Sunday, June 23, 2013

Solution Marketing: Just What Is a "Solution"?

"How do we progress from offering products to offering solutions?" This urgent question has reached the top of many technology CMOs' initiative list. When IDC interviewed solution marketing experts for the newest report in our CMO Advisory best practice library, they confessed that that the first issue to tackle is agreement on what is a solution.

IDC predicts that by 2016, more than 80% of technology purchases will significantly involve the line-of-business buyer, who will specifically drive 40% of all purchases. These business-oriented buyers have little patience with technology that can't be easily connected to a business problem. The new buyer increasingly disdains "raw" products that require substantial work to integrate into something usable. The new buyers seek to buy offerings that are closer to meeting their actual business needs (aka "solutions").

While the specifics about just what is a solution varied among the experts IDC studied, the gestalt of the answer can be easily grasped by comparing a raw turkey and the complete holiday dinner that it will someday crown.

Consider the Turkey Dinner
In the analogy of the raw turkey and the complete dinner, the raw turkey, as a single component to a completed dinner, is like most standalone technology products. People can't eat raw turkey. If guests were to be served a raw turkey with no intervention from cooks, they would be sadly disappointed. The raw turkey certainly has value! However, its value is to the cook — not to the ultimate consumer, for whom it is inedible. Technology products, like raw turkeys, solve important operational problems for the builders, or cooks, of the ultimate solution.

Just as the raw turkey must be cooked and incorporated into a meal before it can be really appreciated by a guest, so must a great deal of preparation work be conducted before most technology products are useful to the end user (the customer's business). Only when enough product components (ingredients) combine with sufficient services so that the end result actually solves a business problem can you really call something a solution. Service work can include planning, consulting, implementation, integration, customization, and training as well as providing financial assistance, overcoming legal or standard hurdles, and more.

Avoiding the Bundling Trap
Companies who want to offer solutions must be especially careful not to fall into the bundling trap. Bundling can be an effective strategy for some situations, but a bundle is not a solution — and companies should not fool themselves into thinking these two strategies are interchangeable. Expanding on the turkey and completed dinner analogy, to host a successful holiday dinner, customers need all the components for the full meal — ingredients, recipes, and equipment to produce it. Then they also need to set a table, decorate the house, put music on, and be ready on time. A good host is concerned about the whole dinner experience for the guests, not just whether the turkey comes out right.

If a company supplies only operational-level technology (e.g. raw turkeys), it must figure out how all the other elements can be put together in a way that can be easily used by the customer. The company must partner with other suppliers and provide orchestration among them.

Solutions require a much more complex go-to-market proposition than products. However, the upside is that solutions offer an even higher value to the customer. By helping customers to have a delightful experience, you create a loyal customer who is more willing to pay a premium and become a proponent of your brand.

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