Dear members and colleagues,

I considered connecting the teamwork mantra of the Super Bowl champion New England Patriots to this month's E-ZINE, but as a long-suffering fan I'll just revel for a few minutes instead (sorry Rams fans). This month's issue digs deeply into two topics: getting closer to your clients and accelerating the sales cycle. Read on for some tactical priorities, ideas on pricing, and new tools that help evaluate and improve performance in these critical areas. Our "new idea" for the month suggests that corporate social responsibility, in the wake of September 11 and Enron, might become marketers' next great challenge. As always, let us know about your new ideas, questions, and suggestions.

—Rob Leavitt, editor and director of member advocacy

What's Hot: Zeroing In on Key Clients: Tactical Priorities for 2002

Two weeks ago ITSMA President and CEO Dave Munn wrote that 2002 is potentially a make-it-or-break-it year for many marketing organizations. At issue is the degree to which marketing organizations can regain momentum following the roller coaster of major gains in the late 1990s and widespread cuts last year.

Read Dave's top five strategic goals for 2002

On a tactical level, the key question is this: How can marketers best zero in on top priority clients, understand their needs, and communicate value in highly targeted ways? Discussions with ITSMA member companies over the last several months suggest at least four near-term answers. They are:

• Targeted research and tracking. Rapid changes and increased competition in market segments (e.g., security solutions) have put a greater premium on market and competitive intelligence. Focused research on specific areas is more useful here than broad market forecasts. At the same time, rigorous tracking of marketing campaign results is more important than ever in justifying expenditures and improving results. A more comprehensive approach to measuring brand progress as well as tracking leads, deals, revenue, and profits can help greatly in determining priorities for scarce marketing dollars.
  
• Refined value propositions. Most ITSMA members have responded to the downturn and September 11 by refocusing value propositions to address changing client needs. But clients remain skeptical of the true business value of many proposed services and solutions. Clients are demanding to see quantifiable and documented business benefits generated by specific offers. Detailed value propositions and credible ROI tools are particularly helpful for sales teams pushing to close more business.
  
• Enhanced sales support tools and processes. Marketers spent much of the last year trying to accelerate the sales cycle, but more can be done. At the modest end of the spectrum, tools such as ITSMA's Leveraging the Sales Channel and Sales Readiness Guide can provide quick guides to help evaluate the effectiveness of existing tools. More comprehensive approaches, such as that described in ITSMA's recent case study, EMC's Push to Sell Services, address such issues as simplifying the services portfolio and creating a more integrated marketing and sales system.
  
• Enhanced loyalty programs. Loyalty is a two-way street. You've got to give it to get it. Many firms demonstrated loyalty to their clients after September 11 with yeoman efforts to repair, support, and transform systems and programs. The challenge this year will be maintaining that level of extraordinary loyalty to clients even as they continue to limit spending and slow purchase decisions. Specific approaches that work well include relationship and loyalty report cards for key clients, "no commitment" problem-solving exercises, and thought leadership initiatives centered on specific client problems.
  

We may not be out of the woods yet, but this year already looks much better than 2001. Nevertheless, "making it" in 2002 will require a difficult balancing act: renewed emphasis on strategic goals with simultaneous investments in a set of tactical initiatives to maximize near-term results. As companies look for programs that can generate fast results, investing in any one of the four initiatives will help. Programs that integrate several or all of these initiatives will maximize momentum for the year ahead.

What new programs are you investing in right now? Write us at ITSMA with your near-term priorities.

—Rob Leavitt

For a deeper assessment of recent trends and emerging priorities, check out ITSMA's recent online briefing on Services Marketing 2002: State of the Profession.

Research Desk

Establishing Comparative Prices to Demonstrate Value

How do clients evaluate your price? How do they judge whether the price you have quoted is reasonable and fair? ITSMA research suggests that they begin with business value. Will the service or solution you are providing help them increase revenue, increase profits, reduce costs, or generate new opportunities? Your first priority here is articulating and quantifying (if possible) the business value.

But business value is not the only issue. Clients also compare the price to what it might cost them to do the work themselves. Hopefully, they include the total cost of ownership in this calculation, including all direct and indirect costs. If they do not, you can help them with this calculation. Finally, they compare your price to the prices of competitors. So you certainly have to be competitive, which means doing your research.

A useful concept in this evaluation is the reference price. A reference price is what the client considers to be a reasonable and fair price for the offer. This price is, of course, somewhat subjective, but that doesn't make it any less powerful in the client's mind. The reference price is usually based on both current market conditions and past experience. It may also be viewed as the perceived price for the best alternative to your service or solution. The best alternative might be an internal group, one of your competitors, or doing nothing at all—even if those alternatives would not provide the same value as your own efforts.

