The Pragmatic Marketer Volume 9 Issue 1
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This document provides an overview of the Spring 2011 issue of The Pragmatic Marketer journal. It includes summaries of three articles: 1) Pragmatic Marketing's 11th Annual Product Management and Marketing Survey, which shares results from their annual survey of product managers and marketers. 2) Finance as a Stakeholder in Product Management, discussing how the product manager interacts with finance. 3) Mining Content Gold: How to Interview Content Experts, providing tips for interviewing experts to generate useful content.
![Finance as a Stakeholder in Product Management
It is not unusual in cases where the If it’s not possible to avoid The accounting literature makes a
customer asks for a commitment of acceptance language in the contract, distinction between services that are
future functionality they also ask include clearly defined acceptance incidental to the software and those
for contract language to provide the criteria as part of the commitment. that are essential. While there is no
right to accept what is delivered. Then the acceptance becomes hard-and-fast rule when services are
Sometimes this acceptance language objective (were the acceptance essential or incidental, the following
is explicitly tied to the future criteria met?) rather than subjective factors would suggest the services
functionality, but often comes as a (does the customer like it?). are essential: (1) the software itself is
generalized right with respect to all Documenting the acceptance criteria not off-the-shelf (i.e., it is not shrink-
of the activities within the contract. in advance also helps determine wrapped but is highly tailored for
In some cases the acceptance the scope and cost of what you’re each customer); or (2) the software
language can be vague or subjective, agreeing to deliver. is off-the-shelf but the customer
such as a language that deliverables is getting significant alterations to
are simply subject to the customer’s Precisely defining acceptance criteria the out-of-the-box features and
satisfaction. up front may be impractical. In functionality; or (3) you need to
this case, seek language defining build complex interfaces in order for
Acceptance by the customer of a formal acceptance process that the customer to use the software; or
future product features can create is closed-ended. For example, the (4) the customer pays for software
an issue, as the test for whether language may specify the parties as the service work is performed;
the company can recognize the will work to jointly define the or (5) payment for software is
revenue from the contract becomes acceptance criteria for the features milestone-based or subject to
customer acceptance. 1
not one of, “have we delivered the once the work begins, or the
functionality we promised?” but acceptance process may include only
rather “has the customer accepted a limited number of rework/revision In the case where there are no
what we delivered?”. Acceptance periods in which you agree to services sold with the software or
language will cause the revenue make changes. In general, the more where the services are deemed
deferral to last until the acceptance tightly defined and closed-ended the non-essential, the software license
has occurred, which may be long acceptance process, the better. Just fee would be recognized as revenue
after the delivery! make sure the contract language is as soon as it is delivered.
reviewed by Finance.
There are a few approaches to However if the services sold with
mitigate the acceptance issue. the product are determined to be
Best case, seek to avoid any Products that include services essential, the rules require that
customer acceptance with “revenue should be recognized
A different problem occurs when in accordance with contract
respect to the future product
the product consists of licensed accounting.”2 Under contract
deliverables. Without explicit
software with significant post-sale accounting, the revenue from the
acceptance language, the test
services (such as those for setup, license fees will initially be booked
for revenue recognition reverts
configuration, data conversion or as deferred revenue, with “a portion
to “have we delivered what we
customization). If the services are of the total [license fees]… recorded
said we would deliver.” Provided
essential to the delivery of the [as revenue] in each period based
the features are clearly scoped, a
solution—i.e., the software has on the relative cost or effort applied
simple documentation exercise of
limited or no value from the services during that period.”3 Essentially
describing how “what was delivered”
that go with it—there may be the software license is recognized
met the commitment given can be
revenue recognition issues. as revenue as the services work is
sufficient to declare “done” and
recognize all the deferred revenue. performed. If the related services
stretch over twelve months,
one-twelfth of the software license
fee would be recognized as actual
revenue each month.
1 KPMG, Software Revenue Recognition: An Analysis of SOP 97-2 and Related Guidance, Second Edition, August 2005, pp. 207-210;
http://us.kpmg.com/microsite/attachments/2005/SoftwareRevRecognitionBook2005.pdf
2 Steven T Petra, Revenue Recognition for Software Products with Multiple Deliverables, AllBusiness, April 1, 2005;
http://www.allbusiness.com/accounting-reporting/record-keeping-gross-receipts/1096815-1.html
3 The ‘Lectric Law Library, Legal Lexicon on Accounting Methods, The ‘Lectric Law Library, retrieved 25 June 2009;
http://www.lectlaw.com/def/a099.htm
2
0 • The Pragmatic Marketer • Volume 9, Issue 1, 2011](https://image.slidesharecdn.com/thepragmaticmarketervol9iss1-110422121742-phpapp01/85/The-Pragmatic-Marketer-Volume-9-Issue-1-20-320.jpg)
The Pragmatic Marketer Volume 9 Issue 1
- 1. Volume 9 • Issue 1 • 2011 The journal for technology product management and marketing professionals ® Pragmatic Marketing’s 11th Annual Product Management and Marketing Survey Finance as a Stakeholder in Product Management Mining Content Gold: How to Interview Content Experts
- 2. Executive Briefing The proven way to create effective product management and marketing teams. • Review key concepts of the Pragmatic Marketing Framework, Business Marketing the worldwide standard for product management and marketing. Plan Positioning Plan Pragmatic Market Market Buying Customer Marketing • Learn techniques leaders can use to accelerate adoption. Problems Definition Pricing Process Acquisition Framework™ Win/Loss Distribution Buy, Build Buyer Customer • Designed specifically for senior management. Analysis Strategy or Partner Personas Retention Distinctive Product Product User Program Competence Portfolio Profitability Personas Effectiveness STRATEGIC TACTICAL MARKET STRATEGY BUSINESS PLANNING PROGRAMS READINESS SUPPORT Competitive Product Launch Sales Presentations Innovation Requirements Landscape Roadmap Plan Process & Demos Technology Use Thought “Special“ Collateral Assessment Scenarios Leadership Calls The of Tuned In Leaders How technology company CEOs create success (and why most fail) Status Lead Sales Event Dashboard Generation Tools Support Referrals & Channel Channel References Training Support by Craig Stull, Phil Myers & David Meerman Scott © 1993-201 Pragmatic Marketing 1 Scan or download the e-book at PragmaticMarketing.com/secrets PragmaticMarketing.com/seminars Call (800) 816-7861 to conduct this seminar at your office
