ITSMA E-ZINE	August 2004

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Editor's Notebook: Services Marketing and the Meow Mix Cafe

I just joined an online forum on experiential marketing and all of a sudden I’m barraged with emails about the Meow Mix Café. In case you missed the exciting news, the Meow Mix cat food company is opening a temporary café on Fifth Avenue in New York to show off its new line of Wet Food Pouches. Humans can buy snacks in corresponding flavors, along with toys, games, and branded merchandise. No dogs allowed.

I’m not a cat owner so won’t be rushing into the café for the new pouches, but I’m certainly intrigued at the new wave of experiential marketing initiatives. Online games, demonstration showcases, staged events—companies across the economy are racing to create ever more entertaining, engaging, and innovative “experiences” for potential customers in hopes of breaking through the clutter of everyday marketing.

Most of the experiential action, perhaps not surprisingly, comes from the consumer marketing world: Fashion shows by Victoria’s Secret, Jeep Jamboree driving festivals, the Crayola Works showplace for crayons, and so on.

For IT services marketers, though, the experiential potential should be enormous. Services, after all, are primarily about experience. That intangibility creates one of the toughest challenges for services marketing, yet it should push us to explore new approaches to demonstrating and simulating the proposed experience.

—Rob Leavitt

What's Hot: Account-Based Marketing and Beyond: Next Steps in Demand Generation

Demand generation is a top priority for most IT services marketers. According to a recent ITSMA member survey, leading IT services providers dedicate more than 40% of their marketing budgets to generating leads. This is a huge number, considering other marketing priorities such as strategy, research, branding, and customer loyalty.

Asked to rate the effectiveness of their own programs, however, services marketers give themselves only mediocre grades. Typical ratings in the ITSMA survey included 2.9 out of 5 for generating new revenue and 3.2 out of 5 for increasing profitability. "C" report cards are not exactly going to lead the class.

The major challenge is gaining the attention of qualified buyers. For most IT services and solutions, legitimate leads require serious conversation. Names gathered from trade shows or free Webinar registrations often amount to little. But breaking down the barriers to serious conversation with the right prospects is extremely difficult in an environment where time is the most precious resource.

One of the most effective responses to the attention problem is shifting lead-generation programs from quantity to quality. Campaigns are becoming more focused than ever, with much greater effort expended on identifying the right audiences and customizing activities to specific niche markets and individual companies.

Equant, a subsidiary of France Telecom, for example, has recently launched a two-year demand-generation campaign targeted at just 31 global companies. Rather than cast its net over hundreds or even thousands of potential customers, Equant committed substantial marketing, sales, and executive resources to a highly focused account-based campaign.

Similarly, Capgemini has pooled marketing resources with three strategic partners, Cisco, Intel, and Microsoft, in a highly targeted campaign to generate demand for retail solutions among just 100 prospect accounts.

Accenture has gone perhaps the farthest in this direction with a truly one-to-one program to expand business with its most strategic customers and partners. The Accenture program includes an intensive research program to fully document and understand all aspects of each existing relationship, all value delivered, executive-level perceptions of Accenture and key competitors, and critical business priorities. Building on that knowledge base, Accenture then creates a global, integrated, high-level program to strengthen the relationship and develop new business opportunities.

The positive results at Equant, Capgemini, and Accenture suggest the power of focus. Micro- and account-based marketing programs are proving far more effective than broad-based initiatives.

In an attention-starved world, however, increased focus by itself is not enough. Successful campaigns need to invest as much or even more energy into how they engage potential buyers as which prospects they target.

Leading consumer marketers such as Proctor and Gamble, Coca-Cola, and McDonalds are moving dramatically away from mass, push-type efforts toward more interactive, entertaining, and invitational programs. The goal of their new wave of Hollywood partnerships, online games, Weblogs, and sponsorships is to create new communities of interest and entice potential customers into more enthusiastic relationships with the brand.

Marketing IT services and solutions certainly differs in many ways from pitching fast food and laundry detergent, but there is no question that business as well as consumer buyers are simply tuning out traditional advertising and other intrusive push marketing campaigns. And sometimes the difference between the two marketing communities is simply that the tech industry hasn't caught up to marketing's cutting edge.

Along with much greater focus, successfully generating demand for IT services and solutions will increasingly rely on five critical initiatives:

• Deep customer insight. Investing more substantially in truly understanding the business drivers, priorities, and perspectives of top-priority customers and prospects.
• Thought leadership. Building demand generation campaigns around legitimately new ideas for solving customers' business problems.
• New tools of engagement. Developing and testing innovative, interactive, and even entertaining tools and campaigns to increase the power of pull.
• Strategic accounts. Prioritizing initiatives with your most important existing customers to create enthusiastic advocates, test new solutions, and reinforce the brand.
• Brand enrichment. Constantly reinforcing the image and reality of being the kind of business that customers want as a strategic partner.

