Friday, October 22, 2010

Tech Marketers May Need to Rethink Budgets for 2011 according to new Harte-Hanks research

Technology marketers are challenged today with handling proliferating marketing channels to reach and engage more overloaded, skeptical and frugal buyers than ever before.

A recent survey from Harte-Hanks reveals some vital metrics to marketers seeking insight on technology buyers and purchase decisions. Surveying 500 decision makers, the survey reveals that technology marketers may want to reconsider their investments and strategies for 2011.

Generating Awareness
In order to start the engagement process with prospects, awareness needs to be created. In researching technology buyer trends, it is important to know how technology buyers become aware in new solutions.

According to the Harte-Hanks survey results, technology buyers become aware of new technology solutions most often through peers/ colleague interactions, magazines and trade journals, product review websites, search engines and industry analyst reports. From these results, it appears that buyers are looking for a “trusted source” recommendation, and third party references, even during the early awareness building phase of the marketing cycle.

Survey participants indicated that although prevalent, promotional e-mails, direct mail, sales representatives and general advertising were less effective at raising awareness of new solutions. The research implies growing skepticism over sales pitches and marketing fatigue make these once effective channels less so at raising awareness.

Surprisingly least effective, considering the growing budgets and efforts put forth in new channels, awareness is less often generated via social media, blogs and banner advertising.

Although some channels are more effective than others, the survey results and advice from Harte-Hanks reveals that connecting through all of these channels are required, although allocations should be adjusted to reflect the effectiveness early in the sales cycle.






Making a Connection
Once you have the buyer’s attention, how do you make a connection with them to raise interest and continue the engagement?

According to Harte-Hanks, technology buyers are serious about their decisions, and are most engaged by factual content, and content focused on cost / value / benefits and bottom line impact.

With two downturns in the past decade, most technology buyers have been asked to do-more-with-less, and as a result, need to find solutions to drive cost savings, productivity and bottom-line improvements. This trend is called Frugalnomics and represents a fundamental and permanent shift in buyer sentiment. Finding ways to help buyers Fight Frugalnomics is essential to attracting attention and engaging frugal buyers.

Going overboard on humorous content, or spending a ton on creative to create edgy / cool programs may not have the desired impact, and fall flat with the serious business of technology buyers.

Technology buyers are seeking partners who can provide tangible advice and recommendations to drive bottom-line impact, not entertainment.


Frugalnomics Reigns
According to survey results, when looking at what is important to making the final purchased decision, technology buyers focus first on ensuring their purchases meet their requirements. After all, if the solution does not do what it is purchased to accomplish, all will be lost.

Next as a criteria, with Frugalnomics in full effect, cost of the solution is a close second, followed by return on investment (ROI). Buyers clearly want a solution that represents a high value, and will help drive bottom-line impact to the business – helping to drive revenue, reduce costs, streamline business processes or improve productivity.

According to Harte-Hanks researchers, “While ROI ranks high, it is interesting to note that its score drops slightly with the level of the decision-maker. For example, in organizations where the CEO/President is the final decision-maker, ROI is “Extremely” or “Very Important” among 92% of respondents, but that number drops to 86% in organizations where Staff makes purchase decisions.”

Overall, the focus of technology buyers is on value – and much less on where marketing often focuses, such as on building vendor-buyer relationships and on brand building campaigns.

From initial awareness and research through to the purchase decision, research by IDC and SiriusDecisions has revealed that more stakeholders are involved in decision making than ever before.

The Harte-Hanks research survey looked currently at how many decision makers were involved at each phase, revealing that the most stakeholders involved early in the purchase cycle, with research and information gathering, at 3.3 people on average, and in the evaluation of particular solutions, at 4.3 (with nearly 20% of organizations report that six or more are involved in the evaluation part of the cycle).

When the actual final purchase decision occurs, not surprisingly, fewer stakeholders are involved in the final decision.

According to Harte-Hanks, “The key for marketers and sales people, of course, is to stake out a strong position early in the process, maximize influence through effective targeting and message delivery, and make an impact on the decision-makers before it is too late.”

Unfortunately, most sales professionals are being engaged later and later in the cycle by buyers, often after key decisions have been made. Sales enablement must be a key focus, to provide sales professionals with the tools to engage and add value earlier in the cycle, providing a reason for buyers to engage sales earlier. This can include executive assessments, to help buyers diagnose issues they might not even know they have, ROI tools to help quantify the net benefits of solutions, and TCO comparison tools, to help assure that selected solutions during evaluation represent the lowest cost overall, and best value.

