ITSMA E-ZINE	November 2006

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Editor's Notebook: Measuring Marketing: Still a Challenge

We all know that documenting the value of marketing is no simple task. We also understand the benefits. Recent research from ITSMA suggests that companies that measure marketing's impact receive more support from top executives and better allocation of marketing resources. Most important, consistently measuring marketing performance can also help companies drive profitable growth by helping the company focus on high margin offerings and customers and by optimizing the efficiency of marketing and sales spending.

The good news is that in a recent ITSMA survey, 59% of the respondents said that their approach to measuring marketing performance has improved over the past two years. However, on a scale of 1-5, the respondents gave themselves a mean score of only 2.65, which is pretty much the same score that respondents to a 2003 survey gave themselves for the same question. This indicates that there's still plenty of room for improvement.

When it comes to measurement, there is no quick fix. Although a large majority of survey respondents claimed to be held accountable for return on marketing investment, less than one in five has an organization that tracks this for all marketing campaigns and programs. Most companies are still measuring in a limited and inconsistent manner. As HP's Deb Nelson will discuss next week at ITSMA's Annual Marketing Conference, building an effective measurement system demands sustained focus and investment in people, process, and systems over a period of years. I harbor no illusions that 2007 will somehow become the year we all turn the corner on measurement. Hopefully we can take at least another step or two forward in clarifying the right metrics for marketing and then making sure they're consistently tracked and monitored throughout the year.

Let us know how you do!

—Rob Leavitt

What's Hot: Marketers as Growth Champions: Three Questions for 2007

Most marketers in a recent ITSMA survey agreed that marketing's primary objective is driving growth and profitability. It's not exactly a shocking revelation. After all, profitable growth is the business of business, so presumably all corporate functions are ultimately focused in that same direction. Indeed, one has to wonder about those marketers in our survey with a different idea of their ultimate mission.

How best to contribute to profitable growth, though, raises all sorts of questions about marketing roles, responsibilities, and priorities. The most interesting finding of the ITSMA study suggested that those marketers with more strategic roles in the business—such as charting business strategy, developing new offers, and ensuring customer satisfaction and loyalty—have a more significant impact on the business than those focused mostly on traditional marketing communications functions.

This finding dovetails with a broader study completed earlier this year by Booz Allen Hamilton and the [US] Association of National Advertisers (ANA). That study, which surveyed marketing executives across multiple industries (compared with ITSMA's focus on technology services and solutions), found that only an elite 9 percent of marketing organizations could be classified as "growth champions" based on their strategic responsibilities for areas such as product innovation, new business development, and investments in new markets or products. Most important, teams in this category were 20% more likely to exhibit superior revenue growth and profitability for their industry than any of the other types of marketing organizations.

Clearly we all want to be considered "growth champions." But how can we get from here to there? Looking toward next year, I'd like to suggest that three questions are essential to the vitality of the marketing organization in technology services and solutions, and to its ability to contribute more substantially to profitable growth.

1. What is Marketing's Proper Role in the Business? The ITSMA and the Booz Allen-ANA studies both suggest that marketing organizations with broad responsibilities for strategic business roles have a greater impact on the business. I guess that might be self-evident, but the fact remains that only a minority of marketing groups in tech services and solutions have such a strategic role. One can't simply demand that marketing suddenly take over business strategy or new offer development, but, if you are not already in those roles, articulating a broader vision and finding opportunities to contribute more directly to them could be useful next steps. If marketing truly has deep customer and market insight (which it should), then leveraging that insight to identify strategic growth opportunities is one obvious way in the door.

2. How Can Marketing Strengthen Relationships Across the Business? One of the more troubling findings of the ITSMA survey was the fact that less than half of the survey respondents felt that the most senior strategy executive would rate marketing's impact as “significant,” and that rating was higher than for any other type of executive. Only 41% felt that CEOs would say "significant;" 27% said that for the most senior sales executive; 25% for line of business leaders, and a mere 8% for the chief financial officer. Given that most marketers (although not all) believe they do actually have a significant impact on the business, either we are fooling ourselves or, ironically, we are failing to communicate. Strengthening these internal relationships on the basis of mutual respect for everyone's contribution to profitable growth must be an ongoing priority for marketing leaders.

