Editor's Notebook: Accenture Masters the Sponsorship Game

Being a long-suffering Boston Red Sox fan, it's difficult to think about golf (or services marketing, for that matter) amid the Red Sox-New York Yankees baseball playoff series. But I am intrigued at Accenture's new sponsorship deal with Tiger Woods.

The three-year deal puts the world's top golfer in the middle of Accenture's new ad campaign based on the theme line: "Go on. Be a Tiger." Befitting one of the industry's top brand builders, the agreement is surrounded by a well-designed global marketing campaign which includes print and broadcast ads in 27 countries, airport displays, Web initiatives, direct marketing, conferences, and thought leadership events. The campaign also launches a new corporate tag line, "High Performance Delivered."

It's a typically impressive marketing performance by Accenture, and certainly a coup in landing Tiger Woods' first partnership with a business-to-business firm. It's also a significant step beyond the industry's more common event sponsorships into the world of celebrity representation. Accenture is not first in this; BearingPoint has had great success working with golfer Phil Mickelson, and CSC got good mileage this summer with its sponsorship of Team CSC in the Tour de France. One wonders, in fact, if Accenture will be able to leverage Woods directly in client settings as BearingPoint has done so well with Mickelson.

The larger question, though, has to do with the relative value of celebrity advertising. Certainly Accenture is taking a sophisticated integrated marketing approach and not simply throwing money at TV. And quite likely the well-executed campaign will get the attention Accenture wants. It's also hard to imagine Woods embarrassing the company in some way (as other celebrity endorsers have done), so the risk seems minimal. Given the prove-it-to-me attitude of most buyers these days, I wonder how effective even the best star-based advertising can be. And I really wonder how the next firm will try to trump Tiger!

—Rob Leavitt

What's Hot: Power Shift: Marketing in the Customer-Driven Future

For most of us, selling into a buyer's market means dealing with customers that negotiate tougher, play vendors against each other, and often get just about anything they demand. For David Moschella, these daily realities mask a more profound shift in market power.

Moschella, a veteran consultant, Computerworld columnist, and author of Customer-Driven IT: How Users Are Shaping Technology Growth, suggests that a fundamental change has taken place over the last decade and that marketers ignore it at their peril. For the first time in the history of the industry, he says, customers are firmly in the driver's seat with regard to growth: "The IT business had always been driven by the product side of the house. When the Internet really developed, though, it was the first time that technology users were directly creating value for other users." Firms like Amazon.com, eBay, and E*TRADE began to create substantial value from IT for consumers and ultimately played a greater role in driving people onto the Internet, and thus promoting IT sales, than the IT suppliers themselves.

The power shift didn't matter much during the Internet bubble because the whole IT industry was booming. Now, according to Moschella, customers must take leadership in developing additional value from IT if the industry itself is to return to solid growth.

It is a provocative argument, and Moschella is careful not to take it too far. For one thing, he readily points to larger economic and political factors that weigh heavily on the industry's prospects, such as the situation in Iraq and with global terrorism. For another, he continues emphasize the importance of continued innovation within the industry.

In vertical market after vertical market, though, Moschella points to questions that dominate the demand side of the equation and asserts that IT firms have little sway over the answers. "The most obvious example is the music industry," he says, where the leading companies have resisted, rather than embraced, new technologies such as peer-to-peer sharing that could bolster IT growth in that sector. "But it's the same in health care, in government, and many other industries. There is enormous potential business, but it is mostly out of the traditional IT industry's control."

Consider the case of radio frequency identification technology (RFID), which could revolutionize supply chain management via wireless tracking of virtually any item. Industry pundits have been pushing the technology for years. Only now, with mega-retailer Wal-Mart pushing its top suppliers to use it, is there a chance RFID will gain serious momentum. "This technology is incredibly important," says Moschella, "but it needs standards and critical mass in the retail industry. The big driver is Wal-Mart getting all its suppliers to use it."

For an industry still largely focused on product innovation, the power shift is jarring. Yet marketers, especially services marketers, are far from helpless. As the critical link between customers and IT firms, marketers can influence the degree to which customers themselves exert greater leadership in technology innovation and investment.

If Moschella is right, at least four types of strategic marketing initiatives will prove essential to boosting customer leadership:

• Industry transformation. Many IT marketing organizations already emphasize vertical marketing. Beyond expanding vertical expertise and focus, Moschella argues that IT leaders need to envision the IT-based transformation of specific industries and tap into leading-edge industry discussions. "It's thought leadership with real substance. Customers are open to it; marketers should be supporting the emerging industry standards and being a visible part of the larger process of change."
  
