ITSMA E-ZINE	August 2006

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Editor's Notebook: Revisiting Your Marketing Communications "Audience Allocations"

With September looming on the horizon, many ITSMA members are actively involved in planning for 2007. As you get deeper into planning mode, I urge you to take a moment to analyze how your budget is currently being spent across your company's audience of customers, prospects, influencers, and others—and to consider making a few changes.

According to data we collected for our 2006 Budget Study, the vast majority of spending is concentrated on customers and prospects, with 39% of the budget going toward customers and 34% to prospects. Only 10% of the budget is spent on influencing the influencers, 7% on employees, 6% on partners, and 2% on investors.

In terms of reallocation, as direct marketing efforts become less effective and buyers in general become more skeptical of company claims, it seems wise to invest more in market influencers, whose messages often have a bigger impact on your customers and prospects than you do. Second, remember that it's your front-line employees who keep your existing customers happy and loyal, so be sure that you're investing appropriately in keeping them up to speed on the latest company news, messaging, and priorities. Also remember that your existing customers—not your prospects—account for a large portion of your new business; some of the dollars that are currently being spent on prospects could probably have a bigger impact somewhere else.

—Rob Leavitt

What's Hot: A New Approach to Marketing and Sales Collaboration

The lack of alignment between marketing and sales in the technology industry is nothing new. Different goals, different timelines, different cultures, and not enough appreciation of how both sides contribute to the business have long undercut a truly integrated approach to sustainable growth.

Although both sides have often bemoaned the "marketing is from Mars, sales is from Venus" disconnect, the traditional approach to closing the gap reflects an outdated view of marketing and sales priorities. If companies are anxious to get the two functions working together more effectively, they need to take a fresh look at both the problem and the solution.

The typical approach to marketing-sales alignment emphasizes getting marketing closer to sales through initiatives such as tighter alignment of marketing activities with the sales cycle, better coordination around demand generation and lead management, and allowing sales to have more input into marketing programs and materials. These types of initiatives certainly can be useful, but they risk reinforcing the standard industry view that marketing is ultimately the junior partner of sales and that the alignment problem is mainly one of marketers straying too far from the daily and quarterly demands of the sales force.

The reality is that dramatic shifts in the nature of customers, competitors, offerings, and market influencers are placing new demands on both marketing and sales organizations, and both sides must change if they are to succeed. Successful alignment today is not about marketing being a better junior partner; it's about greater collaboration on shared priorities within a much more complex customer environment.

For starters, both marketing and sales must provide substantial input to help companies address some of their most important questions, including:

• Which market segments provide the greatest opportunities?
• Which offering areas deserve priority investment?
• Which partners can best contribute to near- and longer-term growth?
• How can we best strengthen relationships with key clients and key executives?

Second, today's longer and more elaborate purchase processes means that marketing can no longer focus just on brand and lead generation and then rely on sales to do the rest; neither can the sales folks simply take leads (even the most qualified ones) and bring them to a close on their own. Instead, marketing needs to not only support sales through the cycle but to actively develop programs and campaigns that engage customers, deepen conversations, and enhance relationships every step of the way.

Finally, the ever-faster rate of change in the marketplace puts greater stress on both sides, not only to "align" programs and strategies in some initial planning phase, but to continuously adjust them in synch to ensure ongoing coordination as company priorities adapt to new challenges and opportunities.

As the pressure to perform continues to mount on both marketing and sales, the benefits of greater collaboration are tantalizingly clear:

• Improved market and segment focus
• More compelling offerings
• Shorter and less expensive sales cycles
• More satisfied and loyal customers

If the two sides are indeed to collaborate more effectively, they must focus on the practical challenges of working together on some the newer priorities for marketplace success. Four of these newer priorities are:

