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Sunday, August 25, 2013

Solution Marketing: Just What Is It?

"How do we progress from offering products to offering solutions?" This urgent question has reached the top of many technology CMOs' initiative list. When IDC interviewed solution marketing experts for the newest report in our CMO Advisory best practice library, they confessed that that the first issue to tackle is agreement on what is a solution.

IDC predicts that by 2016, more than 80% of technology purchases will significantly involve the line-of-business buyer, who will specifically drive 40% of all purchases. These business-oriented buyers have little patience with technology that can't be easily connected to a business problem. The new buyer increasingly disdains "raw" products that require substantial work to integrate into something usable. The new buyers seek to buy offerings that are closer to meeting their actual business needs (aka "solutions").

While the specifics about just what is a solution varied among the experts IDC studied, the gestalt of the answer can be easily grasped by comparing a raw turkey and the complete holiday dinner that it will someday crown.

Consider the Turkey Dinner
In the analogy of the raw turkey and the complete dinner, the raw turkey, as a single component to a completed dinner, is like most standalone technology products. People can't eat raw turkey. If guests were to be served a raw turkey with no intervention from cooks, they would be sadly disappointed. The raw turkey certainly has value! However, its value is to the cook — not to the ultimate consumer, for whom it is inedible. Technology products, like raw turkeys, solve important operational problems for the builders, or cooks, of the ultimate solution.

Just as the raw turkey must be cooked and incorporated into a meal before it can be really appreciated by a guest, so must a great deal of preparation work be conducted before most technology products are useful to the end user (the customer's business). Only when enough product components (ingredients) combine with sufficient services so that the end result actually solves a business problem can you really call something a solution. Service work can include planning, consulting, implementation, integration, customization, and training as well as providing financial assistance, overcoming legal or standard hurdles, and more.

Avoiding the Bundling Trap
Companies who want to offer solutions must be especially careful not to fall into the bundling trap. Bundling can be an effective strategy for some situations, but a bundle is not a solution — and companies should not fool themselves into thinking these two strategies are interchangeable. Expanding on the turkey and completed dinner analogy, to host a successful holiday dinner, customers need all the components for the full meal — ingredients, recipes, and equipment to produce it. Then they also need to set a table, decorate the house, put music on, and be ready on time. A good host is concerned about the whole dinner experience for the guests, not just whether the turkey comes out right.

If a company supplies only operational-level technology (e.g. raw turkeys), it must figure out how all the other elements can be put together in a way that can be easily used by the customer. The company must partner with other suppliers and provide orchestration among them.

Solutions require a much more complex go-to-market proposition than products. However, the upside is that solutions offer an even higher value to the customer. By helping customers to have a delightful experience, you create a loyal customer who is more willing to pay a premium and become a proponent of your brand.

Thursday, August 22, 2013

Welcome to 7th Grade Technology

This blog's purpose is to provide information for the current and past students of the 7th Grade "Introduction to Technology" class at D.S. Ray Middle School.
I, Mr. Lepine, and my teaching partner, Ms. Wallace, team teach this course and are always looking for different ways to make the class better for all of our students.
We hope that this blog will further educate and inspire you to explore technology. In the future, we hope to have our students contribute to this blog and hopefully use it to connect with other people that can give them a better perspective about all the exciting areas of technology.
The other part of this blog will be set up to help current students be more successful in our Technology Class. Announcements of project deadlines and helpful links to technological websites will all be a part of this blog.
I look forward to constantly creating and updating posts, links, cool pictures of our projects and short videos that we create here at Ray Middle School!

Wednesday, August 14, 2013

Tech Sales and Marketing Execs: Avoid Negative Attention from Your CEO!

By Richard Vancil, Vice President, IDC's Executive Advisory Group

A long-standing rift exists between sales and marketing in the IT vendor community. We all recognize the tired observations: sales is more tactical and marketing is more strategic; sales is all about the short term and marketing is about the long term; sales brings in the money and marketing just spends it. And we all know that the finger-pointing from the "two sides" gets sharper from there!

