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Logical Marketing

Companies can’t serve clients’ needs without knowing what those needs are. Businesses have the opportunity to help customers determine their needs.

Just as marketing and sales must go through a series of steps to achieve a close, the buyer goes through a process that leads ultimately to a decision to buy. There are three basic points in this process at which the seller can engage the buyer:

• The pre-request for proposal (RFP) phases, when customers are becoming aware of a need and defining the problem to be solved by the purchase.
• The RFP generation phase, in which customers are trying to settle on an approach to solving the problem and determining what the evaluation criteria will be for the purchase.
• The endgame, when the RFP has been written and the customer is evaluating competing offerings.

A useful way of thinking about this decision process is to recognize that customers will go through all the phases whether they have outside assistance or not. The fact that many customers will be receptive to and profit from assistance represents an opportunity for the seller: the opportunity to leverage the entire selling process by teaching the customer how to buy. This paper is about choosing the best point to engage the customer and the best means of engagement.

Buying Decision Levels

The three levels of the customer decision process can be expressed as three questions:

• What problem do I have?
• What approaches do I have for solving it?
• What implementation of the approach should I buy?

The first question refers to the problem-level decision, where the customer is trying to define the problem to be solved. The solution cannot be defined until the problem is understood. In the approach level, the problem has been defined and can be compared. In this last part of the process, a particular approach has been chosen and key decision criteria have been established, usually focusing on features and price.

It is simple to compete at the implementation level in the sense that it is easy to respond to an RFP. However, when the implementation level is reached, the high-level decisions (what the problem is and the best approach to solving it) have already been made. You may find that your product advantages are not clear when you straightjacket them into a set of customer evaluation criteria. What you do better than competitors may not register with full effect because the customer is not looking for it. And marketing against evaluation criteria means placing your product on the level of your competitors, even if your product is clearly superior or unique in a significant way.

Everyone in sales will recognize the value of helping the customer write the RFP. What may not be recognized is that the decision process can be influenced even earlier, and possibly with even greater leverage, by helping the customer define the problem to be solved by the purchase.

The Product-Approach-Implementation Model

Underlying the PAI model is the recognition that if you can differentiate your product at the problem or approach levels, you reduce the amount of competition at the implementation levels. You can avoid feature-price shoot-outs. You can preempt competitors by showing that you are unique in solving a problem, or that you have a uniquely superior approach to solving the problem. Your marketing and sales priority is no longer trying to get the customer to buy your feature set, but to "buy" the problem you solve and your approach to solving it.

As a marketing tool, PAI is used to find the highest level of significant differentiation between your product and your competitors. You do this by reversing the process your customer goes through in making a purchase decision, starting by understanding what your product does uniquely well, or in a way that is clearly superior to others. Using this as the basis of inquiry, you can probe the higher levels of the PAI model: Does the product, based on its unique qualities, solve or address a problem no one else can address? Or is there a common problem for which this is a substantially different approach?

PAI analysis often reveals one or more key beliefs that a customer needs to hold, or key decisions that the customer must make, in order to prefer your product over the competition (Figure 1). The distinction between decision and belief is critical as we consider the application of PAI to marketing and sales. A belief may be deeply ingrained and not changeable, so the focus of selling must not be to change it. Marketing, however, can use a belief as a segmentation parameter: sorting customers by those likely to hold the belief and those likely not to. The ones who hold the key belief that leads to your product as the logical choice become the focus of marketing resources and effort.

If, on the other hand, the idea in question is not a deep-seated belief, and may not even have been considered by the customer, then it represents a decision. The goal of marketing and selling in this case is to present the best possible case for making the decision that leads to your product.

Figure 1 — PAI Analysis

Marketing Decisions

Problem- and approach-level decisions are made implicitly or explicitly, methodically or haphazardly, with outside help or without, but they are always made. Particularly in high-tech industries, they are often made with a relative paucity of information: product complexity and specialization have reached a point where decision-makers often don't have the technical knowledge, time, or interest to understand the product in detail. The opportunity for marketing is to educate customers about their business problems in a way that leads to your product as the logical choice.

The process for determining your product's competitive differential moves generally upward: starting with the product and its capabilities, you move to the problems that your product's unique advantages could solve, and the superior approach it represents. In the selling process, we start at the top of the process and move downward: you begin by addressing customer problems, discuss approaches to solving it, with the goal of leading customers to view your product as the logical choice for addressing his or her needs.

This type of selling is the diametrical opposite of product-centered marketing, which uses the product as the starting point and tries to bridge the gap to the customer by linking the product's features to customer values (Figure 2). In decision-based marketing, we start on the customer's side of the gap and cross it with the customer.

The initial sales dialogues should not even mention the product: they should instead address problems that are of concern to the customer. These problems might relate to customer retention, system reliability, cost, or profitability. The key criteria is that they are important to the buyer, and they can be defined in such a way that they lead to your product as the best or only solution.