You can help your clients come up with their own reference prices. In so doing, the objectives are to make sure that price communicates value and to shift pricing discussions to assessments of the value being provided by alternative offers. Here are some specific suggestions:

• Provide options. Provide several alternatives from which your client can choose. A higher-priced option will raise the reference price by which the lower-priced options are compared. Adding a premium-priced option will not necessarily increase sales for that option, but it will make mid- and lower-priced options appear more attractive.
• Make a competitive comparison. Provide a direct comparison between your offer and that of a leading competitor. This works especially well for straightforward services and solutions that have very similar benefits, assuming that your offer has either the lower price or a clear value advantage. This technique is more difficult for complex solutions when comparisons are not always apples to apples. With more complex solutions, competitive comparisons should be accompanied by tangible demonstrations of the superior value of your offer. Have you demonstrated better results in similar situations? Are you easier to work with? Are you more responsive? Tell them and show them.
• Offer discounts, but only for volume and payment terms, not price sensitivity. Discounts can be a powerful means to managing reference prices, but in a solutions business they can quickly erode perceived value. If you must lower price, be sure to reduce scope. This technique is really a variant of the options approach described previously. Simply lowering prices is more likely to communicate poor quality or a lack of understanding of the resources required than to win new business. The only real discounts you should provide are those that reward clients for upfront payments, long-term or multiyear contracts, volume orders, and the like.

Recent ITSMA research has confirmed that IT services buyers are not necessarily looking for the lowest price, even in today's resource-constrained environment. But they are looking for a fair price. Properly addressed, the reference price issue can be a great help in communicating value and persuading prospects and clients that your prices are indeed reasonable and fair.

—Julie Schwartz, jschwartz@itsma.com

Turbocharging the Sales Process: Four Steps to Improving Services Sales Support (New Update)

For many product firms, services have been the silver lining in the dark 2001 cloud. Not surprisingly, the sales mantra for 2002 at many technology firms is about services and services-driven solutions. Simply demanding bigger sales quotas for services will not get companies from here to there, however. Increasing incentives will help, but the sales support challenge is far larger than that. Sales reps used to pushing product are too often ill equipped to make an about-face and sell services successfully. The keys to success often lie within the sales support activities (e.g., training, tools, and systems) developed and maintained by marketers and sales managers.

A new ITSMA Update outlines a four-step approach to increasing services sales effectiveness:

1. Educating the sales force about the unique challenges of selling services
2. Orienting marketing and sales around the top priority selection criteria for services buyers
3. Creating compelling value propositions for services and solutions
4. Providing value at every step of the selling relationship

The four-step approach is particularly useful for marketers and sales managers responsible for accelerating the services sales cycle and developing tools and processes to ensure sales force success.

Turbocharging the Sales Process is available free to ITSMA members and for sale to nonmembers. For more information, contact your company's delegates; visit http://www.itsma.com/Research/abstracts/u0036.htm.

CRM Services Brand Awareness and Positioning (New Report)

Customer Relationship Management (CRM) remained one of the relatively stronger technology markets throughout 2001. Not surprisingly, firms across the IT sector continue to bolster their CRM offerings, but the lucrative CRM services market remains wide open. IBM, Accenture, and Siebel Systems topped a recent ITSMA survey on unaided brand awareness for CRM services providers, but IBM, as leader, was mentioned by only 12 percent of Fortune 1000 buyers. Half the survey respondents couldn't even name a single buyer.

ITSMA's new report, Customer Relationship Management Services: Brand Awareness and Market Positioning Study, captures the state of the CRM services marketplace with a detailed review of brand awareness and positioning for leading CRM services providers. Along with unaided awareness data, the report includes market- and firm-level data and analysis on aided awareness of top providers, favorability ratings, buyer selection criteria, decision influencers, and advertising recall.

Customer Relationship Management Services: Understanding Brand Awareness and Positioning in the CRM Services Market was distributed recently to study sponsors. The report is now available for purchase at member and nonmember prices. For more information, visit http://www.itsma.com/Research/abstracts/bcr001.htm.

Services Marketing 2002: State of the Profession (Briefing Slides)

Services marketing took a major hit last year, and only now are many marketers beginning to focus on the turnaround. On January 24, ITSMA's Dave Munn, president and CEO, and Julie Schwartz, vice president of research, reviewed 2001 highlights (and lowlights) and looked ahead to 2002 in their annual State of the Profession online briefing. Briefing slides from their presentation highlight data and examples on such issues as marketing budgets, tactical responses to the downturn, client buying criteria in today's market, key marketing trends, and ITSMA's recommendations for 2002.

Online briefing slides are available free to all members of ITSMA, and are available for purchase by nonmembers. For more information visit http://www.itsma.com/research/abstracts/OLB012402.htm

Don't miss the next online briefing, Metric Systems That Work, on March 19!

