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Editor's Notebook Marketing's Next Challenge BusinessWeek's recent cover story on "The Power of Us" makes the case for a fundamental shift in the economy driven by the "peer power" of nearly one billion people now on the Internet. Open-source software, customer-designed products, and volunteer rating systems are but a few of the emerging dynamos of the Internet-powered collective. The argument makes sense, and it has huge implications for marketing. For one thing, it suggests that the traditional information gap between buyers and sellers is gone; buyers now have access to as much or more data and informed opinion about a given offering as the seller. So throw out the hype; you'll be exposed and taken to task in the blogosphere in no time flat. Focus instead on collaborating with interested customers to co-create unique solutions. For another, it dramatically expands both the playing field and the competition. The globalization of interaction opens new doors internationally for your goods and services. It also creates a new world of competitors. Analyzing opportunities and threats becomes more urgent and complicated as the need for speed accelerates. For a third, it is both cause and effect of a dizzying array of new networking and communication tools, such as Weblogs, online communities, social networking, mobile devices, and interactive television. If you're not using and testing these tools yet, you probably should be. The new tools provide great opportunities for getting to know your community and moving ahead on projects under which everyone wins. Ultimately, it all seems like good news for marketing. A more informed and empowered marketplace demands more careful attention and planning. Marketing is (or should be) at the forefront of understanding and acting upon the necessary changes. Gaining the necessary skills, resources, and respect to meet the challenge, however, often conflicts with the "generate leads now" mentality of many marketing overseers. Marketing is on the verge of a much more substantial and strategic role in the business, but getting from here to there will require some fancy footwork indeed.  [TOP OF PAGE] What's Hot Navigating the Blogosphere On June 2, Sun Microsystems announced the acquisition of StorageTek in a move to strengthen Sun's storage capabilities and bring in new customers. The official press release touted the deal in typical blah-blah marketing speak: "The combination will create a new global leader in comprehensive network computing and data management…. Together, Sun and StorageTek can offer customers the most complete range of products, services and solutions available for securely managing mission-critical data assets." Fortunately for folks interested in the deal, Sun's president and chief operating officer Jonathan Schwartz explained the rationale in plain English a few days later on his popular Weblog. According to Schwartz, the deal made sense because of StorageTek's positive cash flow ("making money is a good thing"), sales coverage ("Sun and STK combine to create one of the largest dedicated storage sales and service forces in the world"), and customer preferences ("Large customers are trending toward wanting to buy from consolidated vendors, with global reach and a systems approach. Sun can now connect those dots."). Even more, Schwartz added a footnote to business blogging history by including for the first time a standard financial disclaimer after his post: "I was going to be frustrated at the requirement, until it occurred to me we'd just set a bit of corporate communications history—blogs are now an official communications vehicle at Sun." Sun's aggressive use of blogging may not lead the company to the promised land by itself but it does reflect the more collaborative attitude that tech firms need to succeed in today's customer-driven market. Indeed, Sun's new branding campaign highlights "sharing" and "the participation age," two powerful ideas that emphasize the new world of interactivity and cooperative problem solving. Are marketers up to the challenge? As the Sun-StorageTek example suggests, blogs can be useful to marketers precisely because they can dispense with the hype that dominates most corporate communications but leaves customers cold. Getting senior executives, technology experts, and business managers talking directly to customers and other stakeholders in a no-nonsense conversational tone can make all the difference in building dialogue and trust with the people who matter most. The question is, can marketers make the switch from one-way monologue to interactive discussion? Even with the rise of targeted, micro, and account-based marketing techniques, most campaigns still rely on carefully crafted messages that are broadcast or narrowcast to specific "targets" (a problematic designation for human beings). The more we learn about our potential customers, the more we refine our messages to entice them to buy. At the extreme, it becomes truly one-to-one. Unfortunately, the emphasis remains "to" rather than "with." Blogging focuses on "with." Not inherently, of course; blogs can be just another platform for useless pontification. In practice, however, good blogs become a vehicle for stimulating discussion and building relationships. As blogging expert Stow Boyd notes, "blogs are social media; they tap into communities of interest that already exist." Not surprisingly, the most energetic and successful blogs in the tech world tend to come from the developer community, where constant give and take is a way of life. For marketers, the opportunity is substantial. As blogging moves closer to the business mainstream, marketers across the tech sector are testing blogs in numerous arenas, including:
What they're finding is that blogs can be a powerful vehicle for direct, relatively informal communication that cuts through the defense mechanisms of cynical and overstressed customers, partners, associates, and others. Thriving in the blogosphere is not so simple, of course. Marketers have to contend with all sorts of legal, policy, and process questions before jumping in headfirst. They need to make sure they have good ideas, good writing, and responsiveness. Most of all, they need to embrace the culture of openness and dialogue. For those marketers hesitant to jump in or unconvinced that blogging is more than just a fad, consider the last ten years of the Web itself, which transformed incredibly quickly from techie and teen plaything to business essential. Blogging is likely another example of a tech development that is over-hyped in the short run but underestimated in the long. As customers, journalists, and others increasingly tune out one-way pronouncements in favor of community-based dialogue, marketers will ignore the blogosphere at their peril. Already we're seeing many in the media ignoring email and Websites in favor of personalized information feeds from the blogs they deem useful. No doubt we're still in early days, and the particulars of blogging will continue to grow and change. But there should be little doubt that a more participatory approach to marketing is taking hold, with blogging assuming a prominent place in that new approach. Learning to navigate the blogosphere is fast becoming a requirement for marketing success. Feature Cracking the Differentiation Code: Standing Out in IT Services ITSMA's recent report Services Marketing Budgets and Benchmarks: 2005 Metrics, Trends, and Challenges reveals that, for 2005, services and solutions marketers identified "differentiating the company or its offerings" as their top challenge. In the following discussion, study author Julie Schwartz shares some insight into why this is such a tough area for services marketers and how they might do it differently. E-ZINE: What makes differentiation such a challenge for IT services companies? Schwartz: Part of the problem is that we're taking an intangible concept—differentiation—and applying it to an intangible offering—services. When you're marketing a product, you can hold it, try it, touch it, taste it, and so on. You can't do that with services. Yet many services marketers are taking the theory that's been developed in the product world and trying to apply it to their offerings. To make things even more difficult, when services companies think about how they want to position themselves, they all want to occupy the same space in the customers' minds—for example, the responsive industry expert that understands your business and is committed to customer success. When that's what every company is going after, it's no wonder they all sound the same. E-ZINE: What can services firms do to make themselves stand out? Schwartz: First of all, they need to make sure that their positioning is customer-driven rather than driven from within the company. Too many companies decide to position themselves a certain way because the management team thinks it's a good idea. It might very well be a differentiator, but are your customers going to care? Is it something that's driving purchase decisions? In other words, it might set you apart from competitors, but in a way that is irrelevant to customers. Or is it something that all of your competitors are claiming, so, by golly, you've got to talk about it, too? In this case, the positioning may be important to customers, but it isn't really a differentiator. By investing some time and money up front in customer research, you're more likely to hit upon a message that not only resonates with your target audience but one that's actually different from what your competitors are touting. E-ZINE: Besides getting at the heart of customer preferences and priorities, what else should services companies be doing to better position themselves? Schwartz: There are a few other essentials. One is making sure that who you are and what you do is communicated clearly. I'm amazed at how many times I visit a company Website, click around for five minutes, and still can't figure out what the company actually does! Is it a software company? Do they sell services? Who are they trying to reach? I have no idea! Tell me in simple, straightforward language who you are and the benefits I'll get from buying your offerings. Another important consideration is building up a good reference program and using communities such as industry associations and the blogosphere to amplify positive word of mouth. Think about it: When you're looking around for a new doctor, do you go to the guy with the coolest billboard? No, you go to the doctor your sister recommended, or to the one your coworker told you about the other day at lunch. Same thing goes for IT services. Finally, I'd suggest that you keep your finger on the pulse of your customers by assessing how their perception of you is changing over time and as a result of your marketing initiatives. You might need to tweak your messaging periodically or even significantly change your positioning based on changes in the customer and competitive landscapes. E-ZINE: Is there anyone out there you can point to as a best-practice example? Schwartz: Capgemini has done a nice job with its Collaborative Business Experience initiative. The company did a lot of research to identify and flesh out its core value proposition and then conducted an internal education campaign to ensure that all executives and employees could live up to the new brand promise of collaboration. Only after several months of internal education did the marketing department unleash its public-facing campaigns. In services, differentiation is something that exists in the minds of your clients. And it's best communicated through the actual customer experience. You can't just declare something and expect them to believe you. The customer experience has to match the promises and value propositions of the brand, which is why the internal education piece is so important. For a more detailed discussion of the challenge of differentiation for services, join Julie on July 19 at ITSMA's breakfast briefing in Newton, MA, Demonstrating Differentiated Value: Building Your Case in a Crowded Market. Stella Goulet, Capgemini's vice president, global marketing, will also be on hand to discuss her company's "Collaborative Business Experience" campaign. For more information or to register online, visit: http://www.itsma.com/Events/event_desc/05BB07N24.htm. Moving to Solutions New ITSMA Resources: Solutions Quiz, Playdoh, and More
The new "Moving to Solutions" section on ITSMA.com brings together best-practice models, guides, and thinking on how to become a true solutions provider, including:
Check out our solutions resources at http://www.itsma.com/solutions. EuroNotes Thought Leadership Marketing: Developing Effective Campaigns Thought leadership remains a hot topic among services marketers, and for good reason. Buyers who tune out traditional sales and marketing pitches are quite interested in innovative thinking about using technology for business advantage. During a recent ITSMA roundtable discussion in London, however, it became clear that many companies are struggling to reach a consensus around what the term "thought leadership" actually means and how best to generate truly new or breakthrough ideas.
