ITSMA E-ZINE	December 2006

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Editor's Note: The Power of Five...Hundred

We're "five" heavy in this issue of the E-ZINE, so I felt compelled to mention it in this note. Ordinarily I wouldn't like such repetition in our table of contents, but I think they're all useful pieces and reasonable titles, so there you have it.

Anyway, my real topic here is a recent blog post from Sun CEO Jonathan Schwartz on reaching out to startups as new customers, the "next Fortune 500." Talking about Sun's image problem with smaller companies (too many think Sun only sells expensive servers to big companies), Schwartz outlines an initiative to attract young companies with fewer than 150 employees. It's mostly a pricing ploy—"we know you're price sensitive so we're going to drive prices into the ground to lower the cost of using Sun's newest innovations"—but the most refreshing part of it to me is simply Schwartz's openness in discussing the strategy.

Schwartz lays out the approach in plain conversational English, links to the relevant datasheets for those who want details, and inspires dozens of reactions from customers, prospects, investors, and others around the world (including many skeptical and negative comments, in fact), all with an 800 word blog post. I have no idea if Sun's initiative will succeed, and some of the negative reactions give me pause. The value of the immediate feedback and the transparency of his approach, however, bode well in a marketplace with so little patience for traditional marketing copy.

—Rob Leavitt

What's Hot: Marketing's Leadership Journey: Five Challenges for 2007

More than 200 marketing leaders representing many of the top technology, telecom, and IT services companies explored five challenges for 2007 while meeting at ITSMA's annual marketing conference on November 15-16. Under the banner of "Driving Value: Marketing's Advancing Role," conference speakers and participants suggested that the following issues should take center stage next year as marketing takes on more of a strategic advisory role in the business:

Deepening Customer Insight. Despite all the rhetoric about companies being customer driven, the reality is that many technology and services firms still operate largely from the inside out. Tapping new digital channels (blogs, social networks, etc.) to improve customer (and market) insight is gaining interest among marketing leaders, but participants also agreed there is still no substitute for personal, face-to-face interaction. Even within tight budget constraints, marketers need to find ways to get closer to customers and use customer insight to help drive investment priorities, business development, and marketing strategies. As Bob Baginski, executive vice president for global marketing and communications at Satyam noted, "marketers should know more about their customers than anyone else at the company." One approach receiving great attention at the conference: building private online customer communities to gather more regular, real-time insight into customer perspectives, wants, and needs.

Sharpening Market Segmentation. Building on deeper customer insight, marketers are also focusing more on segmentation, and moving beyond simple industry or demographic approaches to more sophisticated needs-based models. Some of this revolves around customer business needs. At AT&T, for example, Sue Soares, vice president of product marketing and operations, described how the company is driving new growth with small and medium business customers by mapping telecom services offerings to specific business needs within priority industry verticals. On a different level, Julie Schwartz, ITSMA's senior vice president of thought leadership, outlined the importance of segmenting customers for integrated solutions based on why and how they measure solutions value. While some buyers are focused mostly on technology performance and functionality, others look at return on investment, and still others are more concerned with ongoing measurement and continuous improvement.

Accelerating Market Innovation. Harvard Business School professor Clayton Christensen, author of The Innovator's Dilemma and The Innovator's Solution, struck a chord with participants by demonstrating the potential pitfalls of listening to your best customers. The most disruptive market innovations, according to Christensen, often come from low-end competitors creating simpler solutions for buyers far removed from your current customers (consider how the early personal computers seemed unimportant compared to the powerful minicomputers that business customers relied upon in the 1970s and early 1980s). As such, focusing mainly on improvements for current customers can mean missing important new opportunities as well as emerging competitors. But improving offerings for your best customers is also important, so creating a balanced approach is necessary. For established technology companies, Christensen suggested three possible approaches:

• Low-End Disruption: Creating new, low-cost business models to undercut existing competition
• New Market Disruption: Creating different, simpler, cheaper products and services to sell to currently unserved markets
• High-End Innovation: Creating better products and services to build more business with existing customers and similar prospects

Simplifying Portfolios and Messaging. Marketing simplification was another common thread running through the conference. Too many disparate messages and offerings overwhelm customers, prospects, and companies' own sales forces, and many marketers seem determined to create more focus in 2007. Greg Root, director of services marketing at Symbol Technologies, described the gains Symbol has made in the last year after cleaning up the services portfolio and reentering the market with just three core support offerings. Similarly, Mary Garrett, vice president for marketing for IBM Global Technology Services, outlined IBM's move to a simpler messaging approach, with a new effort to organize communications around priority audience segments such as CEOs, CIOs, and IT managers, rather than endless products, services, and solutions.

