At ITSMA's Workshop on account-based marketing (ABM) a couple of weeks
ago, Avaya's Shawn Jean told an interesting tale. "As someone who's
worked on both the sales and marketing sides of the fence," he said
(and I paraphrase), "I can see both sides of the story. On one hand,
there's marketing, which is out there creating all these great marketing
programs that the sales guys don't always pay attention to, and that
can be frustrating. On the other hand, you've got the sales reps, who
are so focused on what needs to get done right now that it's a challenge
to keep track of relevant campaigns, tie them to revenue, and see the
value in execution." He stopped for a moment and looked around the
room. "It's hard to bring the two sides together."
Shawn then went on to describe his company's burgeoning ABM program,
which is going a long way toward closing the gap between marketing
and sales at Avaya.
But ensuring that marketing and sales are collaborating, truly collaborating,
on shared priorities that are of strategic importance to the firm requires
more than the implementation of an ABM program. It requires a whole
new approach to working together—one that emphasizes flexibility
and speed, necessitates the creation of multiple joint programs and
shared metrics, and perhaps even mandates organizational change.
In response to strong expressions of interest in this topic from our
members, ITSMA has decided to launch a Sales and Marketing Collaboration
Council. The Council will bring together a committed group of senior
executives from ITSMA member companies to network, share best practices,
and collectively advance the state of the relationship between marketing
and sales within the industry as a whole.
If you are interested in learning more about this Council and who
is eligible to join, please contact Jeff Sands at +1-781-862-8500,
ext. 11, or jsands@itsma.com.
Many ITSMA members have embraced the concept of account-based marketing
(ABM), an approach that emphasizes relationship development by treating
an individual account as a market in its own right. The benefits of ABM—including
improved relationships, enhanced positioning, and increased profitability
with ABM accounts—can be enormous, and for the past couple of years ITSMA
has been helping a number of member companies adopt our six-step approach
to ABM.
Well, as we did more and more work around ABM, our thinking evolved,
and we recently decided it was time to update our model. Whereas our six-step
approach was all about applying ABM principles to a single account,
our new model is designed to help companies think through everything they
need to do to create an overarching ABM program that encompasses multiple
accounts.
As we've seen the adoption curve of ABM by our member companies get steeper,
we've seen the starting point change. A few years ago, companies jumped
into the deep end of the pool by initiating pilots without a tremendous
amount of forethought. Frankly, there wasn't a lot to think about—the
pioneers didn't have the luxury of learning from predecessors.
At this point, however, much has been written about the positives and
the negatives of ABM initiatives, and we've documented the ways that pilots
have turned into sustainable programs. You can now benefit by laying the
foundation for overall program success before jumping into the implementation
of ABM with pilot accounts. We believe that companies will have an easier
time institutionalizing a successful, wide-scale ABM program for their
top accounts if they begin full program planning prior to diving into
pilot accounts.
Figure 1. ITSMA's New Model for ABM
As you can see from Figure 1, we haven't abandoned our six steps—far
from it. Selecting target accounts is now part of Phase 1, along with
other planning and design issues such as program oversight, funding, sales
integration, and staffing. The remaining five steps from the old model—understand
and analyze the target account; map value; develop the tactical plan;
execute; and measure results—reside in Phase 2, since they are all account-specific
activities that must be done individually for each target account. In
Phase 3, the company institutionalizes the learnings from the pilots and
builds ABM into the fabric of the way the sales team develops its account
strategies.
Let's review each of the three new phases in more detail:
Phase 1: Program Planning and Design. This is where the company
builds a foundation for ABM program success. It must answer important
questions, such as who will fund the ABM initiative? How much will it
be? Is there an executive sponsor who is invested in the program's success?
Who will manage the overall ABM program? What skills does the program
manager need to possess? Who will implement ABM within specific key
accounts? How many accounts can a dedicated ABM staffer take on? What
are the company's criteria for selecting ABM accounts? What role will
the account team play in implementing ABM? What role will marketing
play? How will we take it to different industries and geographies?