- 3. Inside this issue: Volume 9 Issue 1 • 2011 Creator of the world’s most popular 4 Pragmatic Marketing’s 1 Annual 1th product management and marketing seminars Product Management and Marketing Survey By Steve Johnson About Pragmatic Marketing® Each year Pragmatic Marketing conducts a survey of product managers and marketing professionals. Since 1993, Pragmatic Marketing has Our objective is to provide information about conducted product management and compensation as well as the most common responsibilities for marketing training for 5,000 companies those performing product management and marketing activities. in 23 countries. Our team of industry thought-leaders produce blogs, webinars, podcasts, and publications read by more than 100,000 every year. 16 Finance as a Stakeholder in Product Management The Pragmatic Marketer ™ By Stephen J. Konig When talking about how the 8910 E. Raintree Drive product manager interacts with Scottsdale, AZ 85260 others in the company, we usually Pragmatic Marketing, Inc. talk about sales, marketing, product development and senior Craig Stull / Founder and CEO management, but Finance is a Kristyn Benmoussa / Editor-in-Chief critical role in a company that isn’t ————————————————— talked about much. Interested in contributing an article? PragmaticMarketing.com/submit No part of this publication may be reproduced, stored in any retrieval system, or transmitted, in any form or by any means, electronic, mechanical photocopying, recording or otherwise, without the prior written permission of the publisher. 24 Mining Content Gold: Other product and/or company names mentioned in this How to Interview Content Experts journal may be trademarks or registered trademarks of their respective companies and are the sole property By Cheryl J. Goldberg of their respective owners. The Pragmatic Marketer, a Pragmatic Marketing publication, shall not be liable As technology companies increasingly turn regardless of the cause, for any errors, inaccuracies, to content marketing, their challenge is coming omissions, or other defects in, or untimeliness or unauthenticity of, the information contained within this up with compelling information. Knowing magazine. Pragmatic Marketing makes no representations, how to interview experts will help you warranties, or guarantees as to the results obtained from uncover nuggets that take your content the use of this information and shall not be liable for any third-party claims or losses of any kind, including lost marketing to the next level. profits, and punitive damages. The Pragmatic Marketer is a trademark of Pragmatic Marketing, Inc. Printed in the U.S.A. All rights reserved. ISSN 1938-9752 (Print) ISSN 1938-9760 (Online) Scan to download this issue. Available on select web-enabled camera phones Standard data rates may apply www.pragmaticmarketing.com/scan The Pragmatic Marketer The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 3 Volume 9, Issue 1, 2011 to download a free QR Code reader by ScanLife
- 4. P r a g m a t i c M a r k e t i n g ’s 11 t h A n n u a l Product Management and Marketing Survey By Steve Johnson Each year Pragmatic Marketing conducts a survey of product managers and marketing professionals. Our objective is to provide information about compensation as well as the most common responsibilities for those performing product management and marketing activities. Over 1,800 completed the survey between October 29 and November 25, 2010. Note: When making decisions, remember this summary describes typical practices, not best practices. For best practices in product management and marketing, attend a Pragmatic Marketing seminar. 4 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 5. Profile of a product manager Product Management ratios • Average age is 39 within the company When looking at staffing, it’s often helpful to • Responsible for 3 products and works see how ratios of product managers at your in a department of 6 people company compare to the industry norm. • 92% claim to be “somewhat” or “very” technical For each product manager, we find: • 33% are female, 67% are male • 0.6 Product marketing managers • 93% have completed college and • 0.5 Marketing Communications 43% have completed a masters program • 2.1 Salespeople • 0.6 Sales engineers (pre-sales support) • 0.4 Development leads • 2.0 Developers • 0.1 Product architects and designers Reporting structure Other ratios of interest The typical product manager reports to a • 1.8 developers per QA manager Director or Vice President in the product management department. • 3.0 salespeople per sales engineer Reporting to Title • 39% report to a director • 31% report to a vice president • 21% report to a manager • 9% report to a CXO Reporting to Department • 29% direct to CEO or COO • 31% in Product Management • 20% in Marketing • 14% in Development or Engineering • 6% in Sales The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 5
- 6. Compensation For product management and product marketing titles, the average compensation is $96,483 salary plus $12,688 annual bonus. 67% of product managers and marketers get a bonus. Bonuses are based on (multiple responses were permitted): • 69% company profit • 26% product revenue • 59% quarterly objectives Geographic impact on compensation (in US $) Base salary Bonus Africa $76,000 $22,500 Asia $83,392 $5,058 Australia/New Zealand $104,625 $11,163 Canada $89,934 $10,747 Central/South America $81,000 $12,000 Europe $87,239 $12,257 Middle East $109,334 $15,000 United States $102,960 $14,173 US regional impact on compensation (in US $) Base salary Bonus Midwest $91,157 $10,965 Northeast $109,415 $16,179 Pacific $113,880 $15,221 South $100,375 $15,477 Southwest $110,285 $16,973 West $98,926 $12,496 Midwest (IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI) Northeast (CT, DE, MA, ME, NH, NJ, NY, PA, RI, VT) Pacific (AK, CA, HI, OR, WA) South (AR, LA, OK, TX) Southeast (AL, FL, GA, KY, MD, MS, NC, SC, TN, VA, WV) West (AZ, CO, ID, MT, NM, NV, UT, WY) 6 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 7. Pragmatic Marketing’s 1 Annual Product Management and Marketing Survey 1th Compensation by years of experience (in US $) Base salary Bonus Less than 1 year $98,968 $13,593 1-2 $93,383 $13,891 3-5 $98,628 $12,715 6-10 $103,969 $14,059 11-15 $113,374 $16,009 More than 15 $121,734 $12,896 Compensation by education (in US $) Base salary Bonus Bachelors degree $94,763 $12,260 Masters in Business $105,031 $15,581 Masters in Engineering $103,144 $11,696 Other Masters degree $101,005 $13,546 Compensation by title (in US $) Base salary Bonus Product Manager $100,964 $13,235 Product Marketing Manager $96,470 $14,912 Product Owner $104,702 $17,183 Technical Product Manager $91,841 $9,845 Compensation by technical ability (in US $) Base salary Bonus I am non-technical $94,204 $12,962 I am somewhat technical $99,082 $13,584 I am very technical $101,973 $13,448 The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 7
- 8. Responsibilities and job titles 0% 20% 40% 60% 80% 100% We looked at responsibilities for Product Roadmap each of the 37 activities on the Requirements Pragmatic Marketing Framework™. Market Problems 73% So, for example, 73% of people with Positioning product management and product marketing titles claim responsibility Competitive Landscape for understanding Market Problems Use Scenarios while only 33% claim responsibility Presentations & Demos for Win/Loss Analysis. Product Portfolio Here we see the activities and Sales Tools percentages sorted from most to Launch Plan least, showing “Product Roadmap,” User Personas “Requirements,” and “Market Market Definition Problems” are the most common activities claimed by those with Distinctive Competence product management and product “Special” Calls marketing titles while, at 15%, “Lead Business Plan Generation” is least cited. Collateral Innovation Pricing Thought Leadership Event Support Buy, Build or Partner Buyer Personas Technology Assessment Product Profitability Channel Training Win/Loss Analysis 33% Marketing Plan Status Dashboard Channel Support Distribution Strategy Customer Retention Program Effectiveness Buying Process Referrals & References Customer Acquisition Sales Process Lead Generation 15% 8 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 9. Pragmatic Marketing’s 1 Annual Product Management and Marketing Survey 1th Here we see the same information—activities and percentages of people with product management and product marketing titles—grouped by discipline: Business, Technical, Marketing, and Sales support. 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Business Marketing Market Problems 73% Positioning 70% Win/Loss Analysis 33% Buying Process 18% Distinctive Competence 54% Buyer Personas 41% Market Definition 57% Marketing Plan 31% Distribution Strategy 26% Customer Acquisition 18% Product Portfolio 62% Customer Retention 23% Business Plan 53% Program Effectiveness 20% Pricing 51% Launch Plan 58% Buy, Build or Partner 46% Thought Leadership 48% Product Profitability 39% Lead Generation 15% Referrals & References 18% Technical Sales Competitive Landscape 70% Sales Process 17% Technology Assessment 41% Collateral 52% Product Roadmap 82% Sales Tools 60% Innovation 51% Channel Training 35% User Personas 58% Presentations & Demos 63% Requirements 77% “Special” Calls 53% Use Scenarios 68% Event Support 47% Status Dashboard 30% Channel Support 30% The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 9
