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Editor's Notebook: Marketing and the Bottom Line ITSMA's first online briefing for 2005 focuses on "marketing and the bottom line," and we've had some interesting debate in the office about marketing's ability to contribute to profitability. At one extreme, the thinking is that although marketing helps the top line profitability is all about delivery. Marketing generates leads but has little to do once sales and delivery get into the game. At the other end of the spectrum is the idea that marketing plays a critical role in defining attractive markets and opportunities, phasing out dying offers, and helping ensure client loyalty—all of which feed directly into profitability. Delivery affects profitability at the margins, but marketing plays a critical role in steering the company toward a stronger bottom line. You can probably guess my bias here, but I'd love to know what you think. Our January 18 online briefing is just the beginning of an ongoing discussion on this topic, and we're eager to learn more about your perspectives, examples, and questions.And now for something completely different: Podcasting! I'm certainly intrigued, and if you haven't yet heard about it, you will soon. I'll give $25 iTunes gift cards to (1) the best example of any type of podcasting by your own company, and (2) the best example you know of in any business-to-business environment (are there any out there yet?). Send me links or files with a brief description so I can check them out.  [TOP OF PAGE] What's Hot: Customer Profiles and Account-Based Insight Late last year, ITSMA managed a two-day workshop for a member company; the workshop was devoted entirely to analyzing the business challenges of our member's top client. The workshop followed an intensive research effort to explore different scenarios that the client might follow over the next several years, and it brought together top executives from strategy, marketing, sales, and delivery. The objective was to gain leadership consensus on a detailed picture of the client's business. This, in turn, would create the foundation for a strategic marketing plan to increase business and transform the relationship with the client. Such an intensive effort to gain insight into individual clients (and prospects) is far from the norm, but this account-based approach is beginning to gain traction as marketers grapple with the new buyer reality for IT services and solutions. In an environment where buyers are skeptical of vendor claims and generally uninterested in generic pitches, standard market research is decreasingly useful. Increasingly, marketing high-end services and solutions requires detailed insights into individual clients’ (and prospects’) business challenges, business processes, and buying dynamics in order to develop truly compelling value propositions. Technology firms typically rely on sales teams to probe deeply into individual accounts, but the new environment demands a more systematic approach to gaining—and sharing—the necessary information. For example, Accenture's award-winning client-centric marketing program begins with detailed client assessments that probe deeply into perceptions of Accenture and its competitors held by numerous buying influencers within the client organization. (See the Accenture program summary below.) Unisys has also developed a powerful client profiling program that could serve as a model for marketers across the industry. The focus of the Unisys effort is to develop a deep understanding of a key client's business environment, vision, and critical success factors:
The resulting profile presents an in-depth view of how clients see the world, and thus a guide to how an IT solutions provider can best contribute to the future value of that business. Along with creating a much more powerful tool for winning business with individual clients, creating in-depth profiles enables solutions providers such as Unisys and Accenture to build market insight from the bottom up, looking for clusters of prospective clients that share similar challenges and approaches. Deeper client insight doesn't come easily, of course. It takes time, organization, and, often, cooperation with clients themselves, not to mention much greater collaboration between marketing and sales. It is especially difficult to scale, even for companies with a substantial research operation. And it generally requires tradeoffs with other types of research. But the benefits of digging deeper can be substantial. At Accenture, an initial program with an existing top account led to a 50% increase in direct revenue in one year, along with substantial increases in channel revenue and client satisfaction. Unisys is having great success in its financial services group, which pioneered the client profiling approach. And the ITSMA member mentioned earlier is well on its way to greater success with its target client. Broader market research is far from useless, and on that level companies especially need to strengthen their vertical industry and competitive insight. As the market continues to shift toward buyer-driven solutions, though, the top research priority for technology providers should be deeper insight into individual key accounts and prospects. On the Job: 2004 Award Winner Accenture: Global Client Centric Marketing (Client As a Market of One)Since November, the ITSMA E-ZINE has featured summaries of winning programs from ITSMA's 2004 Marketing Excellence Awards. This month highlights Accenture's award-winning program to develop comprehensive marketing campaigns for individual clients. The program won ITSMA's Diamond Award in the Generating New Demand category. Here is Accenture's summary of the award entry in the company's own words. Business Challenge In response to the increasing complexity of its global client base,
an Accenture marketing team launched a Client Centric Marketing (CCM)
initiative. The purpose of this program was to enhance the client's perceptions
of Accenture's capabilities and services across the organization, with
an ultimate view of increasing demand.
