EXPERT ADVICE
The Perception Game

The way we think of ourselves is not always the way others see us. There's nothing revolutionary about that idea -- it's common sense. What's interesting to me is the way it plays out in business.

Not long ago, I was trying to help a client company try to figure out how to compete more effectively with its biggest opponent in the market. My client is coming from behind, and as the No. 2 in the market, they have their eyes set on the top spot and the reputation and market share that comes with it.

What was particularly irritating for my client was that there really isn't a great deal of difference between them and the competitor -- an increasingly common condition for increasingly crowded markets -- yet my client was trailing.

Perception and Reality

Part of the whole perception game involves deciding what your differentiators are and making the case to the marketplace that your differentiators are the only ones that matter. If you choose right, you'll go far; choose wrong and the sky will not fall, but you must be willing to take a dispassionate look at your position and be courageous enough to do something about it.

Taking a closer look at the messages for the two vendors told me a lot. Both vendors offered on-demand solutions, but my client played that card much more than the competitor. Interestingly, the competitor treated on-demand as table stakes and peppered its messages with benefits that potential users could easily understand, and at the end of the day, I think that's the whole story.

My client's messages appealed to the rational decision makers such as C-level officers, while the competition chose messages that told the users -- and everyone else -- how the product would help them get their jobs done. The messaging difference is not that stark, though. For example, both vendors talk about financial benefits that would appeal to the C-level decision makers.

My client's messages talked about high ROI (return on investment) but didn't give a lot of supporting evidence. On the other hand, the competition never actually used ROI, but their messages were loaded with statements about percentage improvements in a business process that lead directly to ROI. Those messages resonate with both groups. Users see a benefit to their job performance, and savvy executives can take the data and do their own ROI calculations in their heads.

The Message

Why am I bringing this up?

Well, for starters, I see many companies struggling with the on-demand message; they spend a lot of time and treasure to make their applications comply with the new fashion only to discover that there's lots of competition with that particular capability. Moreover, the market isn't swarming over their offerings. I see the same kind of thing in partner programs. Small companies join partner programs and think their work is done, that customers will just show up and it will be order taking time, but that is rarely the case.

These aren't catastrophes; it simply means there is more work to do, and building a marketing program around on-demand is nice, but it's not enough either. Regardless of the delivery mechanism, customers still want real benefits from the products they buy. Over time I think we've forgotten this, and we've begun treating technology like an investment that delivers a return for doing nothing, like a treasury bond.

Nothing could be further from the truth, of course, and my client's struggles with messaging brings this message home. If you want to talk about the return that your product or service can deliver when used correctly, by all means do so, but don't expect that to be enough. When you boil that message down, what you are left with is, "Buy our product because it's so cheap it pays for itself in no time."

That kind of messaging might be alluring to many, but it is the first step on a very slippery slope to a price war. Nobody wins a price war, even the customers who may make temporary gains but will lose everything when -- surprise! -- the vendor can't afford to operate at the price point it has engineered.

Change in Direction

Similarly, don't think that on-demand or whatever the flavor of the week is, by itself, will be enough either. As a differentiator, on-demand worked when the primary competition was on-premise, and while there is still a lot of on-premise software, the market now understands the difference, and on-demand is the growth category.

So the competition is shifting, and with it, our messaging needs to shift too. If you are in doubt, take a look at Salesforce.com (NYSE: CRM), the granddaddy of the on-demand movement. The Salesforce messaging still talks about on-demand and multi-tenant but as secondary considerations. For some time now, Salesforce's major message has been about success -- however a customer wants to define it. Moreover, the company's greatest evangelists are the customers that it calls "CRM Heroes."