- 10. Contrasting titles: product manager For those with a title of product manager, and we found these responsibilities product marketing manager In the following charts, we’ve highlighted As you can see, Product five representative documents to help contrast Roadmap and Requirements product management and product marketing: are the responsibility for over Product Roadmap, Requirements, Positioning, 80% of those with a title of Sales Tools, and Marketing Plan. product manager. 0% 20% 40% 60% 80% 100% Product Roadmap 91% Titles are a mess in our Requirements 86% industry. What one company Market Problems calls a product manager, Use Scenarios another calls a product marketing manager. In Competitive Landscape general, when both titles are Positioning 70% present in one organization, Product Portfolio product managers are focused on technical and business Presentations & Demos activities while product User Personas marketing managers are Market Definition focused on go-to-market Distinctive Competence activities. Business Plan Sales Tools 57% “Special” Calls Innovation Launch Plan Pricing Buy, Build or Partner Collateral Event Support Thought Leadership Technology Assessment Product Profitability Buyer Personas Channel Training Win/Loss Analysis Status Dashboard Channel Support Distribution Strategy Marketing Plan 24% Customer Retention Buying Process Program Effectiveness Sales Process Customer Acquisition Referrals & References Lead Generation 1 0 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 11. Pragmatic Marketing’s 1 Annual Product Management and Marketing Survey 1th For those with a title of product marketing manager, we found these responsibilities While product managers tend to focus on technical activities, product marketing managers are more inclined to focus on go-to-market activities. Positioning, Sales Tools, and Marketing Plan all 0% 20% 40% 60% 80% 100% rate greater than 70% while Product Positioning 88% Roadmap and Requirements (which Launch Plan were rated very high for product Sales Tools 81% managers) are less than 50% for product marketing managers. Collateral Presentations & Demos Marketing Plan 73% Thought Leadership Market Definition Market Problems Competitive Landscape Event Support Buyer Personas Distinctive Competence Business Plan Lead Generation Pricing Channel Training “Special” Calls Program Effectiveness Channel Support User Personas Product Roadmap 40% Product Portfolio Win/Loss Analysis Referrals & References Customer Retention Customer Acquisition Use Scenarios Requirements 31% Innovation Sales Process Buying Process Product Profitability Distribution Strategy Buy, Build or Partner Technology Assessment Status Dashboard The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 11
- 12. Looking at the same data in groups, it’s clear that product managers tend 100% 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100% to focus on the Business technical activities 77% Market Problems 63% shown in purple 34% Win/Loss Analysis 38% below; however 58% Distinctive Competence 47% 70% of product managers also claim 59% Market Definition 65% responsibility for 27% Distribution Strategy 25% Positioning. 69% Product Portfolio 40% 58% Business Plan 46% 55% Pricing 44% 52% Buy, Build or Partner 24% 44% Product Profitability 25% Technical 73% Competitive Landscape 62% 44% Technology Assessment 20% 91% Product Roadmap 40% 56% Innovation 27% 61% User Personas 41% 86% Requirements 31% 74% Use Scenarios 34% 33% Status Dashboard 12% Marketing 70% Positioning 88% 17% Buying Process 25% 40% Buyer Personas 50% 24% Marketing Plan 73% 15% Customer Acquisition 34% 20% Customer Retention 35% 16% Program Effectiveness 43% 55% Launch Plan 83% 46% Thought Leadership 67% 9% Lead Generation 45% 14% Referrals & References 37% Sales 16% Sales Process 26% 47% Collateral 80% 57% Sales Tools 81% 34% Channel Training 44% 62% Presentations & Demos 78% 56% “Special” Calls 43% 46% Event Support 59% 29% Channel Support 41% 1 2 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 13. Pragmatic Marketing’s 1 Annual Product Management and Marketing Survey 1th We asked, “How has your If you could say one thing to your company president without job changed over the last fear of reprisal, what would you say? two years?” • Focus the business on a few key • Allow more control from Do more with less strategic initiatives. employees below upper • I am doing three jobs management in doing their • Focus on the customer’s problems own jobs. at the same time. (the “Tuned In” philosophy). • A million more tasks. • I could do my job better if I • Our short-term orientation means was allowed to talk to customers. • Fewer people to support my less focus on long-term strategies. products, in all parts of the • I could help us be more effective • We’re focused more on detail and in marketing and product company: Marketing, Engineering less on big picture. and Operations. development if you would • We’re constantly whipsawed by only let me. • Fewer and fewer opportunities to the urgent needs of the next get out of the office as additional sales presentation or inside-out layers of management were product idea. brought in. • Company strategy needs to Agile be created, communicated We had 236 responses from • Agile has rolled out further and measured throughout “You’re doing a great job!” to “Quit!” through the company. implementation. – Kudos (30%) • Agile development teams, much • A strategic vision is only more reporting to executive team. helpful if you stick to it. – Need for better communication (9%) (Or at least make a very – Need for more resources (19%) • Development process has moved good case why the vision to Agile model necessitating a has changed.) – Need for coherent strategy (26%) change in how requirements are communicated. In general • Product expertise and – Concerns about micromanagement (16%) I believe that this is actually industry awareness must more in line with the Pragmatic be expected within all approach so I’m ready! departments of the company. Good news • Greater C-level focus on product management including additional budget and staff (a good thing). • A lot more responsibility and new Steve Johnson is a recognized thought-leader focus on growing the business. on the strategic role of product management and • More market oriented with marketing. Broadly published and a popular keynote increased customer interaction. speaker, Steve has been a Pragmatic Marketing instructor since 1996 and has personally trained • Far more involvement in business thousands of product managers and hundreds development. of senior executive teams on strategies for creating products people want to buy. Steve is author of the Product Marketing blog. Contact Steve at [email protected] The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 13
- 14. Are your product management and marketing teams overloaded with tactical activities, spending too much time supporting Development and Sales rather than focusing on strategic issues? The Pragmatic Marketing Framework ™ Business Marketing Positioning Plan Plan Market Market Buying Customer Pricing Problems Definition Process Acquisition Win/Loss Distribution Buy, Build Buyer Customer Analysis Strategy or Partner Personas Retention Distinctive Product Product User Program Competence Portfolio Profitability Personas Effectiveness STRATEGIC TACTICAL MARKET STRATEGY BUSINESS PLANNING PROGRAMS READINESS SUPPORT Competitive Product Launch Sales Presentations Innovation Requirements Landscape Roadmap Plan Process & Demos Technology Use Thought “Special“ Collateral Assessment Scenarios Leadership Calls Status Lead Sales Event Dashboard Generation Tools Support Referrals & Channel Channel References Training Support © 1993-201 Pragmatic M arketing 1 Visit PragmaticMarketing.com or call (800) 816-7861
- 15. Seminars Living in an Agile World™ Requirements That Work™ Strategies for product management Methods for creating straightforward product when Development goes agile. plans that product managers can write and developers embrace. Practical Product Management® Principles of the Pragmatic Marketing Framework, Effective Product Marketing™ the industry standard for managing and marketing Repeatable, go-to-market process to design, technology products. execute, and measure high-impact marketing programs. Pragmatic Roadmapping™ Techniques to plan, consolidate and communicate Product Launch Essentials™ product strategy to multiple audiences. Assess organizational readiness and define team responsibilities for a successful product launch. Executive Briefings Designed specifically for senior management, Executive Briefings discuss how to organize Product Management and Marketing departments for optimal effectiveness and accountability. In addition to the extensive published schedule, training can be conducted onsite at your office, saving travel time and costs for attendees, and allowing a much more focused discussion on internal, critical issues. Pragmatic Marketing’s seminars have been attended by more than 60,000 product management and marketing professionals.
