Editor's Notebook: Bloggers, Spammers, and the Communications Crisis

The bloggers came to Boston this week. Their goal: to validate once and for all that Weblogs, or online diaries, are indeed a valuable communications tool for business. The first-ever ClickZ Weblog Business Strategies Conference represents yet another effort to figure out how business marketers, among others, can break through the overwhelming noise in everyone's lives these days. Are blogs really the new way to help us connect with customers, partners, colleagues, and everyone else who influences our chances for success?

The communications crisis d'jour, of course, is, email spam, which has mounted to almost unbelievable heights in the last few months. It's almost enough to make one nostalgic for the good old days of junk mail. If spamming is annoying us on the receiving end, however, what about the recipients of our own messages? How many of them are still paying attention?

In a way, the bloggers and spammers are pulling and pushing us in the same direction: more thoughtful, personal, and targeted communication with our professional significant others. The bloggers are reminding us that communications is about connections and conversations, and that the human touch matters most of all. And the spammers are forcing us not only to put up stronger defenses against unwanted messages but also to think through the quality and appropriateness of our own messaging activities. If the net result is to help us rebuild the connections and conversations we need to succeed, we may yet work our way through the current crisis.

I'd love to know what you think. Have you entered the blogosphere? Adopted other new tools to break through the noise? Is the spam crisis pushing you to rethink your own communications?

And while you're at it, please take a minute with our reader survey to let us know how we're doing: http://www.itsma.com/aspfiles/press/ezine_srvy0603.asp.

-Rob Leavitt, editor

What's Hot: Grappling with Relevance

It's bad enough that we've had to endure several years of economic malaise. Now we have to argue that IT is still even relevant?

Nicholas Carr caused quite a stir last month with his "IT Doesn't Matter" article in the prestigious Harvard Business Review. Carr's thesis, in a nutshell, is that the very power and ubiquity of information technology is rapidly eliminating the possibility for most companies to use it for strategic advantage. As with electricity, if everyone has it, it's much harder to gain an edge. Once that possibility goes away, the greatest risk for companies is not missing the next new thing but investing too aggressively and overspending on new technology.

Carr's "new rules for IT management" call for companies to spend less, be a follower rather than a leader, and focus more on reducing risk than gaining business advantage.

Certainly buyers appear to be following Carr's script. According to ITSMA's forthcoming report on how buyers view the IT professional services market, caution reigns supreme:

• Controlling costs remains the most important driver for IT investment
• A large majority of buyers are breaking new projects into small phases rather than purchasing the entire project all at once
• The ability to follow through on promises is the most important quality that buyers look for in a potential provider
• Buyers clearly prefer IT professional services providers to consider alternative approaches to problems without allegiance to predetermined technology partners

Much of this could simply be attributed to the sluggish economy itself. On the other hand, CIOs speaking at ITSMA's recent Chief Marketers' Conference suggested that Carr's argument deserves more careful consideration.

Armand Morin, for example, CIO at Private Healthcare Systems, the largest health care cost management company in the U.S., noted that recent moves to reevaluate spending are likely to be permanent: "We've moved from a soft approach [to valuing IT] to a hard, shorter-term, return-on-investment focus. We're working much more with finance. We're doing more just-in-time buying. Some holding back on spending is temporary, but these changes will stay."

James MacDonald, CIO at Fidelity Management and Research, which manages $650 billion of Fidelity's investment funds, echoes Morin's point: "There is a permanent change underway. We had our big build out with Y2K and e-commerce and now we're managed like a mature business function. There has to be ROI for all projects and a more rigorous justification for any spending. There is a big focus on utilization of existing technology. We're trying to simplify everything and drive down long-term support costs."

For Peg Nicholson, CIO of the golf equipment manufacturer Acushnet, the biggest change is that business managers are now more accountable for technology investments. According to Nicholson, this means a much great emphasis on the business rationale for any technology spending.

For marketers, this all adds up to ever greater requirements to understand customers’ individual needs, tailor solutions to meet those needs, and jump through all hoops necessary to demonstrate the business value of those solutions. As Armand Morin noted, “providers who try to fit us into their solutions don’t work.”

None of the CIOs would say that IT doesn’t matter. Ultimately, even Carr himself does not make that bold a claim. With IT supply likely to continue to outpace demand, however, and with hyper-competitive cost-cutting continuing to dominate most industries, the rules for IT marketing may indeed be undergoing a more substantial change than simply struggling through a downturn. IT still matters, but we’re going to have to prove it one customer at a time.