The graphic that follows illustrates some of the basic decisions the buyer must make before entering into a purchase contract. Each decision point is also identified as one of the three parts of the decision-making cycle: problem, approach, or implementation (PAI).

Figure 2 — Product-Centered Marketing

The challenge for the seller is to lead the buyer through every step of the decision-making process with a thorough consideration of alternative approaches that lead to the seller's product as the logical choice.

Leading the Customer Decision Process

The sidebar shows how the seller can lead the buyer through a definition of the problem, and a consideration of alternative approaches, that lead to the seller's product as the logical choice. By leading the customer decision process in this way, the seller teaches the customer how to buy.

When based on a clear understanding of where your advantage fits into the PAI model, leading the customer decision process creates a number of advantages for the seller:

• Eliminate Competitors Early — If you get the customer to agree on your definition of the customer problem to be solved, or on your approach to solving it, you effectively eliminate all competitors who do not solve that problem or provide that approach. A head-to-head feature-price battle with these competitors is thereby avoided. When there is an evaluation criteria-based comparison, it should favor your product because you will have already shaped the customer's thinking about the sale. Improved customer understanding and retention: Lists of features may be important to customers at the user-level, but may mean very little at the decision-maker's level. But marketing decisions at the approach- or problem-level mean engaging the customer with issues that are directly relevant to him or her. The customer will be more likely to engage in a discussion of these issues, and more likely to see them as significant than would any description of features and functionality. A customer is also more likely to relate customer-issue-based sales arguments to co-workers at meetings where purchase decisions are made, making him/her a better "internal salesperson."
• Builds a Bridge to "Partnering" – Leading the customer-decision process is "consultative selling," in which your representative appears as more of a consultant about business solutions rather than a salesperson. The customer is likely to appreciate the seller's understanding of customer business issues and may well appreciate the seller's help in simplifying and sorting out issues associated with buying complex, highly technical products and systems. This paves the way for a relationship that continues long beyond the initial sale, in which you are a partner in solution development.
• Speeds the Selling Process – Messages at the problem and approach levels tend to move through channels more quickly and easily than implementation level messages. While messages at the implementation level often assume a certain technical knowledge or familiarity with the product type, higher-level messages are more business-issue related and often resemble brief case studies. This means that they can be absorbed with less translation or detailed explanation required. At the same time, they help to prepare the buyer for the final implementation level decision, which will occur in some form even if you have successfully distinguished yourself at the problem or approach level. By the time customers get to this point, they will have a sound business context in which to evaluate your product.
• Provides a Tool for Changing Minds — Generally, if a customer is close to making a decision based on features and benefits, you will not change his mind using feature-benefit arguments. However, if you can show the customer that there is a larger or more important problem that hasn't been addressed, there is an opportunity to get the customer to re-think. Having developing sales arguments at all three levels enables you to move the level of discussion higher when necessary.

Situational Segmentation and Sales Message Architecture

Two other key customer-centered marketing processes tie to the PAI model and leading the customer decision process. Situational segmentation is critical for understanding which customers are likely to have a particular problem or favor a particular approach to a solution. Situational segmentation will be helpful in leading you to customers who are likely to have the key belief that leads to your product, while at the same time steering you away from those who don't. It can also lead you to those who may be influenceable to accept the problem as you define it.

Figure 3 — Sales Messaging Architecture

Sales Message Architecture provides the means to develop complete sales arguments at all three levels of the PAI process (Figure 3). The emphases for each level are somewhat different, but the basic elements are the same.

Note that the advantage element is not included at the problem level: here the advantage is simply the ability to solve the problem. Only at the implementation level do you address advantages specific to your offering. By this point in the sale, though, your specific advantages will have far more impact because problem and approach level arguments have prepared the way for them.

The principles of the PAI model and leading the customer decision process are applied frequently and successfully, though sometimes by accident. One of our customers, the president of a large financial services company, found that the success of his meetings with senior customer management depended on whether he was briefed by his sales force before the meetings. Surprisingly, the meetings were more productive when he had not been briefed beforehand. Some analysis of the situation revealed that the sales force tended to brief him on implementation-level issues, issues that were below the scope of senior customer management, and that did not provide clear differentiation at a high level. Without a briefing, he followed his natural inclination to address customer issues at the problem level, which enabled him to address customer issues at a high level, engage the customer, and lead the decision process.

You have the opportunity to capture the best practices that occur from such accidental discoveries, the inspiration of a moment, or the skills of an individual, and transfer them to your entire sales and marketing force. The key is to employ the processes described in this paper for analyzing your product and your customers’ problems and needs. Using this approach, the best practice can be reduced to practice, enabling you to leverage the customer decision process consistently and successfully.