The Bottom-Line
From this important Harte-Hanks technology buyer survey, several significant and often radical trends need to be considered when establishing marketing budgets for 2011, understanding that technology buying decision making has fundamentally changed:

Awareness and social media – Technology buyers rely on trusted 3rd party peers, news sources and advisors for recommendations and guidance, relying the least on tweets, blogs and banner advertising for awareness.

Advice - Marketers should adjust awareness building budgets on the most effective sources for buyers vs. what is trendy / cool.

Connection with content - Technology buyers are seeking partners who can provide tangible advice and recommendations to drive bottom-line impact, not entertainment.

Advice - Relevant, engaging and important decision making content is the most important element of marketing campaigns, and although creative can help get a message across, content is still king.

Value Selling - Technology buyers are focused on the value a solution can provide, seeking the highest bottom-line impact / lowest cost solution, not on vendor relationships or brand connections.

Advice - Marketers should focus more spending on communicating the value of solutions, and less on brand development and buiding.

More Stakeholders Early in Cycle – Technology buyers involve the most stakeholders early in the sales cycle, where direct sales is often not engaged in the process.

Advice - A sales enablement focus is required to arm sales professionals with tools to engage much earlier in the decision making cycle, such as with diagnostic executive assessment, benchmarking or business case ROI / TCO tools.


Source: Mapping the Technology Buyer’s Journey, Harte-Hanks
500 business technology buyers and influencers reveal how they discover, evaluate and decide to purchase products and solutions.


http://www.harte-hanks.com/pdf/HHRPT_MapTheJourney_SurveyResponses.pdf


(registration required)


Research: Harte-Hanks’ 18-question, quantitative, Web-based study, titled “Mapping the Technology Buyer’s Journey,” includes responses from 500 technology and manufacturing managers, directors, vice presidents and CIO/CTOs in the business technology space – all of whom are part of the North American component of the Harte-Hanks Ci Technology Database (CiTDB). Respondents represent various levels of purchasing influence and different types and sizes of organization.

Accelerate Slow Sales Cycles with More Sales Enablement Investments?

Two successive downturns over the past decade have resulted in buyers more skeptical of sales pitches than ever, and a condition called Frugalnomics – where buyers demand quantifiable proof of bottom-line impact for each purchase decision.

The result of Frugalnomics has been a marked slowdown in the pipeline, and longer than ever sales cycles.

According to Andrew Gaffney in his article Marketers Shifting Focus To Sales Enablement To Accelerate Slow Pipelines , “Deals expected to close in the current quarter are often getting clogged and pushed out later in the year. Given this reality, many marketing organizations are investing in sales enablement tools and processes to accelerate deal flow and maximize the productivity of their sales teams.”

So how is the sales enablement role evolving within b2b vendors? According to IDC’s 2009 Tech Marketing Benchmarks, large enterprises have gotten the message that sales enablement is required to drive sales effectiveness, with more than 80% of enterprises with $5 billion plus in revenue now have a sales enablement role in their organization.

However, that number drops steadily in surveys of smaller firms, to:
  • just under 80% for organizations with $1 billion to $5 billion in revenue;
  • 60% for companies between $500 million to $1 billion in revenue and; 
  • less than 40% for companies with under $500 million in revenue.
Joe Galvin, an ex-colleague at Gartner and VP and Research Director with SiriusDecisions, a leading research consultancy in the sales and marketing space, said sales enablement and knowledge management “have now become required components” of a sales and marketing technology infrastructure. “Selling is an art,” Galvin said. “Productivity is a science. It’s the ability to add a new opportunity at the top of the pipeline and increase the number of active opportunities a rep can manage. The right collaboration and solutions can help drive the number of new opportunities — the number of active opportunities and lead to shorter sales cycles by improving the conversion rates from phase to phase inside the buying cycle.”

The ability to connect with customers is more important than ever, however, most buyers indicate that

  • sellers are ill prepared for meetings;
  • do not understand their business and needs, and;
  • are not adding value to engagements.
With sales professionals ill prepared to engage, and with more information and resources available on-line than ever before, buyers are using the Internet to drive purchase decisions, engaging sales professionals later and later in the buying cycle, if at all.

The Bottom-Line
The sales enablement group can help arm sales professionals with the right tools and content at the right time and right place to engage with ever more frugal and skeptical buyers. Without sales enablement best practices, sales cycles will continue to extend and deals will languish. Providing the fuel to sales professionals can overcome the issues, mitigate pipeline obstructions, and reduce sales cycles.



Source: 

Marketers Shifting Focus To Sales Enablement To Accelerate Slow Pipelines - Andrew Gaffney , 20 July 2010







Tailwinds for Marketing Automation Software - Insight from CRM Analyst Lauren Carlson

In a recent blog post from Software Advice's Lauren Carlson, this emerging CRM analyst indicates how hot the market for marketing automation software has become,  and although the niche was timid several years ago, marketers are now adopting these systems aggressively.

These tailwinds for marketing automation solutions indicate a headwind for marketers, who are actively seeking solutions to help solve an increasingly challenging B2B sales environments.

We have written about some of these challenges for marketers, in the blog post "The End of Marketing as We Know It", and how the next decade in marketing will be defined by:
  • Buyers suffering from information overload - with more channels than ever to connect with buyers, and lower cost channels making outreach easier, marketers have been inundating prospects with more marketing messages than ever. The result, more noise and less engagement.
  • Internet fueled buying cycles - research by IDC and Sirius Decisions both indicate that sales professionals are being engaged later and later in the buying cycle, if at all. With more information available, and growing skepticism in vendors, buyers have taken control of the purchasing cycle.
  • Frugalnomics - in the face of two successive significant economic downturns over the past decade, buyers now demand proof of bottom-line impact and highest value from each and every purchase.
Lauren illuminates several of these trends, and provides insight into several more important trends that we see pushing buyers towards adoption of marketing automation. Her insight includes:


Buyers want content of real value
Traditional pamphlets and brochures filled with marketing jargon just don’t cut it anymore. Buyers are looking for informative and interesting content that provides actual value and education. They expect vendors to provide them the content they need throughout the sales cycle. Increasingly, the first two-thirds of that cycle is spent researching the market and vendors, without regular contact with a sales rep. To remain top of mind with the buyer and claim the “thought leadership” position, marketers are deploying marketing automation to provide a steady stream of educational content for buyers.\

Buyers are increasingly wary of sales pitches
One of the biggest issues sales professionals face when engaging with prospective buyers is a declining level of sales engagement. This is often because the buyer is just getting started on research, overwhelmed with competing priorities and not ready for a sales pitch. Also, when the economy is poor and money is tight, consumers become much more skeptical of sales people making big promises. Compound that with a macro trend away from the phone and toward email and the web. As a result, sales and marketing teams are facing the challenge of selling to buyers who won’t talk to their sales team. Delivering the right content over time is a great way to “warm up” buyers until they are ready to talk to sales.

Desire for marketing accountability
Marketing has traditionally been somewhat of a “black box” expense for businesses. While development could be measured on release cycles and product quality, and sales was measured on performance against plan, It’s tough to track marketing’s ROI on positioning, collateral and brand building. B2B marketers have traditionally gotten off easy in terms of strict accountability, but were often the first budget to get cut and were sometimes looked down upon by more accountable departments. Marketing automation empowers marketing to define its contribution to the sales pipeline, tracking each sale back to one or more marketing campaigns.

Sales cycles are longer in a down economy.
Under adverse economic conditions, buyers are less inclined to purchase – plain and simple. Even when there is a clear business challenge and a solution with real ROI, tight budgets create hesitation on the part of the buyer. Therefore, sales professionals are faced with increasingly risk-averse prospects whose buying time frames are longer. Marketing automation tools supporting drip marketing campaigns and lead nurturing can build relationships with buyers during a longer sales process.

B2B sales processes are becoming “consumerized.“

According to Peter Sondergaard, SVP at Gartner, consumerization is a significant trend that will affect enterprise IT purchasing this decade and beyond. What does that mean? Business buyers are demanding that their enterprise purchase process be simplified to match the consumer purchases they make in their private lives. They demand coherent pitches, simplified pricing, rapid implementation and ease of use. Moreover, they don’t want to have to interact with sales every time they want information. Marketing automation plays a critical role in supporting self-service sales interactions.