Just as these misalignments and strained relationships have been long-standing, so has the tolerance of this by the C-Suite executives. The prevailing mindset: as long as the business results have been very good, a little organizational tension never hurt anyone – and some of it is actually helpful! It's a good sign that complacency hasn't set in.

IDC is now observing that C-level tolerance is reaching its limits. More CEOs and COOs are scrutinizing their total cost of creating a customer: the sales plus marketing cost envelope. They are seeing those costs continue to rise relative to the return and are suspecting that the organizational friction and lack of alignment between sales and marketing is a culprit. And they are right!

The costs are just too big a target for senior management to ignore. A typical large tech vendor might spend 3% to 12% of revenue on marketing and an additional 10% to 20% of revenue on sales. For illustration purposes, let's call it 20% in total. Some of those costs are for pure and isolatable marketing activities and some are for pure and isolatable sales activities.
But a good proportion, as much as one-third, or 7% of revenue, are costs that lie at the intersection of sales and marketing. Activities represented in those costs include customer database management (often redundant and disconnected between departments); the lead management process; and the broad category of marketing's support and enablement of field sales. Where this intersection is tangled with miscommunications and broken processes, it is then reasonable to assume that some large part of that 7% might be wasted money.

As a result, more CEOs are now actively inserting themselves in the sales and marketing process to streamline operations and to reduce costs. At many companies, we are seeing a merging of the sales and marketing operations functions. At several companies we are seeing finance teams (and their hired consultants) spending more time examining and rationalizing sales and marketing costs (by order of the CEO). And finally, at a handful of companies, we are observing tech vendor CEOs looking actively at the organizational option of a single sales and marketing executive reporting to the CEO. We expect to see more of this in 2008 and beyond.

Our guidance for the senior sales and marketing executives is this: Start addressing some of these problems on your own or your CEO will start addressing them for you!

If the coming negative attention from the CEO is not enough motivation, it might be helpful to also look at some external catalysts. New IDC research finds buyers increasingly frustrated by the approach and tactics made by the vendor's marketing and sales efforts. They are getting turned-off by messages, material, timing, and sales representation that is out-of-sync with their buying process. Much of this may have roots in the misaligned sales and marketing execution on the part of the vendor.

Sales and marketing executives need to get on the same page. Put yourself in the shoes of your CEO the next time you are preparing for a sales and marketing planning or budget review. He or she is looking for new ways to lower the overall cost to create a customer. Offer a unified solution – not a fractured problem!

Product, Solution and Industry Marketing. . . the Next Evolution

Product marketing needs to undergo a significant evolution in the technology industry. It must no longer be marginalized as a content creation role or simply included as part of product management. Companies have an opportunity to lead this evolution by leveraging product, solution, and industry marketers to drive innovation in the organization and better meet the needs of their customers. Here are some key insights and guidance for tech marketers:
  • Companies should conduct a comprehensive audit of their product, solution, and industry marketing practices and apply a consistent definition of roles and responsibilities across the organization. This should include rules of engagement for these teams to interact within marketing, with other functions (e.g., product management and sales), and across business units where applicable. (contact me to receive a free copy of our 2007 Technology Marketing and Sales Taxonomy doc which includes definitions of these roles - mgerard@idc.com)
  • Innovation will be mandatory for next-generation tech leaders, from a product and solution perspective as well as a marketing and sales execution perspective — and product, solution, and industry marketers are in the best position to drive innovation across these areas. These teams must better incorporate the voice of the customer into the fabric of the organization, within product management for product and solution development and within sales and marketing for the customer creation process.
  • A key theme for the next 12-18 months is to get "ahead of the curve" on sales and marketing alignment and integration. In a recent study conducted by IDC, tech sales executives gave marketing a grade of 62 out of 100 for meeting sales' support needs. Product, solution, and industry marketers are in the ideal position to leverage their technology and vertical knowledge, coupled with marketing skill sets to improve sales efficiency and effectiveness.
Source: CMO Advisory Best Practices Series: Product, Solution and Industry Marketing, IDC #206551, April 2007.

Sunday, August 11, 2013

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