Carpe Diem Consulting - Sales & Marketing Blog For Microsoft Partners

Trust and the $5 muffin refund

Today I was reminded about the difficulty - and the power - of being able to successfully market "trust".  I've been facinated with the "marketing of trust" ever since I wrote my MBA thesis - I've long forgotten the exact topic(!) - but I vividly recall it was a paper combining the theory of marketing trust with the difficulties in building the concept of trust into long term IS outsourcing contracts.

For anything but the most basic ICT transaction, ultimately the customer has to trust that we're going to do "the right thing" by them.  But how can we market the degree to which we can be trusted?  Every firm says they can be trusted - but not all firms can be trusted to the same degree.  How do we get this message across?

In our Essence of Selling Solutions methodology, we speak of the necessity of using Evidence - case studies of other organisations that are happy to go on the record to speak favourably about our work with them.  (Indeed - on our web site we use a quote from one of our key Microsoft contacts as Evidence that we're "up to the job".)

But what if we're in an existing relationship with a customer, and we're about to enter unchartered waters - perhaps they're about to outsource a significant chunk of their IS infrastrucutre to us, and it's just too hard to write a contract to cover every eventuality.  HOW DO THEY KNOW THEY WILL BE ABLE TO TRUST US?

Marketers define trust as (and I'm paraphrasing!)

A can trust B if B has the opportunity to rip A off - and chooses not to do so.

In an outsourcing contract, the vendor will end up with much more information about the customer than the customer has about itself - it would not be difficult to use this information to unfair advantage.  It's the very fact that the vendor has this information - but chooses not to use this to its advantage - that defines the trusted relationship.

So - where do the muffins come in?

This morning I went and bought the family muffins for breakfast.  I was charged $20 - there were quite a few muffins so I handed over the $20 note, and walked off, very happy as I was able to get the last muffins in the store.  (No fun returning to the muffin hungry family empty handed!)

Literally as I was driving out of the carpark - some hundreds of metres away from the store - I spied in the rear vision mirror the shop assistant that served me running frantically towards my car, waving madly.  I thought I must have left my mobile phone behind - but to my amazement she ran towards the car waving a $5 bill.  When she drew near she explained breathlessly "I'm so sorry - I overcharged you - the muffins are only $2.50 each - I don't know what I was thinking!"

WOW!  I would never have noticed this - there would have been absolutely no recriminations if she had not come after me.  But she did.  Once she realised her mistake, she had the opportunity to knowingly "rip me off" - and she chose not to.  I can trust her - and by association I can trust her store.  I now don't think I could ever buy muffins anywhere else!

SO - next time we quote a service fee to a customer based on the numbers of days it will take us - and it turns out we don't need anywhere near that number of days - do we reduce the size of our invoice?  If it's close to the end of the financial year, and we need a certain sale to make our target - but all of a sudden we become aware under confidentiality of a far superior solution that will only become available in the new financial year - do we deliberately postpone the sale, even if this means we won't make target?

What efforts are made in your organisation to "do the right thing" by your customers?

New definition of "Marketing"

The American Marketing Association announced earlier this year a new definition of "Marketing".  This definition is:

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

What are some key take outs and discussion points here for Microsoft Partners?

1. Marketing is not just a department

The AMA's previous definition of marketing started with "Marketing is an organizational function and a set of processes.....".  We may have a marketing department - but it is everyone's responsibility to adopt a "marketing mindset" to constantly communicate and deliver value to customers.

We recently delivered a series of workshops to a technical and consulting team within a NZ Partner, which focussed on assisting these engineers to identify more opportunities to help customers whilst on-site.  Whilst this will obviously assist this Partner to find new sales opportunities, it will also deliver value to customers by helping fix up problems customers are about to have before these problems truly "bite" them.

Similarly - how much client tension has been created in the past by "poor invoicing"?  Accurate, timely invoices - in a format agreed with the client - can save the finance department within your client much time and angst.  Again - this is providing value - this is marketing.

2. Product development - marketing creating value

Understanding the areas of value that customers require is the start of the product development process.  The key question - what are the problems certain types of customers are having, and based on this how can we package our products and services to solve these problems?

Let's not wait until a customer asks us to give them a quote before we figure out how to solve their problems:  let's be proactive, identify key problems in the marketplace, build an offering to solve these problems, and then let the marketplace know that we know how to solve these problems.

Don't promote the "products", however:  promote the "outcomes" that can be created for customers.

3. Marketing's about value - but what is value?

We all say we add value to our customers - but what really is value?

In our consulting efforts, we use the definition

VALUE = BENEFIT - SACRIFICE

The value we provide to a customer is the difference between the "good stuff" we create for them (eg removing a business problem) compared to what the customer has to "give up" (eg money, time, change, risk etc) for us to give them the good stuff.

Value is a relative term.  If you were asked "How much value did you provide that customer?" you can't really answer "42"!  But what you can say is "Compared to these alternatives - we created more good stuff - or we ensured the customer had to give up less stuff."

Value is a topic in itself - but even with this brief definition you can see that:

• knowledge of the value that competitors can provide is critical to positioning our services
• customers have to "give up" much less when they do nothing - understanding this is key to avoiding situations where the customer decides to stay with status quo
• we can provide more value and yet still be more expensive - there are many other things customers have to give up when dealing with us (eg hassle associated with IT change) - if we can smooth these things out we can charge a premium and still create more value

4. What's missing from the definition - how does the seller benefit?

The definition says that marketing must deliver value for "customers, clients, partners, and society at large".  That's great - but what about the seller?  If we're not going to "win" out of the transaction - why should we bother?

Some customers are too hard to deal with.

Some customers beat us down to ridiculous margins.

Some customers take us through a quoting/"request for information" process, but with no real project in site - they're just "testing the market".

Some customers already have a preferred seller in mind - they just need us to participate in a "3 quote" process (naturally telling us we genuinely have every chance of winning......).

The omission of the seller's needs wipes this definition out for me (as a whole) in the Microsoft Partner space.  The more I train Partner sales and marketing teams, the more time I see wasted pursuing opportunities that simply aren't going to be won - or indeed if they are won don't really provide value for the seller.

"Marketing" has a clear role in this regard - be it via "market segmentation", "ideal customer profile", "pipeline management", "bid/no bid", "opportunity qualification" - we must make sure the time we put into sales is worth it.

In this light - interesting to reflect on Kotler's definition of a "marketing opportunity":

an area of buyer need and interest in which there is a high probability that a company can perform profitably by satisfying that need

What's the definition of marketing in your organisation?  Is part of the charter to help find profitable opportunities - and not to chase unprofitable ones?

(Book referenced - Kotler on Marketing - How to Create, Win and Dominate Markets  Philip Kotler Free Press 1999 p36)