• Public and customer confidence. Marketers should tackle more aggressively the diminished reputation of the industry as a whole, working to build rebuild trust in the integrity of business practices and of technology performance. "So much of the IT business is now in the mind of the customer," says Moschella. "The big issue is the confidence of customers and their ability to get excited about IT."
• Globalization. Although the United States remains the largest IT market as well as supplier, the shift to customer leadership suggests that more direction for the future of the industry may come from outside the United States. This has already been the case in areas such as wireless systems and online banking. For U.S.-based companies, this may mean putting even more emphasis on global marketing and relationship building.
• Services leadership. Finally, the shift to customer leadership puts IT services organizations that much more in the center of the industry. As customers take the lead in developing new standards for their industries, it will be up to the services organizations to facilitate the integration of appropriate technologies and processes.

In the end, Moschella remains optimistic about the industry's prospects. "Every generation of technology has enjoyed a long period of expansion, and for the Internet that period still lies ahead," he says. For the first time, however, the pace of change and growth will depend much more on IT users than suppliers

—Rob Leavitt

What do you think? Is Moschella on to something important? Are services marketers ready for the customer-driven future? How is your organization addressing the major customer challenges in key vertical markets?

Features

Increasing revenue in support services has gotten much tougher over the last few years with customers relying more on internal staff, independent contractors, and offshore providers to reduce expenses. To help E-ZINE readers think about steps to grow support services, ITSMA asked Rainmaker Systems and Encover, firms specializing in different aspects of the problem, to contribute the following two articles. Both firms are also sponsors of MarketingServices/2003 so conference attendees can dig into the issues more deeply with them in Berkeley later this month.

Seven Steps to Growth in Support Services

Reversing the erosion of support services revenue that has affected so many companies in recent years requires a systematic program to better retain and serve customers over time.

The obstacles to such a program are many: scarce resources, weak data, scattered marketing activities, minimal internal support, and/or inadequate technology to manage the process. With few signs of a substantial revival on the product side, however, such a program cannot begin too soon.

On the road to higher services revenue, seven guideposts mark the way:

1. Data analysis. Customer data is often fragmented, so data consolidation is the first step. Once you have a unified view of your customers, the next step is to segment the data, looking especially at contract expiration dates, average order sizes, and type of contact information available. At that point, you can begin to identify your most important opportunities and develop a contact strategy.
2. Offer definition. With a clearer understanding of customers and opportunities, you can define or redefine more compelling offers. Be sure to keep them easy to understand, easy to buy, and easy to fulfill. Customers want some choices; you will sell more two-year contracts if you also offer a three-year option. But avoid complicated offers with long lists of rules governing customer eligibility.
3. Communication. The lack of consistent communication with customers is an all-too-common roadblock. Regular, early, and time-sensitive communication using a variety of media is essential to increasing support services revenue. Don't wait until 30 days before contracts expire! Begin right after purchase and/or service incidents, and always create personalized content.
4. Proactive follow-up. Expertise creates results. Your outbound communication makes a promise; your inside sales reps need to reinforce it by being highly responsive to customer inquiries and identifying opportunities to increase customer value, such as adding premium services, co-terminating separate service agreements, or adding uncovered equipment to existing contracts.
5. Online contracts. Customers love the convenience of accessing contract information whenever they want it. Online access to contract information, options, and renewals moves closer to frictionless sales and increases customer satisfaction while freeing up sales resources to focus on higher-level activities.
6. Payment and entitlement. Expediting payment processing minimizes a common barrier to satisfaction and renewal. Similarly, linking sales order data to entitlement systems quickly and accurately is critical. Nothing upsets a customer more than being told they are not entitled to a service they just purchased.
7. Track and refine. Systematic tracking of all performance provides the essential data for program improvement. Capturing and analyzing data for renewals, non-renewals, and competitive migration is critical, as is ongoing review of the impact of different messaging and media on different customer segments.

Putting all these initiatives in place is no simple task. Implementing the type of program outlined here requires careful planning and expert resources every step of the way. Yet the revenue gains can be substantial and the alternative of a quick-fix marketing or sales effort is quite unlikely to generate the necessary results.

—Michael Silton, michael.silton@rmkr.com

Michael Silton is CEO of Rainmaker Systems, a leading outsource provider of sales and marketing programs for service contracts.

