a threat to his/her job, they could cause a roadblock, however. Understand how to get on his or her side. Also, learn what "cool" products they have seen lately. You might become aware of new technologies earlier than you would have on your own.

Other things you are trying to learn:

  • Do they know you? What is their level of awareness or perception of your company?
  • Where do they buy products like yours, what process do they go through, what channels would be acceptable (direct, distributors, VARs, web, catalog), what kind of pricing constraints might there be?
  • Who is your competition and what do they think of them?
  • Who do they go to for advice about products such as yours?

When do we listen?

Becoming expert on your market is not a one-time project. It should be an ongoing process. When you first begin, immerse yourself in this activity. Spend one month visiting 10-12 sites to give you a jump-start. Then, on an ongoing basis, visit one potential a month so you can stay in touch with what is going on in your market. In high technology, things can change relatively quickly, and if you don't stay in touch, you might miss a new trend or shift in technology.

Use every opportunity you have to visit potentials. You might already be traveling to a trade show or conference. Meet potentials there. When you do a speaking engagement, be sure to collect business cards and make an appointment later in the day or the next morning. If your travel budget is constrained (and whose isn't?), don't overlook potentials that might be in your own neighborhood.

Don't forget to stay in touch with those you are able to engage. When you need an outside view, call them to test ideas, positioning, names, and feature possibilities. However, be careful not to skew your results by only listening to the same few.

Where do we listen?

Visiting potentials onsite is by far the best scenario. Viewing them in their "natural habitat" is where you will learn the most and have the best context of their situation. But if you are not able to always do this, it's all right to also listen to them at the trade show or conference, or on the telephone. If you have usability labs at your office, observe non-customers using your products and then listen to them one-on-one afterward to get more information.

How do we listen?

Don't outsource this part of the process! Own it! This is where the market expertise lies. And don't take sales with you. This is not a lead generation or selling activity. It is a market research function and a listening exercise, not a talking exercise. Your objective is not to drum up new business by talking about how great your products are, but to learn about the problems in the market and how your products fit in the landscape.

Here are 10 tips on listening to potentials:

  1. Observe them doing their job in their natural habitat.
  2. Spend a "day in the life" with the potential. Follow him or her around doing the job.
  3. Ask questions: 'Why did you do that? Who needs that information and why? What purpose does that function serve?'
  4. Keep the questions open-ended. This kind of market research is qualitative, not quantitative and should not be conducted like a formal survey.
  5. Don't interrupt--let the subject finish a thought. You might be thinking, 'Our product will solve their problems!' Save that for later. You will probably still learn something by letting them talk.
  6. Don't talk about your product. At the very end of the interview, if it turns out that your product is a perfect fit, you might say, 'We actually have a product that might fit your needs. Are you interested in learning more?' If the person says, 'No,' you need to respect that. The problem is probably not urgent enough if this is the answer (which tells you a lot).
  7. Get the tour. Many companies offer a formal tour of their facilities. If so, take it. It can be very enlightening about their business, about what they are proud of, about how they do things.
  8. Go with a buddy. Whenever possible, do these interviews in pairs. What you don't see, your partner might. One person can take notes while the other observes and asks questions. Perhaps you should pair up a senior product manager with a less experienced one, a product manager with marketing manager, or the product manager with a development lead.
  9. Document the interview in a call report right away. You won't remember details from one visit to another unless you do. This will become a body of knowledge you can share with others on your team.
  10. Debrief with someone on your team right after your interview. This helps you remember, analyze, and share the information you have learned.

This activity takes self-discipline to make it a part of your everyday routine. It is so easy to slide back into tactical, urgent activities, but becoming expert on the market is very strategic, and the future of your company depends on it. It helps you figure out what you need to build 12-18 months from now.

Out of the 3 groups you should listen to in your market, potentials are the hardest to engage. Why? Because it require you to get outside your comfort zone.

However, becoming a market expert can be the most valuable of all activities you can do as a product manager. Only you can make it happen!

Stay tuned for Part 2 on Listening to Evaluators.

 

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Categories: Personas Go-to-Market Market Analysis
Barbara Nelson

Barbara Nelson

Pragmatic Marketing, Inc. has continuously delivered thought leadership in technology product management and marketing since it was founded in 1993.Today, we provide training and present at industry events around the world, conduct the industry’s largest annual survey and produce respected publications that are read by more than 100,000 product management and marketing professionals. Our thought-leadership portfolio includes the Pragmatic Institute Framework, e-books, blogs, webinars, podcasts, newsletters, The Pragmatic Marketer magazine and the bestseller “Tuned In.”

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