Product Management v. Sales: Don’t Confuse Your Market


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published April 12, 2017

While small companies can align the focus of sales and marketing, most large ones cannot.  Sales are said to own the customer.  Marketing, and more specifically product management, is said to own the product.  But what happens when multiple products from the same company can be sold to the same customer?

We have seen this challenge arise repeatedly, especially following company acquisitions. Initially, the acquiring company often ignores the issue as it focuses on growth, with the belief that internal competition regarding performance and resources leads to market aggression.  But over time, the conflict leads to confusion. While deliberate, internal ambiguity within the company may be tolerable— or even a virtue—market confusion is not.

Customers delay and abstain from purchasing when they aren’t sure which of the company’s offerings would best suit their needs.

As A.G. Lafley, the past CEO of P&G, and Roger Martin, the Dean of the Rotman School of Management noted, “Performance is sustained not by offering customers the perfect choice, but by offering them the easy one.”

Product Suites Competing for the Same Customer

To clarify the observed challenge, consider a company that has recently acquired a number of smaller firms and now has several product lines.

Prior to the acquisitions, each acquired firm had several products within their product line and each had a salesforce selling their product line.  Sometimes those firms would have competed with one another.  Other times they were focused on distinct segments with distinct offerings.

Post-acquisition, some of the products in individual product suites will overlap in purpose, and some of the salesforce will overlap in customer segments. From a product perspective, multiple offerings may address the same customer challenge but in a different way, and be intended for distinct segments.  From a sales perspective, every individual salesperson is trying to maximize the sales of their product suite, sometimes to the same customer at the same time.

And that is where the challenge lies: The customer will face multiple salespeople from the same company trying to sell different products to the same or different needs. Even if the products do not overlap in functionality, they compete for the same budgetary resources of the customer. The customer will be told by one salesperson to buy an offering to solve one set of problems, while simultaneously being told by another salesperson to solve a different set of problems.

Given this situation, the customer will not find the choice an easy one.  Faced with competing challenge definitions and solutions from the same firm, the customer will have to make tradeoffs.  Tradeoffs are hard. Here is where A.G. Lafley’s admonition becomes pertinent.

Solutions Competing for Customers Through Salespeople

This challenge arises from (1) having the salesforce aligned by product suite and (2) having product managers aligned by customer segment.  Multiple firms have noticed this challenge and a common solution has been deployed.

First, salespeople.  It is well accepted that salespeople are responsible for managing customer relationships.  As such, salespeople should be aligned to customers not product suites.

For technical products, it is unreasonable to expect every salesperson to fully know the details of the entire product catalogue, and the challenges they address. To address this information need, account managers are assisted by technical support tasked with clarifying how offerings address different customer challenges.  In this manner, the account manager can determine which products are best suited for the strategy of their customers, and then promote specific products within their accounts over others.

Second, product managers.  Consumer and industrial firms have often found familiarizing product managers with customer challenges rather than customer segments, improves outcomes.

To clarify the nature of the challenge, consider a company that sells software or silicone. If they assigned product managers by customer segment, product managers may be aligned to segments such as household, micro, small, medium and large businesses, or by industry such as buildings, aerospace & automotive, electronics, healthcare, household, and specialized applications.

Unfortunately, one inevitably finds a certain product may be useful in a segment that it wasn’t intended.  (Customers are often fickle about being confined to a single segment for all their needs.)  Product managers will want to reach across their customer segment defined limitations and grow their market.  But this sets up product managers to compete for resources and sales attention.

To address the challenge, firms find that product managers should be aligned to problems they solve, rather than to distinct customer segments.  For instance, an accounting software firm may align product managers by household accounting, business accounting, and tax preparation; or the silicon firm may align product managers by sealants, coatings, elastomers, solvents, etc.

The product manager for household accounting may create or manage a good, better, best product lineup.  Simultaneously, the product manager for business accounting may create or manage a different set of good, better, and best versions or online and offline offerings.

Here, customers may find they are buying the premium product for household accounting while a good enough product for business accounting.  In some ways, they are crossing segments, in other ways though, they are simply getting the right solution to their specific needs.

Non-alignment of Sales and Product Management

Notice that the solution many companies have taken results in sales and product management being unaligned.  Sales focuses on their individual account needs while product managers focus on creating solutions to address challenges, which may be faced by multiple customer segments.

Does this create tension within the organization?  Does this mean that the product managers don’t have full control over their sales team and route to market?  Yes.  It does. If an organization’s performance is to be sustained, alignment tension should be managed internally rather than letting it overflow into external transactions—making it hard for consumers to know what and how to buy.

Posted in: ,

About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.