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Editor's Notebook After KatrinaAs the disaster called Katrina continues to unfold along the U.S. Gulf Coast, one of the few bright spots is the powerful response from citizens, community groups, and businesses. America has always had a strong voluntary and self-help tradition, and, regardless of one's views on the adequacy of the US government's role thus far, we are clearly seeing some of the better impulses of the private sector. From Avaya to Unisys, technology companies are contributing funds, matching employee donations, and sending vital equipment and expertise to assist the relief and recovery efforts—as, of course, are companies from all industries. This is necessary and helpful, and, sadly, becoming a little too familiar. Looking ahead, though, I wonder if we ought to set our sights higher. Without in any way diminishing our industry's rapid and substantial response, I have to believe we can do more. Consider just a few of the more obvious and immediate problems in Katrina's wake: locating the missing, coordinating assistance programs, connecting dispersed families and friends, finding skilled resources. All are facilitated by our industry's tools and systems; all can be improved. Further down the road, we need to tackle much more daunting questions: how best to rebuild New Orleans; how to strengthen defenses against future disasters; how to bridge the social divides laid bare in Katrina's wake; how to think more comprehensively about local, national, and human security. Except for the first, the questions are not exactly new, but perhaps Katrina will inspire a renewed energy to address them. The political scene in Washington might not inspire much hope for a fresh start, but we can certainly look within. And we might have to do this anyway. Not long ago, amid the excesses of the late '90s boom, we saw a wave of new thinking and action in the areas of corporate community relations, social responsibility, venture philanthropy, and the like. Some of it faded with the downturn, but it suggested many interesting possibilities for doing good while doing well. Certainly the citizenry remains focused on the social and environmental impact of the corporate world; catastrophes like Katrina will likely deepen public scrutiny. The main priority today is doing everything possible to ease the pain and accelerate the healing. But then what? What do you think? Should the tech industry put more energy into the social and environmental sides of the ledger? Should we collaborate more to address community challenges? How is your organization contributing?  [TOP OF PAGE] What's Hot Marketing on the VergeIn the last 50 years, few industries have been identified so strongly with innovation as technology has. From the rise of commercial mainframe computers in the 1950s to the explosion of the Internet and its myriad offspring in the 1990s and early 2000s, the tech industry has pulsed to the beat of constant invention. From a marketing perspective, however, the tech sector has lagged far behind the cutting edge, particularly on the business-to-business side of things. Long characterized by a build-it-and-they-will-come mentality, the industry has traditionally invested most of its energy in breakthrough product development—then sat back and watched the business roll in. It hasn't always worked, of course. Such a dynamic industry has had more than its share of creative destruction. Until recently, however, marketing has played a relatively small role in the industry's fortunes. Unlike more mature consumer products industries, where marketers play central roles in business strategy and planning, the enterprise tech sector is characterized by small "m" marketing—lead generation and sales support focused on advertising, trade shows, brochures, and, more recently, Web sites and online campaigns. Strategic thinking has traditionally been left to the entrepreneurs and engineers. During the periodic slowdowns, a quick injection of sales force energy would pick up the slack. Until now. As the tech industry matures in a post-bust world and hunts for its next wave of growth, the locus of innovation is shifting toward the marketing department. Indeed, marketing leaders are on the verge of three dramatic transformations. First is marketing's role in changing corporate cultures from product-out to customer-in. The technology industry is grappling with an historic shift from a seller's to a buyer's market. No longer interested in purchasing the next new thing, business buyers are more knowledgeable, more skeptical, and more demanding of demonstrable business value for any technology investment. They want much more specific solutions for their precise business challenges. Marketing's job in this new buyer reality is to put the customer front and center for the whole company. Most important, as marketing immerses itself in customer needs, it can more effectively exert leadership in the crucial offer development process. The goal is for marketing to utilize customer input and insight to guide research and development rather than simply waiting for the engineers to throw new products over the wall and then scrambling to sell them. At Sprint, for example, marketing is leading a charge to develop new solutions for business customers by deploying small "market sensing" teams