Non-Customers Are Where Important Changes Often Start

There is a risk of complacency for start-ups (and even larger firms) who have achieved a level of security in their first niche. Markets change, consumer needs change, and you need to continue to explore opportunities to sell your offering to new customers–non-customers–even though it’s a much harder sales process than a renewal, upgrade, or follow on sale to an existing customer. Peter Drucker warns about this in an interview in February 2002 issue of Information Outlook (hat tip to Pauline Harris “Peter Drucker’s at it Again!“)

Companies may know a good deal about their customers. They know nothing, as a rule, about their non-customers — the people who should be our customers but buy from someone else. Why do they do that? And yet it is the non-customer where important changes always start first.

It’s consistent with a 1994 article he wrote for Harvard Business Review entitled “The Theory of the Business.” He offers department stores as a cautionary example of a set of firms who had high customer satisfaction but didn’t realize that they were losing share. There were not talking to any non-customers, assuming that they weren’t customers because they couldn’t afford to be when in fact tastes were changing.

I was reminded of the value of talking to non-customers by a September 16 blog post by Brian Bailey entitled “Bye Bye Cadence.” Recent events may have rendered the title unintentionally ironic but the article relates a conversation Brian had with some Cadence employees after he gave a talk at CDNLive! (the exclamation point is part of the name).

Afterwards I was talking with a group of Cadence employees. They said that the total cost to put on such a show was significantly less than what they usually had spent on DAC. In addition they did not have to constantly look over their shoulders to see if someone was listening in to their conversations and the quality of the people who attended was so much higher than the leads they got from DAC. One person asked if they thought Cadence would ever go back to DAC. The consensus answer was – I don’t see why we would ever want to return to DAC.

I left a comment on September 25 (I only mention this to be clear that I am not “piling on” after the recent executive exodus at Cadence) that I wanted to end here with as well.

There is always strong value in a user group and communicating privately with your current customers. Not enough EDA vendors do enough to actually have a conversation with their customers. Full points for Cadence in doing so at CDNLive!

A trade show like DAC allows you to interact with prospects–potential new customers. It’s also a bigger draw than a single vendor (or even single vendor ecosystem) show. To the extent that Cadence wants to launch new products that carry them beyond their current customers they will need to do more than CDNLive! style events.

Clearly Cadence is already shrinking on a revenue basis, I would suspect that avoiding trade shows and other forums that would allow them to interact with non-customers will only allow them to continue to shrink more cost effectively.

Update June 15: What a difference a few months make. Thanks to a comment by Grant Martin on Daniel Payne‘s recent blog post “DAC Transitions Over Time” I learned that Cadence has converted 2009 CDNLive into a series of webinars and is back at DAC with a much bigger footprint than 2008. In fact they are vectoring their customers to DAC for face to face meetings. See http://www.cadence.com/cdnlive/na/2009/pages/default.aspx

CDNLive! conferences give Cadence technology users around the world an opportunity to exchange ideas with their peers as well as with Cadence technologists. However, the current global financial environment is impacting everyone in the electronics industry, including many of our customers. Fewer resources are available to dedicate to critical projects. And travel budgets are limited.

To better accommodate our customers, who have expressed concerns over their ability to travel and take time away from their desks, we have decided to host this year’s CDNLive! Silicon Valley event as a series of webinars. These webinars will be an excellent opportunity for users to share their work and present their papers to an even larger audience—and a wider range of their peers—than what was anticipated at the face-to-face conference.

Our presence at DAC in San Francisco in July will provide an opportunity to meet face-to-face with customers. And this year’s CDNLive! events in Japan, Taiwan, Israel, and India will proceed as planned. We feel the decision to deliver this year’s CDNLive! Silicon Valley as a series of webinars is the right way to help our customers achieve productivity, predictability, and reliability.

Further details on the Webinar Series schedule will be posted as available.