Moving from products to solutions is a strategic priority for many organizations, and how to make the switch is an issue we commonly advise clients on.
Often, organizations’ reasons for prioritizing a switch to solutions are strategic (e.g. a desire to be perceived as a trusted adviser – not just a supplier – to customers). However, usually there is also a financial driver. By their nature, solutions are likely to be larger deals that are sold to higher levels within an organization. They often help establish and keep longer-term customer relationships, and can be much more profitable than product deals. For companies that have grown by mergers and acquisition (M&A), increasing cross-sell and upsell is usually core to their M&A rationale and their overall corporate strategy.
So, what’s wrong with moving from products to solutions?
One problem is that some companies attempt to “move” from products to solutions without really doing anything different. I like to offer this joke: “Is a fork a product, or a solution to the problem of needing to get food into your mouth to eat?” It really doesn’t matter what you call it – it’s still the same thing. The fork analogy may seem silly, but it’s the current strategy for some companies trying to go to market with solutions.
In her recent blog post titled What’s Your Solution Type, my colleague Lisa Singer described the different type of solutions, as defined by our solutions model. In short, simply calling something a solution rather than a product doesn’t make it a solution.
Another problem is the goal itself – moving from product to solutions. The goal should instead be to offer products and solutions. Moving to solutions implies that products are bad and should be avoided. Sure, solutions are good, for the reasons articulated above, but there are several reasons why customers won’t buy a solution:
In all of these cases, if a company has fully moved from products to solutions, it misses out on an opportunity for a sale that a company that provides both products and solutions would be well positioned to make. The reality is that there is still a lot of demand for products. Even companies that are successful with solutions still generate substantial revenue from products. In fact, selling solutions often starts with selling products; selling one product is a great foot in the door for a future solution sale.
Now, successfully going to market with both products and solutions is not simple. In particular, it requires changes in the marketing organization, including (usually) establishing both product and solution marketing. (See my colleague Marisa Kopec’s recent blog post titled The Difference Between Product Marketing and Solution Marketing.)
Often, changes in the product management function, such as adding a role of solution management for integrated solutions, are also required. But, just as crucial to the transition is an organization-wide shift in mentality to one that values – and can support – both products and solutions.