Peeling the onion: What are you really selling?

My company used to develop custom computer applications for oil and gas companies. We specialized in PC-based apps back in the days when mainframes dominated large corporations and PCs were only just beginning to make their way into the corporate world. These mainframe-focused corporations had trouble keeping up with the demand from their own users for applications on personal computers, and few off-the-shelf apps were available at that time, particularly ones that addressed the unique processing requirements of the energy business.

System developers in typical IT departments lacked skills appropriate to the world of PCs. PC programmers typically lacked any knowledge of how a corporate IT department works or what constraints there are on the need to maintain systems and keep everything running smoothly on the corporate network. Our positioning was that we employed older, seasoned project managers who understood the needs of the IT department, but we staffed projects with younger, PC-savvy programmers. For a while our positioning allowed us to gain a foothold in the local market, but it wasn’t long before our competitors noticed our success and started positioning themselves the same way.

We now faced a bit of a dilemma: How could we compete against large system development companies that had long-established relationships with IT managers? And how could we compete at the same time with small PC developers who could significantly undercut our billing rates?

It was at this time that I attended the Owner/President Management Program at Harvard Business School. One of the things HBS is big on is the whole topic of marketing and positioning, and one of the questions they push business owners to ask themselves is: “Who is my customer and why does he buy from me?” This resonated with me and, in time, changed my life and led to great success for my company.

From that point on, every morning as I drove to work I asked myself “Who really is my customer? What does she really want from me?”

On the surface, my customer was a middle manager in a company’s IT department. I didn’t try selling to end users – and, in fact, we quite frequently had to turn down requests from end users to develop systems for them – because I knew that would alienate the IT staff. They, after all, were the people who would have to maintain our system, ensure it fit into the corporate network, and ensure that data duplication was minimized. They would not be happy if a new system were suddenly sprung on them by someone they considered to be one of their users.

So we marketed our services to IT middle managers, offering to develop custom applications for their internal corporate clients on their behalf. Selling to the CIO was a waste; our systems were generally too small to justify their involvement. We sold to the people who had the authority to approve expenditures in our price range (typically $5,000 to $100,000). These were the same people our competitors sold to, so we had to find a way to differentiate ourselves once again.

One day, on my commute to work, I started asking myself random questions about my customers and prospects. For example: a potential customer might be, say, the System Development Manager, but what does that tell me about them? How old are they? Are they male or female? Why do they buy from the competition rather than us? Why do they buy from us rather than the competition? What worries them? Thus began a total transformation in the way we sold our services.

At first I found it very hard trying to fit customers into any neat categories. For example, age. How on earth could I know the age of everybody I might want to sell my services to? But when I thought about it, I actually found I could narrow it down. These people were middle managers. So they had obviously been working for a while. So they were probably around 30 or older. But they were only middle managers, so they were unlikely to be much over 40. OK, so the majority are going to be in their 30s. What could I deduce about IT professionals in their 30s and early 40s who had management responsibilities?

First they were probably married or in live-together relationships. Which meant that many of them would have children. And since they were in their 30s and most people have kids in their mid to late 20s, their kids were likely aged between 5 and 15. Which meant that schooling was a big factor in their lives. So what? How did that help me sell system development services? Well perhaps it didn’t, directly, but it likely gave me something I could use in my marketing. If I read a particularly insightful article on handling schooling issues, perhaps I could clip it and send it to someone I was trying to establish rapport with. Perhaps not. And perhaps they weren’t married and didn’t have kids. But the odds were with me, so I persevered. If nothing else, they reinforced my mantra of

Stay visible; stay close.

You don’t bug potential customers, but you don’t let them forget you, either.

Every morning I peeled another layer from the onion.

What do my potential customers think about at work? What do they think of their boss? They probably think they could do his job better than he does, simply because most people in large companies tend to think that way. Which means they probably aspire to that job, or one similar to it. So, rather than simply emphasizing our technical competence, I found myself emphasizing the fact that if they allowed us to build a system for them, it would reflect well on them. Employees think differently than entrepreneurs. An entrepreneur is committed to the growth and health of her baby – her company. But an employee is mostly focused on finding meaningful work, climbing the corporate ladder, getting promoted, and making more money. So if I could find a way to help them accomplish their personal objectives, I would clearly have a head start over the competition. Focusing on what our work would do for them, as opposed to their client, the end user, gained much more traction than simply pointing out the benefits of our solution to the corporation.

This turned out to be a fine line to walk. Even though an employee’s personal objective may be promotion, he will still evaluate a proposed system on its benefits to the company and the end user, as well as on its fit within the corporate network. Yes, he will perform his evaluation on those bases, but they are not his passion. His passion is self growth, more responsibility, promotion. Also, I had to be careful not to make my case too blatantly, as that would look tawdry and insincere: “My objective is to help you become successful.” What I was trying to do was what car salesmen do when they point out how good you look in a particular vehicle; it has to be the right vehicle in the first place or it doesn’t matter how ‘good’ you look in it.

Constantly peeling the onion and figuring out more qualities of our customers helped me develop still more approaches. The important message that came out of this is this one:

Companies don’t do business with companies. People do business with people.

I never sold my services to Exxon. I sold my services to Joe Blow who works at Exxon. Joe Blow is a professional – or he wouldn’t be a manager in the first place – and so he has Exxon’s interests at heart. But he is also Joe Blow, person, with his own likes, dislikes, aspirations, and frustrations. By recognizing these and tailoring my marketing to them, my company started steadily pulling away from our competition.

As we grew and hired full-time sales people I taught them this approach. Initially they resisted as sales people with experience always think they have the most effective approach. But when they started selling focused on the customer’s personal objectives rather than just their corporate objectives, they discovered they were consistently out-selling competitors.

The beauty of this is that price becomes almost irrelevant. We found out that our bids were typically 10 to 15 percent higher than the competition, but we had a far better success rate than they did. Over six years we grew from 12 people to over 200, in a highly competitive business with very few barriers to entry. Our profits were double the industry average.

When you help people accomplish their personal objectives, they tend to like you. And

People do business with people they like.

Peel that onion, and keep peeling. On the surface you may be selling widgets. But if you focus on learning more and more about your target market, you may discover you are actually selling something else, and widgets are just your vehicle for doing so.