that ferret out opportunities in specific market niches. The teams work hand in hand with offer development groups that pull resources from across the company and from partners to meet individual customer needs. It's a far cry from build first and market later, and it's beginning to show real results. Second, spurred by this mandate to become customer-centric, is marketing's elevated role in the business. Historically relegated to the supporting cast, tech marketers in the enterprise arena are stepping up to provide guidance around corporate strategy, partnership alliances, and M&A, as well as shaping the company's overall agenda regarding investors, employees, and customers. Cost-cutting and operational efficiency will always be important factors in guiding corporate decision-making, but understanding the market and executing on visionary thinking is fast emerging as the new path to achieving sustainable growth. The recent transition at data storage leader EMC is a powerful example of a company that has been redefined by its marketing department. A top performer through the go-go 90s, EMC was hit hard by the tech crash after 2000. With marketing taking the lead, EMC has since turned itself from an engineering and sales-driven "box" company focused on bigger and better storage devices to a diversified information systems and solutions company with services and software accounting for more than half its revenue. Key to the shift was marketing's clear understanding of industry consolidation, product commoditization, and customer demand for more sophisticated approaches to managing and securing critical data. Marketing's ability to help reorient the firm's strategy, expand the addressable market, pursue strategic acquisitions and partnerships, and develop higher-end consulting capabilities were central elements of EMC's successful shift. Third is the transformation of marketing communications from one-way broadcasting about features and functions to interactive dialogue about business solutions. The current hype in the marcom world revolves around online tools like blogs, podcasts, RSS, and vertical search. Cool tools may well have a place in tech marketing's next iteration, but the more important innovation is recognizing the need for a new mindset that embraces the idea of participatory marketing. Tech buyers on the business side have little patience for generic pitches. They're not answering the phone, reading the [e]mail, or responding to free seminar invitations. They know their own agenda, they're checking you out behind your back, and they'll come to you if, and only if, they think you have particular insight into their most immediate needs. Creating real conversation in this harsh climate begins with creative ideas and clear-eyed humility. Valuable and original ideas are actually rather difficult to develop, and the most valuable solutions derive from collaborative initiatives. Buyers don't expect tech firms to have all the answers; they do expect them to engage in dialogue that moves everyone down the right path. The blogging explosion in the tech industry precisely reflects precisely this mindshift from pronouncement to collaborative problem-solving. IBM's blogging guidelines, announced with some fanfare back in May, capture the new spirit in stressing two main reasons for IBMers to blog: to learn from clients and others, and to contribute to the future of the business, technology, and the world at large. At Sun Microsystems, president and COO Jonathan Schwartz's popular blog both demonstrates and reflects the company's larger commitment to "the age of participation." The shift to marketing-led innovation in the business-to-business technology sector is far from done. Marketing is still relegated to the old-line marcom and sales support role at many tech companies, and product innovation continues to loom large (although often with good cause, since the flow of gee-whiz products continues to amaze). But the savviest leaders have recognized the signs of a maturing, customer-driven industry, and are looking to more innovative and sophisticated marketing to sustain continued success. FeatureMercury Rising: An Interview with Mercury’s Christopher LochheadChris Lochhead, Chief Marketing Officer at Mercury, an enterprise software company, recently spoke with us about the strategic role marketing plays at his firm, why wallet share has become more important than market share, and how to anticipate market need. ITSMA: You originally started working with Mercury as an independent consultant in 2002. What was the company looking to do when it brought you on board? Lochhead: I started consulting for Mercury right when we were in the bowels of the downturn in IT spending. Back then, Mercury held a strong position in a niche market—the software quality and testing market—but the management team saw a real opportunity to grow beyond that niche. In order to do it, though, they realized they needed to reposition the company as an enterprise software vendor, and they brought me in to help create a new strategy around business technology optimization (BTO), which we launched in October 2002. ITSMA: You were appointed CMO in 2003. What are some of the most important changes you've made since then in terms of how Mercury does business? Lochhead: The first thing was helping the executive team decide how