The CEB's Commercial Insight is based on three pillars:
- Be credible/relevant – Demonstrate an understanding of the customer’s world, substantiating claims with real-world evidence.
- Be frame-breaking – Disrupt the customer’s current logic, revealing an underappreciated aspect of the customer’s environment or a flawed assumption.
- Lead back to your unique strengths – Refer customers specifically to areas where you outperform competitors
Points #2 and #3 are critical to avoid the commoditization of solutions, the worst scenario for suppliers, as the buyers are satisfied with a limited set of functionalities shared among several products of competing companies and trigger a price-based war. The CEB research shows that most times suppliers are asked for a proposal when the internal process is around 57%, usually very close to an official RFP, where the the project already has shaped up and it is increasingly difficult to steer it to the strong, distinguishing features of the product.
If you think this is bad, think of all the projects that are not even reaching 57% as the average 5.4 subjects involved in the purchasing decision are not agreeing and moving the project forward:
The CEB research prescribes the creation of Commercial Insight instead of traditional marketing material to break this mold and enter the internal decisional process much sooner, influence it highlighting how the business of the customer could be improved following a new approach that they are currently unaware of, and only at the end, once the customer acknowledges the pain points of the current situation and heats up to the alternative approach offered, show how the product is the natural choice as it provides the best solution in the new scenario, essentially leading to the strong points of the solution instead of leading with them.
The CEB books make a strong case for the need for Commercial Insight on both marketing and sales department, as the marketing department is responsible for creating correct and powerful Commercial insights, and the sales force has to take advantage of that by adopting a Challenger posture with the customer.
However, R&D is hardly mentioned in the books, as if the product was a given and a firewall separates R&D from marketing and sales. The thesis of this post is that the creation of Commercial Insight and the Challenger method greatly influence the activity of R&D.
Let's get back to that famous 57%: if the sales force is entering the negotiation when the project is close to RFP, the focus of the sale, from the point of view of R&D, will be matching the specs of the project, making sure that other competing suppliers are not proposing additional features missing in our solution. An ideal product in this scenario would be a solution that is a super-set of all the functionalities of competing products, as it would be able to participate in all RFPs. Talk about featuritis! In reality, missing features are evaluated, based on the relevance of the customer, the timeline for delivery and the degree of certainty of the sale, and eventually developed. So the focus of R&D is on monitoring and copying other competing solutions to be as compliant as possible.
Of course, there is another possibility, the sales force may have a stronghold on the customer and enter the project well before the 57%, act like a consultant for the same and influence the specs of the project to capitalize on the distinguishing features of the own product, but every supplier tries to do this and many times they will get there first.
With Commercial Insight and the Spark - Introduce - Confront process, our chances of getting there and re-frame the project on different assumptions are much higher. Still, the product has to have these effective and innovative features in spades in order to build relevant Commercial Insight. Remember point #3, the Commercial Insight should lead customers to the strenghts of product, but these have to be unique, without any doubt on the customer's side, or we are spending a considerable amount of time reframing a project to a state that still allows competitors to sneak in and win the project. Now, when marketing and sales adopt the Commercial Insight approach, the thirst of real, tangible technical innovation from R&D is going to increase significantly, otherwise there is nothing to build on. Look how the panorama shifted from copying competitors, to clearly differentiate from them!
Another aspect that is worth talking about is how Commercial Insight can influence R&D planning. Once the marketing department is building Commercial Insight on the new product developments in close cooperation with R&D, there will be a growing perception inside R&D of how new functionalities can directly influence the business side. The flow from technical innovation to creation of Commercial Insight in marketing can also be reversed, as the possible quantity and quality of Commercial Insight that can be generated by a new functionality is a valuble metric for planning the development. In the end, the Commercial Insight is how that functionality will generate revenue by winning customers, so it falls flat or it is just a copycat of a competing solution, it is likely that there will not be much leverage out of it.