• Account-based marketing (ABM). As companies look to generate more business from their key accounts, ABM is gaining attention as a critical initiative. By definition, developing marketing programs for individual key accounts requires intensive collaboration between marketers and sales account teams. Although the main goals for ABM are typically to improve revenue, profit, positioning, and/or relationships within the accounts, the side benefits of bringing sales and marketing together in a priority area for the business are substantial as well.
• Reference management. Skeptical buyers, analysts, journalists, and others continue to elevate their demands for provider proof. Not surprisingly, reference programs have moved to the forefront in recent years as critical support systems for both marketing and sales. Making them robust and flexible enough to enable the right reference at the right time in the right format, however, requires much greater marketing and sales collaboration than has usually been the case.
• Executive relationship development. Technology and services firms today all see the need to strengthen relationships with senior executives to win larger deals and improve client loyalty. Meanwhile, they also need their clients to help them understand new opportunities, develop new solutions, and minimize marketplace mistakes. Systematically improving the quality and quantity of executive relationships requires deep and sustained collaboration between marketing and sales.
• Consultative and solutions sales training. As companies focus more on upgrading the ability of their sales forces to sell higher-value solutions to more senior business buyers, they are bumping into the limits of traditional sales training. Marketing organizations potentially have a major role to play in complementing the generic skills development with the specific market, competitive, and business insight necessary to support effective solutions selling.

Doubtless there are other initiatives that can help close the gap. Simply putting marketing and sales people in each others' shoes more often—for example, through joint planning, job rotations, or even more physical colocation—can be a huge help. Shared metrics and accountability is another critical area. But the four initiatives discussed here have two critical qualities that recommend them highly. First, they are all (or should be) practical corporate-level priorities for success that can only work with greater marketing-sales collaboration. Second, they each have the added advantage of being able to generate near-term sales results while strengthening the foundation for longer-term sustainable growth.

—Rob Leavitt

For more on how to improve the alignment between marketing and sales, register for ITSMA's September 19 Web Briefing, Marketing and Sales: A New Integration.

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The Interview

Creating Community: An Interview with Communispace's Siobhan Dullea

As buyers continue to tune out traditional marketing efforts and spend more and more time online, marketers are being called on to overhaul their approach to connecting with customers and prospects. Online communities are emerging as a powerful new way to make those connections, and ITSMA recently sat down with Siobhan Dullea, vice president of Community Consulting at Communispace Corporation, a company that builds and runs private online customer communities, to get the inside story on how BtoB firms can leverage this new approach.

ITSMA: Over the last couple of years, we've seen a huge number of companies look to build more interactive relationships with customers. What are the advantages to cultivating these relationships online rather than in person?

Dullea: Face-to-face meetings are obviously tremendously powerful, but they're limited by time and numbers. Now, if you could have a room full of 300 customers just down the hall from you and you could pop in there anytime you wanted to ask them questions, get advice, or even just be a fly on the wall, at all times you would have a bird's eye view on what customers want. There would be no more second guessing about what new products or services customers want, or what people think about your competition, or where and how to attract new customers. The people in the community would tell you directly and with insightful color commentary. That's what an online community can give you: continuous customer feedback, seven days a week, 24 hours a day.

ITSMA: The idea of being a "fly on the wall" is intriguing. Tell us more about that.

Dullea: Members of online communities aren't bound by the sponsoring company's agenda in the same way that customers at an event would be. They're free to talk about anything they'd like, both with the sponsoring company and with each other. How members talk to each other about how an issue or product can be incredibly revealing, and so is how customers influence one another. Within 24 hours of launching one BtoB community, there were 11 different dialogue topics under way, and only four of those had been seeded by the community facilitators. The rest were created by customers around issues they care about. Fifty people had already added brainstorming ideas, and over 70 people had answered surveys.

Some of the best lessons come from hearing customers talk about those things that annoy, disappoint, or outrage them. We encourage people to give the good, bad, and ugly. This gives the sponsoring company valuable insights into what's really on customers' minds, not just insight into the issues they think are important to their customers.

ITSMA: There are clearly numerous benefits for the sponsoring companies, but what makes participation in a branded online community attractive to the customer members?

Dullea: Different people are motivated by different things. Some people like the sense of empowerment that comes with having a voice; others appreciate the opportunity to discuss interesting topics with people who have similar interests, roles, or responsibilities. Sometimes sponsoring companies do offer tangible incentives to encourage participation. We've found that when you ask people to help you figure out a particular problem because you value their advice—versus asking for general input or feedback —they will go to extraordinary lengths to help you. We’ve also observed that when customers feel like part of an exclusive, valued club of advisors, they will work harder on your behalf.