3. How Can Marketing Better Demonstrate Its Contribution to the Business? Five years into the post-downturn push for greater marketing accountability, marketers in ITSMA's survey admitted that they're still not doing a great job in measuring marketing performance. Better metrics for brand, leads, and sales support will all help, as would increasing fluency in the CFO's language, but the bigger challenge is tying marketing programs and performance more broadly to overall growth and profitability. This goes beyond traditional metrics (important as they are) to marketing's vision of itself and its role, and to marketers' ability to build stronger peer relationships across the firm.

Although these questions are daunting ones, the trends are positive. More marketers are taking on strategic roles in the business, and CEOs increasingly highlight priorities that should play to marketer's strengths, such as deepening customer insight, enhancing customer relationships, and accelerating business innovation. Keeping our eye on the big picture objective will serve us well in the year ahead.

—Rob Leavitt

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The Interview: A Portfolio Approach to Thought Leadership Development

Bob Buday, a founding partner of The Bloom Group, recently sat down with ITSMA to discuss why technology services companies need to change the way they develop thought leadership, how they can get more traction with their intellectual capital, and which marketing activities are most effective at converting interest in a firm's thought leadership into genuine leads.

ITSMA: Thought leadership has gained an enormous amount of attention in the IT world, particularly among IT services providers, over the past few years. Why is thought leadership so important?

Buday: We recently conducted a survey on this topic with 179 professional services marketers, and the respondents ranked strong intellectual capital as the most important factor for achieving marketing success. I think that this interest has grown out of the fact that with so much competition out there today, companies have to compete on something other than price. What they're competing on these days is deep expertise—and thought leadership can be one very effective way to communicate that expertise.

ITSMA: In your survey, you also discovered that many professional services firms rank their own thought leadership as mediocre. Why aren't companies doing better?

Buday: I don't think they understand what it takes to say something truly new and compelling. The biggest problem that companies have when they market their intellectual capital is that they don't have anything new or different to say. Producing high-quality intellectual capital requires deep research—often case-study research—into a topic that hasn't been explored much. A lot of companies focus heavily on promoting their presumed thought leadership without actually investing much in its development. This has to change.

We'll know that attitude is changing when we no longer hear the line: "Publishing anything is okay because it gets our name out there." That’s a myth for professional services firms. Substandard publications erode the brand image of companies that supposedly bring expertise to the table.

ITSMA: How do you suggest companies tackle the challenge of producing quality thought leadership?

Buday: In many companies, marketing isn't seen as a player in content development, but by viewing marketing's role as packaging and distributing content, these companies are setting themselves up for lackluster results. Marketing needs to be the department that takes a step back when ideas first come to the fore and recognizes that all ideas are not created equal. Marketing has to ask hard questions like, "Are other firms already covering this topic?" and "How much expertise do we really have around this topic?"

One way for marketers to make this shift is by taking a portfolio management approach to developing intellectual capital. This allows you to collect, assess, develop, and write about a balanced array of ideas to ensure that the firm has the right mix between short-term bets and long-term bets to support demand generation in the current quarter as well as over a year or multiple-year period.

The portfolio management approach involves four basic steps:

1. Topic identification. The first step is to gather ideas for good topics. Many firms take an ad hoc approach to this task, but they risk skipping over topics that are essential to growing the business. In other companies, marketing takes the lead by convening workshops with practice leaders and other company thought leaders to generate ideas.
2. Topic assessment. Once the marketing team has assembled a collection of prospective topics, it should assess the topics through two primary lenses:
• The market need for clarity on the topic. Topics that are not well understood or that involve a business problem for which an effective solution has not yet been found represent some of the best opportunities.
• The depth of the firm's expertise on the topics. If the firm has a wealth of experience, it can draw on that in its publications; if it doesn't have much experience, it needs to invest significantly in researching the topic.
3. Idea development. To be substantive and generate market interest, all points of view need evidence—examples of companies that have followed the approaches set forth in the point of view and have benefited substantially. Again, if the company doesn't have its own case-study examples, it needs to go out and do thorough case-study research.
4. Portfolio balancing. It is critical for marketers to ensure that the ideas being researched and fleshed out include short-, medium-, and long-term bets. It's also important that all the ideas are aligned with the company's strategy.