The program uses specific, client-focused market research to help determine a baseline, identify gaps in perception, and improve understanding and management of the client perception of Accenture. It helps create long-term positioning with the client executives through direct marketing programs and increases Accenture sales and revenue. For example, Accenture has been working with a major client for about 15 years. The relationship includes the following components: channel partnership, joint research activity, and reciprocal customer arrangements. Due to the multiple components of the relationship, along with the size and global nature of both organizations, there was a need to create a global approach with a single point of contact to own the client account, provide an environment to enhance client relations, and generate mutually beneficial business opportunities. Around the time that Accenture acknowledged this client relationship challenge, the client merged with a large industry competitor. Accenture had a similarly complex relationship with the second company. As the two companies consolidated, Accenture also combined its independent internal teams. We restructured, recommitted, refocused, and relaunched our teams and goals for the client account. Program Objective The competitive situation within the newly merged client organization was that Accenture was no longer the dominant player in the account. Even though our results were more substantial than other channel and delivery partners, the client executives were not aware of the range of our services and capabilities. In the past, Accenture was limited by our internal structure of regional and functional accountability. With a lead point of contact now in place for the client account and with the launch of a global CCM program, the competitive situation would change. Program Execution The foundation of the initiative is an external Client Research Assessment study to determine objective client perceptions. The study provided critical information enabling Accenture to adjust behavior according to the client's business needs. We also obtained an understanding of the client's view and suggestions to enhance Accenture's position. The CCM program is then based on the study results, and the program is directed at narrowing the gap between the client's perception and Accenture's desired perception. Narrowing the gap is performed with customized campaigns. The Client Centric Marketing Plan emphasizes both short- and long-term tactics to create immediate results while enhancing longer-term client relations and increasing revenue growth. A sample CCM Plan includes the following steps:
Specific CCM tactics include:
The CCM initiative is fully integrated with the sales account development planning process, thereby tying marketing directly to the sales process and enabling marketing to be more proactive with the account teams. This CCM program has the most comprehensive linkage of sales and marketing in Accenture and has become a model for other CCM accounts. Business Results Success is measured in terms of financial results and client perceptions. Financially, we have generated a remarkable increase in new demand with the client:
Client perceptions have become well understood and managed since the CCM initiation. The focused CCM program has helped the Accenture account team create long-term positioning with client executives and significantly reduce the gap between the client's perception of Accenture and Accenture's desired perception. For summaries of all 2004 award winners, visit http://www.itsma.com/News/mea/recent_winners.htm. Moving to Solutions: Tackling the Development Challenge Steve Hurley's monthly column highlights the ideas, challenges, and best practices in marketing and selling technology-related solutions. Welcome to Steve's world! Designing and developing solutions, according to many of our members, is the hardest part of the whole solutions cycle. Marketing solutions effectively is no walk in the park, but it's probably a 3 on the Solutions Difficulty Meter (our very own scientifically proven tool!) compared with 8 for solutions design and development. The development challenge is conceptually simple: It just takes the right people. And there's the rub. To create true solutions, companies typically need to identify and access technologies and resources (i.e., staff) across the entire company. That's easy, so long as the organization is flexible, responsive and collaborative. Unfortunately, this tends to mean creating nirvana: the collegial, flexible, matrixed organization where everyone miraculously comes together as needed to do the right thing. If only! Some companies are moving in this direction, but the heavy-duty organizational change that often comes with the objective can wreak havoc along the way. The good news is that there are some effective initiatives for solutions development that are bigger than a Band-Aid but smaller than a heart transplant. An increasingly popular approach is the “solutions council,” which brings together key representatives from across the company to evaluate and develop solutions. Council members live in their respective business or functional units but meet regularly to determine which oars they must pull on to move the Solutions Ship forward. Most of the solutions councils I've seen are an amalgam of horizontal and vertical solutions representatives speckled with other key functional groups such as marketing, sales, and finance. Northrop-Grumman created a council a few years ago to take its main offerings into the various government organizations. In the professional services arena, BearingPoint relies heavily on its solutions council to determine which solutions are ready for prime time. On the software side, Reynolds & Reynolds leverages its council not only to make up-front decisions but also to monitor development and launch. Simply establishing a solutions council does not guarantee success, of course. Like most corporate activities, these councils typically involve major-domo managers and executives with divergent personal and business objectives. How do you make solutions councils effective?