Breaking the Code: Maximizing Services Sales Through the Channel

Industry analysts suggest that 50% or more of the potential revenue from service contracts is left on the table through inefficient processes. A key reason is that the resellers' cost of sales for such contracts discourages them from pursuing any but the largest contracts. The manufacturer is left with a tough choice: forego the services revenue which typically brings their highest margins or utilize precious internal resources to boost services sales directly.

Cisco Systems successfully confronted this channel growth paradox head-on in the late 1990s. Determined to help its partners sell service contracts more effectively, Cisco built an online Service Contract Center to streamline the process and capture more services revenue for everyone. Contract revenue increased 60% within the first two years.

Companies looking to solve this challenge today must address three core issues with process and technology:

• Managing the installed base. After the initial hardware sales, the sheer number of moves, adds, and changes, and the associated lack of accurate data, inhibit manufacturers and resellers from pursuing renewals effectively. Resellers, typically focused on new deals, are rarely incented to maintain or share updated information on the installed base. Yet manufacturers need updated information to market new services offerings and drive contract renewals through the channel.
• Clarifying the range of service offerings. "Complete" service configurations are typically the most cumbersome for resellers to market and sell. Configuring possible permutations—the number of products multiplied by service level, duration, and location—quickly becomes a daunting task. It is also extremely difficult to deliver marketing tools that can help resellers (never mind customers) make sense of the complexity.
• Managing contract renewal processes. Resellers cycle endlessly via phone, fax, and e-mail to sort out customer assets, pricing rules, and availability. The most complex tasks are still done manually: contract co-termination, pro-ration of pricing, and approvals for special terms and conditions.

By addressing your resellers' marketing and sales needs, you create a win/win scenario:

• Improve visibility. Increase your own visibility into the installed base by providing the ability and incentives to engage resellers and customers in managing installed base information. Offer a simplified, self-service system that makes it easy for both groups to participate. The result is enhanced customer service, improved reseller competitiveness, and increased revenue and profits for the manufacturers and their channel partners.
• Simplify service offerings and delivery. Elaborate service offerings may seem attractive from a marketing perspective but can quickly reduce business if your salespeople and channel partners can't internalize and sell them. Make it easy for resellers to quote service. Give them the ability to do "what if" analysis across their installed products. Streamline and automate the quoting process to eliminate multiple iterations.
• Automate the most complex processes. Manufacturers have already automated their internal processes; it's time to automate collaborative processes as well. By automating the most complex parts of the service management process (e.g. renewal notification, quote revision, and special approvals), you can lower the cost of sales, help resellers engage customers more effectively, and increase the volume of service contracts renewed. Becoming "easy to do business with" reinforces brand strength with both resellers and customers.

Overcoming the channel growth paradox for services contracts requires thinking from the outside in. Discover the critical pain points for your resellers, and proactively provide solutions. With the right focus, services contract revenue can be a powerful way to capture and retain your resellers' attention and drive substantial, sustainable, and profitable growth for your entire business ecosystem.

—Michael Minard, mminard@encover.com

Michael Minard, an authority on marketing products and services to and through the channel, is vice president of corporate development at Encover, Inc., a provider of software and services that help manufacturers collaborate with their channel partners to maximize revenue from service contracts.

ITSMA E-ZINE readers can order a free copy of Encover's Reseller Snapshot which captures reseller trends and attitudes. Send your name, company name, and title to: info@encover.com and include "ITSMA" in the subject line.

Research Desk:

Winning New Business: Three Keys to a Credible Pitch

Last month I wrote about buyers being more willing to jettison existing vendors and do business with new IT providers (see "New Opportunities? Customers Show Less Loyalty to Existing Vendors," in the September 2003 ITSMA E-ZINE). But buyers are not just looking for a lower-cost provider, according to recent ITSMA research across multiple vertical industries. Price is important and is often a driver for considering a switch, but the most important issue in actually making a change is vendor credibility.

IT firms can demonstrate credibility in three major ways, according to our research:

• Demonstrating an understanding of the customers' business
• Building the business case
• Providing references and proven results

Demonstrating business understanding is tricky. Buyers have little tolerance if you walk in with a preset solution before discussing the problem, but neither do they want you to come in with a blank sheet of paper and ask them about their challenges. They want you to do your homework and know something about them. One CIO recently told me that it doesn't even matter if a sales person is wrong—the fact that he or she made the effort is what is important.

