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| Technology
Sales & Marketing: |
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Party Like its 1999? |
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In this issue, Tom
Pisello, CEO and founder of IT business value selling
consultancy Alinean and ex-Managing VP at Gartner, discusses the
latest IT spending research, highlighting key opportunities for
improving the sales and marketing of IT solutions. |
| Q: |
Is 2006 shaping up to be a good year for IT
spending growth? |
| A: |
The latest survey results were just released by
IDC, and it looks like there is some cause for celebration.
Worldwide annual growth in global IT spending is expected to be
6.3% in 2006, with annual growth in software sales leading the
way at 7.0%. Annual growth in hardware sales and services are
less, but still healthy at 6.0%. |
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Compared to 2002 where growth was a dismal -31%
for system vendors and -18% for service providers, these are
happy days. But these growth figures are still a far cry from
the pre-bubble burst years of 1999 through 2001, where double
digit growth was the norm. |
| Q: |
Do the latest increases in IT spending mean
good things for IT Sales and Marketing executives? |
| A: |
Indeed, the growth presents some great
opportunities for the savvy IT solution provider. IDC's CMO
Advisory Practice projects that the global marketing budgets of
IT vendors will increase by 7% on average in 2006. This is the
greatest year-on-year increase in spending in five years. |
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For historical perspective, in 2005 technology
marketing spending was up 6.4%, in 2004 spending was up 5.8%,
while in 2003, tech marketing spending was down 1.7%. |
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However, as with the five prior years, increases
in tech market spending are outpacing the overall growth in the
IT marketplace, meaning that the landscape is becoming ever more
competitive and customers are getting harder and harder to
reach. As any sales and marketing executive can tell you, every
dollar of revenue earned by IT solution providers is getting
harder to come by. |
| Q: |
How is IT spending changing for small and
medium enterprises? |
| A: |
Right now, SMB IT spending growth is set to
eclipse the enterprise, growing by a healthy 7.2%, up from 4.8%
for 2005 – this according to Forrester latest research. With
this recent rise, SMB spending is said to now account for almost
48% of all IT spending. |
| Q: |
Small and medium businesses have come alive as
of late, and there is a real race on to address this
marketplace, particularly with new simplified solution sets,
on-demand applications (SaaS) and strong channel / reseller
relationships to help reach these buyers. |
| A: |
On average, how much do IT firms spend on
marketing? |
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On average, IT firms invest 3.6 percent of their
revenue on marketing, with software vendors spending the most,
at 6.5 percent of revenue, Hardware makers spending some 3.7
percent of revenue on marketing, while IT service firms spend a
paltry 1.1 percent of revenue on marketing.
Three important trends on where this money goes: |
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- Skilled marketing staff is becoming more important: The
tooth to tail ratio, the amount of program spending to people
has taken a surprising turn, with 63.5% of spending on
programs, a migration of more spending on people from a mix of
66% in 2004.
- Focus of spending is on lead generation versus awareness
building: Another trend we see is that more of the budgets are
being focused on the front end demand generation part of the
sales and marketing process versus later stages such as
awareness building and engagement. It is becoming more
expensive to gather attention and hence the higher spending
earlier on in the process.
- Sales tools are gaining in importance: As customers get
harder to reach, investments in case studies, white papers and
interactive online tools have grown - now 17% of total
marketing budgets, second only to Advertising (23%) and Events
at (19%) and ahead of direct marketing investments (13%).
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| Q: |
Why are buyers getting harder to reach? |
| A: |
Frugal buyers are the norm - driven to be
skeptical by a lack of demonstrated value from prior investments
and increased investment governance.
Vendors know that from every prospect they will hear “show me
the money”, with over 90% now requiring ROI proof before the
project gets approved, and over 85% saying the demand for
business value analysis has increased or remained the same.
The issue for vendors is that even though almost all buyers
require justification, most are not capable of doing the
cost-benefit analyses themselves. As a result, over 81% of
buyers expect the vendors themselves to quantify business value
of proposed solutions. We see that many buyers invite multiple
vendors in to provide different business cases and perspectives,
then use the best analyses as their own justification to get
economic approval.
Vendor analysis is so important that prospects view the ability
to justify solutions as a key differentiator, with over 61%
rating solution providers value assessment ability as important
in the selection process.
But skeptical buyers are equally cautious about vendor provided
ROI, and only 17% of buyers we surveyed had a high degree of
trust in vendor value assessments.