Phase 2: Account-Specific Project Implementation. The activities
in this phase should all be familiar; they are five of the six steps
outlined in our old, six-step approach. Some of the key questions to
consider while executing on this phase include these: What kind of research
is necessary to build a deep understanding of the target account? What
are the target account's main business imperatives? How do the company's
capabilities map to the target account's needs? How can the company
ensure that the ABM team stays totally focused on solving client business
issues rather than "selling more stuff"? What are the best marketing
tactics for each of the company's plays vis-à-vis the target account?
Who will own the execution of each tactic, and who will track the results?
Phase 3: Program Evaluation and Management. This is where the
company steps back from the activities going on within each individual
ABM account to see whether they are tracking according to plan and how
likely they are to meet the stated objectives. This critical feedback
becomes the basis for the final program design. Companies need to be
prepared to answer questions such as how many accounts do we want to
fold into the program? Where does this fit with our other marketing
programs—segment marketing, mass marketing, partner and alliance marketing,
and so on? Where will the funding come from for a significantly expanded
program? Where will we find a large number of marketers with the skills
that we now know we need?
Many services and solutions companies are harnessing the power of ABM
to build better relationships, boost profitability, and achieve the coveted
role of trusted advisor with their key accounts. Our updated model will
not only help companies execute ABM within specific accounts, it will
also help them lay the foundation for program success.
New
Thinking
A Better Way to Segment: What Marketers Can Learn from a Milkshake
Clayton Christensen, Harvard Business School professor, co-founder
of Innosight LLC, and author of The Innovator's Dilemma, The
Innovator's Solution, and Seeing What's Next, recently provided
insight into what marketers can learn about segmentation from studying
why consumers "hire" milkshakes.
ITSMA: Clay, you've said that you believe that the fundamental
paradigm of how to segment markets is broken. Could you please explain?
Christensen: When we are marketing, we're playing in the categorization
world. If you're inside the company looking out onto the market, it appears
as though the market is structured by customer category or by product
category. Therefore, we segment markets either by the attributes of the
customers or the characteristics of the products. Then we try to find
correlations between the attributes and the probability that customers
will buy. But the fact that I'm in a certain demographic segment doesn't
cause me to buy a product. The propensity to buy might be associated with
those characteristics, but it isn't the causal mechanism.
So what causes us to buy? We buy because we have a job to do. We hire
products and services to do the job for us. Therefore, if I really want
to predict whether a customer will buy my product, I should not segment
markets by categories of customers. Rather, I should try to figure out
the segments based on the different "jobs" that people are trying to get
done, for which my product might be "hired."
Let me illustrate this concept with an example from the fast-food industry.
A fast-food restaurant was trying to goose up the sales of its milkshake
product line. It segmented the market by product category and had extraordinary
data on the demographics and even the psychographics of customers who
bought milkshakes. It invited members of these demographic segments into
conference rooms and asked them, "How could we improve our product so
that you would buy more?" The company got very good feedback from these
customers about how to improve its milkshakes. It did improve them, and
surprisingly, the improvements had no impact whatsoever on sales or profits.
Consequently, the milkshake was determined to be a "dog" product that
had no growth.
Peter Drucker once said that rarely does the customer buy what the company
thinks it's selling. Therefore, one of my colleagues went into a restaurant
one day and observed for 18 hours to see if he could answer the question,
"What job do people hire a milkshake to do for them?" He took very careful
notes, including the time at which people bought milkshakes, what those
people were wearing, whether they were alone or with a group, whether
they bought other food or just the milkshake, whether they drank it in
the restaurant or took it out. It turned out that nearly half the customers
bought milkshakes in the very early morning. It was the only thing they
bought, they never drank it in the restaurant, and they were always alone.
So the next day my colleague returned and confronted these people as
they left the restaurant, milkshakes in hand, asking them, "Excuse me,
please, but could you tell me what job you are trying to get done for
yourself when you hired that milkshake?" As they would struggle to answer,
he would say, "Think about when you're in the same situation, needing
to get the same thing done, but you didn't come here to hire a milkshake.