ITSMA: I can imagine that some companies are more successful than others at building relationships through these communities. Is there a defining trait that contributes to their success?

Dullea: There are two defining traits. One, companies view their communities as an ongoing, strategic marketing operation, not a campaign or research project. The second is that they view people in the community like company insiders and advisors. They tell community members how the company is using their ideas. They share their candid perspectives on the industry. They are open, friendly, and respectful. If you treat people like advisors, they will not only help you for very little compensation, they will become your advocates with other customers and prospects. Reciprocity rules.

ITSMA: We tend to hear about more of these types of initiatives in the BtoC space than in the BtoB world. Why do you think BtoC companies are leading the charge here?

Dullea: I think that BtoB companies have long felt that they have data about their customers and the market, and many rely exclusively on data. But given today's competitive pressures, BtoB companies are recognizing that the data is no longer enough.

We have one BtoB technology client that is realizing a big increase in customer loyalty and advocacy thanks to its community initiative. They're asking their customers for input on everything from the user interface on the Web to the shipping process, and then they're acting on that input, which is essential to demonstrating that you listen to your customers and value their input.

For more on how to leverage online communities at your company, join us for ITSMA's September 21 Workshop, Blogs and Beyond: Marketing in the New Digital Channels. The workshop will feature a panel of digital marketing experts, including Siobhan, who will help you build a digital marketing plan that incorporates the best of blogging, RSS, online communities, microsites, podcasting, wikis, and more. Register at http://www.itsma.com/events/event_desc/06WS06N17.htm

To read more from Communispace, register to download a recent whitepaper, "What Customers Gain from Listening" from the Communispace site.

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On the Job: Avaya's Customer Councils: Achieving C-Level Success

In 2003, Avaya faced a dilemma that often strikes technology firms as they hit their stride: Many of its customers were making the shift from commodity buyers of telephone equipment to strategic buyers of communications solutions. With nearly 1 million customers worldwide, including most of the Fortune 500, Avaya found itself with many strategic buyers yet few truly strategic customer relationships.

To build deep and meaningful relationships with executive buyers and influencers, the company stepped out of its product- and technology-centered comfort zone and launched a ground-breaking customer council program for the senior-most executives of Avaya’s most strategic customers. The program has enabled Avaya to hold meaningful dialogues with its customers on three main topics:

• Customers' fundamental business challenges
• Avaya's strategic roadmap
• Ways to use technology (including but not limited to Avaya's) to move the industry forward

The council program has served to improve Avaya's relationships with key customers and position the company as a thought leader on important industry issues.

Building the Council Program

With the help of strategic marketing partner Tapestry Networks, a specialist in the emerging arena of leadership networks and peer-to-peer dialogue, Avaya quickly got to work on the first of its councils—the Executive Advisory Council (EAC). The goal was to build networked, many-to-many relationships with a group of noncompeting (but otherwise similar) customers who would see each other as peers—and who would have as much to say to Avaya, individually and collectively, as Avaya might say to them.

To ensure that the level of dialogue was as effective and mutually beneficial as Avaya hoped, the team applied several core principles as they developed their council model:

• Ensure that participants belong together around the same table. “Even if it’s your favorite customer," Sharon Watkinson, senior manager of global marketing at Avaya, warns, "if it’s not good for the group, if they’re not genuine peers, you won’t have the right dynamic.”
• Engage market leaders around a broad, strategic theme. Members of the EAC are CIOs or equivalent executives from market leaders in diverse industries—companies earning an average of $30 billion in annual revenue. The organizing theme was broad, inviting members to explore with Avaya the challenges and opportunities of converged communications across the enterprise.
• Achieve critical mass with the right number of participants—but no more. “At any particular meeting, we try to keep it to no more than 15 customers—and usually seven to eight Avaya executives,” Watkinson explains. “The ability to have an intimate discussion dwindles after you’re above about 25 people.”
• Insist on personal commitment from all participants. Council members make a personal commitment to attend network meetings, which are held once every six to nine months. They cannot send substitutes. As the EAC’s host, Avaya's Chairman and CEO has led by example—to date, he has never missed a council event. Thanks to this commitment, each discussion builds on the previous one, and relationships develop among the participating customers as well as with senior Avaya executives.
• Establish explicit ground rules to foster trust and frank discussion. Council meetings at Avaya operate under a modified Chatham House Rule so that comments and insights from the council discussions can be shared freely with the outside world but never attributed to a particular member. In addition, Avaya is very clear about the fact that council meetings are never an appropriate place for a sales conversation.