Marketing channels have changed and grown

The Internet has vastly changed the way we communicate. It has also changed the way companies market. There are more channels to reach customers – email, microsites, social networks – and businesses must develop more cohesive marketing plans. Marketing automation allows companies to ensure a coherent, unified marketing approach by tracking these various marketing channels in one system.
SaaS systems are greasing the skids

Given the number of relatively new entrants into the marketing automation market, almost all of these systems are built on a modern, software as a service (SaaS) architecture. This has reduced friction for early adopters. Buyers have been able to get up to speed and start demonstrating value far more quickly than early adopters of sales force automation (SFA) and call center software in the 1990s. Moreover, subscription pricing has enabled marketers to add a digestible monthly or quarterly line item into their budgets, rather than seek approval for a costly capital expenditure for on-premise software.


The Bottom-Line
The defining forces of the past decade in marketing have changed, where the leverage of new and exciting channels to reach B2B buyers have both empowered and inundated prospects, and macro-economic conditions have created Frugalnomics. The next decade will be defined by marketers in a fight against marketing fatigue, sales disintermediation and Frugalnomics.

Wednesday, October 20, 2010

Frugalnomics in Full Effect: Forrester and Gartner Downgrade IT Spending Outlook

In the latest research from Gartner and Forrester, both IT research firms revised their annual spending projections over the next few years, predicting lower budgets and slower growth. Gartner's forecasts, revealed at their annual IT symposium here in Orlando, are the most pessimistic, predicting that the next five years would "represent a period of timid and at times lackluster growth."

The revised forecasts track the overall macro-economic conditions and projections for US and other developed economies, and although emerging economies are expected to continue with strong economic growth, these forces are not enough to drive strong IT spending growth overall.

What do these revised projections mean for IT solution providers? CIOs will maintain tight controls over budgets, and although some sectors will see spending constraints loosened, the prevailing Frugalnomics sentiment is expected to continue in full effect. Frugalnomics has buyers seeking quantified bottom-line impact and best value from every project. IT solution providers must recognize this change in order to succeed over the next 5 years - moving from product / solution selling to value sales / marketing strategies - helping buyers quantify the business benefits, return on investment and value advantages of proposed solutions to frugal, economic focused buyers.

Gartner's View: Timid Growth for Next Five Years
According to Gartner's latest projections, global enterprise spending on IT should increase 3.1%in 2011, and continue this "timid" growth over the next five years. Overall spending is forecast to rise for IT hardware, software and services to $2.5 trillion in 2011 and climb to $2.8 trillion in 2014, a gain of only 12 percent over that period.

Of important note to vendor sales teams, "Several key vertical industries, such as manufacturing and financial services, will not see IT budgets recover to pre-2008 levels before 2012 or 2013," Peter Sondergaard, head of research at Gartner, said in a statement. "Emerging economies continue to be the locomotive of enterprise IT spending, substantially outpacing developed economies."


Forrester Research: More Optimistic, But Less So
Forrester Research has updated its U.S. IT spending predictions for 2010, estimating 8.1% growth this year, compared to July's prediction of a 9.9% uptick.
The adjustment came as weaker than expected economic data was released from the U.S. Department of Commerce, indicating that the overall growth slowdown would force CIOs to rethink IT budgets.
In prior research reports and board presentations, Forrester has optimistically predicted a new fourth wave of IT innovation, and these predictions drive higher spending growth projections. Unfortunately, faltering macroeconomic conditions have knocked down the rosy predictions, and delayed the innovation wave.
With a slowdown in IT spending in the U.S., Forrester's global estimate of 2010 IT spending has also been revised downward to 7% from 7.8%. Looking forward, Global IT spending is expected to grow 7% in 2011, with U.S. spending jumping 7.4%, according to the latest report.


The Bottom-Line
Forrester continues to predict that we are on the cusp of a new wave of IT spending, and the start of an important innovation cycle. We too believe that innovation will lead us out of this global recession, and are optimistic but in order to drive innovation, fuel and a spark-source are needed. With developing nations economies continuing to sputter, the fuel is not yet available.

Regardless of which growth rate predictions you subscribe to, the growth rates have clearly slowed, and vendors need to be prepared for Frugalnomics more than ever in 2011. As a result of two boom-bust cycles of the past decade, buyers are more frugal and skeptical than ever. They need help in how to do-more-with less. They demand quantified ROI justification on over 90% of purchase decisions. They demand utmost value and lowest total cost of ownership (TCO) from every solution.

Marketers need to provide the content in order to spark these frugal buyers to action. Its easier to do nothing, unless economic reasons are provided for change.

Sales enablement needs to revolutionize sales methodologies from old product / solution selling to value selling, arming sales teams with the tools to connect and convince frugal buyers to change. Diagnostic assessment tools, ROI calculators and TCO comparisons tools are a requirement.