ITSMA: Do you have any tips on how to effectively market thought leadership once it's been developed?

Buday: A word of caution before I address the question: If you're funding too many ideas, you won't get traction with any of them. Don't produce 100 white papers a year; develop six and really invest in those six.

Publishing is very important for IT services firms. But it's not the only way they should promote their expertise. In fact, the survey respondents indicated that hosting their own seminars is the most effective way to market their intellectual capital. Traditional approaches like sales brochures, trade show booths, and advertising rated low on the effectiveness scale. Companies are finding that low-bias, educational marketing channels work best, and seminars are both educational and give the company the opportunity to start a real relationship with the prospect.

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On the Job: Fujitsu Services: Redefining Its Reputation

In 2004, Fujitsu Services, one of Europe's leading information technology (IT) services companies, faced a maturing market and increasing competition. After being rebranded from ICL to Fujitsu Services in 2002, the Fujitsu brand as an IT services provider was relatively unrecognized outside Japan. The company knew that it needed to do something drastic marketing-wise, and it looked to Philip Oliver, newly appointed acting CMO, to develop a new approach.

Oliver’s initial analysis revealed a strong company with unique assets, yet one that suffered from an identity crisis. In conjunction with Fujitsu Services' CEO, Oliver launched a major brand and differentiation initiative that is notable for a number of reasons:

• Emphasis on reputation, not brand
• Experience-based differentiation
• Attention to the internal audience

Reputation vs. Brand

Almost at once, Oliver noticed that bringing up the subject of branding at senior management meetings was sure to quell any passion in the room and cause the senior management team's eyes to glaze over. According to Oliver, "When you talk about brand to senior executives, they think brands are about consumer product. B2B executives are not interested, because they do big deals with big clients. But if you call it reputation, suddenly you have their attention. " Senior managers understand the value of a good reputation and especially how difficult it is to do business when you have a bad one.

According to Oliver, the difference between brand and reputation is subtle but important:

• Brand is communicated through a company's traditional marketing communications activities: identity, collateral, events, direct marketing, analysts and press relations, and so forth.
• Reputation, meanwhile, is established via services delivery and client and employee experiences.

By equating reputation to the successful closing of business, Oliver captured the CEO's and management team's attention. A good reputation speeds up the sales process. Services sales typically take longer than product purchases; therefore, anything a company can do to speed the sales cycle is going to be welcomed.

Experience-Based Differentiation

With the help of an agency that well understood the nuances of B2B services, Fujitsu Services reached out to its clients and prospects as well as its senior executives. The company asked CEOs, CIOs, and other executives throughout Europe for their opinions, and the executives were not shy. Through these conversations Fujitsu Services learned how the market perceived the company as well as the executives' honest views of the IT industry overall.

The research was critical to establishing components of Fujitsu Services' reputation model and ensuring its relevance to client priorities. The research revealed that clients perceive a history of IT solutions providers over-promising and under-delivering. They are very cynical. Nobody believes the advertising claims. At the same time, Fujitsu Services was viewed as largely pragmatic, honest, and delivering as promised. This begat the notion of "realism" that has since become the essence of the Fujitsu Services brand.

After multiple iterations of internal and external discussions, research, tuning, simplification, and testing, Fujitsu produced a list of five genuine differentiators, with realism at the core (Figure 1).

The differentiators have little to do with technology. Rather, they relate to the client experience—what makes the company different in the eyes of its customers.