Beyond these best practices, Avaya has found that demonstrating accountability to council members is central to the program. According to Nancy Maluso, Avaya’s global marketing director, who is responsible for driving key lessons from the council meetings throughout the organization, “We can now track key inputs from these customers and see what we did with them—did we shape our business strategically?—and sometimes we find out we didn’t do enough. Because we made a commitment to report back to customers, we do a report card on ourselves.”

Beyond the Councils

With the councils as the foundation, Avaya has built an executive relationship management (ERM) program to reach beyond the set of customer leaders engaged in the councils themselves. These ERM programs include an executive sponsorship program that pairs Avaya executives with select customer executives and an executive forum program that organizes educational events for larger groups of customers. For both of these customer programs, the Avaya councils have functioned as powerful “content engines,” generating valuable thought leadership, marketing, and sales-support materials.

“The most important outcome our customer programs have created is an avenue for our executives to learn from our customers without there being a sales or service issue involved,” Maluso concludes. “It enables them to keep the marketplace up front in their mind as they develop their business. Culturally, it brings the customer closer to our organization,” keeping Avaya relevant, top-of-mind, and a true strategic partner.

—John DeWitt and Meghann Grandy, info@itsma.com

For more on Avaya’s council program, see out latest Case Study, Avaya’s High-Impact Customer Councils.

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EuroNotes: A Farewell Message from Bev Burgess

Over the past five years at ITSMA Europe, I have seen a number of important changes take place in the market for technology services. Broadly, customers now want suppliers to solve their business problems, they involve more people in buying decisions and supplier selection, they take longer over those decisions, and they want to work with proactive partners who understand their business and where it needs to go in future. Of course, the extent to which these things are true varies by customer segment and by culture, as we have seen repeatedly in our research into "How Customers Choose."

The choice facing these customers is also greater today, with many new entrants queuing up to meet their technology needs and many traditional suppliers building capability or acquiring skills to offer a broader range of services and solutions more consistently across the European geography. The battle for customers’ business, particularly the larger, multiyear deals that feed the engine of many IT services companies, is becoming fiercer. A more focused and targeted approach is being considered by almost all suppliers, with traditional marketing techniques such as segmentation increasing in importance and newer techniques such as account-based marketing becoming more widespread.

In my view, the role of the marketer has never been more important. We help our companies think from the outside in, we drive better strategy through fact-based tools and techniques, and we tell each company’s story in a way that few other people can. Many of the marketers I’ve met in Europe over the past five years are pulled in so many ways—on one hand, to deliver tactical results within the next quarter, and on the other hand, to build a strong and differentiated company for the future. Yet most are managing to do these things with increasing sophistication and are adding huge value to the companies they work for.

This is my last EuroNotes as I step down from my position as managing director of ITSMA in Europe, and so I want to congratulate all the European marketers I’ve had the pleasure to work with over the past five years for the progress they have made and the value they deliver. You have made my job an interesting and enjoyable one, and I want to thank you all and wish you the best for your future.

And finally, please remember, if the job was easy, you probably wouldn’t want to be doing it anyway!

—Bev Burgess

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Moving to Solutions: Measuring Solutions Value: Is It a Headache for You, Too?

If you've read any research lately around the value of IT, you know that one message repeats itself again and again: Measuring the value of technology is no easy task! Recent research from Ziff Davis confirms ITSMA's own research—only a handful of technology providers are measuring the value that their products, services, and solutions deliver, and customer skepticism around the vendor-provided metrics remains high. When it comes to solutions, the measurement issue is muddied even more by the complexity of solutions, the longer sales cycles involved, and the number of people who participate in the purchase decision.

