Technology vendors are promoting solutions, rather than products, to their enterprise customers. Most do so as a reaction to commoditization and falling margins. A few, as a proactive step to differentiate and increase the value they deliver. Of course, other industries and consumer-oriented companies are turning to solutions too. (Just look at Wells Fargo’s new Home Improvement Program, designed to combat the commoditization of equity financing.) Many principles of successful solutions are common across industries, but we’ll address the problem children first: Most technology-based “solutions” are no more than re-positioned products with a services pitch tacked on. Many others start with lofty ideas, then fall down in execution.
What’s a Solution?
Sales and marketing people frequently use the words “solution” and “product” interchangeably, obscuring (intentionally?) a very real distinction. Products supply a specific set of functionality. Solutions address customers’ broader objectives – ones that often have a direct impact on business success. That means solutions are more complex, and require a larger investment and broader skill-set to take to market, deploy, and operate.
| || |
One or more products or services
Integrated blend of products, services, and expertise
Type of Need Addressed
Specific requirement - the need to perform a particular task
Strategic imperative – the driver that causes the customer to allocate budget
Success Factors to Achieving Benefits
- Rich feature set
- Reliable performance- Rapid deployment
- Simple, low-cost maintenance
- Integration (not joint marketing) among components
- Clearly defined roles among solution participants- Adaptability of solution to evolving needs
- Broad changes in buyer organizations’ behavior
Differentiating between products and solutions
Roles in the Solution Stack
To assess realistically the required investment and likely returns of offering a solution, companies must first determine what role they would play within a solution ecosystem. A company's role within the solution stack determines key decisions about product development, sales capabilities, and alliance strategy. The participants in a complete solution are:
- Orchestrators: Experts in the customers’ most critical needs, they determine what comprises the solution. Often, orchestrators own the core intellectual property or expertise to meet the customers’ needs. Orchestrators also typically lead the customer relationship.
- Completers: Offer niche products that are critical to the success of the overall solution.
- Complementors: Enhance the effectiveness, efficiency, or attractiveness of the solution, but are not critical to delivering on its core promise.
- Delivery experts: Make the solution easier to adopt and more usable for end-customers.
The orchestration role is the most alluring. To execute it successfully, however, requires significant investment and a broad set of competencies, so its also the riskiest. While its common for a single company to play more than one role, solutions invariably involve inter-company collaboration.
Achieving Success with Solutions
When an organization decides to orchestrate a solution, it must be ready to commit resources from multiple disciplines. Ignoring any one area almost certainly means the solution will fail to reach its full potential for revenue and account penetration.
- Select the right use-case and decision-makers. Existing customers are an indispensable source of input at this stage.
- Determine which capabilities are critical, and how to make the solution most readily adoptable by customers
- Form the required alliances, starting with Completers, then Delivery Experts, and finally Complementors.
- Determine and articulate the concrete value of the complete solution. Quantify it!
- Assess and, if necessary, enhance sales channel skills to execute a solution selling approach
- Go to market in phases to balance investment and return
- Expect a learning curve and actively manage the solution’s evolution
Solutions are not a panacea for invigorating revenue growth or raising margins. Nonetheless, organizations that are able to identify the right role within a solution and effectively execute on each stage of solution development can create significant benefits and opportunities for their business:
- Attention of new, often more powerful, buyers and decision-makers within customer accounts
- Entree into new accounts, including expansion into larger enterprises with higher budgets
- Ability to command higher average sale price and deal size
- Higher services revenues associated with the product, and increased interest from delivery partners who expand market reach
- Position as a "trusted partner" to customers
About the Author: