Customer Selection – Part 1 of 4

June 8, 2010

Continuing with my series of my favorite CSIA presentations from 2010, I very much enjoyed the Are You Selecting Your Customers…Or Are They Selecting You? by Dean Streck, CEO of V I Engineering who is an NI Select Alliance Partner.  In his presentation, he astutely illustrates that customer selection defines everything about your company from how you quote and the prices you can charge, to your process model and how you work, to the people you hire and the skills they need, and ultimately to your profitability and your ability to control the destiny of your company. Dean offers a fresh perspective on your customers and offers advice on your selection process, so you can truly understand your customer contributions to your business.

Know Thyself

Dean starts with the premise that it is hard to pick your customers if you don’t first clearly understand who you are. He recommends several tools that can guide you in this self-evaluation including some methods already mentioned in this blog.

Porters’s Five Forces – a look at the most common factors that affect your business.: Your buyers Your suppliers, Your Rivals, Substitutes, and Barriers .

Where You Play – what is your competitive position and how are you choosing a unique point on the Productivity Frontier.

OAS Statement – What are you Objectives (ends), Advantages (means), and Scope (domain). The OAS statement is basically your business strategy. Check out these tips for your annual planning process.

Strategy Map – is a visual representation of the strategy of an organization. It illustrates how your organization plans to achieve its mission and vision by means of a linked chain of continuous improvements.

Balanced scorecard (BSC) – is a strategic performance management tool – a semi-standard structured report supported by proven design methods and automation tools that you can use to keep track of the execution of activities by your staff within their control and monitor the consequences arising from these actions.

Your Customer Selection Process – who in your organization is responsible for your customer selection. That starts with the CEO who develops and communicates the customer selection criteria. It then falls to marketing and sales to identify the accounts and create the opportunities that fit the criterion. Then, the rest of the operations on both the technical and business side must work to meet the needs of those clients.

Looking Into the Mirror

As you can see, customer selection is as much about you as it is the customer. You must first figure out who you are as a company today and the company that you want to be. Then, you can be proactive about selecting the customers that will help you achieve your goals.

Customer Selection (Part 2 of 4) – Know Thy Customer


Strategic Planning – Plans for 2010

December 15, 2009

As we look forward to an economic recovery in 2010, we must make plans to grow our system-level business in conjunction with our Alliance Partners. We continue to add sales resources to identify and pursue these system-level opportunities.

Our Mission Remains the Same

National Instruments mission remains the same – create innovative products and delivering quality support. We are working hard to empower you with:

  1. Delivering new products with the latest technologies along with quality technical support.
  2. Well-integrated platforms like PXI and CompactRIO where you can pick the modules that meet the customer’s application.
  3. We also continue to give you more ability to customize our products. Not only in software, we now let you program the hardware with FPGAs. We even let you designs your own hardware – like CompactRIO modules and the new FlexRIO front-end for PXI.
  4. We also provide you with reference designs and architectures to help your engineers build good solutions for our customers.

We encourage you can learn more about how these products can create more opportunities for your businesses.

Working On Your Business, Not Just In IT

But, for you, it’s not just about having good technology, it’s about managing your business. It is not simply about solving the technical challenges of a particular project, but building a system integration company that can reliably deliver those solutions.

As I travel around the world, it has been a privilege to learn about your businesses. And, I try to share what I have learned in Alliance Day presentations, one-on-one business consultations …. I have even started this blog to foster best business practices.


Strategic Planning – Outlook for 2010

December 8, 2009

So, when will we see an economic recovery? We believe that we have seen the worst of it. And while we must rebuild from 2006 levels, we are expect a modest recovery in the coming years. The good news is that NI is in an even stronger position as we continue to take market share.

Purchasing Managers Index (PMI)

National Instruments often refers to the PMI which has been a good indicator of how our business will perform. The PMI began to decline in 2007, the deteriorated rapidly in 2008-09 with the severity of the economic downturn. But, over the last few months, the global PMI has begin to recover – becoming positive in Q3.

National Instruments Outlook

We have seen our business stabilize over the last several months. We believe that we have ‘hit the bottom’ and are beginning to rebuild from that new level. We saw a return to growth in Q3 and are anticipating sequential growth in Q4 as well.

And, as the economy recovers, we believe that we will be in an even stronger market position. We’ve continued to make strategic investments through this downturn and belive that we are actually gaining market share. So, we will reap the benefits of this position as the market returns.

Our Partner Business

As our system-level business returns, we expect our Alliance Partner business rebound and continue to grow as a percentage of our overall business. Those Alliance Partners that can successfully manage their business will be in a better position for growth.


Strategic Planning – Review of 2009

December 1, 2009

Well, here we are in December. As always it is an opportunity to review our performance over the past year as well as make adjustments and plans for next year. 

The Great Recession

It has been a challenging year for most of us, so I thought I’d offer a little humor. During my 20 year career at National Instruments, our business mostly looked like this. That was until year year – and the Great Recession.

After several years of steady growth in our revenue, we began to see the effects of the Great Recession in the 4th quarter of 2008. This trend continued into 2009. And, although the decline has stopped, our business is significantly down from where it was a year ago.

Impact on our Partner Business

Unfortunately, this trend has also adversely affected our Alliance/VAR business. For the past several years, we not only growing revenue, but actually increased it as a percentage of our business.  But, as the recession took it’s toll, particularly on our larger system-level business which is commonly channeled by our partners, we’ve seen an adverse affect on our partner business.

OK, enough bad news. Next week we’ll talk about the chances of an economic recovery and what that will mean for NI and our partner business.


Alliance Strategies – Part 5 – Systems

July 6, 2009

Products – Systems

Some Alliance Partners produce solutions into standard systems. Note that NI still classifies these companies as “Solution Partners,” because they channel NI products, rather than “Product Partners” that co-market a complementary tool. The concept of turning repeat projects into standard products is definitely a good one, but you should avoid the temptation of creating generic systems. Saying that your system “Will Test Anything” is not credible or compelling to the user. Instead, consider marketing a series of specific systems. The series may rely on a common architecture, but the individual models are more compelling and actionable.

As opposed to a tools-level business that relies on mass marketing to generate numerous sales leads, a system-level business requires more market research to proactively target customers, rather than waiting for customers to contact you. Advertising and sending direct mail to large databases is often inefficient. It is quicker to simply identify your potential customers and contact them directly. Here is a hint – do not solely use the Web and search engines to market yourself, but rather, use them to proactively identify customers.

Also different than the tools-level business, the sales process is not typically transactional but rather a complex, long sales process. It is actually more similar to a services business. However, pricing strategy is quite different. Often, a services business builds a project on a time- and material-basis, but systems should be priced according to customer value and what the market can bear. Because specific customer requirements often differ, you may want quote standard system plus customization. Many skilled system suppliers often leverage the sales opportunity by offering a subscription component for ongoing maintenance and support.

Working with NI

As previously mentioned, the NI business model is optimized for mass marketing and selling tools. Therefore, while we both sell products, our processes may be completely different. It may be tempting to market to the NI database, but for the most part, our database is full of “do-it-yourself” engineers. That is not to say that NI is not interested in marketing, but we recognize our emphasis is typically about how your system is a great use of our tools, rather than solution-level marketing to end users. Still, any publicity is good publicity, so you should certainly pursue how NI marketing campaigns and activities can highlight your system. For example, NI seeks solution-level collateral for its Web site, vertical events, and the Alliance Partner news section of Instrumentation Newsletter.

Similarly, the field sales organization is primarily tasked with tools-level selling. Don’t expect an NI DSM to sell (or even know about) your system. However, please use DSMs as a resource, not as a sales channel. Rather than wait for them to call you, proactively contact DSMs regarding your target accounts. They can tell you if NI has already made end-roads into the account. You can offer to bring them along on your sales visits. They should likely be interested and can provide you with credibility and local backing.

In some instances, NI may have a business development manager dedicated to your industry area. If so, they can assist you in your marketing and sales efforts and act as a liaison for working with the NI sales and marketing organizations.


Alliance Strategies – Part 4 – Products

July 1, 2009

Products – Tools

The Alliance Partner program also includes “Product Partner” companies that offer tools-level products complementary to those from National Instruments, such as cameras, motors, stages, sensors, and more.

In addition, Alliance Partners package their expertise into National Instruments LabVIEW add-ons and toolkits. Often, the most successful Alliance Partners tend to be more vertical with significant value added, not generic routines. Besides, if your product is truly general purpose, NI is probably developing a similar product already. Before developing such a product, you may want to consider whether it is really something you want to produce or keep as a competitive advantage. Often, a toolkit can become a calling card to sell your services.

Another consideration is whether you are actually prepared for the product business model. Becoming a tools supplier requires a different approach to R&D, marketing, sales, and support. Selling tools requires mass marketing techniques. You need data sheets, demos, a Web presence, and more. Selling tools also requires a short sales cycle, so you need to invest in Web and tele-sales. Be sure to price your tools to include marketing and support costs.

Working with NI

The good news is that NI sells and markets at the tools-level, so it is easier to integrate and leverage our business development efforts. You can start with marketing your tool on ni.com. Your Alliance Partner profile should include your product description. If it is an NI LabVIEW add-on, it automatically shows up in the LabVIEW Tools Network. Third-party advisors, such as Motion Advisor and Camera Advisor, also may be applicable.

Product partners also can take advantage of marketing at NI events. For example, you can exhibit at NIWeek, NI Technical Symposium (NITS), and NIDays to interface with NI customers looking for the latest tools from NI and its partners.

For specialty tools, contact the product marketing manager whose product closely aligns with yours to discuss co-marketing plans. Recognize that the product marketing manager’s primary goal is generating leads for his or her products, so co-marketing should be a win-win situation. For example, use a direct mail campaign or Webinar that cross-markets to both your database and an NI database.

While it is tempting to think that the worldwide NI sales organization can become your virtual sales force, it is probably too much to expect sales to remember your product. NI district sales managers (DSMs) are busy trying to keep up with NI product releases. Rather than sending the DSMs your literature, make sure you are listed on ni.com. This way, the NI sales organization can find you too. You also can talk to your respective product marketing manager to learn how you can participate in his or her sales training and information as a way to get the attention of the NI sales force.