What did you hire?" It turned out that they all had the same job to do:
They had a long and boring commute to work. One hand had to be on the
steering wheel, but God had given them this other hand in which they needed
something to hold while they traveled. They weren't hungry yet, but they
knew they'd be hungry by 10:00 a.m. Therefore, they needed something that
would land in their stomachs and stay a while.
So what do I hire when I have this job to do? A banana doesn't do the
job well at all. It's gone in three minutes, I am hungry an hour later,
and it leaves an empty peel on the seat. Doughnuts get my fingers sticky
and then the steering wheel is gooey. Bagels are dry and tasteless, and
they make crumbs all over my clothes. If I try to put cream cheese or
jam on them, I have to steer with my knees, and if the phone rings, I've
got a real problem. And I hired a Snickers bar once, I'll admit, but it
made me feel so guilty I never did it again. But let me tell you, when
I hire this milkshake, it is so viscous that it easily takes me 20 minutes
to suck it up that thin little straw. It gives me something to do, and
I'm still full at 10:00 a.m. It also fits in the cup holder.
It turns out that the milkshake does the job better than any of the competition.
Surprise! The competition is not Burger King's milkshakes. The competition
is bananas, doughnuts, bagels, Snickers bars, and in many cases, boredom.
Why boredom? It was so inconvenient to get these milkshakes that people
quite often just drove to work bored.
My observant colleague also learned that in the afternoon and evening,
the milkshake tended to be hired for a very different job. In the evening,
the milkshake was bought by fathers with their children and eaten with
a meal inside the restaurant. Dad feels bad because he has been saying
no to his kids all day, and he just wants to say yes to something. He
says, "Sure, Spence, you can have a milkshake." Dad finishes his meal.
Spence finishes his meal, and then he picks up that thick, viscous milkshake
and it takes him forever to suck it up that thin straw. Dad waits patiently.
Then Dad waits impatiently. Finally Dad says, "We've got to go," and he
throws the shake away half consumed.
Suddenly, the milkshake is not a one-size-fits-all product. If you understand
the job the product is being hired to perform, it's very simple to see
which improvements to the product would get the job done better. For the
morning job, for example, you would actually want to make the milkshake
more viscous so it would take even longer to suck up the straw. You would
stir in tiny chunks of fruit, not to make it healthy, because customers
don't hire it to be healthy, but to add variety. Think about it. Every
once in a while, you would suck up a piece of fruit, and it would add
an air of unpredictability to the morning routine. You would also move
the milkshake dispensing machine from behind the counter to the front
and give people a prepaid swipe card so they could just dash in and go.
Most companies assume they're giving customers what they want. All too
frequently, those companies are kidding themselves. Since its founding
in 1984, CDW, a $6 billion-plus technology reseller, has strived to put
the customer at the heart of everything it does. Over the years, the company's
research team invested millions of dollars collecting customer insights
and determining the drivers of customer satisfaction, loyalty, and retention.
Toward that goal, CDW employed a sophisticated arsenal of customer research
techniques, including frequent customer loyalty surveys and focus groups.
However, like many companies, CDW found that competitive pressure was
growing, customer spending was cautious, and the Web was dramatically
changing the sales process. Despite all its investment in customer research,
the company was aware that there were still things it didn't know about
its customers. The loyalty data helped identify "bigger customer challenges"
but was not specific enough that the company could act on more granular
opportunities for improvement. CDW needed to find a way to truly understand
what was important to customers and to uncover what it didn't know enough
to ask.
CDW Turns to Private Online Communities
As Calvin Vass, senior manager of research at CDW, explored new methods
to collect customer feedback in more intimate and continuous ways, he
became intrigued by the idea of building private online communities for
specific segments of CDW's customer base. He looked to Boston-based Communispace
to make it happen.
According to Vass, "Building online communities for our customers made
sense to us for two main reasons. First, they'd enable us to get continuous
customer feedback rather than semiannual or ad hoc feedback. Second, they'd
allow us to really drill down on a particular topic and get insight we
could act on. When we act on the feedback we receive from our customers,
it shows them that we're listening to them, that we really care. The communities
enable us to do that."