—Rob Leavitt

ITSMA's forthcoming report, Professional Services and Solutions: 2003 Market Positioning Study, includes detailed data and analysis on buyer perceptions based on a survey of 400 decision makers from nine vertical markets. The report covers unaided and aided awareness of professional services providers, familiarity and favorability, relative market positioning, preferred company attributes, and buyers' goals and priorities. The report will be available for sale at member and nonmember prices on June 30, 2003. Visit http://www.itsma.com/research/abstracts/bps0004.htm.

Features

EDS “Context Marketing” Puts Business Issues Front and Center

The gap between rhetoric and reality is often pretty wide for services marketing organizations. We all know we’re supposed to lead with business issues, and we talk about it all the time. But the common reality is that marketing campaigns, collateral, and sales tools focus on features and benefits with little attention to the business situation of the prospective customers. And salespeople continue to have trouble engaging in the strategic discussions that business executive buyers need to conduct.

Putting business issues first is easier said than done, of course, especially when you’re marketing to multiple industries, geographies, and types of buyers.

In 2002, EDS responded to the challenge by rolling out a series of strategic and programmatic initiatives based on the concept of “context marketing.” The idea was to organize all marketing initiatives around the business issue and industry environment on which its clients and prospects were focused. Under the new approach, marketing campaigns, materials, and tools would describe how EDS’s capabilities solve business issues within a client’s specific industry and geography.

Step one, not surprisingly, was to figure out the key business issues. Recognizing the importance of focusing on top business executives as the ultimate buyers, EDS undertook extensive research to answer the basic question: What is keeping the CXO up at night? The research identified eight fundamental CXO concerns around which to organize new marketing messages and communications programs.

Step two was to create a business issues communications framework that would give support to individual marketing initiatives. The framework provides a common structure to ensure that all marketing materials and programs follow the same approach: business issue, industry context, target audience, EDS solution. The approach ensures that marketing and sales speak to potential clients in the most effective possible way. Programmatically, the framework covers all aspects of marketing communications, including advertising, direct mail, events, Web, media relations, and sales support.

Step three was rolling out the program to the field worldwide to create buy-in and compliance. The rollout included a global presentation and a microsite on the company intranet to facilitate internal communication. The microsite includes communications activity calendars, business issue guides, presentations, white papers, model sales and marketing letters, quarterly newsletters, and measurement documents.

To enhance buy-in from the field, the program also carefully identified corporate versus regional marketing responsibilities and included the development of regional and local business issue marketing plans. In addition, the program included corporate-level development of templates of model marketing programs, business issue toolkits, revised collateral and Web content, and numerous case studies and success stories.

The new context marketing has generated impressive results to date. EDS salespeople report that the business issue context is indeed helping them initiate a more strategic level of dialogue with their prospects. This, in turn, has already translated into new leads, qualified opportunities, new contracts, and a substantial return on marketing investment.

As one EDS marketer explained, “Our clients aren’t buying a good or service. They are buying value they can count on to build their businesses. They are buying an experience. Our job as marketers is to create the environment where sales can help the client locate that experience.”

—Naomi Steinberg, nsteinberg@itsma.com

This article is based on ITSMA’s new Case Study, EDS: Transforming Global Marketing Communications. The full report is available without charge to ITSMA members and for sale to others. Details: http://www.itsma.com/research/abstracts/cs0006.htm.

Digging into Defeat: Four Keys to Learning from Strategic Losses

Nobody likes to lose business, especially when it was a major deal and you were on the short list. Not many people like to dwell on the defeats, either. It's depressing, and you've got to focus on the next deal anyway.

Nevertheless, we all recognize the importance of learning from our losses. The question is how best to dig into defeat.

Win/loss analysis programs typically incorporate interviews, phone or Web surveys, trend analysis, and some sort of scorecard. Companies often use outside resources to enhance customer openness and program objectivity. Program goals often include tracking win rates, uncovering competitive advantages and disadvantages, and improving marketing and sales effectiveness.

But does your program go deep enough? Are you really learning enough about why winners win and losers lose, especially for the most strategic deals for which your firm was a final candidate?

When it comes to the really big opportunities, according to Hugh Macdonald, founder of the sales consultancy SalesScope, Inc., it is critical to take a comprehensive approach to understanding the critical decision factors. Quick interviews or surveys are too superficial to uncover the kinds of learning required to make an impact on the next major deal and on win rates more generally.