[TOP OF PAGE]

Professional Development: Tammy Ribaudo, New SMPP Director

ITSMA is pleased to welcome Tammy Ribaudo as director of its Services Marketing Professional Program (SMPP). A services marketing veteran with leadership experience at firms including Arthur D. Little and CSC Consulting, Tammy is responsible for guiding and mentoring participants throughout their enrollment in the program and ensuring that the program delivers maximum value to each participating company.

"We're thrilled that Tammy has joined the ITSMA team," stated Steve Hurley, vice president of learning and performance excellence. "Her background and dedication to professional development will translate directly into greater value for SMPP participants and corporate sponsors. Companies beginning to re-invest in their people after the 2001 downturn should take a close look at what Tammy brings to an already valuable program."

About SMPP: Unique within the industry, the SMPP is a six-month individualized learning program designed to increase IT services marketing skills through "action learning" focused on immediate job and business needs. Drawing on ITSMA's extensive research and expertise, participants follow a Personal Development Plan created in consultation with a corporate sponsor (usually the participant's manager) and a designated ITSMA mentor. The program allows services marketing professionals at all levels to gain new skills without requiring extensive time away from their normal work responsibilities. Simultaneously, the program helps companies accelerate critical projects by incorporating priority marketing initiatives into the learning and coaching program.

Contact Tammy Ribaudo at +1-781-862-8500, ext. 54, or tribaudo@itsma.com.

For more information on SMPP, visit http://www.itsma.com/education/smpp_about.htm.

Upcoming Events

March 13-14: Creating Market-Focused Growth: Workshop with Dr. Lynn Phillips (San Francisco, CA)

Lynn Phillips is back with a perennial ITSMA favorite. Thriving in today's market depends not only on targeting the right customer segments but also on delivering a profitable value proposition to those segments better than any competitor. "Creating Market-Focused Growth" is designed to help marketers deal with many of their biggest challenges, including defining and delivering better value to current customers, attracting new customers with superior value offerings, and communicating value to customers more effectively and efficiently.

For more information or to register online, visit http://www.itsma.com/events/event_desc/e03140200.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

March 19: Metric Systems That Work: Digital Dashboards and Real-Time Reporting (Online Briefing, free to members)—Note Time Change: 11:00 EST

Does executive management really appreciate the value of marketing? Can you provide them with clear, compelling metrics that highlight marketing results? Join ITSMA's Steve Hurley to discuss new ways of packaging your marketing metrics for executive action. Steve will present a detailed strategy to align marketing with corporate priorities, measure the value of your marketing activities, and report to executives the data they need.

For more information or to register online, visit http://www.itsma.com/events/event_desc/E03190200.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

March 26-27: Selling the Sizzle: Building Influential Marketing Teams and Programs (ITSMA Europe Workshop, Beaconsfield, U.K.)

Marketing leaders in Europe are spending more and more time justifying marketing investments, measuring and demonstrating the value created for their businesses, and ensuring that marketing activities are well understood internally. "Selling the Sizzle," a new ITSMA Europe workshop, responds directly to these internal marketing challenges. The program provides marketing mangers and directors with an internal communications framework, a series of practical, high-impact techniques, such as a balanced scorecard for services marketing, and communication and influencing skills.

For more information or to register online, visit http://www.itsma.com/Events/event_desc/E03260200.htm or contact ITSMA Europe at +44 (0) 1494 616027 or info@itsma.com.

May 22-23: Marketing's Role in Accelerating the Turnaround: ITSMA's Chief Marketers' Conference (Chicago)

How are marketing executives strategizing for the next economy? What role can marketing play in accelerating the turnaround in your firm? What are your priorities for driving innovation and sustained growth as the economy begins to recover?

A unique forum for top marketers in IT, telecom, and professional services, ITSMA's second annual Chief Marketers' Conference will highlight new and successful approaches to accelerating growth and profitability. Designed exclusively for marketers at the director/vice president level and above, ITSMA's conference provides a rare opportunity for marketing executives to share ideas with their peers on the state of the market, new opportunities, and strategies for success in the new economic environment.

Confirmed speakers to date include:

• Michael Treacy (keynote address), co-author of the best selling book The Discipline of Market Leaders; co-founder and chief strategist, GEN3 Partners
• John Gantz, chief research officer and senior vice president, IDC
• Rusine Mitchell-Sinclair, general manager, Safety and Security, IBM Global Services
• Tom Murnane, partner, Global Marketing and Brand Management, PricewaterhouseCoopers Consulting

For more information or to register online, visit http://www.itsma.com/Events/event_desc/E05220200.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com.

