Getting Into Customers Heads Rich Mironov

Getting Into Customers' Heads § Rich Mironov § 21 -July-04 www. mironov. com rich@mironov. com © 2004

Agenda § § Introductions Are you selling or listening? War story: medication management Pricing as a listening exercise 2

Know What You Know § Some things I know § § Technical product design Enterprise computing Network security Pricing for rational organizations § Some things I don’t know § § Consumer electronics and home computing Non-tech markets Fashion-driven buying behavior Large-scale advertising 3

Selling & Listening § Can’t do both at the same time § Some roles are mostly selling § § Sales & Marketing Recruiting Personal trainer PR, Investor Relations § § Tech support Doctor Order admin Reporter § Some roles are listening (then solving) § “Sellers” need to make time to listen and learn 4

Selling or Listening? § You are selling when you… § § § Do most of the talking Anticipate objections Plan your arguments Understand material Have a goal in mind § You are listening when you… § § § Ask open-ended questions Take notes Repeat for clarification Use silence Expect to be surprised 5

Example: Pitching Press & Analysts § Completing a product roll-out § 30 press calls, 15 industry analysts § I already have an agenda § § “Great company, important customers…” “New versions has breakthrough features…” “We know where the market is going…” “Here’s an amusing anecdote…” § Pitching, not listening § A few analysts may actually know something § How to sincerely ask their opinions? 6

Example: Trade Show § Goal: pull in wandering attendees § Quick qualification, scan their badges § I already have an agenda § “Do you have a wireless network? ” § “What kind of security are you using? ” § “Can we get you more information about…” § Mental shift for (rare) knowledgeable visitors § Existing customers § Potential business partners § Serious prospects 7

When Selling Fails § Truly not a prospect -or- seemingly not a prospect? § What if you had… § § § Mis-labeled benefits Alternate product configuration Wrong market or audience Less likely application Wrong pricing model § Can’t know until you get inside their heads § Critical in new and evolving markets 8

Making Time to Learn Who: § Members of your target audience but not current sales targets § Friends of friends § Willing to be blunt Value their time § Make a formal appointment § Buy lunch? Token gift? § Promise not to market/sell for 90 days 9

“I can’t stop for gas or I’ll be late for the party. ” 10

Extended Interview Format § Get inside their heads § 1+ hour intensive in-person interviews § Open-ended questions, lots of listening § Record session if possible § Ask about… How their business works Terminology Natural units of work What keeps them awake at night (pain) Current solutions, alternatives, shortcomings, competitors § Unstated requirements § Pricing and ROI dimensions § § § 11

Example: What's the Unit of Work? § § § § Hospitals are sized in “beds” Airlines in “passenger-miles” Pharmacies in “prescriptions” Hotels in “room nights” HR departments in “employees” Assembly plants in “trucks per day” Chip fabrication in “yield” and “wafer size” Sales force automation software in “seats” 12

And Listen For… § Their concerns… not the concerns you wish they had § § § How they describe their needs Motivators and blockers Customer’s idea of competitors Do features matter? Word of mouth, reputation Emotional climate 13

How Much Listening is Enough? § § See “natural” market segments Understand customer’s internal logic Silently anticipate answers Priority of requirements are obvious § Established markets: one or two § “listening sessions” per month New markets: until you see the patterns 14 ?

Quiz Q: What are the four most powerful words in Marketing? A: “A customer told me…” 15

Agenda § § Introductions Are you selling or listening? War story: medication management Pricing as a listening exercise 16

War Story: Healthcare § Concept-stage start-up § Application to manage inventory and re-ordering of patient medications § What should application do? § Is there a market? Wide-ranging one-on-one interviews… § Long-term nursing facility § Leading private-practice spinal surgeon § Large acute care hospital § Lots to learn, many surprises 17

Long-Term Care Facility § Stable group of 15 -30 residents (patients) § Elderly, chronic illnesses, complex mix of medications § Residents each have own doctor § Families often pay for meds § Several local pharmacies, varied ordering lead times § What keeps operator awake at night? § § One patient runs out of something Lost meds, refused meds, stolen meds Notifying family of status, problems Low-wage workers, high turnover § Dream solutions: auto-renew each Rx as needed, auto-notify families of changes in resident status 18

Spinal Surgeon § Private practice, 100+ active patients § Mostly on-the-job, Workmen’s Comp § Chronic back pain notoriously hard to verify § Skilled and stable staff § Doctor, 3 nurses, office manager, receptionist § Most meds are controlled substances § Therefore, no refills without an office visit § What keeps them awake at night? § No-shows, appointment reminders § Drug seekers § Scheduling office hours, surgery, pro bono § Dream solution: auto-confirm appointments 19

Large Municipal Hospital § Serves broad community § Paying and non-paying patients § Many departments, complex processes § Legacy systems § Doctors prescribe, pharmacy dispenses § What keeps them awake at night? § HIPAA: Health Insurance Portability and Accountability Act § Litigation § Cost containment, supply “stock-outs” § Can’t “restock” meds if unused § Dream solution: secure, integrated patient information tied to real-time dispensing & costing 20

What Did I Learn? § Initial concept was very limited § Healthcare is very complicated § Looks like one segment § Endless opportunity to be surprised § Postponed design for more research § More interviews or narrower target? § 8 hours well spent 21

Post-Course Corrections 22

Some Take-Aways § Assume you don’t know everything § Set aside time to listen, learn § Let the world surprise you § Climb into customers’ heads 23

Agenda § § Introductions Are you selling or listening? War story: medication management Pricing as a listening exercise 24

Exercise: Pricing for Consulting § Your last start-up just closed, so you are suddenly a consultant. A prospective client needs some market analysis § What are your pricing objectives? § How to structure a project? § Risks for you? For client? 25

Possible Objectives § Work at any price § Food on the table § Loss leader § Underprice first assignment, get follow-on work § Good reference for other clients § Become indispensable § Push for a full-time position later § Gain market experience § What will the market bear? OK to lose assignment 26

Possible Models for Consulting Project § Per hour, no limits § Per project § Fixed price for initial sizing § § § § (“pay me to estimate”) Per hour with project ceiling Milestones (progress payments) Equity (pre-IPO stock) Customer sets value at end Shared savings (portion of ROI) Free (experience, reference, try&buy) Barter 27

Risks in Consulting Models Client’s Risk Consultant’s Risk Straight Hourly Unlimited cost, quality, completion None Fixed project price (pay on completion) Timely completion Unlimited effort, defining “done” Partial work not valuable, inspecting Upfront analysis May overpay later No immediate cash value Fixed price milestones Equity, portion of ROI 28

A Few More Take-Aways § § Assume you don’t know everything Set aside time to listen, learn Let the world surprise you Climb into customers’ heads § § Innovators may have to invent markets Pricing models should match solution Listening is the first step Not a one-time effort 29

Getting Into Customers' Heads § Rich Mironov § 21 -July-04 www. mironov. com rich@mironov. com © 2004