- 16. By Stephen J. Konig When was the last time you talked with Finance? We often talk about the cross-functional nature of the product management role; indeed, the product manager is sometimes described as the “CEO” of the product. But when talking about how the product manager interacts with others in the company, we usually talk about sales, marketing, product development and senior management. One critical role in a company that isn’t much talked about is Finance. 1 6 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 17. Finance as a Stakeholder in Product Management Don’t confuse Finance with What is revenue recognition On the other hand, suppose I don’t financial data; product managers and why should I care? actually have the pencils I’m selling; are used to dealing with market maybe I sell custom pencils (for size, penetration, unit volumes, Usually when measuring a product’s example, with the customer’s name market share and sales. But this is performance we’re focused on and logo). On the very last day of mostly expressed in terms of units sales—i.e. how many units or the quarter I get an order for 10,000 sold, bookings and forecasts, not copies were sold or shipped, what custom pencils. My policy is to get in accounting or financial earnings was the average price, the length the cash up front, so the customer terms. One of the challenges of the sales cycle, the win rate, etc. pays me $500, but I still have to with Finance is reported financial Often ignored is how those sales make and deliver those pencils. earnings, especially if your company got treated from an accounting This takes a few days, and won’t is public. And unfortunately the perspective. If the company incurs actually happen until a day or two discrepancy between sales bookings a future obligation under the terms after the start of the next quarter. and reported financial earnings of the sales contract, some or all of In this scenario, the accounting can be significant, especially under the contract value may be recorded rules say I need to consider that specific circumstances. As a product as deferred revenue (a kind of $500 cash a liability, not revenue, manager you should really be aware liability like debt) instead of revenue because I still owe the customer of these when the CFO knocks or income. Imagine if every sale something. I can’t really say that on your door (or cube) and starts of a product caused the company I’ve earned $500 until I fulfill my talking about software revenue to look like it was taking on end of the bargain, which is to recognition. more and more debt… if it stayed make and deliver those custom that way you’d quickly go out of pencils. If for some reason I weren’t The rules for software revenue business. Revenue recognition is the able to deliver those pencils (maybe recognition are varied and set of accounting policies and rules I decide to go out of the pencil complex (for details, read the under which Finance determines business, or my pencil machine American Institute for Certified whether your sale will be classified breaks and I can’t deliver them by Public Accountants’ Statement of as revenue versus deferred the time I’d promised), I’d have to Position 97-2). There are times revenue, and when that deferred return that $500 to the customer. when decisions about the product revenue can be re-classified as real This liability is deferred revenue — can have a direct effect on how revenue or income. it represents money we think we’re it gets treated from an accounting going to earn, but haven’t earned perspective. And there are times Let’s say my business is selling yet. Continuing with this example, when product features, sales pencils, and each pencil sells for 5 my financial results for the quarter approaches and purchasing models cents. On Thursday a customer buys would show no revenue or income impact Finance, such as when a 10,000 pencils. I take $500 cash from from pencil sales, but would show product the customer, hand him the pencils, that my deferred revenue increased and $500 of revenue goes onto my by $500. Let’s say I do deliver those • is new and trying to satisfy “early books. Simple and easy. In this pencils a few days later: I can now adopters” world my total sales of pencils in say I’ve legitimately earned the the quarter will always be the same $500. On my financial statement • requires a lot of post-sale as my reported revenue or income for the next quarter I could fairly professional services from pencil sales. claim $500 of revenue or income, and reduce deferred revenue by the • is sold under a software-as-a- same $500. If I were just reporting service model (SaaS) on sales in the quarter, none of this matters—in both cases I could say I made $500 in pencil sales. But from an accounting perspective, these two scenarios are quite different. The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 17
- 18. Finance as a Stakeholder in Product Management The problem in many software can be performing well (sales takes on increased significance, sales is a customer doesn’t volumes and bookings are high and since shareholders and financial always immediately get what they cash is coming in the door), while analysts are often unable to review purchased. It can take a long time externally it appears as though internal sales metrics… all they for a product to be implemented the product is not earning any see is reported financial earnings. or customized or configured… or even losing money (since the Consequently they may have an and until the customer gets all of costs associated with delivering the incomplete and comparatively what’s paid for, the company may product—like salaries—are being negative understanding of the not be able to report the full value paid now, even though you aren’t product’s performance. of the sale as revenue. While this is earning any revenue with which to usually just temporary—the money offset those costs). The longer the While there are many circumstances will eventually be recognized as period of time between a sale and that can lead to a product’s sales revenue as future commitments are the reported revenue, the greater being booked as deferred revenue, honored, deliverables are delivered will be the disparity between the in this context understand these and obligations fulfilled—the longer product’s internal performance and three: (1) when making a promise it takes, the larger the discrepancy its reported financial results. The to deliver new functionality in between the product’s internal greater the share of your company’s a future release; (2) when the performance (contracts signed, cash overall performance is attributable product requires significant received from the customer) and to the product, the greater will post-sale services; and (3) under a its reported financial performance. be the impact for Finance. If the software-as-a-service (SaaS) delivery Indeed it is possible for a dichotomy company is publicly traded or model (see the table below). to emerge: internally the product preparing a public offering, this Revenue recognition issues encountered in software sales Scenario Revenue Recognition Issues Mitigation Promising future Future functionality is treated 1. Avoid if possible functionality as an “undelivered element” of the contract that results in all 2. Ensure future functionality commitments are tightly contract revenue being deferred and carefully worded until all future functionality has been delivered or until 3. Seek favorable acceptance criteria from the customer the customer has accepted the new features Product includes If the services are necessary 1. Augment the software with features that reduce the services effort significant and lengthy to use the product, software post-sale services revenue is recognized over the 2. Enhance the offering to include pre-packaged configurations term of the services engagement 3. Enhance the offering to include standard integration to 3rd party systems 4. Enhance the offering to reduce the level of customizations required Product is sold under a Revenue is deferred until 1. Augment the software with features that reduce the services effort software-as-a-service customer is live. Services model and includes revenue is recognized ratably 2. Outsource delivery of professional services to a 3rd party significant post-sale over the term of the contract. services 1 8 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 19. Finance as a Stakeholder in Product Management Promise of future functionality Once agreed to—whether verbally should always review contracts or in the contract—you have a or agreements when promises A common challenge is the prospect revenue recognition issue. The for future functionality are made who says your product lacks some future functionality commitment and will typically advise on the critical functionality without which will be treated as an “undelivered implications of the various terms. they won’t buy. While it is not a element” in the contract, making it good idea to manage the product likely that no revenue from the sale If you have agreed to certain roadmap for individual customer can be recognized until all of the features in the future, the challenge requests, there are circumstances promised features ship. (There are will quickly shift to mitigation, as in which it may be unavoidable. many accounting rules surrounding not all commitments are created undelivered elements and multi- equal. Since the value of the sale When entering the market with a element contract arrangements that will be deferred until all future new offering it is common to solicit can cause a different accounting functionality has been delivered, it early adopters with the hope these treatment. However in most cases becomes important to understand customers will turn into references. the undelivered element of a future what “delivered” means. There are Generally these customers are product deliverable will cause all a few traps to avoid: (1) vaguely- willing to accept a product’s of the revenue associated with defined features or requirements immaturity because they see its the deal to be deferred until the that are subject to wide-ranging potential. The hope is you convert promised features and functionality interpretations, and (2) any sort of early adopters into successful are delivered.) sign-off or acceptance on the part users, who then serve as reference of the customer with respect to accounts to future prospects. If the sale includes other future functionality. elements—such as services for It is common—particularly in setup, configuration, customization, Vaguely-worded feature and markets where references from training, maintenance, data requirements