Complete 2002 Events Calendar: http://www.itsma.com/aspfiles/Events/calendar.asp

Toolbox:

Each month ITSMA highlights a new idea, application, or other type of tool that marketers can use immediately to strengthen their programs and organizations.

Online Marketing Checklist

As companies rely more and more on online marketing tools to develop and maintain relationships with clients, creating an integrated online program becomes a top priority. ITSMA's Online Marketing Checklist helps marketers evaluate their own programs and match potential online tools to the appropriate stages of client relationships.

Visit http://www.itsma.com/research/toolkit_free/olm_checklist.htm to view and download the tool.

Marketing Performance Audit

ITSMA is now offering all corporate members a free Marketing Performance Audit. The audit provides member companies with a strategic review of marketing performance based on industry benchmarks in areas ranging from profitability to client satisfaction and loyalty. The audit helps identify performance gaps vis a vis industry leaders and explore areas for improvement with ITSMA experts.

Visit http://www.itsma.com/research/toolkit_free/mrkt_audit.htm for a description of the tool and a guide to the implementation process.

View more ITSMA Tools.

New Ideas: Leadership in the Networked Economy

Between September 11 and the Enron fiasco we've seen pretty much the best and worst of corporate America. But both events, curiously enough, contributed to the same powerful trend: heightened scrutiny of corporate social responsibility. And both will have an important impact on the future of marketing.

"Reputation is a huge driver" in the new environment, according to Anthony Williams, senior research analyst at Digital 4Sight, a Toronto-based think tank. The networked economy has put companies under intense scrutiny, with shareholders, clients, governments, advocacy groups, and employees watching every move. "No company can afford to be seen negatively," says Williams. Exposure of one false move—employee discrimination, environmental damage, suppliers using child labor, misstated earnings, etc.—can cause immediate and substantial damage.

The question for Digital 4Sight, which recently launched a major research project on "Leadership in the Networked Economy," is whether companies can turn the new transparency to their competitive advantage.

Marketers have already grappled with the challenges of shifting from the world of controlled information (I parcel out messages and data as I see fit) to one of instant communication (my customers, partners, and shareholders know as much about the company as I do). But the corollary poses a tougher challenge still: greater transparency creates higher standards for behavior. If you're going to talk the social responsibility talk, you've got to walk the walk.

If the folks at Digital 4Sight are right, the next big challenge for marketers may be how best to bring together the traditionally separate realms of doing good and doing well.

Hewlett-Packard (HP), long a leader in corporate philanthropy and community support, is one firm attempting to walk the new walk. Amid the controversies of its attempted merger with Compaq, HP is also investing in programs that connect social responsibility concerns with strategic and tactical business opportunities. Indeed, HP's vice president for corporate strategy and operations, Debra Dunn, is also the point person for "e-Inclusion and community engagement." HP is also lead sponsor for the Digital 4Sight project.

For example, as Clifford Bast, global manager for HP Environmental Strategies and Solutions, explains, "the e-Inclusion program is focused on providing access [in underdeveloped communities] to the power of the Internet to assist with basic needs like health care and clean water. But this will also help accelerate market development in the areas that have the greatest potential for growth."

Similarly, notes Bast, HP recently reinvented its environmental vision and strategy. Like many firms, HP had for years invested in reducing the environmental impact of corporate operations, partly to respond to public pressure and partly to save money. The new approach adds an external focus on helping customers reduce their own environmental impacts. "This will have a much bigger effect on the environment," according to Bast, while simultaneously creating important new market opportunities.

Can HP's marketers make the case, internally and externally, that more such initiatives will strengthen the brand and bring in more revenue? "There are a lot of great things happening in small groups," says Bast. "But they don't yet add up to a change in the overall message. If we can't scale them up they just look like traditional social or environmental projects. The real impact comes with getting our different businesses to work together and find the "sweet spot" where they can address business and social problems together, create partnerships, and support communities. This will bring out the real value for the corporate brand."

Corporate do-good initiatives were all the rage at the height of the dot-com boom, and many such efforts lasted about as long. For Digital 4Sight and HP, however, today's social and market pressures suggest that a more sophisticated and integrated approach to corporate social responsibility is fast becoming a prerequisite for success in the post-boom, post-September 11 world.

—Rob Leavitt

Is corporate social responsibility a luxury for good times or an essential ingredient for marketing success in the new environment?

For more information:

• http://www.digital4sight.com
• http://www.hp.com/engage

ITSMA in the News:

• eWeek: Services Firms Turn to Discounts
• Tech Republic: Advice to Services Firms: Don't Lower Prices (login to TechRepublic required)

View more ITSMA in the News

Do you have a services marketing question?
Visit Ask ITSMA to access our experience, insight, and research results.

(c) Copyright 2002, ITSMA

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About ITSMA
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.