Building New Customer Connections. The fifth challenge comes back to the first; with deeper customer insight comes the possibility of stronger customer connections. The power of account-based marketing to build those connections was an important refrain throughout the conference, with great examples coming from Xerox and Northrop Grumman, each of which has generated significant results from substantial marketing investments in priority accounts. Digital connections was another area sparking discussion among participants, with general agreement that marketers should begin moving from interest and experimentation in new social media over the last two years to more focused investment in 2007.

The journey to market leadership, as Satyam's Bob Baginski termed it, is a long-term one that requires new skills, new priorities, and constant attention to the changing dynamics of internal and external stakeholders. Marketing technology-related services and solutions these days is not for the faint of heart (if ever it was), but the five challenges noted herein should provide useful guidance as marketers continue the journey in the months to come.

—Rob Leavitt

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The Interview: Marketing's New Mindset: An Interview with Foghound's Lois Kelly

Lois Kelly, a founding partner of the strategic communications firm Foghound, recently sat down with ITSMA to discuss the trend toward "conversational marketing," the new responsibilities that marketers must take on to ensure that their companies stay competitive, and how to hire marketers with the skills to drive conversational marketing throughout the organization.

ITSMA: As we look back on 2006, it's clear that the marketing function is undergoing some major changes. What is the most important change that marketing needs to make in 2007?

Kelly: With so much information available today, it's important for companies to develop an interesting point of view that resonates in the market. But in order to do that, companies also need to listen to what's going on in the market. Customers today don't just want the facts about your services or solutions; they also want insight on where the industry is headed and how your products and services can help them get there. In 2007, we're going to continue to see marketing shifting away from broadcast and moving instead to a more conversational approach.

ITSMA: Practically speaking, what does the marketing department need to do to make sure it's taking a conversational approach?

Kelly: First, the head of marketing needs to champion the new mindset and define the new roles and responsibilities that the various marketing functions need to take on. For example, someone within marketing needs to take responsibility for listening to customers, influencers, and industry thought leaders and then reporting back. This could be the market research department or the public relations department, but someone has to be accountable for it.

Once the listening is in place, it can feed the development of the company's points of view. The people who are responsible for the company's branding, messaging, and positioning are often good candidates for fleshing out its points of view. Then, once the company has a compelling point of view, it's up to the people who are responsible for sales support to create conversation guides for the sales team so that the reps can engage customers on industry issues and challenges all the time, not just when they're trying to sell a specific service.

ITSMA: That's a great starting point for how to organize around the idea of conversational marketing. What new skills are required? What should you be looking for when you're interviewing a job candidate?

Kelly: In the technology industry in particular, I find that people are seduced by résumés. If they see someone who's worked for one or two of their major competitors, they tend to think that that person will be a good addition to the team. Not necessarily! Sometimes people who've been in the industry for a while are quite set in their ways and unwilling to try a different approach.

In my opinion, the most important thing to look for in a job candidate is intellectual curiosity. You want to hire people who are always going to be interested in what the next thing is, why it's important, and how to master it. You want to hire people who are passionate about the marketing profession and the industry you are in.

One trick I've suggested to clients who need help with hiring is to ask job candidates to write a one-page point of view on a subject like what's going on in the industry. That will very quickly show you if that person is passionate, informed, and capable of communicating clearly.

ITSMA: There are a lot of new digital communication channels that are generating a lot of buzz right now, including blogs, podcasts, and Second Life. Are these tools going to continue to generate excitement in 2007?

Kelly: What people are beginning to see is that there are all these new channels for conversational communication, but most companies have very little to say! I think that 2007 is going to be the year when we start seeing the gap between the companies that are listening to their customers and generating interesting content for these digital channels and the companies that aren't listening and don't have much to say. I also think that marketers are beginning to realize that face-to-face opportunities are still more valuable than anything we can do with cool new tools like Second Life. In the coming year, I'd recommend that companies focus as much on how to engage in conversational marketing offline as they do in experimenting with the next proliferation of digital tools.

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On the Job: Symbol's Strategy for Selling Support Services

Symbol Technologies, a company well known for making mobile computers that are so rugged that they continue to work after being run over by a Boeing 737 jet, had a problem. Services revenues were decreasing, attach rates were low, and Symbol's Global Services Division was having a difficult time raising the attention of the product marketing and sales teams. After all, with the sales team trying to sell products that are not supposed to break, it was difficult to create a compelling reason to sell maintenance services with new orders.