can create a significant peer organizations are critical to conversion, subscriptions or problem for revenue recognition, sales success—to spend a significant hosting—not only will product since it becomes difficult to identify amount of time and effort courting revenue be deferred until the when the promised feature has and working with early adopters. promised functionality is delivered, actually been delivered. If you Ideally the early adopters are also but all of the revenue from all of agree to deliver “a way to publish considered bellwether organizations the other elements will be deferred! content to the Web,” it can be hard by their peers, enabling the If, for whatever reason, you don’t to understand when you’ve actually sales team to reference them in deliver those new features, the done that, since different people discussions with prospects. customer could legitimately ask for may have different ideas of what their money back, even the money this means. The circumstances Because the product is new and spent on other services, as they around the sale and the best you may be selling before all of the never would have purchased those understanding of what the customer key features have been developed, other items had they known they (not you) had in mind will likely be early adopters often find the product weren’t going to get their requested used to determine if the promised to be inadequate or incomplete. features. In essence, your company feature has been delivered. When While they may see the promise the will receive no economic benefit considering a commitment for product offers, they are uncertain from the sale until all the promised future functionality, it is important when or if it will be developed functionality has been delivered to know what you are actually to satisfy their needs. As a way to to the customer. committing to. How will you know hedge risks, they ask you to commit (or rather, when an objective person to including certain additional If you’re facing whether to agree would know) the commitment has features or functionality, often by to a prospect’s request, what should been met? The commitments should a particular date. you do? In one way, the financial be in writing, should be narrow and significance of the commitment clearly scoped and should include helps in judging whether you should a definition of “done.” agree to it. There are scenarios such as market entry where the value obtained may be worth the short-term economic costs. Finance The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 19
- 20. Finance as a Stakeholder in Product Management It is not unusual in cases where the If it’s not possible to avoid The accounting literature makes a customer asks for a commitment of acceptance language in the contract, distinction between services that are future functionality they also ask include clearly defined acceptance incidental to the software and those for contract language to provide the criteria as part of the commitment. that are essential. While there is no right to accept what is delivered. Then the acceptance becomes hard-and-fast rule when services are Sometimes this acceptance language objective (were the acceptance essential or incidental, the following is explicitly tied to the future criteria met?) rather than subjective factors would suggest the services functionality, but often comes as a (does the customer like it?). are essential: (1) the software itself is generalized right with respect to all Documenting the acceptance criteria not off-the-shelf (i.e., it is not shrink- of the activities within the contract. in advance also helps determine wrapped but is highly tailored for In some cases the acceptance the scope and cost of what you’re each customer); or (2) the software language can be vague or subjective, agreeing to deliver. is off-the-shelf but the customer such as a language that deliverables is getting significant alterations to are simply subject to the customer’s Precisely defining acceptance criteria the out-of-the-box features and satisfaction. up front may be impractical. In functionality; or (3) you need to this case, seek language defining build complex interfaces in order for Acceptance by the customer of a formal acceptance process that the customer to use the software; or future product features can create is closed-ended. For example, the (4) the customer pays for software an issue, as the test for whether language may specify the parties as the service work is performed; the company can recognize the will work to jointly define the or (5) payment for software is revenue from the contract becomes acceptance criteria for the features milestone-based or subject to customer acceptance. 1 not one of, “have we delivered the once the work begins, or the functionality we promised?” but acceptance process may include only rather “has the customer accepted a limited number of rework/revision In the case where there are no what we delivered?”. Acceptance periods in which you agree to services sold with the software or language will cause the revenue make changes. In general, the more where the services are deemed deferral to last until the acceptance tightly defined and closed-ended the non-essential, the software license has occurred, which may be long acceptance process, the better. Just fee would be recognized as revenue after the delivery! make sure the contract language is as soon as it is delivered. reviewed by Finance. There are a few approaches to However if the services sold with mitigate the acceptance issue. the product are determined to be Best case, seek to avoid any Products that include services essential, the rules require that customer acceptance with “revenue should be recognized A different problem occurs when in accordance with contract respect to the future product the product consists of licensed accounting.”2 Under contract deliverables. Without explicit software with significant post-sale accounting, the revenue from the acceptance language, the test services (such as those for setup, license fees will initially be booked for revenue recognition reverts configuration, data conversion or as deferred revenue, with “a portion to “have we delivered what we customization). If the services are of the total [license fees]… recorded said we would deliver.” Provided essential to the delivery of the [as revenue] in each period based the features are clearly scoped, a solution—i.e., the software has on the relative cost or effort applied simple documentation exercise of limited or no value from the services during that period.”3 Essentially describing how “what was delivered” that go with it—there may be the software license is recognized met the commitment given can be revenue recognition issues. as revenue as the services work is sufficient to declare “done” and recognize all the deferred revenue. performed. If the related services stretch over twelve months, one-twelfth of the software license fee would be recognized as actual revenue each month. 1 KPMG, Software Revenue Recognition: An Analysis of SOP 97-2 and Related Guidance, Second Edition, August 2005, pp. 207-210; http://us.kpmg.com/microsite/attachments/2005/SoftwareRevRecognitionBook2005.pdf 2 Steven T Petra, Revenue Recognition for Software Products with Multiple Deliverables, AllBusiness, April 1, 2005; http://www.allbusiness.com/accounting-reporting/record-keeping-gross-receipts/1096815-1.html 3 The ‘Lectric Law Library, Legal Lexicon on Accounting Methods, The ‘Lectric Law Library, retrieved 25 June 2009; http://www.lectlaw.com/def/a099.htm 2 0 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 21. Finance as a Stakeholder in Product Management The impact in this For six months, the company would scenario is less obvious not be able to record subscription but still potentially revenue. significant. Finance will likely look at how to The significance of this is in an shorten the revenue effort to recognize more revenue recognition period and the sooner, Finance may ask if anything obvious way to do this is can be done to shorten the to shorten the duration of implementation period. This might the services engagement. include adding features to your But there are limits to product to make setup, configuration how much time can be and implementation more efficient. compressed in a project with a fixed amount If the goal is to reduce the of work. implementation time without Software as a Service (SaaS) reducing the total revenue, you may If the product is new, some need to evaluate the feasibility of effort may be needed to work In software-as-a-service increasing the services billing rate, around functional gaps. Closing arrangements, the customer doesn’t of offering pre-packaged services these can result in decreased buy the software up front; they that generate the same revenue but effort and time. You could look pay for how much they use on a can be delivered more quickly, or at ways to reduce deployment periodic basis, usually monthly. to better define what represents a and setup time (e.g., tools that true go-live milestone (e.g., deferring assist in implementation, or Two different kinds of revenue tasks that could be performed moving configurations from a test recognition issues can arise under after go-live). environment into production). a SaaS arrangement. Revenue cannot be recognized until the customer The second case presents a more Regardless, you will need to identify is “live,” or using the software interesting challenge and suggests ways to replace the lost revenue. with actual data. Additionally, any other potential remedies to Good approaches here include associated professional services investigate. Under the traditional selling prepackaged configurations sold must be recognized evenly licensed software model, revenue or interfaces separately, increasing (the accounting term is ratably) from professional services is the software price, or selling over the term of the subscription recognized as the work is done. For services as a fixed price package contract, instead of as they are example if the customer purchased at a higher price, rather than on delivered. Both of these can impact $100,000 worth of software and a time-and-materials basis. the way revenue recognition $120,000 worth of professional impacts the product. ser vices, and the ser vices Customers often don’t distinguish engagement lasts for twelve months, or care about the ways in which In the first case, consider a customer your company would recognize functionality or features are who agrees to pay $10,000 per $10,000 of services revenue per delivered, merely that they get month. The customer signs the month (assuming the work was delivered. Provided the overall price contract and begins paying done in even increments over this and timeline are acceptable, whether the subscription fee. However period). This approach works well a feature is delivered directly out of your offering involves some because the costs are typically the box or as a result of services it significant setup, configuration and incurred in a similar pattern: your may not be a significant distinction customization work, so it takes company probably pays employees to a customer. However, the six months before the customer working on that project monthly dividing line between software and is able to use the software in a as well. Assuming the deal is services can be significant from the production capacity. The typical profitable overall, your company will perspective of Finance. accounting treatment would be to be able to report profits from this defer the subscription revenue until engagement right from the start. the customer is live, meaning that none of the subscription fees can be recognized as revenue until then. The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 21