Macdonald, a 23-year technology sales veteran who has conducted in-depth reviews of more than $2 billion worth of buyer decisions on technology-related solutions since 1999, highlights four keys to analyzing losses for major deals:

1) Invest the resources. Losing a multi-million-dollar deal should trigger a significant review, according to Macdonald. "You want to understand all aspects of how the pursuit was conducted, how the decision was made, why the loser lost, and why the winner won. There should be multiple lessons learned and recommendations for competitive intelligence, client process and values, and the selling process itself."

2) Triangulate the information. Macdonald typically interviews up to six people each on the buying and selling sides to make sure he gets as many insights and perspectives as possible. Interviewees on the buy side may include project sponsors and leaders, financial managers, and other key decision influencers—which may include outside consultants used by the buyer to evaluate the finalists. Interviewees on the selling side should include key representatives from the pursuit team and other proposal supporters, such as relationship managers, solution architects, and sales leaders.

3) Forget about magic bullets. In most cases, Macdonald notes, buyers believe that any of the finalists can do the job effectively. "You won't often find any blatant disconnect between the solution you are able to deliver and the client’s stated objectives. You will see definite lessons for improving intelligence gathering, the sales process, and understanding the buying process, but there usually is no magic bullet." Instead, decisions tend to focus on more subtle issues of trust and confidence and how differentiation is established. Winners are generally those firms that can demonstrate some unique attributes that inspire greater confidence in success and less risk of failure than their competitors.

4) Institutionalize the lessons learned. Surprisingly, says Macdonald, few of even the largest technology and professional services firms have created a robust system to institutionalize the learning from in-depth win/loss analysis. Many companies track the basics, as noted earlier, but far fewer invest in processes or knowledge repositories to capture and disseminate the deeper lessons learned. "Companies need to assign someone the responsibility of better leveraging this potential tool and making it part of the sales discipline. You have to make sure it's done in a consistent way and the information gets out into the field. And you can't just throw data out there; you need a process where people really learn."

Managed properly, in-depth analyses of strategic losses can have a dramatic impact on win rates for major deals. Digging deeply into defeats can provide critical insight into how buyers really buy, how winners really win, and how key competitors differentiate themselves on the crucial matters of trust and confidence.

—Rob Leavitt

Cracking the Segmentation Code: Services Marketers Rethink Segmentation Strategies

Services marketers agree that good segmentation schemes are critical to success, but they rate their own programs as only moderately effective, according to a new ITSMA member survey. Nearly 90% of survey respondents rated segmentation as important or very important to their marketing strategies. Yet less than half rated their own companies' approaches as effective or very effective.

Part of the problem is that not all IT services organizations are taking a very formal approach to segmentation. Only 20% in the ITSMA survey have a formal budget for developing market segmentation strategies. Lack of management buy-in, limited resources, decentralized responsibilities, and the very complexity of services businesses all exacerbate the problem. As a result, many services organizations rely on fairly rudimentary segmentation schemes, such as industry, company size, and geography, which may not reflect unique buying groups in terms of needs and behavior.

Nevertheless, many services marketers are taking the issue seriously and working to develop more sophisticated approaches. NCR, for example, has taken a relationship-based approach to target key accounts for its multivendor services offers. Following an overall corporate strategy to build deeper relationships with existing customers in certain vertical industries, the multivendor services marketing team created an algorithm to score the strength of existing relationships with thousands of customers to predict future purchase behavior. The approach identified 250 high-potential clients. Rather than continuing to commit "random acts of selling," as had been the case, marketing and sales now concentrate their resources on these 250 target accounts.

Dimension Data has similarly taken a hard look at existing customers and identified multiple tiers of customers in terms of revenue and profits. Through extensive research, the company now understands which customers are most profitable by industry vertical, company size, technology usage, and business needs. The research laid the groundwork for a new strategic account management program that has moved the company from a classic supply-side segmentation approach (based on existing offers) to a much more effective demand-side approach.