In the summer of 2005, Symbol's Global Services focused its attention on revamping the company's services portfolio and creating an undeniable value proposition that encouraged customers to buy Symbol products so they could also have Symbol services.

According to Greg Root, director of marketing for Symbol's Global Services Division, "One of the things the team had to remember was that the sole purpose of Symbol Global Services is to support the customers of Symbol products. The product sales teams create our total addressable market—we can't sell our services until somebody sells our products. So it was critical that we give the product teams a compelling reason to talk about services from the very beginning." For the services to be an undeniable value proposition, the team had to take on a more strategic role.

Following in-depth customer research that included focus groups, conversations with customers and channel partners, and the analysis of existing service contracts, the marketing team decided to simplify the services portfolio by reducing its 12 existing service offerings to three.

The simplification of the portfolio was important, but it was the inclusion of comprehensive coverage that was the key decision. Until then, industry service plans only covered normal wear and tear such as broken screens. Damaged keypads were considered the result of abuse, and customers were charged extra for the repairs. This would often result in customer dissatisfaction because a customer would often be surprised by the additional charges on top of their existing contract. The services team knew that the comprehensive, "no questions asked" service offering would support and enhance the rugged image of Symbol's mobile computers.

Symbol's Global Services also realized that including comprehensive coverage at no additional cost would differentiate Symbol from its competitors and provide a significant competitive advantage. According to Root, the marketing team saw the ruggedness of the handheld computers as the product's competitive strength. They then concluded that the weakness within that strength was that any damage done to the rugged device would fall outside the realm of "normal wear and tear" and result in an expensive repair bill. Adding comprehensive coverage at no additional cost defended the product against competitive attacks based on high repair costs. It also gave the sales and product marketing teams a reason to discuss services at the very first customer meeting.

When Global Services marketing officially unveiled the new support program in January 2006, "Sell more services!" became Symbol's rallying call. Since comprehensive coverage was introduced, Global Services has seen its attach rate improve significantly.

Several other interesting developments happened as a result of the effort. Symbol's sales reps noticed that customers were buying Symbol products because of the unique value of the comprehensive services. In addition, several business partners decided to close their service operations to resell Symbol's services. However, the most gratifying result for the services marketing team is that the product teams now see Global Services as a strategic partner that can help them differentiate and add value to Symbol's products in a competitive market.

"One of the big lessons here," said Root, "is the importance of crafting a well-thought-out marketing strategy in differentiating the company from competitors and driving new business. Doing more marketing communications is not the answer. Developing the right portfolio of services has been the key to our success."

"Symbol's story very clearly illustrates what recent ITSMA research has shown: Marketers with strategic responsibilities such as developing new offers and managing the portfolio have a bigger impact on the business," said Dave Munn, ITSMA's president and CEO. "Symbol's services marketing team leveraged its knowledge of the company's customers, competitors, and internal priorities to create an offer that literally sells itself—without ad campaigns, lead generation initiatives, or even customer communications. This is the value that marketing can bring to the business. These are the rewards of moving beyond marketing communications to take on a truly strategic role."

—Meghann Wooster, info@itsma.com

For more on Symbol's Marketing Excellence Award-winning program, please see:
http://www.itsma.com/News/mea/ITSMA06MEABook.pdf PDF (330KB)

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EuroNotes: Just Say No: Five Tips for Prioritising Marketing Activities

For the past few years, marketers have been asked to—yes, I know it's a cliché, but it's true—do more with less. To maximise the value of the marketing contribution and preserve the sanity (and personal lives!) of hardworking marketers, we need to prioritise marketing activities. Sometimes, we even need to just say no.

Together with participants from a recent roundtable meeting in London, ITSMA has put together five quick tips that can help marketers prioritise their activities:

• Simplify marketing's role. Sit down and map out marketing's role by laying out what the marketing team actually does so that your role is clear to everyone in the organisation. Your role should focus primarily on three linked elements: strategy, brand, and demand. If these three elements get lost amidst a crush of other activities, make a commitment to refocus your energy on these basics.
• Engage with key stakeholders. Marketing exists at the whim of the CEO and CFO, which makes it the easiest target for cuts when times are tough. Make a commitment to understanding the business goals and objectives of the company's key stakeholders.
• Align your marketing activities against business priorities. The marketing strategy—and highest-priority activities—should feed the company's business goals. This can be done by using a balanced scorecard with appropriate metrics.
• Deliver what you prioritised … and say no to the rest. (Or at least point out the consequences to the plan of saying yes to peripheral activities.)
• Communicate with company stakeholders. Trust requires personal relationships, which you can build through regular, planned communications about what marketing is doing and the results being achieved.