The ultimate challenge, then, is creating compelling enough marketing programs that the right buyers actively seek you out in search of insight, ideas, and solutions. Highly targeted account-based marketing is an important start. Infusing and surrounding those activities with more creative approaches to new solutions, new tools of engagement, and a more compelling brand will move you to the head of the class.

What's new on the demand generation front in your organization? Are you doing account-based marketing? What are your most effective tools of engagement?

—Rob Leavitt

For more information on ITSMA's lead-generation survey and the latest in demand-generation practices, see Rebalancing Push and Pull: Best Practices in Demand Generation. This ITSMA Briefing is available at no charge to members and for sale to all others. Learn more at http://www.itsma.com/research/abstracts/olb072004.htm.

For more information on account-based marketing, see Account-Based Marketing: Making an Impact. This ITSMA Europe Briefing is available at no charge to ITSMA Europe members and for sale to all others. Learn more at http://www.itsma.com/research/abstracts/OLBEU043004.htm.

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Features

Marketing to the C-Suite: Value-Based Solutions at Unisys

Like most IT services firms, Unisys has moved aggressively since the industry downturn to improve its marketing and selling efforts into the executive suite. As the market tightened, board directors and C-level executives quickly intervened in the IT buying process. The challenge for Unisys, and for many firms, has been creating visibility outside its clients' IT departments and giving the sales force the tools to engage successfully with executives.

Following a detailed analysis of its marketing and sales processes and tools, Unisys developed a new Value Adding Solutions Provider (VASP) program to move up the buying ladder and win in the C-suite. The program contained five key components:

1. Analyze key business drivers. The first step was developing a common business frame of reference for marketing and sales. By analyzing existing deals, references, and case studies, the marketing team identified four common business drivers behind its customers' investment decisions:
   - Money: Return-on-investment, cost savings, revenue gain, shareholder value
   - Customers: Channel management, client retention and satisfaction
   - People: Productivity, satisfaction, and retention
   - Risk: Risk avoidance, management, and flexibility

2. Create value-based references. Unisys had delivered many successful projects but had not utilized these examples well in marketing or sales situations. Focusing on the common business drivers, the marketing team gathered the most compelling client value statements into a reference database for more widespread use. Moving beyond typical case studies, the program emphasized video testimonials from senior executives at client firms.

3. Leverage value statements for marketing and sales tools. Once they captured the client value statements on video, Unisys marketers assembled a series of new tools, including CD-ROMs, supporting collateral, advertising, and PR initiatives—and made them all available on the company intranet.

4. Target key accounts. Marketing worked closely with sales to build detailed profiles on target accounts based on an in-depth understanding of the entire business ecosystem for each potential client. Equipped with the profiles, account teams could then analyze their target clients' business visions and strategies. This creates a much stronger basis upon which to propose potential solutions to C-level executives.

5. Communicate business value. By creating a detailed view of the client, Unisys is able to identify business executives' major pain points and create business value-based messages and materials. For example, if a particular prospect in the financial services industry is looking to improve profitability through cross-selling, Unisys is now able to identify a specific solution and back it up with targeted value statements and collateral. This gives the sales team much greater support and confidence to initiate the executive dialogues that are essential to success.

Building the VASP program has demanded substantial investment and testing, and Unisys wisely focused on its most important industries and clients to help get the program off the ground. Testing the program on a small group of accounts was critical to proving the concept and gaining internal buy-in. After 18 months, VASP program results have been impressive, including:

• Sales uplift of at least $100 million
• Significant increase in board-level discussions
• Increased marketing/sales alignment
• Improved internal morale

Building such detailed and account-specific campaigns requires a serious commitment to market and client research as well as greatly improved coordination between marketing and sales. As with Unisys, it makes sense to start small and build from initial success. As the Unisys example demonstrates, though, the payoff in terms of new business and executive relationships can be dramatic.

—Bev Burgess, info@itsma.com

This article is excerpted and adapted from Unisys: A Value-Based Approach to Client-Centric Marketing. This ITSMA Europe Case Study is available at no charge to ITSMA Europe members and for sale to all others. For more information, visit http://www.itsma.com/research/abstracts/euc004.htm.

Cisco Strengthens Position in Growing Market for Network Services

Cisco Systems has advanced its leadership position in network services for large enterprises, according to ITSMA's latest study on buyer preferences and perceptions. As business buyers increase spending on improving network efficiency, security, and flexibility, Cisco is beginning to emerge as the network services provider of choice.