Recent initiatives at Sprint demonstrate the importance of getting the whole company, not just marketing and/or sales, behind segmentation strategies. Like many technology companies, Sprint has invested substantial resources over the last few years in developing a solutions business. Making this work requires shifting from a product-centric to a customer-centric orientation, and Sprint has created three new groups that work together to develop solutions for target market segments:

• Segment marketing, with dedicated experts and resources to understand customer requirements in each target segment
• Product/services managers to manage the life cycle of the products and services that comprise new solutions
• Development to create solutions for each segment while maintaining a cross-functional perspective to look for leverage across different verticals

Finally, IBM Global Services has implemented a truly needs-based segmentation approach. Two years ago, faced with a multitude of different segmentation schemes, none of which reflected the benefits sought by customers, IBM launched an extensive market research program to support a new approach. Through the research, IBM identified six distinct customer groups based on the ways customers buy technology and solutions and the perceived criticality of technology. Sophisticated statistical techniques confirmed that these different groups responded differently to offerings and value propositions. IBM was then able to create sales tools that help sales people categorize prospects and steer conversations in the most constructive directions.

Not every company will be able to go as far as IBM in creating a needs-based segmentation approach. But the examples here suggest that many services marketers are moving beyond the standard demographic breakdowns that are of only limited value in today's market.

—Julie Schwartz, jschwartz@itsma.com

This article is adapted from ITSMA's recent briefing, Best Practices in IT Services Segmentation. The complete briefing, which includes findings from ITSMA's member survey on segmentation, is available without charge to ITSMA members and for sale to others. Details: http://www.itsma.com/research/abstracts/olb052003.htm.

Research Desk

IT Spending Plans Continue to Slide (Tech Poll)

CIO Magazine's Tech Poll provides a monthly assessment of technology buying trends from a broad cross-section of chief information officers (CIOs), mostly from North America. The latest survey, conducted May 8-15, 2003, shows a continuing slide in plans for IT spending for the next 12 months compared with projections made earlier this year.

Key findings:

• CIOs plan to increase overall IT spending 3.3% over the next 12 months, down from a 4.2% projection in April. This is the lowest growth projection since February 2002.
• About 21% of respondents plan to cut IT budgets in the coming year whereas 22% say they will remain flat. Some 29% plan for modest increases (under 10%). Close to 30%, however, plan on double-digit increases in IT spending over the next 12 months; this holds for companies of all sizes.
• Security, storage, and hardware remain the top categories for spending increases, with 40-50% of respondents planning increases in these categories in the next 12 months.
• Asked specifically about spending on customer relationship management (CRM), about 35% of respondents are beginning or in implementation now; 14% have already completed an implementation. About 19% have projects on hold, and almost 30% have no CRM plans at all.

May Tech Poll figures are based on 268 survey responses, with 93% from North America. CIOs made up 86% of the total respondents. 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://www2.cio.com/techpoll/index.cfm.

Understanding the Service Provider Market: New Study Will Evaluate Market Positioning for Telecom Services

Services and consulting are critical to the growth prospects of companies selling into the slowly recovering telecom service provider market. Crafting effective marketing campaigns for these offerings, however, requires detailed knowledge of buyer needs, concerns, and purchase criteria, as well as an understanding of how buyers evaluate the key vendors in the market.

ITSMA's third annual multiclient study, Telecom Services—Service Provider Market: 2003 Market Positioning Study, will provide a limited number of study sponsors with a unique opportunity to obtain actionable data and expert recommendations on how best to sell into this market. Participation will help study sponsors test and validate internal assumptions, improve marketing strategies and tactics, and create more effective brand differentiation.

To learn more about the benefits of study sponsorship, visit http://www.itsma.com/Research/prospectus/mk0399_bnwsp03.htm or contact Matt Leary at +1-401-635-2148 or mleary@itsma.com.

Other upcoming market positioning studies:

• Managed Services: http://www.itsma.com/Research/prospectus/mk0374_ms03.htm
• Storage Solutions: http://www.itsma.com/research/prospectus/mk0367_strg03.htm

EuroNotes: Research on Thought Leadership Suggests Marketing Priorities Mismatch

New ITSMA research in the British financial services sector highlights an important gap between marketing priorities and the buying process. According to a survey of senior decision makers, the types of thought leadership activities with the most influence in the selection process are not widely used by IT services providers. Specifically, the two activities buyers identified as the having the most impact, personal briefings and company audits, are the activities least used by providers among a large list of thought leadership initiatives.

Conversely, the most common thought leadership activities, research publications and email promotions of Web-based information, seem to be the least effective in influencing purchase decisions.

In a time when decision makers are bombarded with one-to-many marketing campaigns, a more personalised approach appears to be most effective. This seems especially the case for business executives. For example, business leaders are less likely than chief information officers and other IT leaders to attend seminars and conferences, which are prime vehicles for promoting thought leadership.