Building the business case is also a bit of a balancing act. Customers don’t want you to come in with a full-scale ROI presentation. Their situation never falls into a one-size-fits-all category, so they won't trust your numbers. Unless they hire you first specifically to do this, you cannot know enough to build their internal justification for them. Instead, customers are looking for help with appropriate models, frameworks, and benchmarks. They want to make sure they have accounted for all the benefits and costs. Using your experience with other customers, you can help them achieve their goals.

Finally, providing references and a proven track record is absolutely essential. Never underestimate the power of word of mouth in a services business. Another CIO told me he would hire a solutions firm without even interviewing them if he had a recommendation from a respected colleague.

You can’t just sit back and wait for the good word to spread, however. You have to proactively manage your references. Assuming you do a good job, most customers are willing to serve as references, and most customers will consider vendor-provided references as credible—especially if they are given a good-sized list to choose from.

Winning new business is never easy. Focusing your pitches around the three keys to credibility, however, can greatly increase your chances.

—Julie Schwartz, jschwartz@itsma.com

Learn more about ITSMA's recent customer research in What Do Customers Want? Buying Priorities for IT Services and Solutions. This ITSMA briefing is available without charge to ITSMA members and for sale to all others. Details at http://www.itsma.com/research/abstracts/olb092303.htm.

Large Enterprise CIOs Are Getting More Optimistic on IT Spending (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 September 11-18, 2003, suggests that CIOs continue to expect decent spending increases in the year ahead, with CIOs from large enterprises being especially optimistic.

Key findings:

• CIOs plan to increase technology spending 5.9% over the next 12 months, down a bit from their August projection but otherwise above all projections since March 2003.
• CIOs from very large companies (5,000+ employees) projected 12-month spending increases of 8.6%, way up from only 2.5% in August. This group outperformed the overall average for only the second time in the last four years.
• Most CIOs expect spending on consulting to either increase (34%) or stay about the same (46%), with only 17% projecting decreased spending on consultants.
• Spending projections for seven of the eight specific IT categories measured in the survey showed increases from the August survey, with security and computer hardware leading the way; only the storage category showed a slight decline in projected spending.
• Projected spending on infrastructure software reported its largest ever monthly increase, with CIOs from financial services, federal government, health care, and telecommunications reporting particularly strong spending plans.

September Tech Poll figures are based on 251 survey responses, with 93% from North America. CIOs made up 91% of the total respondents. Large firms with more than 5,000 employees represent 16% of the results. The respondents represent a wide range of industries, including technology services, manufacturing, finance, state and local government, health care, and wholesale and retail distribution.

For complete survey results, visit http://www.cio.com/techpoll.

ITSMA Brand Tracking: Competitive Positioning in Key Services Markets

ITSMA's brand tracking research provides critical market data and recommendations at extremely reasonable rates. Multiclient studies enable participating companies to analyze customer awareness of top providers, knowledge and preference of various firms, competitive positioning, desired attributes, and much more. Read the prospectuses for details on the following upcoming studies:

• 2003 Managed Services—Europe
  http://www.itsma.com/research/prospectus/mk0398_eums03.htm
• 2003 Storage Solutions
  http://www.itsma.com/research/prospectus/mk0367_strg03.htm
• 2004 Professional Services and Solutions
  http://www.itsma.com/research/prospectus/mk0402_ps04.htm
• 2004 Network Services: Buyer Preferences in the Enterprise Market
  http://www.itsma.com/research/prospectus/mk0410_ent04.htm

EuroNotes: Adapting Global Strategies to the German Market

With the regional economy still flat, opportunities for growth in IT services in Germany remain few and far between, according to participants at ITSMA Europe's late September marketing roundtable in Frankfurt. Amid the search for new sources of growth and profitability, marketers and sales professionals in Germany are wrestling with a host of difficult issues surrounding channel and partner strategies, sales competence, and marketing investment.

Read the full story: http://www.itsma.com/europe/notes/100803.htm

More EuroNotes

Marketing Toolbox: Online Marketing Checklist

The ultimate goal in marketing is developing clients who maintain long-term purchasing loyalty to your firm, recommend you enthusiastically to others, and turn to you for strategic advice. Developing such trusted relationships requires not only excellent service but also a marketing strategy that emphasizes moving prospects and clients through a series of relationship stages from awareness to trust.