Sources:

A synposis of the Gartner research can be found at: http://www.reuters.com/article/idUSTRE69H3FW20101018

A synposis of the Forrester research can be found at: http://www.computerworld.com/s/article/9191401/Forrester_downgrades_U.S._IT_spending_forecast?source=CTWNLE_nlt_pm_2010-10-15
 

Wednesday, October 13, 2010

Alinean Launches Interactive White Papers

Overcomes Marketing Information Overload, Transforming Traditional White Papers into Dynamic, Personalized Engagement Tools

Alinean, the leading creator of value-based interactive sales and marketing tools for B2B vendors, today launched a new demand generation tool for B2B marketers – Alinean Interactive White Papers. Unlike traditional white papers, Alinean Interactive White Papers use profile information from a prospect to intelligently customize the collateral with more personalized, relevant and analytical content. Alinean Interactive White Papers help B2B marketers better attract and connect with today's overloaded, skeptical and frugal buyers.

The basic white paper is still one of the most important pieces of marketing content - used and trusted as the key buying decision tool by over 65% of early stage buyers and 61% of middle stage buyers (SiriusDecisions -2010). However, in the new world of information overload, these white papers are getting lost in the clutter and worse, do not engage today's more frugal and demanding buyer who require quantifiable proof that proposed solutions will drive bottom line results.

"Our research shows that the features today's buyers want most is the ability to personalize and customize their content experience, to control how they interact with the content, and that they are more likely to share and socialize content that is relevant to them," said Josh Heitsenrether, Senior Vice President, Ziff Davis Enterprise Strategic Services. "By utilizing SmartPapers, our proprietary version of Alinean's Interactive White Paper, marketers can deliver more personalized and more impactful results to potential buyers that will ultimately lead to deeper engagements and higher lead conversions."

Completely customized by Alinean or Alinean partner to empower one-to-one marketing campaigns, the Alinean Interactive White Paper is a SaaS hosted application that turns a traditional white paper into a customized and engaging interactive document. The B2B marketer entices prospects to the Alinean Interactive White Paper via links in direct mail campaigns, on promotional micro-sites or from their corporate web site to dramatically improving click-throughs because of the attraction to interactive content and relevancy.

Clicking on the link to access the Alinean Interactive White Paper, the prospect provides some basic profile information, such as location, size, industry, buyer role, stage in buying cycle, pain points or unique business opportunity. Typically 5 to 10 pivot points are used to analyze needs and customize the quantitative and qualitative content of the white paper, driven by the Alinean customization engine, and delivered to the user in PDF or Word format.

Examples of Alinean Interactive White Papers can be found at:
• The New Economics of Mid-Size Enterprise Computing, sponsored by Sun and Intel (https://roianalyst.alinean.com/ziffdavis/AutoLogin.do?d=151948843902083664)

• Using Desktop Virtualization to Drive Cost Savings and Improve Manageability (https://roianalyst.alinean.com/ziffdavis/AutoLogin.do?d=614181278944749031)

Alinean develops the Alinean Interactive White Paper by leveraging existing white paper content or helping to create new content. Leads captured using Alinean Interactive White Papers are directly integrated with lead management systems including Eloqua, MarketFirst and Salesforce.com, collecting and passing on key contact and profile information for lead scoring, nurturing and follow-up.

"Corporate executives and buyers live in a world of information overload, making it difficult for vendors to connect and capture their attention, educate them about solutions and move the sales cycle forward," said Tom Pisello, Chairman and Founder of Alinean. "With Alinean's Interactive White Papers, B2B marketers can evolve traditional white papers into more personalized deliverables to drive relevant connections with increasingly skeptical and frugal buyers."

Analyzing initial Alinean Interactive White Paper campaigns, Alinean has measured proven incremental value including: attracting 350% more prospects to a site with interactive and personalized content versus traditional white papers; generating 120% more qualified leads than traditional static white papers; better tracking and scoring leads with integrated profiling on specific customer opportunities and needs; and accelerating sales cycles by 10% or more.

The Alinean Interactive White Paper solution is currently available directly from Alinean, for existing white paper content, and for new content development and campaigns, via partners such as Ziff Davis Enterprise (private labeled as SmartPapers).

Alinean and Ziff Davis Enterprise recently held a Webcast to launch these Alinean Interactive White Papers. The Alinean Interactive White Paper solution starts at $1,500 per month.

