Thursday, October 11, 2007

2008 Essential Guidance for CMOs

Marketing investment across the IT vendor community will increase by 6.1% for 2007. This increase in marketing investment will lag behind the growth rate of global vendor revenue, which is forecasted by IDC to be 6.7% in 2007. Tech marketers should watch this trend closely, and monitor their marketing budget ratio (MBR) and marketing investment change (MIC) data versus the industry. My research within IDC on marketing ROI has consistently shown that tech marketing leaders tend to expand their budgets at a rate equal to or greater than their revenue growth rate. Short-term budget reductions may improve short-term operating margins while sacrificing longer-term growth. This holds especially true for disinvestment in the brand and awareness-building elements of the marketing mix, which tend to return the best results when managed with a smooth and steady investment strategy. Here are some key guidelines for tech marketing executives and their operational counterparts for 2008:

- Think more about tech marketing from the "outside-in" versus the "inside-out." Tech marketers traditionally "go to market" in a one-way trumpeting of product and feature messages. As buyers get smarter and savvier, these product-centric and very expensive techniques will be less well received, and the return on traditional marketing investments will decline.
- Embrace interactive marketing. The new online and interactive marketing mix represents an excellent launching point for better "outside-in" practices and the potential for greater returns on investment. However, many vendors are off to some operational false starts in this area. IDC suggests beginning with an investment and operational review of all Web 2.0 marketing techniques.
- Start a channel marketing measurement initiative. The return on the channel marketing dollar is one of the murkier areas of the marketing investment portfolio. Now is the time to invest in establishing a set of improved processes and ongoing measures for channel marketing operations.Improve the overall "end-to-end" marketing in your company. Reduce your sales and marketing integration challenges by creating a single view of the customer from end to end; rationalize the number of customer databases if necessary. Better leverage customer and prospect data to improve the entire customer-creation process, from initial awareness through advocacy.

Source: Marketing Investment Planner 2008: Benchmarks and Key Performance Indicators, IDC #208489, September 2007

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!

Tuesday, October 9, 2007

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, October 7, 2007

Field Mktg. . .The Missing Link for M&S Alignment

CMOs and their organizations continue to fall short in optimizing alignment with their sales organization, and the field marketing function offers significant opportunity to improve the linkage with sales. Based on the results of a study I completed as part of IDC's CMO Advisory Practice of the field marketing function and related processes, I'd like to offer the following key insights and guidance:

  • Conduct a comprehensive audit of your field 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 and with sales. Best practice leaders achieve greater efficiency and effectiveness through global consistency: common language, sales communication and enablement, and more rapid sharing of best practices.
  • Achieve a greater balance of centralization versus decentralization from a staffing as well as a program investment perspective. Regional marketing execution must leverage corporate strategy and global best practices, yet still maintain the autonomy to meet local needs and respond to business opportunities and competitive threats. IDC recommends that 60–70% of field marketing's execution and assets should originate from corporate, with the remainder driven regionally or locally by field marketing.
  • Leverage field marketing to improve marketing's performance as well as the perception of marketing's contribution to the organization. More specifically, field marketing needs to act as the "center of gravity" for development and execution of the local sales and marketing strategy in collaboration with sales. This includes field marketing helping to drive local sales strategies. (e.g., market sizing, identifying and helping to prioritize targets) As once participant put it, “I don’t think I ever want them totally aligned. . . I want to create tension in a positive way."

Source: CMO Advisory Best Practice Series: Field Marketing. . the Last Mile to the Customer, IDC #207984, August 2007.