The paradox is that buyers rely on vendors to deliver cost
justification analysis, but they are not trusting of the
results. Third party research and tools seem to help with the
skepticism, as well as vendors providing the analysis in a
collaborative and cooperative fashion. |
| Q: |
Are marketers focused on the right messages
to overcome the skepticism? |
| A: |
A recent CMO Council and KnowledgeStorm survey
to "Define What's Valued Online” indicates that marketing
messages are still missing the mark. In the survey, buyers were
asked what they liked least from vendor messages, particularly
online content. The number one pet peeve for technology content
was "hype and puffery of offering"; number 2 was "poor
communication of business value proposition"; and number 3, "too
few proof points that evidence ROI."
Clearly online experiences need to move from the current
product catalog approach -promoting traditional feature-function
and price, to a more personalized, interactive and quantified
value-oriented approach.
Recently, we have worked with several vendors who are re-tooling
their website to provide value-oriented content including
vertical case studies, research, interactive capability /
maturity/opportunity assessments and online ROI and TCO tools.
An example of this is SAP’s small and medium business campaign
which contained value-oriented / interactive ROI tools:
http://www.sap.com/valuecalculator/SMB/SAP_GrowingBusinesses_Calculator_content.epx
These efforts are receiving great response rates and feedback,
but are point solutions to a broader messaging problem. In these
campaigns a particular portion of the site is beefed up with
effective value-oriented content – but the entire experience /
site is not value oriented. We have yet to see a major vendor
re-orient their entire site to overcome these pet peeves and
move from product catalogs to true business value interaction.
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| Q: |
Are marketers focused on the right buyers
today? |
| A: |
A recent IDG/CXO media survey indicated that
business and IT executives where making most of the buying
decisions - including defining requirements, specifying brands
and ultimately approving the purchase. However, most IT sales
and marketing efforts are heavily focused on mid-level decision
makers.
With these targets in mind, we see that IT marketers are too
focused on the solution’s technology, products, features, price,
performance and technical / tactical buyers.
Based on the buyer’s decision making process revealed in this
survey, the focus should be instead on the client’s unique Goals
and opportunities, business issues, the potential value of the
proposed solutions, top and bottom-line impact and executives /
economic buyers. |
| Q: |
What can sales teams expect for the rest of
2006? |
| A: |
According to Selling Power in a survey of sales
executives this March, the sentiment is that in 2006 it will
take more time to close each sale and more calls get to a
decision. Unfortunately, the longer the sales cycle, the greater
the chance for a “no” decision.
To address this issue, technology companies are currently
investing heavily in CRM – an estimated $1.5 billion in 2006, up
8% from 2005.
Unfortunately our surveys indicate that CRM helps sales
productivity - the efficiency of the sales process, but not
selling effectiveness. Traditional CRM investments have little
to no reported impact on reducing the number of visits, reducing
sales cycles or other measures of selling effectiveness.
Addressing selling effectiveness needs to be a key discipline of
sales leadership in order to overcome skeptical customers and
lengthening sales cycles. To address this issue, we are seeing
an emerging ecosystem of solution providers that work in
conjunction with current CRM solutions to address improving how
effective sales professionals are at engaging with clients.
These solution areas include:
- Automated proposal builders
- Account Intelligence
- ROI and TCO tool vendors
- Industry Researchers
- Value-oriented sales training companies
The trend will be that these solutions quickly mature and
consolidate to form a complete sales effectiveness solution set
as part of a more well rounded CRM solution which addresses
efficiency AND effectiveness. |
| Q: |
What is your bottom-line advice for
technology sales and marketing going forward? |
| A: |
A couple of take-aways from the research and
metrics are:
- Move from product speeds and feeds to a more
value-oriented focus – what opportunities does the prospect
have and what quantified value can the solution deliver.
- Engage prospects with active and personalized versus
passive content to break through the noise and keep them
engaged once you have their attention
- Go beyond CRM investments to provide empowering tools to
help improve selling effectiveness – helping sales to deliver
value oriented messages and quantified ROI evidence to
prospects.
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Cost-Justifying Your IT Security Investments
Almost all IT projects need cost justification, and
security projects are no exception. This article offers some
guidelines on how to cost justify new security solutions and
investments.
Read the whole story on Search CIO.com »
Click here
to learn more about Alinean's Business Value Selling suite of solutions
» |
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Is There Real Business Value Behind the Hype
of SOA?