Monday, October 11, 2010

Marketing Hierarchy of Needs: Achieving Marketing Efficiency and Effectiveness

Every year, around Halloween, organizations meet to begin the battle for budget allocations for the New Year. For marketers, the news is good overall. According to research from IDC and Forrester, marketing spending is anticipated to increase between 3 to 5% for 2011.

This represents substantial growth when compared to 2009 cut-backs; however, even with the 2010/2011 snap-back in spending, most marketing budgets will remain below pre-recession levels. In the current environment, marketers are still being asked to do-more-with-less, driving a significant change in strategies, campaigns and go-to-market channels.

Marketing Spending lags Revenue Growth
Comparing marketing spending growth versus revenue growth reveals another important issue facing marketing budgets – the growth in marketing budgets lags revenue growth for the first time in eight years. For example, an IDC survey of technology marketers revealed that 2010 revenue grew at a healthy 5.8% world-wide, and that this greatly exceeded the 3.7% average market spending growth over the same period. Prior IDC surveys over the past 8 years indicate that as a key driver of revenue, growth in marketing spending normally precedes revenue growth. However, the opposite is strangely reflected in these latest results.

We have seen this same issue occur in IT spending over the past decade, where IT spending lagged significantly behind revenue growth following the bursting of the technology bubble in 2001, and are wondering if the same will now be true of marketing budgets going forward?

Most executives know that the playing field has changed, and two recessions in the past decade have resulted in Frugalnomics - changing the way that budget decisions are made by requiring quantifiable proof of bottom-line impact from each investment. Does the growth lag because marketing executives are not doing enough to tie spending to performance, justify marketing investments, and make the case for their fair share of the budget?

To fight Frugalnomics, most marketing leaders will need to do a better job convincing frugal executives to spend more on marketing by painting a better picture of why the investments are needed, and in particular, proving quantifiable ROI from each marketing investment.

Marketing service and technology providers also need to do their part to fight Frugalnomics, helping marketers quantify the value of proposals to prioritize projects and garner investment, and verify that post-project expected returns were delivered.

To help set budgets more effectively, and help marketers battle for their fair share, it is important to make sure that spending is balanced across all aspects of marketing, and that investments in one area do not cause neglect in another. Too often we see marketers invest in campaigns without having the right underlying foundational investments in operations, technology or content. For example, we see many firms that have neglected lead handling operations, launching marketing campaigns, but not having an adequate back end system to centrally capture and nurture the leads to close.

When examined from top to bottom, there is a clear hierarchical dependency between marketing technology and operations, content, campaigns and strategy, and by thinking about the investments and practices as a hierarchy, marketers assure proper foundational investments, while still delivering innovation. We find that thinking of this hierarchy as a Marketing Hierarchy of Needs, closely resembling Maslow’s well traveled theory, helps in making proper budgeting, spending justification, and driving better efficiency and effectiveness.

Driving the focus beyond the typical campaign thinking of traditional marketing, the hierarchy assures that foundational investments and best practices are in place before the team addresses higher-order investments, which rely on good technology, operations and content in order to deliver.

Maslow’s Hierarchy of Needs
In his hierarchy of needs, Abraham Maslow asserts that people are motivated by unsatisfied needs, and that certain lower needs are the initial focus and require satisfaction before higher needs can be addressed or achieved. Foundational needs include physiological requirements such as air, water, food, and sleep, and safety which includes security of home and family. Higher needs include, in order, Love, Self Esteem and Self Actualization. When each of these needs in turn is satisfied, from lower to higher, new (and still higher) needs emerge, and so on. As each need is met, personal achievement rises and purpose is fulfilled.


Maslow’s hierarchy of needs

The theory has been extended from human behavior to economics, whereby marketplaces need to have
foundational needs met before demand for higher needs can be pursued. For example, a third world economy focuses on the physiological and safety needs first – basic human survival. Until this can be resolved, whereby people have the water, food and shelter they need, higher level needs and the ability to have a consumer marketplace is not priority. For first world countries, the lower needs are viewed as commonplace commodities, while the focus moves towards meeting much higher end needs of careers, vacations, hobbies and spiritual fulfillment. As foundational needs are met and commoditized, the attention moves upwards towards higher order needs in order to achieve fulfillment.