Attention to the Internal Audience

For the rollout of its reputation management program, Fujitsu Services is placing a huge emphasis on internal audiences. The marketing and human resources organizations have collaborated to develop a long-term interactive program. Over the course of two years, every employee will have eight quarterly touches of the reputation program. This does not mean listening passively to eight presentations; rather, it involves eight interactive, participative small group sessions.

Although Fujitsu Services' objective is to get all employees to internalize the defining brand attributes, the company is not looking to "turn out clones." Oliver explains, "We hire good, bright people. Good, bright people have brains! They like to work things out for themselves ... What straight talking means to a guy who fixes ATMs is different from a consultant working with a CEO as part of a large business process outsourcing deal. "

In addition, the company has enlisted 120 employees to serve as reputation program champions. Having the right number of champions in each business unit has turned out to be a critical success factor. The champions know how their business units work, and they know how to tailor the engagement session materials for greatest impact.

Gauging Success

Thus far, the vast majority of Fujitsu Services' people are engaged in the program across Europe. However, success for a reputation program is not measured by how many employees can speak the "gospel," but by actual employee behavior and the "uptake" among clients and industry influencers.

Recent customer surveys show a consistent improvement in customer satisfaction. Further, customers are starting to describe the company as honest and straightforward. And although it is not yet uniformly consistent, the research shows that individual employees are changing their perceptions and behaviors. Perhaps one of the most telling signs is that the company is starting to attract people from its competitors—people who "18 months ago would never have considered working for us."

By embedding the principles of the reputation model in every aspect of the way the company does business, Fujitsu Services has gone well beyond "this year’s marketing campaign" to a program with staying power.

—Julie Schwartz, jschwartz@itsma.com

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Research Desk: Best Practices for Measuring the Value of Solutions

ITSMA recently conducted research on behalf of our Solutions Council on how clients measure solutions value and how solutions providers can help. Two important takeaways we uncovered are:

• Don't rely on the return on investment (ROI) of your solution to win business. Customers are skeptical of provider claims. They would rather build their own business case for a solution than take the ROI number a provider gives them. According to the customers we interviewed, the provider cannot possibly know the customer's company or business well enough to calculate what the ROI will be. Further, vendors usually don't take perceived risk into account when coming up with their ROI estimates, but this is a very important factor to the customer. What customers do want from providers are tools, models, benchmarks, and case-study examples that can help them build the ROI model for the solution, implemented in their environment.

• Build measurability into your solutions. Another customer pet peeve is that providers frequently treat value measurement as a sales and marketing activity and do not make it easy to pull the metrics/KPIs that are important to the customer out of the delivered solution. In the words of one respondent, "Our ERP solution criteria was to improve on-time shipments by 25%. But the system did not give me any metrics on shipping! I had to write a custom report to do this." Providers should take time to learn the client's business, work with the client up front to establish KPIs, metrics, and reports, and build measurability into the solution.

Both customers and providers agree that value measurement is a hot topic that's growing in importance. Providers that are able to adopt best practices will gain credibility with customers and get closer to that coveted "trusted advisor" role.

—Meghann (Grandy) Wooster, info@itsma.com

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Upcoming Events

101 Ways to Say No! Prioritising Marketing Activities
November 9 Marketing Roundtable (London)
http://www.itsma.com/events/event_desc/06RT11E32.htm

Profitable Portfolio Management
December 5 Inner Circle Meeting (London)
http://www.itsma.com/Events/event_desc/06RT12E33.htm

Making the Case for Marketing: Communicating with Senior Management
December 12 Web Briefing
http://www.itsma.com/Events/event_desc/06OB12G34.htm

ITSMA's 2007 State of the Profession Address
January 23 Web Briefing
http://www.itsma.com/Events/event_desc/07OB01G01.htm

Complete Events Calendar

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ITSMA specializes in helping companies market and sell services and solutions more effectively. As a membership organization, we provide research, consulting, and training to the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.