The research suggests that a shift in priorities for thought leadership activities could yield significant results. Rather than focus mostly on broadcast initiatives such as white papers and public relations, a more effective strategy would combine research, publications, and PR with a real investment in one-to-one outreach to clients and prospects with tailored audits, personal briefings, and other individual meetings.

The ITSMA survey, conducted in partnership with London-based Tiger Lily, an analyst relations consultancy, included telephone interviews with senior decision makers from 31 financial services organisations in the United Kingdom including small, medium-sized, and large companies. ITSMA designed the research to explore the role and impact of thought leadership in the buying process as business executives become increasingly important influencers and decision makers along with their IT counterparts.

—Bev Burgess, info@itsma.com

This EuroNotes is adapted from ITSMA Europe's recent briefing, Effective Thought Leadership: Engaging Senior Decision Makers. The complete briefing is available without charge to ITSMA Europe members and for sale to others. Details: http://www.itsma.com/research/abstracts/OLBEU060303.htm.

ITSMA will explore the role and impact of thought leadership marketing at its Annual European Forum: Winning in a Solutions World, 18-19 June. Details and online registration: http://www.itsma.com/Events/event_desc/03AF06E05.htm.

More EuroNotes

Marketing Toolbox: Sales Support Assessment Guide

Complex services and solutions don’t exactly sell themselves. The sales process is long, and sales representatives generally rely on an array of sales tools to move prospective clients through the typical stages of a relationship (Figure 1). Yet sales representatives often don’t have or don’t know how to access the right tools to help them move prospects along. The result can be slower sales cycles, more tension between marketing and sales, and lost deals.

ITSMA's Sales Support Assessment Guide can help both marketing and sales create a more effective and usable set of tools to employ throughout the sales process. The guide provides a simple way to map all available sales support tools to each of the different relationship stages.

Developing your own guide will help you identify critical gaps and new tools you can create that will have the most impact on sales. Once the guide is developed, you can use it as the foundation for a sales support directory (e.g., a portal on the corporate intranet) that will help sales representatives quickly find the most useful tools for their immediate situations.

Download the Tool: http://www.itsma.com/research/current_tool.htm.

More Marketing Tools (membership online access required)

Upcoming Events

Winning in a Solutions World: Marketing, Selling, and Delivering Value
Annual European Forum—June 18-19, London, UK
http://www.itsma.com/Events/event_desc/03AF06E05.htm

ITSMA Europe's Annual Forum will explore how to win in a solutions world by marketing, selling, and delivering client value. With presentations from leading practitioners and academics plus working sessions and networking opportunities, the forum is a must for marketers looking for practical techniques and new concepts to improve their return on marketing investment.

Accelerating Services Growth
Client-Centric Marketing Course—June 25-27, Boston
http://www.itsma.com/Events/event_desc/03ME06N09.htm

ITSMA's signature MBA-level course provides an intensive, hands-on learning experience focused on the core client-relationship issues that services marketers need to master in order to succeed. The course is led by Steve Hurley, ITSMA's vice president of learning, and Philip Dover, faculty director for Babson College's School of Executive Education.

Solutions Selling: Developing Systems, Skills, and Tools to Sell Value-Driven Solutions
Membership Online Briefing—July 15 (no charge for members)
http://www.itsma.com/events/event_desc/03OB07N11.htm

Shifting sales to a solutions orientation typically involves a rash of changes in everything from compensation and coverage to training and tools. But if the sales force isn't ready, the best solutions in the world will just sit on the shelf. Join Steve Hurley for a review of the key changes that marketing and sales both must make to create an effective engine for selling solutions.

Differentiation Strategies for Marketing and Selling Technology Solutions
Membership Breakfast Briefing—July 31, Silicon Valley (no charge for members)
http://www.itsma.com/Events/event_desc/03BB06N10.htm

After years of upheaval, technology marketers are making real progress in defining successful strategies for a slow-growth economy. The key is articulating a clear and different value proposition and carrying that through the entire marketing and sales cycle. Join Dave Munn and Steve Hurley to discuss ITSMA's latest research on what's working best in today's market.

Complete 2003 Events Calendar
http://www.itsma.com/aspfiles/Events/calendar.asp

Event Sponsorship Opportunities
http://www.itsma.com/Events/other_desc/sponsorprg.htm

Ask 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.