- 22. Finance as a Stakeholder in Product Management Unfortunately, the accounting Since the impact to the accounting Conclusion treatment for this arrangement treatment is directly correlated with under a subscription arrangement the amount of professional services It may be surprising to learn that is less favorable. Under subscription needed, lessening the amount of you need to understand accounting rules, the revenue from associated services will lessen the financial revenue recognition rules or that professional services must be impact. Another alternative is to you need to involve Finance in recognized over the term of the recommend the company not provide decisions around your offering. subscription contract, not over the services at all, but instead partner Ignorance of revenue recognition, duration of the services engagement. with a third-party firm to provide how they impact your company Consider a similar example to the them. In either case your company and how product offering decisions one above, except that in this case would be foregoing the services influence them can result in very the customer purchases a $10,000 revenue. Perhaps there is room to bad outcomes for the company. per month, three-year subscription to increase the monthly subscription Outcomes that a product manager the software. They still agree to the fee in order to offset the lost services is in a position to avoid, if aware same $120,000 worth of professional revenue, perhaps you can generate of the issues. services which are still performed referral revenue from the partners, within the first twelve months. or you may simply conclude that As a first step, consult with Finance the revenue recognition issues are to understand how revenue from Accounting rules for subscription not worth the incremental services your offerings is recognized today arrangements will require your revenue. But in modeling these and what policies Finance has company to recognize the $120,000 scenarios—especially one that adopted. When considering a ratably over the term of the contract. involves partnering with third parties new offering, review the expected In this example, that means the —make sure you take customer elements of the offering, the nature company can only recognize satisfaction into account. of the sales arrangement and $3,333 per month of revenue from deliverables, and the expected cash the professional services engagement. A final alternative would be flow and timing of payments. Review But if we are paying our employee to shorten the duration of the this before the first sale and you $8,000 per month, the company will subscription contract, ideally to a can avoid significant downstream report a loss of $4,667 per month timeline consistent with the expected pain and ensure the offering is on the services. duration of the services engagement. structured for the best possible The drawback here is it increases revenue recognition treatment. Just It is possible for the treatment to the potential for customer churn as with product development— be less severe, as there are means (as customers are able to discontinue where changes become by which some of the $8,000 can the subscription sooner); in more expensive as the be spread over the contract term, addition, your company development process as well. However it is generally not may incur increased progresses—changes possible to spread all of the costs retention costs as due to finance over the contract term. The effect well (e.g., sales costs concerns become of this is also muted over time as to re-engage with the much more expensive more and more subscriptions are customer and ensure they once your product sold, since revenue from previously are satisfied before their has launched. completed engagements continue contract expires). You to be recognized even though there will need to model the may no longer be any continuing effects of increased direct costs. However margins will churn and retention generally appear far less favorable costs to determine under a subscription arrangement if shortening the than under a perpetual license contract duration arrangement. is a viable option. Stephen Konig is a product manager with more than 15 years of experience in bringing B2B and enterprise software solutions to market. His work has spanned vertical solutions for the energy industry, HR and talent management software for businesses and governments, and solutions to assist non-profit organizations raise money and deliver on their missions. Stephen is currently a Director of Product Management at Blackbaud, Inc. Contact Stephen at [email protected], or via Twitter at StephenKonig. 2 2 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 23. Product Launch Essentials ™ Plan and execute a successful product launch Are your product launch efforts focused on deliverables rather than results? Launching a product is more than following a simple checklist. A successful product launch is the culmination of many, carefully planned steps by a focused, coordinated team. Even good products can fail because of organizational issues, misunderstanding of roles and responsibilities, and a lack of a strategic approach to guide efforts. • Learn a repeatable product launch process to shorten the launch planning cycle, get the resources needed, and know what to expect at every step. • Understand the seven product launch strategies your team can use to maximize sales velocity. • Measure product launch progress with indicators that identify unforeseen issues before they become big problems. By David Daniels Scan or download the e-book at PragmaticMarketing.com/launch Download a complete agenda and register at PragmaticMarketing.com/launch Call (800) 816-7861 to conduct this seminar at your office
- 24. MINING CONTENT GOLD By Cheryl J. Goldberg How to Interview Content Experts 2 4 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 25. A s technology companies One of the best ways to find The type of content you will be riveting content is to pick the producing will point you toward brains of experts. Whether the types of experts you need to increasingly turn to you need to come up with a interview. Examples of content compelling angle for a white paper experts that might help you come content marketing, their or thought-leadership article to pique the interest of your target up with content for various stages of the buying cycle are as follows: audience, or determine key challenge is coming up with customer challenges, or fill in • Early-stage education. If you technical details that will bring want to educate prospects who’ve compelling information. your piece to life, experts can help you uncover better content more never heard of you, you’ll want to start with thought-leadership quickly. Experts are likely to have content that defines the customer Knowing how to interview access to information that would problem and what’s necessary be difficult, or even impossible for a solution. Helpful experts to find otherwise. experts will help you uncover include industry analysts, customers, prospects, sales Mining these golden nuggets representatives that specialize in nuggets that take your requires you to find the right that target market, and industry experts and to know how to solutions managers at your content marketing to the interview them so you can best extract the knowledge they have company who specialize in a particular industry. to offer—while being respectful Your company’s professional next level. of their often busy schedules. services consultants will also be familiar with the challenges customers face. Hunting the elusive expert Content marketing has become • Research phase. As customers a critical part of the marketing Clearly, the first step in finding realize they need a particular mix for technology companies. the right nugget of content is type of solution, they’ll start Content marketing employs content identifying the right expert. To researching their options. To help to engage current and potential do that, you must determine customers at this stage, you’ll consumers based on the notion what type of content you need want to provide more in-depth that delivering high-quality, relevant to produce. Often your content technical information about your and valuable information drives requirements are obvious. If your product and its benefits. Experts profitable consumer action. sales force comes to you all the that can help you with this According to a recent study by time asking how your solution type of content include recent MarketingProfs and Junta 42 1, addresses the Dodd-Frank Wall evaluators of your product, 9 out of 10 organizations market Street Reform and Consumer engineers at your company, with content while 51% of Protection Act, you know product managers, and your marketers plan to increase their what you need to produce and chief technology officer. spending on content marketing probably whom to ask. • Validation. Here you’ll want to over the next year. The computing/ provide proof of your product’s software industry is the biggest But what if you simply need more ease of implementation and adopter of content-marketing content for lead-generation and success in solving customer strategies, with 94% of technology lead-nurturing activities? Start problems. Interview existing companies using this strategy. by performing an audit of your customers, your professional Yet, creating the right content isn’t existing content. Compare the services consultants, and your easy. The same study found that content you already have with customer support/help-desk developing engaging content and what you need for different stages representatives. producing enough content were of your customers’ buying process. two of the biggest challenges If you need input, go to customers, facing marketers. prospects and your sales force. You can then determine what’s missing. 1 B2B Content Marketing: 2010 Benchmarks, Budgets and Trends, by MarketingProfs and Junta 42 The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 25