Alinean CEO Tom Pisello finds ROI on both the
business and the IT sides when service-oriented architecture is
employed.
The No. 1 business priority for CIOs in 2006 is business process
improvement - implementing technology to help the business become
more streamlined and easier to do business with. The good news is
that IT executives realize that collaborating with business leaders
to drive business process improvements is vital to company success;
the bad news is that even though business/IT alignment has been a
top priority for the past eight years and IT organizations are
transforming, the issue of business/IT alignment remains.
Read the whole story on Computerworld.com »
Learn how to quantify the value
of SOA to prospects and customers - with Alinean's
ROI Analyst
and ROI
Calculator »
|
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Do ROI calculators have proven value for
direct marketing campaigns?
This article, written in response to a SearchCRM
reader inquiry, examines "ROI calculators", and explains what they
are, how they work, and how effective they can be at improving sales
and marketing campaigns.
Read the whole story
on SearchCRM.com »
Learn how Alinean's ROI
Calculator can help you generate and capture qualified leads,
quantify your business value proposition and empower your sales team
to quantify business cases for clients »
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Ask The CRM Expert: Questions & Answers
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This month on SearchCRM.com, several excellent questions were
posed.
Click on links below to view
discussions on topics including:
|
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SearchCRM.com's "Ask the Experts" is a
place to get your technical questions answered by leading
authorities in the field. Experts have been chosen by the
editorial team for their knowledge of specific technology
areas.
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WHAT'S NEW...
Announcing Alinean Value Finder for
salesforce.com's AppExchange
Do you use salesforce.com? Test Drive Value
Finder for salesforce.com's AppExchange. Technology solution
providers’ sales and marketing teams can now deploy Value Finder
within their Salesforce implementation to uncover targeted,
qualified opportunities, and generate compelling engagement sheets.
Built on the AppExchange on-demand platform, Value Finder for
AppExchange is immediately available for test drive and deployment
at
http://www.salesforce.com/appexchange. Alinean's Value Finder™ for AppExchange delivers the first targeted
account intelligence software specifically designed for technology
solution providers. With proprietary IT spending research and corporate
financial profiles, the software empowers your sales and marketing teams
to effectively research market opportunities, create targeted campaigns,
and obtain detailed profiles on any account.
Click here to preview this exciting new application - designed
to empower salesforce.com users with proprietary IT and performance
intelligence and briefing sheets on over 20,000 companies worldwide
»
Click here to learn more about Alinean's integrated Value Finder
software on the AppExchange » |
|
Alinean Releases Business Value Selling Suite
v2.7 Alinean has
announced an important upgrade to the
Business
Value Selling Suite of software, specifically designed to help
solution providers develop compelling business cases for proposed
solutions. With the suite, consultants, sales professionals and
channel partners can better engage with Cx-level executive decision
makers and economic buyers, quantify the costs and benefits of
proposed solutions, and justify investments.
Using business value to sell has been proven to reduce discounting
by 20% or more by migrating sales from features, function and price
selling to value selling, reduce the time it takes to develop
credible businesses cases from days or months to hours, reduce sales
cycle durations by 30-40% by automating the problem identification
and business case building phases of the project, and increase the
success rate of proposals by over 60%. This new version 2.7 of the
software represents the sixth upgrade to the suite since it was
launched in 2004.
New features in version 2.7 include: |
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Enhanced user interface and
workflow to make it more easy and fun for sales professionals
without a financial background to be effective with developing and
presenting results
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Direct creation of compelling
Microsoft PowerPoint presentations
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Enhanced analytics to create
more compelling reports
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Integration of the tools with
CRM solutions, including a special AppExchange version for
SalesForce.com users
To Learn
more about the Alinean Business Value Selling Suite, click here » |
|
 Get
Certified in Business Value Selling
Make it official! Attend one of IDC
| Alinean ValueExpert(TM) Certification
courses.
The sessions are held regionally throughout the year. Upcoming
classes:
» October 12, 2006 (Thursday) in Orlando, FL
Register for one of our next sessions by
calling 407-382-0005 x332 or via email at
roiexpert@alinean.com.
Hurry! Space is very limited.
For more information
& a complete schedule of upcoming classes, click here »
|
|
Learn how Alinean can turbo-charge your sales with a customized business
value selling solution.
Visit our web site at
www.alinean.com
or contact us at 407-382-0005 or
ROIexpert@alinean.com.
Alinean - The Business Value Selling Experts
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Tel:
407.382.0005 
866.693.6271 
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