How CDW's Communities Work
CDW launched its first online community in March 2004. A year later,
the initial community was split into three separate communities: one each
for small, medium, and large business customers. Today approximately 400
customers participate in each of these three communities. The company
has also launched two additional communities: one for its K-12 market
and one for higher education.
Unlike public forums, private communities are facilitated to ensure that
conversations stay fresh and strategically relevant. Community-building
and research activities keep members highly involved. Through a combination
of online chat, surveys, and online focus groups, CDW elicits feedback
from its community members on anything from their top IT priorities for
2007 to the topics they would like to see covered in the next issue of
CDW's Biz Tech magazine or how they would spend CDW's marketing
budget if they were the company's CMO.
On average, community members spend 30 minutes a week providing feedback
to CDW and other community members through diverse activities, including
completing surveys, participating in brainstorming sessions, offering
advice, commenting on market trends, and sharing experiences.
Figure 1. Screen Shot from a CDW Community
Results
When CDW launched its first online community, the research team had to
work hard to sell the value of the tool to the rest of the organization.
Today, says Vass, that's no longer an issue. "Everyone wants to use the
communities! Our biggest issue now is how to stagger all the activities
everyone wants to do!"
In addition to the value that the communities provide to the business,
it's also clear that the customer participants are benefiting as well.
According to a recent survey, 84% of community members feel that their
voice matters to CDW. And many have expressed how rewarding it is to see
the company act on their feedback. As one community member put it, "I
like the fact that a vendor cares about our opinions. If it helps make
the service we receive better, then I'm all for it."
Another benefit of conducting customer research via online communities
is that the voice of the customer is heard throughout the organization
at a fraction of what it would cost to conduct traditional one-off surveys
and focus groups. Vass estimates that the survey feature for the communities
alone has saved the company about $3 million a year. Add to that the $6,000
average cost of a focus group—without company travel and expense to get
geographical representation—and the company saves another estimated $1
million per year. This is more than four times the budget for CDW's online
customer communities.
"Our online communities have revolutionized the way CDW interacts with
customers," said Vass. "It's clear that customers today want to be heard.
They want to collaborate with the companies that can help them succeed.
Thanks to our online communities, our business strategy is more in tune
with our customers' wants and needs than ever before, and that's a beautiful
thing."
Traditional partnering in the technology space has often focused on the
use of partners to extend market reach—using partners in a "sell-through"
model. But customers are demanding ever more sophisticated solutions that
deliver business results rather than merely solve technology issues. Today's
services providers are frequently required to collaborate with others
to meet customer demands. Striking and developing these "sell-with" partnerships
is not without its challenges, and at an ITSMA Roundtable in Paris last
month, a number of European members got together to explore in greater
detail best practices for creating successful partnerships.
Support From the Top
Many partnerships begin with good intentions but fail to deliver on their
initial promise due to lack of senior-level buy-in and support from the
start. All roundtable participants cited gaining this buy-in as a critical
precursor for successful partnerships.
Ensure Strategic and Cultural Fit
Another critical step to creating a win-win partnership is to create
an agreed vision for the partnership that links back to the overall business
goals of both parties. These types of partnerships—the ones that are built
around jointly identifying and meeting market opportunities, as opposed
to opportunistic alliances struck around a specific customer bid—are much
more likely to be successful, long-term affairs.
In addition to ensuring a strategic fit, however, it is also important
to ensure that the partnering companies are a cultural fit. Conflicting
metrics, differing management styles, or opposing attitudes on risk or
investment philosophy can create major obstacles. Partners must also keep
in mind that it is the strength of personal relationships at all levels
that will hold the relationship together for the long term; therefore,
they must work hard to build those personal connections.
Size Isn’t Everything
Remember that size or scale of operations does not necessarily dictate
the scope of a potential partnership. Again, it is more important that
the strategic fit of the partners and their respective contributions to
the service proposition are equally relevant to the end user and target
market.
Build a Joint Value Proposition
The next step in establishing a "sell-with" partnership is to identify
a clear, differentiated joint value proposition. This is essential not
only for communicating with customers; it also assists in minimising conflicts
with other partners and programmes.
Educate and Communicate
Education and regular communication are also key to a partnership's success.