There are, of course, any number of techniques that marketers have tried to keep themselves and their functions focused on their key priorities. But ultimately it is the trust of the key stakeholders and marketing's alignment to the core objectives of the business that will enable marketing to keep saying yes to the right things … and no to the rest.

—Tim Shercliff, tshercliff@itsma.com

More EuroNotes

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Research Desk: Five Steps to Business Assessment

We all know that gaining deep customer insight and working it through the organization is one of the most important things marketers can do. But customer insight is only one piece of a comprehensive marketing strategy for which the goal is to drive profitability and have a recognizable impact on the bottom line.

Bob Baginski, senior vice president for global marketing and communications at the Indian outsourcing firm Satyam and a presenter at ITSMA's Annual Marketing Conference in November, laid out a useful five-step scheme for marketers to consider in getting a firm handle on the state of the business:

1. Markets. What are the key trends, financials, and growth prospects of the markets you are in? What are the most important industry, horizontal solution, and geographic dynamics? What are your firm's most important strengths, weaknesses, opportunities, and threats (SWOT)?
2. Customers. How should you understand the range of deals with customers? What are the most important issues and opportunities you face with different customers? What does demand look like from the customer perspective? Who are your customers' most important market influencers? What can you learn from other anecdotal information?
3. Alliances. Who are the key players, and how do you classify them? What are the most important technology and other issues facing them and facing your individual relationships? What are the key drivers, and how would you assess the health and prospects of those relationships?
4. Competitors. Who are the key competitors, how strong are they, and what is their strategy? What sort of innovation is emerging from competitors, and how should you address that? How strong are their brands, and how do they relate to and affect your own?
5. Company. What are the basic financials, and what is the core strategy? What are investment priorities, and why? Where does marketing fit into the larger corporate agenda?

Most marketers understand the importance of these questions, but having a rigorous approach to answering and updating them on a regular basis is less frequently the case. The point, according to Baginski, is to know the business and its possibilities from multiple perspectives as well or better than anyone else in the organization. This will not only enable more effective marketing strategy and planning, it will also help marketers become the trusted partners of business leadership rather than a simple support function that is too easily marginalized when times get tough.

—Rob Leavitt

Top Six for 2006: Most Popular ITSMA Downloads and Briefings

In 2006, ITSMA focused on a number of important issues for services and solutions marketers, including mastering solutions development, implementing digital marketing, and maximizing marketing's strategic role. Over the course of the year, we monitored the research reports you downloaded and the Web Briefings you attended to see which issues got the most traction.

Solutions was definitely a hot topic: Three of the six most frequently downloaded research reports dealt with solutions. Another hot topic was relationship growth, with two of the six best-attended Web Briefings focusing on this issue.

In case you missed any of the year's most popular research reports, be sure to check out:

1. Taking a Fresh Approach to Services Portfolio Management
2. Moving to Solutions 2006: An ITSMA Handbook
3. Marketing Technology Services and Solutions to the New CIO
4. Rethinking Marketing in a Solutions World
5. Solutions Metrics: Quantifying and Reporting Value
6. Sales Support Assessment Guide

For those who were unable to attend our most popular Web Briefings, the presentation slides are available at:

1. Relationship Growth Strategies for Key Accounts
2. 2006 Marketing Mandates: ITSMA's Annual State of the Profession Address
3. CXOs Are Different: Building Relationships through Councils and Community
4. Digital Priorities: New Tools for Connecting with Customers
5. Meeting the Differentiation Challenge: Competitive Positioning in a Converging World
6. Win-Win Strategies for Marketing with Partners

There were, of course, many other topics that interested our members. Please see our Online Research Library for a list of everything ITSMA published in 2006.

—Meghann Wooster, info@itsma.com

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Upcoming Events

Making the Case for Marketing: Communicating with Senior Management
December 12 Web Briefing
http://www.itsma.com/Events/event_desc/06OB12G34.htm

ITSMA's 2007 State of the Profession Address
January 23 Web Briefing
http://www.itsma.com/Events/event_desc/07OB01G01.htm

Account-Based Marketing: Best Practices and Critical Success Factors
February 13 Web Briefing
http://www.itsma.com/events/event_desc/07OB02G05.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.