ITSMA recently interviewed members of our Solutions Council and discovered that even these companies, which are leading the charge for solutions, are faced with myriad challenges in this area. For instance, most members' companies have yet to establish a formal process to measure solutions value. This problem is exacerbated by the fact that there is no clear owner of value measurement.

Another major challenge to measuring the value of solutions is that most vendors usually don't even try to measure value unless a client specifically requests it. This is partly due to the high cost associated with the process, which most solutions providers are incurring on their own, and also to the complexity, tools, and time associated with value measurement.

So, what's the answer? We're still trying to figure it out! But we do know that running away from measuring the value provided by solutions is not the answer. Might clients be willing to collaborate (and maybe even share the costs!) with their solutions providers around the measurement issue in order to get their providers' help in justifying their internal case? Might it be that measuring value is not worthwhile for all solutions, just the more complex ones? Stay tuned as we explore this issue and the roles and responsibilities of the parties involved in more detail. In the meantime, maybe an aspirin would help!

—Adnelly Reyes-Colberg, areyes@itsma.com

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Research Desk

Delving into Differentiation

The only way to avoid being seen as a commodity provider in today's market is to offer something distinctive from the competition. Not surprisingly, therefore, differentiation is one of the top marketing priorities identified by ITSMA members, with substantial energy devoted to creating value propositions, collateral, events, internal education, and other activities to help their companies and offerings stand out from the crowd.

Despite the time and money invested, however, it is a rare services firm that really does stand out. To help you avoid the trap of "me too" marketing, ITSMA has identified three types of differentiators, which are outlined below:

• Unique differentiators. Unique differentiators are very desirable. They create a gap between the firm and its competition that is very difficult to close, at least in the short term. Unique differentiators may create a totally new type of company, service or solution offering, or delivery or payment model. These characteristics are not shared by any other company.
• Differentiators by degree. These differentiators relate to amount, number, or size, such as lower prices, higher customer satisfaction, more consultants trained in a particular technology, faster response time, and so forth. They are not as powerful as unique differentiators, but they are easier to create. This type of difference is also more easily copied by competitors, which means that the competitive gap can be closed more quickly.
• Faux differentiators. Faux differentiators do not actually confer a real competitive advantage. For technology services and solutions, they include characteristics that customers either do not notice or assume that everyone has, such as sound financial management, superior management, or general technology expertise.

Although unique differentiators are the most coveted, not all of a provider's differentiators can be unique. In reality, companies need to think of their differentiators in terms of a portfolio to be managed. There should be a mix. Marketers should aim to identify at least one or two attributes or features that are unique and then look to support those unique differentiators with some additional differentiators by degree.

—Julie Schwartz, jschwartz@itsma.com

For more on the different types of differentiators as well as an exploration of what makes differentiators "real" vs. "perceived," see ITSMA's new Differentiation Audit Tool.

For more on differentiation, see out latest briefing, Meeting the Differentiation Challenge: Competitive Positioning in a Converging World.

Upcoming Events

Lessons From Other Industries – What Can We Learn From Investment Banks, Airlines, And Construction?
September 13 Inner Circle Meeting
http://www.itsma.com/Events/event_desc/06RT09E24.htm

Marketing and Sales: A New Partnership
September 19 Web Briefing
http://www.itsma.com/Events/event_desc/06OB09G25.htm

Blogs and Beyond: Marketing in the New Digital Channels
September 21 Workshop (Boston, MA)
http://www.itsma.com/Events/event_desc/06WS06N17.htm

Growing the Business with Micro- and Account-Based Marketing
September 26 Lunch Briefing (Santa Clara, CA)
http://www.itsma.com/Events/event_desc/06BB09N26.htm

Placing Your Bets: Marketing Investment Priorities and Trade-offs
September 27 Executive Roundtable (Santa Clara, CA)
http://www.itsma.com/Events/event_desc/06RT09N27.htm

ITSMA's 2006 Marketing Conference
Driving Value: Marketing's Emerging Role
November 15-16 Conference (Cambridge, MA)
http://www.itsma.com/Events/event_desc/06AC11N31.htm

Complete Events Calendar

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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.