Online marketing tools can play a central role in supporting and helping manage this process. ITSMA's Online Marketing Checklist provides an evaluation tool to examine how comprehensively your online marketing program supports a relationship development strategy.

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

More Marketing Tools (membership online access required)

Upcoming Events

Last Chance to Register! Marketing Returns: Leadership, Innovation, and Results MarketingServices/2003 Annual Conference—October 20-22, Claremont Resort and Spa, Berkeley, CA http://www.itsma.com/events/event_desc/03AC10N13.htm Marketing is back! As tech spending begins to grow again, marketing is exerting greater leadership in defining new opportunities, refining the customer experience, and measuring the business return on marketing investment. ITSMA's annual conference is the premier event for marketers interested in the latest strategies and tactics for generating growth in technology services and solutions. This year's conference will emphasize emerging opportunities for growth, new approaches to marketing and selling solutions, best-practice peer sharing and networking, and presentation of the 2003 Services Marketing Excellence Awards—all inspired by the great food and surroundings at the Claremont Resort and Spa in Berkeley, CA. Featured speakers include: Howard Rheingold (keynote speaker), author of Smart Mobs and one of the foremost authorities on the social implications of technology Michael Winkler, Executive Vice President and Chief Marketing Officer, Hewlett-Packard Brian Fugere, Chief Marketing Officer and Partner, Deloitte Consulting Chelsea Hardaway, Global Director, Brand Communications, Deloitte Consulting Leigh Alexander, Vice President and Chief Marketing Officer, Unisys Sangita Singh, Chief Marketing Officer, Wipro Technologies Brian Eckert, Executive Vice President, Marketing, Dimension Data Cary Fulbright, Senior Vice President, Marketing, salesforce.com Shahla Aly, General Manager, Services Strategy, Microsoft Larry DeBoever, Chief Research Officer and Executive Vice President, Hitachi Consulting Peter Solvik, Managing Director, Sigma Partners; former CIO, Cisco Systems Philip Oliver, Vice President, ITSMA; former Vice President, Worldwide Strategy, IBM Global Services Dave Munn, President and CEO, ITSMA Julie Schwartz, Vice President, Research, ITSMA And more! Pre-conference workshops on October 20 highlight new tools and techniques for marketing solutions, selling solutions, and leveraging channels. Learn more and register online at: http://www.itsma.com/events/event_desc/03AC10N13.htm. Conference sponsored by: Premier Sponsor Rainmaker Systems is a leading outsource provider of sales and marketing programs for service contracts. Rainmaker's cost-effective programs generate new service revenues and promote customer retention for its clients. Visit us at http://www.rmkr.com. Sponsor High-tech manufacturers such as Juniper Networks use Encover's applications to increase renewal revenue, reduce the cost of sales, and increase visibility into their installed base. Visit us at http://www.encover.com.

A Framework for Technology Services Marketing
November 17-19, European Client-Centric Marketing Course (London, UK)
http://www.itsma.com/Events/event_desc/03ME11E11.htm

ITSMA Europe's Client-Centric Marketing Course provides a practical framework for marketing technology services in Europe, benchmarks and best practice examples to improve marketing campaigns, and new tools and techniques to increase growth and profitability. The course is led by Bev Burgess, managing director of ITSMA Europe, and includes guest faculty from Cranfield School of Management plus leading practitioners from Accenture, Computacenter, and PricewaterhouseCoopers.

Marketing Metrics and Corporate Change:
Using Metrics to Guide Value Creation and Delivery
November 18, Online Briefing (No charge for members)
http://www.itsma.com/Events/event_desc/03OB11N16.htm

Marketers have always understood the importance of measuring the value of their efforts, but yesterday's luxury is today's urgent priority. Join Steve Hurley, Jeff Lowe, and Tim Ambler to learn how you can use a marketing scorecard to drive corporate change and improve marketing and sales performance.

Accelerating Services Growth
December 3-5, Client-Centric Marketing Course (San Francisco, CA)
http://www.itsma.com/Events/event_desc/03ME12N17.htm
Register by October 31, 2003, and receive a 10% early-bird discount.

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 professor Lauren Wright of California State University, Chico, and co-author of Principles of Service Marketing and Management. The course also includes CIO representatives and a guest speaker from Hewlett-Packard.

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

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

ITSMA in the News

Clients Prefer Product Companies' Services Arms Over Traditional Consultancies (Consultants News) - PDF 50k

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

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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.