technology

Technology Services Marketing Gets Its Act Together

Technology Services Marketing

If you are the kind of marketer who leads your business in its strategic thinking, owns the relationship with the customer, controls the brand(s) and manages the portfolio, then you are probably not working in a technology company. Especially not one focused on providing services around the hardware and software that customers need to run their businesses.

The IT industry has traditionally been a sales-led, macho environment in which to work. Up until the early 1990s, the name of the game was distribution, with members of the sales team effectively working as order takers. But following the dotcom crash and the economic downturn, we are operating in one of the most fiercely competitive yet undifferentiated markets there has ever been.

The major industry analysts, such as Gartner and IDC, are predicting that overall growth rates in spending on business-related IT services will not outpace growth rates in GDP for most countries. On top of that, third-party intermediaries are increasingly part of any deal, shifting the balance of power in the industry towards the customers and squeezing supplier margins whenever possible. In addition:

  • product companies are dashing into services markets, desperate to generate more revenue
  • customers are becoming more sophisticated and sceptical, demanding that suppliers back up their claims for return on investment
  • profitable mega deals are a species in decline
  • and consolidation within the industry has already begun – HP bought Compaq; Oracle bought Peoplesoft and Siebel; Business Objects bought Crystal Decisions.

THE GOOD NEWS AND THE BAD NEWS

The good news is that there are still opportunities out there. The UK is one of the fastest-growing geographical areas of demand in Europe. UKbased organisations whose core activities rely on technology, are still spending to get the advice they need to align their technology investment to their business goals. And they are still spending to get the support they need to install and run their IT systems day to day. So the challenge for IT companies now is to find the segments of the market that offer faster than average growth, win them over and then ensure that they are so happy they will not even consider the competition.

The bad news is that, according to an ITSMA survey1 conducted earlier this year, everyone in IT is looking to grow their service business by around 20%. With nearly every IT company focused on the same growth areas, price competition is becoming fiercer. Tech companies can remedy the situation, but they must be willing to invest in areas such as brand positioning and differentiation.

So we come to the conclusion that, more than ever, strategic marketing is needed to deliver results and build sustainable advantage for the future. But marketing as a discipline in most technology services companies is poorly developed, poorly understood, and undervalued. There are very few CMOs who have come up the ranks from the services side. And there are even fewer CEOs at IT services companies who have climbed the ranks through marketing.

What's Next?

Philip Oliver, acting group marketing director at Fujitsu and ex-IBM marketer and strategist, outlines the future role of marketing in IT services companies as being about strategy, brand and demand, with trust as the key enabler between the marketing department and its internal stakeholders.

To fulfil this new role, we have to look at each of these elements, starting with the need for more strategic marketing thinking.

DRIVING STRATEGIC THINKING: WHERE TO PLAY AND HOW TO WIN

When annual growth in demand for technology-based services was still in double digits, the focus was on making the services accessible and coping with recruitment/delivery issues to meet demand. Now that growth has slowed, companies are starting to think about identifying segments where growth is still attractive, tailoring or customising offers for those attractive opportunities.

This is where integrated technology solutions come into play, but most companies still need to do a better job at making sure their value propositions are targeted and relevant. Unfortunately, too many marketers in the industry are ill equipped for this, coming, as they do, from a specialist marketing communications background.

To drive more strategic marketing thinking into the business, marketers need to go back to basics. This means auditing their external and internal environments, particularly looking out for changes that may be long-term migrations in the way business is done – such as the offshoring or global sourcing phenomenon. BT's Global Services team, particularly the enterprise marketers led by Andrew Campling, excels at this, using classic market audits to identify new opportunities within priority customer segments.

Generally, a much deeper insight into customers and their issues is needed. But because these marketers rarely see a customer this could prove difficult. Setting up a decent market intelligence program incorporating primary and secondary research sources, and involving debriefs of internal customer-facing staff, is the way to start.

We can learn something from the example of our fmcg colleagues, who have to present their latest market insight to their top teams every one to two weeks. If you extrapolate that buying cycle to technology's three-to six-month cycle, it means quarterly health checks on customer priorities and perceptions, at the very least.

To complement this knowledge of the customer, marketing must keep a close and detailed eye on competitors. IBM leads the field here, able to anticipate problems its key competitors will face before they do. To achieve this, IBM Global Services marketers and strategists enlist the help of their colleagues in the finance department, who have a better eye for reviewing financial statements and spotting trouble ahead.

BUILDING A DIFFERENTIATED SERVICE BRAND

Branding is the second aspect of the new role and here again we find something of a gap. This stems from the fact that many technology CEOs have never seen the point in investing in something as intangible (to them) as their brand. In a business services company your reputation makes or breaks you as buyers rely on word-of-mouth to select suppliers for multi-million dollar, multi-year deals.

In many technology companies, the number of service and front-line personnel outweighs the number of target buyers they are trying to influence. So an increased investment in internal brand alignment programmes (versus external brand communications) makes sense. It's a matter of getting your story straight and getting everyone on board with it before you try to take it to the market.

To make this concept more tangible, technology marketers should think of service companies in the leisure industry, such as airlines and hotels. When these companies promise customers a friendly and relaxing experience, they make every effort to live up to their word.

It sounds like common sense, delivering on promises. But if internal stakeholders do not know what marketing is promising or do not have a clear plan for how to live up to those promises, brand integrity and brand equity are in trouble.

IT marketers must use research to discover what matters to customers and find out how they and their competitors are delivering on what matters. Finally, they must map out the service process as far as possible, and design each touchpoint to represent and reinforce their points of difference in the areas that matter to their customers.