to position the company. It was the middle of the downturn and we had to figure out how we could play into that environment and capitalize on it. What we were seeing was that for the past 40 years, technology had played a seminal role in automating and optimizing the core functions of business—finance, sales, HR, you name it—but IT itself hadn't gone through this process. And it needed to. So we saw this opportunity and had to figure out how to connect to it. We wanted to become to the CIO what SAP is to the CFO. And that's how we started talking about aligning business and IT. Another thing we did when I came on board was to reorganize the whole marketing department. When I got here, there was no global marketing function; the marketing budget was spread out over a bunch of different product business units. That needed to change. Marketing also started taking a very proactive approach to working with the field organization, helping sales deliver an enterprise message and adopt an enterprise selling model. In order to help sales get into companies and start talking to higher-level players, we also had to kick off a major branding campaign. No C-level exec is going to take a meeting with some sales guy from a company he's never heard of. Building a powerful brand was a priority right from the get-go. ITSMA: Mercury is a billion-dollar company. What's marketing doing to move the company beyond the billion-dollar mark? Lochhead: Everyone doing business in the IT industry right now grew up playing a game called "market share," or "How do I position my company in a growing market?" Well, somewhere around 2001, IT budgets flatlined and the game changed. Today, you've got to be focused on wallet share—getting your customers to spend more of their budgets on your technology products, services, and solutions. That's where we're putting our energy right now. Mercury is in a good position because we've got value propositions that CIOs really care about—reducing spending on IT infrastructure, lowering the cost of compliance, improving service levels. When we put in a call to a CIO and start talking about these issues, he says, "Hey, when can we set up a meeting?" ITSMA: You started talking about aligning business and IT back in 2002, and now the concept is everywhere! How can companies make sure they're anticipating market needs and setting themselves up for future success? Lochhead: You've got to be very in touch with your customers, you've got to be able to move and react quickly, and you've got to be able to form and articulate a provocative point of view. I spend a full 50% of my time with customers. In fact, our whole executive team spends a lot of time in the field. And you can't just file the information your customers are giving you away for future use. Use it! Adjust your strategy, your messages, the offers you're bringing to market. Make sure that you're aligning sales and delivery so that they can go out and give your customers what they want. And have a few people on staff who can build a compelling argument around how you help meet customer needs. Having clear, powerful thought leadership is how people are going to know that you're the player that can help them win the game. We'll continue our conversation with Chris at Marketing on the Verge: ITSMA's 2005 Annual Conference on November 7-9 in Cambridge, MA. For more information about the conference or to register online, visit http://www.itsma.com/events/event_desc/05AC11N27.htm. On the JobCitrix Systems: Creating a New Market CategoryIn 2003, technology company Citrix Systems had broken the $500M barrier and was looking to take its business to and beyond the $1B mark within three years. Although its "server-based computing" software was the clear market leader in this limited category, in use in nearly 95% of the Fortune 500, penetration within individual organizations was shallow and awareness beyond the IT manager level was low. Company leaders decided that to achieve its goals for revenue growth, Citrix had to evolve from a company with a single product, customer segment, and go-to-market path to a company with multiple products, multiple business models, multiple customer segments, and multiple go-to-market channels. To do this, it had to establish a broader market category. It also had to define and lead the new category with a corporate branding campaign that would resonate with senior-level business executives. "We all know that the first step in creating great, long-term customer relationships is to learn who those customers are and what they want," said Kate Hutchison, corporate vice president of marketing at Citrix. "So one of the first steps we took as we began thinking about the branding campaign was to find out what was important to our customers." The company conducted customer research that revealed that roughly half the businesses surveyed employed people who worked outside the office and that nearly a third of the respondents had 10 or more offices that they kept connected using a base of application software. Furthermore, many of the customers—almost 60%, in fact—cited a remote access need or pain point, not a server-based computing need or pain point, as the motivating factor for purchasing Citrix software and services. Making information securely, easily, and instantly accessible from anywhere, using any device, emerged