- 26. Mining Content Gold: How to Interview Content Experts Experts are from Mars; Here’s a simple test to diagnose • Do research in advance. If Novices are from Venus when experts have entered “curse of you’re looking for direction knowledge” territory. As the expert on a good approach to take in a While experts can furnish much is talking, your eyes glaze over and particular market, read some trade useful information, you may you’ll say to yourself, “Huh?” publications or analysts’ reports encounter one major roadblock: about relevant trends before you They literally speak a different The solution is to get people to do the interview. If you’re looking language from everyone else. In speak in concrete terms, describing for more information about a their book Made to Stick, Chip implications and providing lots of product, read any existing materials Heath and Dan Heath call this detailed examples. Being armed about the product and its issue “the curse of knowledge.” with a few tricks-of-the-trade competitors including white In the book, the authors write will help you get the specific, papers, PowerPoint presentations, about a study performed by concrete information you need analyst reports, press releases Elizabeth Newton at Stanford in from content experts. and news stories. 1990 that illustrates the problem. A group of researchers gave half • Create a list of questions. Content experts are always busy of the participants in their study Honing translation skills: so you’ll want to make the most a song, say the “Star Spangled How to improve your of their time. Prepare specific Banner” or “Mary Had a Little Lamb,” and asked them to tap interview skills questions. For example, if you’re the melody on a table. The looking for high-level direction, When I interview content other half of the participants be prepared with the types of experts, I act as a translator were asked to guess what song questions that typically appear between expert-ese and plain was being tapped. on a creative brief, such as English. Much of that translation the goals for the project, the work is taking abstract expert-speak When the tappers were asked to audience, message, the three-to-five and speaking in concrete terms. The predict how many of the listeners supporting messages and so on. following are some tips and tricks would guess the song, they guessed Alternatively, if you’re looking that will help you improve this 50 percent. The listeners actually for clarification on technical points translation process. correctly guessed the song only for a datasheet or brochure, go 2.5 percent of the time: 3 out of 120. through existing materials and have specific questions ready. The reason for the discrepancy is 1. Prepare carefully that once we know something, we • Mentally prepare to depart from find it hard to imagine what it was Every good interview starts with your list. At the same time, keep like not to know it. As a result, it’s preparation. You need to be clear in mind that when you conduct difficult to share our knowledge on what you want to accomplish an interview, the person may with others because we can’t and do your homework. But at answer one question in the readily re-create our listeners’ the same time, remember that an course of answering another. state of mind. interview is a conversation; know Don’t think you must go through what you need to get out of it, One way the curse of knowledge your questions one by one. Keep but don’t follow a script. manifests itself is that experts often your questions at the ready, but speak in highly abstract terms. You be prepared to change course • Set goals. Before setting up as you proceed through see this all the time in marketing any interviews, clarify what you materials. For example, take the the interview. want from the interview and following description of a leading communicate in advance your middleware product: goals with your content expert. XYZ Company Middleware is For example, are you looking to the #1 application infrastructure determine the direction to take for foundation available today. It a particular piece? Do you need enables enterprises to create and to know the primary messages a run agile, intelligent business piece should convey? Do you need applications while maximizing clarification about a product’s IT efficiency through full utilization messaging? Write down the items of modern hardware and software you want to cover and send this architectures. list to participants before the meeting so you both can prepare. Huh? 2 6 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 27. Mining Content Gold: How to Interview Content Experts 2. Handling the preliminaries 3. Conducting the interview • Go from abstract to concrete. Earlier, I mentioned the curse of Once the interview has started, you’ll An interview ideally should be knowledge. If you can’t quite get want to set the stage to make your treated as simply a conversation your mind around something interview subjects feel comfortable whose purpose is to find out someone tells you, it probably and keep them on track. information. However, the means that their explanation was following techniques will help too abstract. There’s a few types • Set the stage. After some initial you get people talking, make sure of follow-up questions you can chitchat while you’re waiting you truly understand what they ask to gain clarification: for everyone to join the call, have to say and extract the most review any procedural details. useful information. – Ask for an example. If you’re For example, when conducting talking about a particular interviews for customer success • Start with open-ended questions. product feature, ask them to stories, I always talk about the Although I always come to the describe a particular instance review process; reassuring interview prepared, I like to start of how someone would use customers that they’ll have an with open-ended questions rather that feature. opportunity to review and adjust than close-ended questions that – Ask them to describe a process. any of the copy as well as to can be answered “yes” or “no.” Another way to obtain helpful provide written approval. For example, if I’m talking examples is to ask how people to an expert about what direction would do a particular process • Ask for preliminary information. a piece should take for a given Next, go over any housekeeping without the feature and then audience, I’ll ask: “Given that our how using the feature improves information. For example, be audience is large group medical sure to get the correct spelling the process. practices, clinics or small hospitals, of the expert’s name and their what’s the most important problem – Ask them to tell a story of one proper title. our product might solve?” If particular time that they used • Summarize your agenda. Once I’m interviewing a customer for the feature and how it helped you’ve attended to the preliminaries, a case study, I’ll ask, “What are solve their problem. review any information the subject the most important benefits your company has achieved from – Ask them to say the same thing should keep in mind. For example, another way. you might want to briefly remind using our product?” Remember them of the audience for the piece, you’re talking to someone who – Ask how they would explain the topic, and objectives for the knows more about the topic than the subject to a non-technical interview. Sometimes I’ll even you do and simply getting them person. summarize the types of questions talking may well lead to insights I’m going to ask. you hadn’t considered. – Ask why the feature or idea is important. • Repeat what the expert just said. If you want to be certain you understood what your subject has just said, repeat what they told you in your own words. If you don’t have it exactly right, they’re sure to correct you. And maybe add an additional insight or two in the process. The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 27
- 28. Mining Content Gold: How to Interview Content Experts • 5W and 2H. In journalism, people furniture maker to make more • Embrace silence. When someone talk about how you need to find pieces in the same time. The stops talking, don’t say anything. out the 5Ws and 2Hs. This is a reason that’s important is that Give people a moment or two or good construct for helping you the furniture maker can make three of silence before you jump understand software capabilities. more money in the same in with your next question. This amount of time. may feel uncomfortable, but do it – Why is this feature/technology anyway. People abhor a vacuum required? • Ask great questions. This tip in the conversation and will often comes from Michael Stelzner. He come up with another idea that – Who is going to use it? gives examples of how to improve they might have forgotten if you – What does the feature/ your questions: rushed in to save them with your technology do? What are the – Bad question: Is a data backup next question. specific benefits of the feature/ plan important? technology? • Anything else? In the same vein, – Better question: Why is a data once someone seems to have run – When is the feature/technology backup plan important? out of steam on a particular topic used? or at the end of the entire – Great question: Can you tell interview, I always ask them if – Where does it fit into the me three reasons why a backup there’s anything else they want to workflow? plan is important? add. Often I get the most – How is the feature/technology interesting information from the – Excellent question: What are off-the-cuff responses they give used? the implications of not having a when they think the interview – How often is the feature backup plan? is over. used? Is it one-time only or • Repeat the question. When I first administrative in nature? • Ask permission to follow up. started out in journalism, I once For complex, technical topics, • 5 Whys. Another reason you may asked an experienced reporter it’s often necessary to do a second be interviewing a product expert what to do if someone wouldn’t interview to clarify points missed is to determine the benefits of answer a question. His answer, in the first interview. For example, a product or service. Yet some “Ask it again a different