The ITSMA study, based on interviews with 301 business and IT executives from large companies in five major industries, documents Cisco's increasingly strong brand for network support and professional services.

• Cisco leads the field in unaided awareness for network professional services, with a growing lead over other equipment manufacturers such as Lucent and Nortel, network carriers such as AT&T and Sprint, and network systems integrators such as IBM and EDS.
• Cisco also tops the list for buyers' familiarity with network services firms and overall impression of those same firms.
• Finally, Cisco is more often perceived as the leader or one of the leaders in distinct sub-categories of network services than any other firm.

The ITSMA study is not simply the Cisco story, however. For one thing, rivals including IBM and AT&T have also improved their positions with buyers as providers of network services over the last several years. For another, the hottest growth areas for network services, including security and mobility, remain highly competitive. Cisco does hold dominant positioning in buyers' minds for network security services, no doubt assisted by its extensive advertising campaign. But IBM holds a strong second place.

No company holds a dominant position in supporting mobile and wireless environments, according to the buyers interviewed in the ITSMA study. But buyers think first about the leading wireless carriers, including AT&T and Sprint, as providers of expert services in this area.

Interestingly, Cisco does not even lead in buyer perceptions for expertise in supporting supporting Voice over IP, a technology that Cisco has pushed hard and helped introduce to the market. Rather, almost three quarters of buyers interviewed consider Avaya to be an expert in supporting VOIP. Cisco rates second in this critical emerging category.

Overall, however, Cisco is beginning to bid for a leadership position in network services similar to that held by IBM in IT professional services, wherein business buyers perceive a clear number one firm in the market. As with the IBM example, market leadership is a far cry from market control. The network services market remains far too fragmented for anything approaching monopoly power. But there is no question that Cisco's combination of product leadership, investment in services, customer advocacy, and strong marketing is creating a virtuous cycle that greatly enhances brand strength for network services.

What makes this even more interesting is the fact that Cisco relies so heavily on partners for selling and delivering network services. The increasing buyer preference for Cisco thus speaks almost as much to Cisco's partnering programs as to its general brand development.

—Rob Leavitt

ITSMA's new report, Network Services: Buyer Preferences in the Enterprise Market—2004 Brand Tracking Study, provides a detailed analysis of how IT and business executives from large enterprises and government agencies assess leading providers of voice and data networking services. The report includes data on brand awareness, favorability, market positioning, preferred attributes, and market drivers. The report will be available for purchase at member and nonmember prices in September 2004.

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Research Desk

Tech Spending Shows Continued Strength in July (Tech Poll)

CIO Magazine's July Tech Poll showed projected increases in IT spending of 8.1% over the next 12 months, virtually matching June's 8.2% projection and continuing the strong projections of recent months. Notwithstanding the disappointing results announced recently by software and other technology firms, IT buyers do not appear to have reduced their spending expectations.

Key Tech Poll findings include:

• Businesses planning to increase IT spending outnumber by more than an 8-to-1 margin those planning to cut spending.
• More than a third of all businesses expect to increase IT spending by more than 10%.
• Top spending priorities include security software, computer hardware, data networking equipment, and storage systems. Fewer buyers plan to increase spending on outsourced IT services, enterprise applications, or telecom equipment.
• CIOs cited reducing costs, improving competitive position, and improving reliability and simplicity as the top priorities for IT investments.

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 July 8-15, 2004, included 262 respondents. Large firms with more than 5,000 employees represent 18% 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.

Research Sponsorship Opportunities: Sales Practices; Brand Tracking for Software, Managed Services, and Telecom Services—Service Provider Market

ITSMA's multiclient studies provide great opportunities for marketing organizations to gain action-oriented data and analysis at highly affordable rates by pooling resources with peer organizations. Sponsorship opportunities are currently available for four studies:

2004 Sales Practices Study: Best Practices and Benchmarks from IT Services Leaders
http://www.itsma.com/research/prospectus/mk0463_sp04.htm

A new buyer reality has forced IT services leaders to rethink their sales strategies, organizations, and processes. ITSMA’s 2004 Sales Practices Study will explore how companies that include IBM, Sprint, Computer Associates, PeopleSoft, Rockwell, NCR, Kodak, and dozens of others are meeting the sales challenge in response to changing buyer behavior.