as a particularly important customer issue at both the business and the IT level. Staking out a position around the key customer business concern of enabling access on demand, Citrix decided, would be much more effective than continuing to beat the tech-focused server-based computing drum. Working with an analyst firm, Citrix sized the market opportunity for access-enabling software and services; according to 2003 projections, the market had the potential to exceed $22B by 2007—many times larger than the server-based computing market. Based on the research findings and tremendous market opportunity, Citrix rallied around the access message and started promoting its software and services as "access infrastructure." It also began touting the company itself as the leader in this space. "When you're looking to increase penetration among your installed base, it's critical to understand how customers are using your technology to solve real business problems," said Hutchison. "Customers were using Citrix for a wide range of business initiatives, and that caused us to think differently about how to communicate our value—today and in the future. It also made us think about how to expand our product portfolio to deliver increasing value to our customers and investors, which ultimately led us to redraw the lines of our overall market category. Our strategy enabled us to position Citrix as a provider of a complete, end-to-end infrastructure for on-demand access—a message we knew would resonate with the business decision makers who lead our vast customer base." To get the word out to its target audience of senior-level business buyers, Citrix launched its first-ever corporate branding campaign. (Previous efforts had been limited to product messaging.) The company realized that C-level buyers are much more likely to listen to peers than a mass-market campaign (in fact, ITSMA customer research identifies references as the number-one most effective marketing vehicle year after year), so it teamed up with an advertising agency to execute a campaign that leveraged testimonials from senior-level customers in sophisticated print advertisements. By building its program around such well-known names as AutoNation, Delta Air Lines, HP, Prudential Fox and Roach Realtors, and SAP, Citrix was able to provide the credibility and validation that potential customers crave when making buying decisions. The new messaging campaign proved successful. Within a year, awareness of Citrix among C-level executives had increased 9%. Analyst inquiries increased 100%, and the average deal size increased 24%. The company has also come a long way toward reaching its goal of breaking the $1B barrier, growing 26% in annual revenue from $586M in 2003 to $741M in 2004. For FY05, the company expects net revenue to be in the $865M to $880M range. "Our marketing is about much more than messaging," concluded Hutchison. "It's about proactively shaping the market. You can't be reactive with these kinds of campaigns. Marketing should be at the front lines, with the top-level players providing an informed opinion of where the business should go and helping it get there." —Meghann Grandy, info@itsma.com EuroNotesA Systematic Approach to Enhancing ReputationEffective reputation management is important for any company, but it is especially valuable for professional services firms, since these companies do not provide tangible output that customers can hold, admire, and share. In fact, building and maintaining a solid reputation through marketing activities such as thought leadership, public relations, reference management, and educational seminars should be the cornerstone of professional services marketing—not more tactical lead-generation programs or simple sales support. Marketers who understand how to systematically build reputation into the center of a company's business approach (as represented in Figure 1) will realize increased revenue, higher margins, and reduced costs. Figure 1. The Role of Reputation in Generating Work
Source: Young, Laurie (2005). Marketing the Professional Services Firm. West Sussex, England: John Wiley and Sons Ltd. We all know that a good reputation stems from excellent work with clients. But what this means for marketers is that they should closely monitor customer satisfaction and loyalty, since clients talk about the service they receive. After an engagement is completed, positive (and negative) stories begin to proliferate about the firm, creating a reputation. If that reputation is positive, it will generate repeat business from the same client or referrals to different clients. If the reputation is negative, the practitioner and the firm will collectively end up as an ambulance chaser, caught in a cycle of low fees, poor clients, and low earnings. The two main drivers of future revenue growth are therefore the quality of work and the quality of client service. Together they create a strong reputation, which eventually turns into a brand; the brand, in turn, draws in more work. This "demand-pull" approach has three very powerful benefits. First, it keeps the cost of sale low because the firm does not have to go out and look for work. Second, it enables firms to keep prices high because, if clients come to the firm, practitioners can focus on diagnosing need. Pricing becomes a consequence, not a focus, of discussion. Finally, focusing on reputation will help companies attract not only the best customers but also the best talent and partners, ensuring that their reputations stay strong in the long term. But before services marketers can execute on the demand-pull approach, they need to understand the competitive reputation of their firms and their lead people. In the European M&A market, for instance, many suppliers pay hundreds of thousands of dollars for benchmark surveys conducted regularly with buyers. Some even use these surveys as input to their lead advisers personal review processes. Once the firm's competitive position is clear, marketing can focus on creating demand-pull by highlighting the company's strengths through activities such as:
When, for example, I was marketing partner of PwCs global advisory business, we decided to grow the anti-money-laundering practice more aggressively. The three-year investment included international thought leadership programs, PR campaigns, and seminars for clients. The heart of our approach, though, was the selection of one partner who already had a reputation for good work in the field. He was systematically built into an international expert who wrote, presented, and advised governments on the subject, in addition to building a healthy pipeline of work. Similarly, most leading professional service firms that address technology needs (from McKinsey to headhunter Russell Reynolds) have a community of lead partners who are able to gain the respect of board-level leaders. Many have a world-class reputation as thought leaders that stimulate new ideas and policy initiatives, altering the industry they address. Reputation enhancement, by creating demand-pull, is the way professional services firms grow and flourish while keeping cost of sales low and prices high. It is the antithesis of the "push" approach to marketing that focuses on sales support, tactical pricing, and promotion that characterizes much technology service marketing. By taking a systematic approach to reputation marketing, marketers can play an important role in enhancing the firm's reputation, increasing revenue, increasing price, and reducing costs—a winning combination in any business. —Laurie Young, lauriedyoung@aol.com Laurie Young, author of recently published Marketing the Professional Services Firm, has held senior positions with BT, Unisys, and PricewaterhouseCoopers. He has also founded, built, and sold a professional services firm.
Research Desk Good Enough for Government Work?There's no denying that the government, whatever country you are based in, is a huge consumer of goods and services, including technology systems, services, and solutions. Selling into the public sector, however, requires a different mindset from selling to the private sector. Claire Hamon, director of business information systems for the Crown Prosecution Service, U.K. and a former employee at U.K.-based bank Lloyds TSB, recently spoke about what public sector customers are looking for from technology suppliers and how these things differ from buying criteria at private companies. One of the key differences between the public and private sectors, Hamon revealed, is a lower level of financial awareness in government employees. In the private sector, financial metrics are very clear. Your efforts are measured by sales, revenue, margins, and profitability. Metrics in the public sector are very different. According to Hamon, "The benefits that will be delivered through IT will be benefits to society, and it's extremely difficult to put a value on that." For this reason, few public sector employees have the ability to discuss the technology investment portfolio and to put together a compelling financial case. However, she believes that an ability to demonstrate ROI is extremely important and that technology providers who are willing to educate government employees on how to do this have a leg up on the competition. Other key differences that Hamon addressed include:
These differences, along with the opportunities they represent for technology providers, are explored in greater detail in The Customer Perspective: Claire Hamon, Director of Business Information Systems, Crown Prosecution Service, U.K. This ITSMA Viewpoint is available at no charge to members and for sales to all others. For more information, visit http://www.itsma.com/research/abstracts/v0025.htm. —Alison Lambden, alambden@itsma.com
Piloting Account-Based Marketing at Xerox Global Services EuropeIn early 2004, Xerox Global Services Europe was created to enable Xerox to have one services business with a single, strong value proposition: to improve and manage clients' document-intensive business processes. The European marketing team was tasked with helping the company take a service-led approach. Because the market had a firmly entrenched perception of the company as a product supplier, the team knew that elevating the role of services within the company would be easier said than done. To meet the new mandate, the team decided to explore account-based marketing (ABM), an emerging technique that they'd heard had the power to improve positioning and profitability within key accounts. But before they could commit serious resources to the ABM effort, they needed to know that the approach would work. Sarah Hauser, services marketing manager at Xerox Global Services Europe, recently outlined how the company went about planning, building, and executing an ABM strategy for a single pilot account. Starting out, the team had three key measures of success for the ABM pilot, including:
The first step in launching the beta program was to identify a target account and then build a solid understanding of that account. Using insight from ITSMA on how to shape an ABM campaign, Hauser's team knew it needed to identify the account's genuine business imperatives. This would allow them to uncover new opportunities and map out exactly how Xerox Global Services could help the target succeed in meeting its business goals. The key opportunity the team uncovered was an RFP for managed print services that the target company was launching in the summer of 2005. Thanks to their extensive research, the team knew that the target had made mistakes with similar RFPs in the past. This knowledge allowed the team to craft a customized value proposition, getting very specific about how Xerox Global Services could help. Next, the team went about building a sales and marketing plan for the account. During the research phase, they had uncovered 24 key stakeholders within the target account; now they set objectives for what they hoped to accomplish with each individual by executing on their ABM sales and marketing plan. Using the value prop the team had created, which hinged on Xerox's proven experience delivering managed print services, team members:
The campaign proved extremely successful. Stakeholders at the target account actually requested additional copies of both the guide and video—the first time, Hauser admitted, that she'd ever received requests for more direct mail! The campaign also successfully differentiated Xerox from its competitors, created a new perception of the company within the target account, and led to several additional meetings with director-level influencers. The RFP has yet to be completed, but the outlook for winning the deal is good. As an added bonus, the sales team for the target account noted that the campaign completely changed their perceptions of marketing. The pilot proved the ABM concept at Xerox Global Services and helped the leaders there decide to allocate more resources to this powerful technique for the upcoming financial year. —Meghann Grandy, info@itsma.com For more on Xerox Global Service's efforts, ITSMA's six-step approach to ABM, and how to scale an ABM program beyond a pilot program, see Account-Based Marketing: Improve Demand, Positioning, and Profitability Within Target Accounts. This ITSMA briefing is available at no charge to members and for sale to all others. For more information, visit http://www.itsma.com/research/abstracts/olb081605.htm. For more information about ABM in general and how ITSMA can help, please visit the ABM section on our Website: http://www.itsma.com/ABM. Professional Services: Playing to WinITSMA's newly released Quest for Marketing Differentiation: 2005 Professional Services and Solutions Brand Tracking Study reveals that because customer priorities for selecting a services provider hinge on trust and commitment, most of the companies examined in the study are vying to position themselves around the same issues. And with everyone chasing the same positioning, everyone seems the same. So how can a professional services firm differentiate itself and catch the attention of buyers? According to the research, past experience is a huge factor in the vendor selection process. It's no surprise that a well-delivered project goes a long way toward helping a services provider win follow-on work. Marketers must be sure to fan the flames of familiarity by following up with customers and keeping track of customer satisfaction, loyalty, and reference programs. But what about getting on a new prospect's short list? What does it take to get a foot in the door? The study shows that 63% of customers take note of new vendors for:
In other words, they attract attention by successfully differentiating themselves from competitors. Only 27% of customers take note of a new vendor for competing on price (Figure 1). Figure 1. Getting Noticed
It's clear from these findings that sharp positioning, good relationships, and real differentiation are the keys to professional services success. Even in a crowded market, those firms that focus on escaping from the crush of "me, too" marketing by credibly demonstrating uniqueness through such techniques as reference management, thought leadership, or account-based marketing are most likely to win in the long term. —Lori Weiner, lweiner@itsma.com For more information on ITSMA's Quest for Marketing Differentiation: 2005 Professional Services and Solutions Brand Tracking Study, visit: http://www.itsma.com/research/abstracts/bps006.htm. Please also note ITSMA will soon announce the launch of our 2006 Professional Services and Solutions Brand Tracking Study; contact Lori Weiner for more information.
[TOP OF PAGE] Upcoming Events How Customers Choose Solutions: Responding to the New Decision Process Transforming Marketing for a Solutions World
Designing and Delivering Account-Based Marketing Increasing Your Impact In Key Accounts
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 U.S. 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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