If you check off these five points as “done,” you're virtually guaranteed to see less name calling, better attendance (especially if you remember to serve food and beverages!), fewer Blackberries in use, and shorter concept-to-market cycles. —Steve Hurley, shurley@itsma.com [TOP OF PAGE] Research Desk Tech Poll Falling: Time to Get Nervous? CIO Magazine's December Tech Poll closed a generally strong year with a dramatic dropoff in IT spending projections for 2005. Following an upward trend through most of 2004, projections in December fell to 6.7% from November's 8.4%. According to Dr. Ed Yardeni, chief investment strategist for Oak Associates, which partners with CIO to conduct the monthly survey, "The latest results are surprisingly weak, suggesting that IT watchers need to look out for some downside surprises in the new year." At the same time, the December results were still the strongest January forecast since 2001. Compared to last year's initial projections, CIO predictions for 2005 are higher in each of the eight specific sectors in the Tech Poll. Overall, suggests CIO publisher Gary Beach, "2005 will be a good year but not a barnburner. It will also be a market transition year as the tech vendor merger/acquisition binge continues to play out. CIOs are nervous and unwilling it seems to place big bets on vendors both doing the acquiring and those being acquired." Asked to forecast the IT spending environment for the first quarter, more than half the CIOs responding to the survey said it was "partly cloudy, modest pick up ahead." About 17% of respondents see a cloudy first quarter due to a heightened political and economic risk environment, and 9% see a rainy future, with no pickup in sight. About 17% see a sunny period for the first quarter. A particularly troubling sign comes from a survey question about the impact of Sarbanes-Oxley regulatory requirements. A strong majority of respondents expect a significant diversion of IT resources from other assignments to address Sarbanes-Oxley. On average, CIOs reported almost 10% of the average IT budget will be diverted toward the new requirements. Spending projections for outsourced IT services dropped slightly, with 30% of CIOs projecting increases, compared with 33% in November. Almost 22% of respondents expect to cut back such spending, compared with 18% in November. The rest project spending on outsourced IT services to remain unchanged. Tech Poll provides a monthly assessment of technology buying trends from a broad cross-section of CIOs, mostly from North America. The latest survey, conducted December 2-9, 2004, included 243 respondents. Large firms with more than 5,000 employees represent 18% of the results. The respondents represent a wide range of industries, including technology services, manufacturing, finance, state and local government, health care, and wholesale and retail distribution. For complete survey results, visit http://www.cio.com/techpoll.
Brand Tracking: Storage Solutions and EMEA Telecom ServicesITSMA's Brand Tracking Studies provide a highly affordable complement or alternative to high-priced custom research projects. As multiclient-sponsored programs, the studies pool resources to generate detailed data in key market segments at a fraction of the cost of going it alone. New sponsorship opportunities include the following: 2005 Brand Tracking Study: Storage Solutions
2005 EMEA Brand Tracking Study: Telecom Services—Services Provider
Market
Sponsorship opportunities are still available for: 2005 Brand Tracking Study: Professional Services and Solutions For more information on sponsoring any of these studies or on ITSMA's brand research capabilities more generally, contact ITSMA at +1-781-862-8500 or info@itsma.com.
[TOP OF PAGE] Upcoming Events Marketing and the Bottom Line: ITSMA's 2005 State of the Profession
Address Amid the new buyer-led reality, technology services and solutions firms need to change the way they market and sell—or risk being left behind. Join ITSMA's Dave Munn, president and CEO, and Julie Schwartz, senior vice president and chief research officer, to explore marketing's changing role and the most significant contributions that marketing can make to growth and profitability in the year ahead. IDC Marketing Performance Measurement Summit Join IDC, Steve Hurley from ITSMA, and senior marketing professionals in business-to-business markets for a forum focused on exploring best practices for marketing performance measurement. Topics include deciding what to measure, adopting metrics, and conducting measurement and reporting to demonstrate value and justify budgets. *ITSMA members, friends, and E-ZINE readers save $400 off the standard $895 rate. Peeling the Solutions Onion: What Really Works in Marketing and Selling
Solutions There are solutions companies, and then there are solutions companies. This web briefing focuses on the latter—those companies that are thoughtfully and methodically changing how they listen to the market, generate high impact solutions, and launch them into the marketplace. Join Steve Hurley and guest speakers from EMC, Novell, and Sprint for an exploration of the best of the best in marketing and selling solutions. Customer Reference Forum 2005 References are critical to marketing and selling services and solutions, yet the challenges of managing a robust, effective reference program are substantial. Organized by Lee Communications, this unique event will zero in on the key elements of building and maintaining reference programs in technology companies, with feature presentations from executives at HP, Intel, Lucent, Microsoft, Unisys, and other top firms as well as an overview of best practices from ITSMA's Steve Hurley.
Ask ITSMA! Do you have a services marketing question? (c) Copyright 2005, ITSMA Please forward this newsletter, but only in its entirety. Public citation or publication of any information herein is encouraged but subject to US and international copyright law and conventions. Any citation must include full attribution to ITSMA. Individual graphics or paragraphs can be published without permission as long as attribution to ITSMA is included. Publication of longer selections or complete articles requires ITSMA permission. For permission or more information, contact pr@itsma.com. [TOP OF PAGE] Subscription Information Subscriptions are available in text and HTML versions. To SUBSCRIBE or to change the format of your subscription, visit http://www.itsma.com/aspfiles/press/ezine.asp. To UNSUBSCRIBE, please email us at unsubscribe@itsma.com or mail us at ITSMA Subscriptions, 420 Bedford Street, Suite 110, Lexington, MA 02420, USA. Back issues of ITSMA E-ZINE are available at http://www.itsma.com/News/ezine/default.htm. |
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