UNISYS – INTEGRATED MARKETING PROGRAMME TARGETING RETAIL BANKS

Led by Paula Darvell and Chris Skinner, Unisys's financial services marketing team first defined the key issues that retail bank executives cared about, such as reducing the cost of serving customers to compete with internet-only banks. Then, they built value propositions around their ability to add value on these issues, such as cutting mortgage processing costs by 40%. Finally, they backed up these value propositions with specific customer references to prove the point – all delivered in an integrated sales and marketing campaign that used multiple media to reach its target audience. One measure of success, apart from the $100m uplift in sales achieved, is the fact that Radio 4's Today programme goes to Unisys for comments on financial services industry issues.

GENERATING TARGETED DEMAND

The third aspect of the new role is the one we are all historically comfortable with – demand generation. But even the discussion here has changed its tone. While it may be possible to generate leads for maintenance service contracts that keep your PC software or even your PC running smoothly, it's an entirely different ball game in the world of systems integration and outsourcing contracts.

Generating demand here is more about providing an executive dating service. In companies such as Accenture and EDS, marketers are constantly warming up prospects and driving opportunities to meet for their sales and account teams. They recognise that service contracts regularly last between one and five years and represent a huge investment for buyers, who do not respond well to transactional selling and push marketing techniques.

Having a sense of which marketing vehicles work at different stages of the relationship cycle in this industry, as shown in Figure 1, is important.

Third-party recommendations, whether from buyers, peers, the press, industry analysts or other sources, are crucial. Hewlett-Packard recognised this and did a great job with its recent advertising campaign featuring HP+ customer success stories. Deloitte is also forging ahead here, focusing on the idea of pull marketing through its branded content approach, incorporating publications for customers such as How to Choose a Consultant.

ITSMA has researched what works in building relationships with buyers, and recommends the following approach.

  • Demonstrate an understanding and a vision around their business issues.
  • Swiftly follow up with a compelling and differentiated value proposition, articulating how their issues can be resolved using your service.
  • Support your claims with solid references.

Unisys' integrated marketing campaign is an excellent example of this approach.

BUILDING TRUST WITHIN THE BUSINESS

Get Commercial – Understand the Business Drivers

In order to step into their new role, IT marketers have to gain backing from the business. There are two major steps to take. The first is to demonstrate an understanding of the commercial aspects of a service business. Being an expert in marketing will not cut it – you need to understand the business.

GETTING LINE EXPERIENCE

LYNDA Chambers, head of the UK private-sector business at French-owned Steria Group, has been on a personal journey to build her commercial experience. Previously head of UK marketing, Chambers first added sales to her remit and now runs the private-sector business P&L as well. She is adamant that, 'I now make it mandatory that marketers get out of marketing, visit customers and work in other parts of the business for a while.'

If you do not know what drives your colleagues – utilisation rates, total contract values, pipelines – then you cannot communicate just how marketing can help with the issues that keep them awake at night; or, more broadly, how you can help the business make money.

Other companies, such as UKowned Computacenter, are responding to this increasing need for marketers to understand and get closer to the business by putting marketers into service business units. Hewlett-Packard, under former CEO Carly Fiorina, split marketing into back office (technology and solutions development) and front office (customer-facing) activities alongside their colleagues from other functions.

Others are still grappling with the best way to structure their marketing function to be closer to the business, but many have settled on a combination of:

  • Employing service line marketers who interface with the P&L business units (for example, consulting)
  • Employing industry-aligned marketers who build propositions for and relationships with specific customers (for example, CIOs in utilities).

These two teams are then supported by some form of shared service for communications, research and intelligence specialists too. This approach, used by Accenture, Atos Origin and Fujitsu, to name a few, has the benefit of bringing marketing thinking closer to the business and its customers, while balancing the need for scale and buying efficiencies in specialist marketing areas.

Get the Metrics – Demonstrate You Have Delivered

The second issue linked with building trust is good old performance measurement. Trust develops when you have done what you said you would do, and a marketing performance measurement system is the best way to demonstrate this. Indian firm Wipro has built an excellent system for showing how its marketing programmes have extended the reach of their sales teams, filled the business pipeline and shortened the sales cycle (see Figure 2).

Lynda Chambers at Steria has also been busy measuring the business results of marketing investment. She recommends 'keeping it simple and using the language of the business'. The result emphasises the size of the business pipeline, Steria's brand strength in its target market and with an eye to financial prudence in the marketing budget.

To summarise, as the tech sector matures, marketing must step into a new, more strategic role in the business. Although the IT industry has traditionally lagged behind fmcg companies in terms of marketing, by focusing on strategic thinking, true brand differentiation and targeted demand generation, tech marketers will be taking a huge step in the right direction.

Furthermore, by enhancing their knowledge of the business and tying marketing results back into business drivers, marketers will build trust with their internal stakeholders, and together they can successfully ride the waves towards industry maturity.

ENDNOTES

  1. ITSMA (Information Technology Services Marketing Association) specialises in helping companies market and sell services and solutions. As a membership organisation, it works with the world's leading technology and professional services firms to generate new business, build customer loyalty, and strengthen brand differentiation. www.itsma.com

This article featured in Market Leader, Winter 2005.

NOTES & EXHIBITS

FIGURE 1: EFFECTIVE MARKETING VEHICLES ALONG THE RELATIONSHIP CYCLE

FIGURE 2: DEMONSTRATING THE BUSINESS RESULTS OF MARKETING AT WIPRO


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