by Davide Cis and Neil Baron –
We tackled the subject of migrating customers to new technology, products and platforms (migration henceforth) at our August Product Executive Forum (PEF), where experienced product management and product marketing professionals from the Boston area meet to discuss shared challenges and find innovative solutions.
Not all Migrations are The Same
There are several types of migrations that occur, with their own unique aspects. For simplicity, we classified them into two main categories: Internal (driven by internal activity) and External (driven by the market).
- Forces within the organization (e.g. a merger or acquisition of two organizations) rather outside customer needs, are the drivers of internal migrations. After a merger, sometimes of two competing companies, existing clients must migrate to the dreaded Better of the Two or the infamous Next Gen product. The new product(s) that emerge from internal migrations are often more expensive than their ancestors or the added value to the customer is sometimes unclear. We also fall into the trap of allowing development to create new offerings simply because they can.
- External migrations are those where new products are released in response to outside forces such as competitors or regulatory changes.
A Major Hurdle: We Forget About the Customer’s Migration Hurdles
Organizations invest time and money developing new product versions, and involve significant resources in the market launch. We may have validated with the market that an important need is met. However, the target customers do not always share the excitement of the new product launch. Why?
The answer may lie in the tendency of minimizing the hurdles our customers face when upgrading. While we see the value in the upgrade, customers see risk and hassle. We often underestimate the level of change that upgrades present to the customers. An example from real life. While many people appreciate the features of a new car, they dislike the hassle of buying a car. So despite the annual release of new models, with all their new and flashy features, the challenges of dealing with the car sales outweigh the benefits of new car features. These people prefer driving the car “into the ground” until a purchase is the only alternative.
Neil presented a concept that helps Product Managers and Product Marketers think more concretely about the hassles facing customers when upgrading. This is the Client Value Equation:
Value = Benefits – Cost of Benefits Acquisition (Hassle)
From this equation, we can see that when the hassle of upgrading is larger than the benefits received from the upgrade, the value of the upgrade is negative. So there is no compelling reason to upgrade. Of course, we can try to force the customer to upgrade through tactics such as stopping support for older versions. However, the negative impact on client relationships can be serious.
Conversely, the value for a client of the upgrade is positive when the cost associated with an upgrade is less than the benefits received from the upgrade. Then the client may consider upgrading.
Underestimating the cost of change and disruption can become major factors in product failure and client attrition. It is critical to understand both the benefits of migrating and the obstacles to a successful migration. If the hurdles outweigh the benefits, customers will not migrate or, worse, will depart, frustrated by the diversion of product attention to the new versus the old.
Reducing the Barriers to a Successful Migration
The PEF discussed various ways to increase the odds that customers can successfully migrate. One way is to allow customers to run the old and the new version of the product in parallel. We can also help our clients overcome the migration risks with migration toolkits that reduce the impact on the client’s ongoing business operations. Product Management should always include in their roadmaps tools and features that aim at facilitating migrations and upgrades.
The upgrade message, for both the internal and external audience, must be produced with extreme care. Internally, we must align our team competencies to ensure that everyone in the company understands their role in making the migration successful. We also have to account for the fact that customers will remain on the existing product lines for a while.
Senior managers often suffer from the planning fallacy. This is a theory from social psychology that states that it is human nature to underestimate how long tasks take. In other words, they underestimate how difficult migrations can be for both internal resources and the customers. Product Management is responsible to educate senior management about the complexities that major upgrades and new product launches entail.
Externally, soft launches to early adopters and cultivating clients to act as product champions in the industry, can be key factors to success.
A Virtuous Transition
Migrations can be hard, costly, and lengthy. Depending on the deployment model, by the time they complete, newer versions of the product may already be available, creating a vicious cycle. Turning this cycle into a virtuous one is the responsibility of product management. Anticipating customer needs and reassuring customers that their interest is center to the product value proposition will discourage the process of exploring other options that the announcement of an upgrade sometimes triggers.
Realizing that we, as vendors, have core competencies that differ from the clients’ core competencies will go a long way in creating product empathy and mutual support. Applying tools such as the value equation can be helpful in analyzing the best path forward and identifying potential fatal flaws in our approach.
Sometimes upgrades are necessary because of regulation, sometimes they are the result of the need for modernization: in all cases, a strong focus on the customer is necessary to overcome the implementation challenges to meet the pressing deadlines and guaranteeing long lasting and successful product adoption.
About the authors:
Neil Baron has served in a variety of senior marketing and management roles at companies such as IBM, Digital Equipment Corporation, Sybase, Art Technology Group, Brooks Automation and ATMI. He is passionate about involving customers throughout the go-to-market process. In 2009, he started Baron Strategic Partners, a consulting firm focused on helping organizations launch groundbreaking products and services and re-energize older ones.
Davide Cis is BPMA Blog Manager. Davide is constantly searching and applying best practices of product management to enterprise software. When Davide is not reading or listening about products and strategy, he is probably watching Italian Soccer or tasting Italian wine.