Research Desk Offshore Software Services: Still Too Risky? With all the hype about offshore services, one might think that U.S.-based IT firms are either losing clients in droves to less expensive firms in India, China, and elsewhere or are racing as fast as possible to set up shop in those countries themselves. To some extent, of course, both scenarios are exactly what’s happening. Indeed, the U.S. Bureau of Labor Statistics suggests that more than 7,000 American IT workers were laid off in the first three months of 2005, and a new McKinsey study predicts that 770,000 tech jobs will be sent offshore by 2008 (more than double the total number of IT services jobs performed offshore in 2003). But the reality is a bit more complicated, according to Lori Weiner, senior director of research at ITSMA. Weiner recently completed a Brand Tracking Study designed to explore the customer decision process for buying software applications and services. The study reveals that offshore services for enterprise software applications are not yet earning serious consideration from decision makers in key verticals such as manufacturing, financial services, and government. Only 3% of the study respondents indicated that they'd be very likely to consider an offshore firm for full hosting and application management. A resounding 66% of them claimed that this would not be likely at all. Meanwhile, when asked about the likelihood of using an outside vendor for application hosting, 53% responded that this was completely unlikely, and only 11% said they'd give the matter serious consideration. “It's clear that most companies are currently unwilling to consider giving up control over their enterprise applications,” notes Weiner. “Of those that are willing to consider it, they're significantly less likely to give up control to a company that is based overseas.” According to similar ITSMA research from 2004, buyers are often interested in the lower costs associated with outsourcing and offshoring, but they're wary of hurting their productivity and the quality of their service. Thus the stronger negative reaction toward offshoring, which can mean language barriers, troubles with time zones, and cultural differences that can lead to misunderstandings. Does this mean that software vendors and services providers are immune from offshoring fever? "Absolutely not," says Weiner. "Although application offshoring isn't posing much of a threat yet in the software sector, we are seeing glimmers of interest, most notably from large organizations and those in a post-implementation stage. Thinking through various ways to offer low-cost offshore services without sacrificing the quality of the services will allow companies to be on the leading edge of any future spikes in interest." Please watch for the release of ITSMA's new study, Enhancing Customer Value from Enterprise Software Applications and Services, in the next few weeks. —Meghann Grandy, info@itsma.com
[TOP OF PAGE] Upcoming Events Measuring the Solutions Business: Meeting the Metrics Challenge Demonstrating Differentiated Value: Building Your Case in a Crowded
Market Account-Based Marketing: Increase Your Revenue with ITSMA's Three-Step
Plan How Customers Choose Solutions: Responding to the New Decision Process
Ask ITSMA! Do you have a services marketing question? (c) Copyright 2005, ITSMA Please forward this newsletter, but only in its entirety. Public citation or publication of any information herein is encouraged but subject to U.S. and international copyright law and conventions. Any citation must include full attribution to ITSMA. Individual graphics or paragraphs can be published without permission as long as attribution to ITSMA is included. Publication of longer selections or complete articles requires ITSMA permission. For permission or more information, contact pr@itsma.com. [TOP OF PAGE] Subscription Information Subscriptions are available in text and HTML versions. To SUBSCRIBE or to change the format of your subscription, visit http://www.itsma.com/aspfiles/press/ezine.asp. To UNSUBSCRIBE, please email us at unsubscribe@itsma.com or mail us at ITSMA Subscriptions, 420 Bedford Street, Suite 110, Lexington, MA 02420, USA. Back issues of ITSMA E-ZINE are available at http://www.itsma.com/News/ezine/default.htm. |
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