2004 Brand Tracking Study: Customer Priorities, Competitive Positioning, and Brand Preferences for Software Applications and Services
http://www.itsma.com/research/prospectus/mk0448_sw04.htm

The reinvention of the business software market requires vendors, integrators, and consultants to rethink the way they develop offers and work with customers. ITSMA's new Software Applications and Services Study will provide critical insight into the emerging buying reality for the market generally and for specific applications based on interviews with 500 senior decision makers.

2005 Brand Tracking Study: Identifying Leaders in Managed Services
http://www.itsma.com/research/prospectus/mk0467_ms05.htm

The recent upswing in technology investment, combined with a continued search by buyers for outsourcing and managed services options, suggests a significant opportunity for providers of managed services. ITSMA's second annual Managed Services Study will provide a detailed analysis of how network, IT, and business executives assess individual providers and the market as a whole.

2005 Brand Tracking Study: Telecom Services—Services Provider Market
http://www.itsma.com/research/prospectus/mk0475_sv05.htm

After a long downturn, major communications suppliers are reaping the benefits of growing and thriving services and consulting offers. ITSMA's fourth annual Service Provider Study will assess how network and business executives at telecom services providers view the leading vendors of telecom services and solutions.

EuroNotes: HP's Four Steps to Targeted Value Propositions

All too frequently, IT services vendors’ claims for competitive superiority cover similar if not identical spans of capabilities and fail to stake out a unique position from the buyer’s perspective. Standing out in a crowded market requires truly differentiated value propositions that resonate with customers' business needs and demonstrate your organization's particular strengths.

Perhaps the toughest challenge is creating a rigorous process to link proposed services and solutions with the business value they can deliver. To meet this challenge, marketers at HP Services have developed a four-step program to ensure the development of targeted value propositions that consistently emphasize the business issues and challenges facing CxO-level decision makers.

- Read the full story
- More EuroNotes

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Toolbox: ITSMA's Strategy Health Check

Strategy in many IT services organizations can be summed up crudely as "doing what we did before, but better." Finance drives an annual planning process designed to increase revenue and profit in pretty much the same areas as the year before.

A bit harsh? Perhaps, but ITSMA research suggests that marketing typically takes a back seat in the strategy process; competitive and opportunity analysis is generally quite thin; and a negotiated aggregation of business unit financial goals serves as the foundation of most organizations' "strategies."

How effectively does your strategy process anticipate and respond to market and competitive change? Take ITSMA's Strategy Health Check for a quick review of your company's approach.

- Take me to the Strategy Health Check
- More Marketing Tools (membership online access required)

Upcoming Events

Hold These Dates! Marketing Matters: ITSMA's Tenth Anniversary Marketing Conference October 18-20, 2004—Cambridge, MA http://www.itsma.com/events/event_desc/04AC10N15.htm Marketing matters more than ever for technology, networking, and IT services companies. And yet the matters of marketing that matter most have changed dramatically in the past few years. Join marketing leaders from across the industry to explore the latest thinking, strategies, and tactics on today's top marketing challenges. Featured speakers include: David Goulden, Executive Vice President, Customer Operations, EMC Arun Chandra, Vice President, Marketing, Technology Solutions Group, HP Charles Doyle, Worldwide Director, Marketing, Communications and High Tech, Accenture Harris Miller, President, Information Technology Association of America Jeffrey Zabin, Director, Marketing, Fair Issac; co-author, Precision Marketing: New Rules for Capturing, Retaining, and Leveraging Profitable Customers Jon Korin, Vice President, Strategic Development, Northrop Grumman Information Technology Andrew Salzman, Vice President, Corporate Marketing, Siebel Systems Elizabeth Lawson, Director, Channel Management, Cisco Systems Ira Entis, Director, Global Field Marketing, BearingPoint Dave Munn, President and CEO, ITSMA Plus breakout and networking sessions, a panel discussion with leading CIOs, and presentation of ITSMA's 2004 Marketing Excellence Awards.

Building an Effective Client Reference Program
August 17 Online Briefing (no charge for members)
http://www.itsma.com/Events/event_desc/04OB08N23.htm

Voice of the Customer: Understanding Buyer Behavior in Europe
September 9 Online Briefing (no charge for ITSMA Europe members)
http://www.itsma.com/events/event_desc/04OB10E10.htm

Building Professional Services
September 14 Workshop (Columbus, OH)
http://www.itsma.com/Events/event_desc/04WS09N22.htm

Engaging the Business Buyer: Tales from the Front Lines
September 21 Online Briefing (no charge for members)
http://www.itsma.com/Events/event_desc/04OB09N14.htm

- Complete 2004 Events Calendar
- Event Sponsorship Opportunities

Ask ITSMA!

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Visit Ask ITSMA to access our experience, insight, and research results.

(c) Copyright 2004, 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.