January 13, 2010

How to Position Yourself to Win the Sale

Most software vendors think that selling software is all about features and functions. In fact, features are often the least important aspect of a B2B software sale. What’s far more important is the market narrative in which the sale is going to take place, because that narrative determines whether a software firm is positioned in the customer’s mind as a likely winner or a long shot gamble. The market narrative thus influences every aspect of the buying decision by acting as a touchstone for whether vendor statements ring true.

For example, in the CRM business, the dominant narrative is the market share battle between Oracle/Siebel (the “enterprise” guys) and salesforce.com (the feisty up-and-comer). Within that narrative, Oracle/Siebel positions itself as having the widest set of capabilities within the context of a complete ERP system, which are being scaled down to fit SMB needs. To counter that, salesforce.com positions itself as a product designed specifically for SMBs, with additional capabilities added through application partners. Both marketing positions are believable because they support the overall market narrative of a conflict between an established vendor and an upstart.

For CRM vendors other than Oracle/Siebel and salesforce.com, this dominant market narrative can be a real headache. Because the narrative defines the conflict as being between those two vendors, every other vendor starts looking like an also-ran. Any message that emphasizes “the complete ERP” must work to differentiate itself from Oracle/Siebel, while any message that emphasizes the “on-demand for SMBs” angle must differentiate itself from salesforce.com.

How do you deal with a market narrative that’s disadvantageous to your company? You must reframe the sales discussion so that the dominant market narrative doesn’t make sense to the customer. The easiest way to do this is to leverage some other market narrative that runs counter to the conventional wisdom of the dominant narrative.

For example, Microsoft’s marketing strategy for the CRM space carefully distances itself from the “Oracle/Siebel versus salesforce.com” narrative. Instead, Microsoft is emphasizing a different market narrative: the “Microsoft will commoditize all software” message that’s been the mainspring of Microsoft marketing for more than two decades. According to this market narrative, Microsoft enters an application area that’s full of complicated, hard to use products and creates a product that’s so easy to use that it effectively replaces the existing applications.

Microsoft’s message around its CRM products constitutes a real threat to salesforce.com, which has reacted by repositioning itself as a more open alternative to Microsoft’s integration platform. Thus salesforce.com hopes to become viewed in the CRM market much like Linux is viewed in the operating system market. Microsoft’s message is less of a threat to Oracle/Siebel, because Oracle has already established its ability to secure segments of business computing, like database, which are impervious to commoditization.

In other words, the battle for the SMB segment of the CRM market is not so much between products and product features as it is between conflicting marketing narratives. Product positioning and product selection takes place within those narrative frames, which are constantly being reinforced in the press and in analyst reports. The savvy vendors understand this, which is why they expend massive marketing dollars attempting to establish a favorable market narrative.

Unfortunately, most smaller vendors don’t understand how market narratives work and try to fit their messages within the dominant narrative. For example, there’s a CRM vendor that’s currently touting itself as a replacement for failed Microsoft CRM implementations. That’s a losing proposition, because it reinforces Microsoft’s market narrative, which assumes that Microsoft will eventually master commoditization and come out with a truly easy to use product. Similarly, another CRM vendor is emphasizing how well it works with Microsoft Office – essentially the marketing equivalent of shooting yourself in the foot.

A more effective approach in this case would be to leverage a different market narrative – like the growth of outsourcing by offering to take full responsibility for CRM customization, implementation, and rollout. In this case, the customer doesn’t care about what product is being used, but only whether they can trust the vendor to provide that function reliably. The “outsourcing” narrative essentially trumps other narratives, rendering them meaningless.