way.” This I recently interviewed a sales rep technical experts have difficulty advice holds true not just for a for a telecommunications describing how the feature might budding Woodward or Bernstein equipment vendor about the benefit a particular audience. but for someone interviewing a ROI of his company’s optical Taking a page from Six Sigma content expert. An expert may not networking products. The piece methodology can help. In Six answer the question you thought we produced was based on a sales Sigma methodology, people talk you posed, or they may not presentation. In our first interview, about using “the 5 Whys” to fully understand the question. Asking it the rep went over the presentation determine the root cause of a a different way will help them and the key points he wanted problem. You can use the same understand what you mean and to get across. In the second, I technique to fully understand may just elicit the response you’re drilled down on specific technical the benefits of a solution. For looking for. details that he hadn’t mentioned example, people often give the in the conversation as well as example that the feature is the discrepancies I’d found between drill and the benefit is the hole. the presentation and other But there might be an even more datasheets and brochures from important benefit for a particular the company. audience. If the driller is a furniture maker, the benefit might not just be the hole, but the fact that because the drill makes holes so quickly, the craftsman can finish their handcrafted pieces in half the time. Going one step further, the reason why that’s important is that it allows the 2 8 • The Pragmatic Marketer • Volume 9, Issue 1, 2011 Issue 1, 2011
- 29. Mining Content Gold: How to Interview Content Experts Logistics • How long should a call be? Conclusion Calls with content experts vary. Here are a few tips on the At minimum, they’ll be 30 Interviewing experts provides logistics and procedural aspects minutes. Sometimes calls can go valuable information that will of conducting an interview. as long as 90 minutes. Generally help you create more compelling speaking, I prefer to keep the content and infinitely enrich your • Taking notes. Content from calls under one hour because content-marketing efforts. By your interviews is very valuable. any longer and it’s difficult for finding the right content experts You don’t want to lose any of it. everyone to focus and retain and employing some of the Different people prefer different information. interviewing techniques described methods for recording content. here, you’re more likely to extract Because I do a lot of interviews • Group conference calls. If just the golden content nuggets that and type very quickly, I almost you have several experts at your will bring your content marketing always type my notes during the company in the same area of to the next level. conversation. This saves me from expertise, it’s helpful to have them having to transcribe either written all on the same call. In this way, notes or tapes. I prefer to type each expert can hear what the as much of what people say as other is saying, interact in real possible. However, many people time and come to an agreement suggest jotting down the main on what information to include points and then going back and and what to leave out. filling in the details once the • In person or on the phone. interview is over. One might argue that it’s best • Taping the call. If the content to interview people face-to-face will be very technical, I usually because it allows you to have record the call and take notes. a real conversation with them. That way, I can go back and fill in Also, people like to draw any details from the conversation diagrams on whiteboards I may have missed. While you and reference other can use a tape recorder to tape props while they talk. conversations in person or over Nonetheless, with most the phone, I use the RecordMyCalls content expert interviews, service that records calls over the the phone works just fine. phone. You simply dial into the If you really need to see service and then dial the phone something, many number you’re calling and the companies are service starts recording the equipped with conversation. At the end, you an online have a digital sound file you conferencing can listen to on your PC or solution like send over email. RecordMyCalls GoToMeeting. charges a small monthly fee and a per-minute charge for each minute of recording time. For an additional fee, they’ll even transcribe your call. Cheryl Goldberg has been interviewing content experts for more than 25 years as a marketing copywriter and technology journalist. As principal of Goldberg Communications, she currently develops, writes and edits marketing communications—such as white papers, customer success stories, thought-leadership articles, solution sheets, email campaigns, web content and much more. She has previously held senior editorial positions at PC Magazine, DBMS Magazine, and Macintosh Business Review. For more information, go to www.cjgoldbergcommunications.com and read her blog at www.hightechcommunicator.typepad.com. Contact Cheryl at [email protected] The Pragmatic Marketer • Volume 9, Issue 1, 2011 • 29
- 30. Mining Content Gold: How to Interview Content Experts Cracking the Tough Nuts By Cheryl J. Goldberg How to Manage Difficult Interview Subjects Your first few interviews When you encounter a taciturn front of you and keep going back were flawless. You think, subject, take a step-by-step to it. In addition, it’s useful to “This is a piece of cake.” approach. For example, if you’re have a pre-approved outline and Don’t get cocky. With a interviewing them for a customer continue to gently remind them little preparation and a few story, you might need to go of your agenda and pull them interviewing techniques through the entire list of product back to the task at hand. in your back pocket, most features and walk them through interviews will go off without every aspect of what you need. a hitch. That’s because most For example, I may ask “What The Arrogant Snob people are flattered to be about this particular feature? Is asked for an interview and this something you use? Do you I don’t run into people who are there’s nothing most people benefit from this? How? What arrogant in interview situations like to talk about more than are the implications of that? very often, but you encounter themselves and their areas How did you do things before? them from time to time. Often, of expertise. But a small What do you do differently they’re technical folks who look percentage of folks are far now?” While these are the same down on marketers as a lesser from easy to interview. Don’t questions I’d ask anyone, the species. Whereas most people let them throw you for a taciturn type requires a lot take the attitude that there is no loop. Be prepared. more explicit prodding. such thing as a dumb question (although it is a good idea to do your homework first to ask as few Here are the most common types Although many interviewers and questions that appear dumb as of challenging interview subjects journalists warn against using you can), the arrogant interviewee and how to get what you need leading questions, you may have will go out of his way to pounce from the interview anyway. to resort to this tactic with the on any “dumb” question or strong, silent type. Don’t get me otherwise find ways to make wrong, my purpose isn’t to get you feel stupid. The Strong, Silent Type them to say what I want them to say. I use this technique simply Arguably the most common of to put forth a theory for them to So how do you avoid the scorn the “problem” interview subjects react to and find out if they agree of these interviewees? You need are those that simply don’t like or disagree and why. Because to do your homework, learn to talk—even about themselves. my interview style is friendly and your topic and be as prepared When you ask a typical, talkative non-threatening, this works well in advance as possible. When you subject an open-ended question, for me. Someone with a more ask questions, make sure it’s clear such as how does your company forceful, combative interview that you’re asking for clarification benefit from using our product, style, however, may not get for something that’s unclear to they’ll talk for 10 minutes about the subject’s true opinion from a reasonably intelligent person. which features they like best, why using this tactic. Restate their answers in ways that they like them, and what benefits pull in related information so they they provide. Some people will know you know what you’re cover most of the questions The Wanderer talking about. on your list without your even having to ask. But when you The wanderer is the interview ask an open-ended question to subject that constantly veers off You don’t know what you’ll get the taciturn type, they’ll respond on tangents. You ask them about with five words. X and before you know it they are Of course, the thing about off to the races on topic Y. The interviews is that you never know wanderer is also fairly common. in advance what your subject will So how do you get the information be like. Prepare for the worst by you need from these people doing your homework, having to create a piece that really To keep the wanderer in line, an outline and a list of questions elaborates fully on the facts in you need to be very clear from at the ready, and by having a a way that will provide enough the outset on what you need from bag-of-tricks up your sleeve for context for the average reader? the interview. To this end, you’ll dealing with difficult interview need to keep a list of questions in subjects—just in case. 3 0 • The Pragmatic Marketer • Volume 9, Issue 1, 2011
- 31. Pragmatic Roadmapping ™ Online or onsite at your company Align your product strategy with the market Do you need a practical and repeatable way to communicate product plans, strategy and vision? Recorded live, Pragmatic Roadmapping is a complete one-day seminar, presented in three parts you can watch all at once or spread over several days. Each session includes instructor-led, hands-on exercises to help you define, plan and complete your roadmap. • Align and focus the organization around the market not just your products. • Identify which projects to fund based on available resources and company strategy. • Communicate the roadmap internally & externally with just the right detail for each audience. Scan here for more information Download a complete agenda and register at PragmaticMarketing.com/roadmapping Call (800) 816-7861 to conduct this seminar at your office
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