This is especially true for services companies, which need to go to extra
lengths to ensure the delivery of a consistent service experience. (It's
much easier to ensure consistency with a sell-through approach whereby
a partner acts as a reseller of a packaged "product" to the end customer.)
Participants at the Roundtable cited a number of activities to ensure
that everyone involved in the partnership has a good handle on what it
means and what it involves, including:
Executive briefings to all client-facing staff
Demos and training on capabilities
Easily accessible support materials—both physical and online
Trust Matters
As in any long-term relationship, openness and trust between partners
(and in many cases clients, too) is essential if the partnership is to
develop and grow over time. This requires considerable efforts where multiple
country and business units are involved and should not be underestimated
when embarking on the journey.
Keep Marketing's Role in Perspective
Finally, it is important for marketers to recognise that although marketing
has a clear role to play in selecting and developing the partner portfolio,
marketing should not own this relationship. A good test of an organisation’s
commitment is the allocation of dedicated alliance management resources
to be the ultimate owner of the partner relationship and nurture it over
time.
Research Desk
Ask ITSMA: What's the Difference Between Advisory Councils, Executives
Forums, and Communities?
Each month, ITSMA receives a number of queries through Ask
ITSMA, a resource designed to give members a quick and easy
way to get insight on important services and solutions marketing
questions they face. In this column, we will publish some of our
favorite questions along with excerpts from our replies.
Question: How do you define the difference between advisory
councils, executive forums, and communities?
Answer: Advisory councils typically comprise senior representatives
from top customers, and they're designed specifically to provide ongoing
input to guide a company's strategic direction. They might meet several
times a year for a day or two and focus on major company issues and
direction. They are typically led by top company executives (ideally
the CEO) and provide participants with an opportunity to give feedback
and have an impact on the company—which presumably they want
to do since they are invested in the company's success.
Executive forums are typically one-off events or a finite series of
events that bring together small groups of executives to focus more
on industry or technology issues of interest. We're seeing an increase
in marketing investment in these types of events, which often feature
third-party experts as well as company representatives as the main
speakers. They are very much relationship-building efforts rather than
sales pitches but don't require the ongoing commitment from participants
the way an advisory council would.
Communities are the most amorphous of the three, but typically they
are demographic- or issues-based programs that try to bring together
larger groups of people (customers for sure, but often other interested
parties such as developers, VARs, and so forth) for ongoing dialogue
and education. Some are more online oriented, others more face to face.
They typically bring together lower-level participants than the councils
and forums—often IT directors and managers or people from other
functions. Communities can be effective in building relationships with
a larger number of people than face-to-face programs allow; they can
also be effective for gathering information about customers and their
perceptions of the company and its offerings on a more continuous basis
than one-off surveys allow.
Because each of these relationship-building programs is targeted at
a different audience, ITSMA recommends that companies should be leveraging
all three, in addition to other customer-facing activities such as
reference programs, satisfaction surveys, and other primary research.
Do you have a services marketing question? Visit Ask ITSMA to access
our experience, insight, and research results.
We'd like to extend a big welcome to four new members of ITSMA:
CGI,
an information technology and business process services firm
First Data,
a large provider of merchant processing services
Hexaware,
a specialized IT and BPO service provider
LexisNexis,
a provider of information management and workflow solutions
We're also happy to note that we've confirmed a number of speakers
for ITSMA's
Marketing Leadership Forum on May 22 and 23 in Berkeley, CA. They
include:
Joann Duguid, Vice President, Solutions & Sector Marketing, Americas,
IBM
Steven J. Garrou, Director, Solutions Marketing, Unisys Global
Infrastructure Services
Terry Gebert, Vice President and General Manager, Manufacturing
and Process Solutions, Rockwell Automation
John Hagel, Author, Senior Advisor to McKinsey & Co., and President
of John Hagel and Associates, LLC
Robert Mattis, Vice President, Management Services, Pitney Bowes
Anyone who registers to attend the Marketing Leadership Forum before
Monday, April 9 will receive a 10% discount, so sign up now
at www.ITSMA.com/leadershipforum.
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