Marketing Hierarchy of Needs
The Marketing Hierarchy of Needs™ represents a hierarchical view of marketing practices, services and investments. Each layer represents the next highest level of achievement, relying on a sound foundation in order to advance efficiently and effectively to the next level.


Alinean Marketing Hierarchy of Needs™

The Marketing Hierarchy of Needs consists of the following tiers:
  • Tier 1: Marketing Operations and Technology – the foundational element of people, process and technology to support the development and delivery of marketing programs, including lead capture and scoring, analytics, user experience, content management, account management, campaign management, data management, sales and channel enablement.
  • Tier 2: Content Marketing – development, customization and delivery of content to support marketing campaigns including white papers, case studies, executive assessments, calculators, product demos / trials, video, events / seminars and user communities / portals;
  • Tier 3: In-bound and Out-bound Marketing – the execution of multi-channel inbound and outbound marketing campaigns including direct mail, newsletters, e-mail, teleprospecting, social media, advertising, search, content syndication and public relations / analyst relations;
  • Tier 4: Marketing Intelligence – using the information collected from foundational levels, intelligence is applied to identify target segments / groups, align sales and marketing, measure campaign ROI, optimize the marketing investment portfolio and drive marketing strategies to achieve growth.
Tier 1: Marketing Operations and Technology
Marketing Operations and Technology forms the foundation for all other marketing services. A lack of foundational investment and best practices can cause other higher order investments to be less efficient and effective.
Marketing Operations and Technology consists of the following services:

  • Lead capture and scoring
  • Collecting and analyzing on-site analytics data
  • Optimizing creative “look-and-feel” (e.g., navigation, placement of content, imagery, etc.)
  • Content management
  • Account management
  • Campaign management
  • Data management
  • Sales enablement (publication, awareness and training)
  • Channel sales enablement
Tier 2: Content Marketing
Campaigns rely on content to drive engagement with prospects. Without solid content as the foundation, in-bound and out-bound campaigns don’t have the tools to break through to overloaded, skeptical and frugal buyers.
According to Junta42, Content marketing is a marketing technique of creating and distributing relevant and valuable content to attract, acquire, and engage a clearly defined and understood target audience - with the objective of driving profitable customer action. Basically, content marketing is the art of communicating with your customers and prospects without selling. Instead of pitching your products or services, you are delivering information that makes your buyer more intelligent. The essence of this content strategy is the belief that if we, as businesses, deliver consistent, ongoing valuable information to buyers, they ultimately reward us with their business and loyalty.
Content Marketing consists of the following services, investments and assets:

  • Traditional white papers
  • Interactive white papers
  • Executive Assessment Tools
  • ROI Calculator
  • TCO Comparison Tool
  • Product Demos / Trials
  • Video
  • Podcasts
  • Case studies
  • Research / analyst reports
  • Live events / seminars
  • Online events / webinars
  • Communities / Portals
  • Interactive smart content - Delivery of content to match stage in buying lifecycle, and customization of content for industry, size, location, role
The following provides examples of typical content provided by marketing and used by prospective buyers throughout the buying lifecycle.


Tier 3: Out-Bound & In-Bound Marketing
Traditional marketing (outbound marketing) is a marketing strategy that focuses on finding customers by building brand awareness through advertising, promotion, public relations and sales.
Out-bound marketing consists of the following services, investments and assets:

  • Newsletters
  • E-mail
  • Deploying online external lead generation programs (e.g., co-registration, email list purchases, etc.)
  • Teleprospecting (Outbound Telesales)
  • Direct mail
Inbound marketing is a marketing strategy that focuses on getting found by customers. marketers "earn their way in" (via publishing helpful information on a blog etc.) in contrast to outbound marketing where they used to have to "buy, beg, or bug their way in" (via paid advertisements, issuing press releases in the hope they get picked up by the trade press, or paying commissioned sales people, respectively.

In-bound marketing consists of the following services, investments and assets:

  •  Social media
  • Display / banner advertisements
  • Optimizing website for organic / natural search
  • Paid search
  • Content Syndication
  • Directory Advertising
  • Tradeshows
  • Association Marketing
  • Public Relations / Analyst Relations
  • Inbound telesales
  • Television / radio advertisements
  • Print advertisements
  • Deploying offline “drive-to-web” programs
Tier 4: Marketing Intelligence
Marketing Intelligence is the process of acquiring and analyzing information in order to understand the market (both existing and potential customers); to determine the current and future needs and preferences, attitudes and behavior of the market; and to assess changes in the business environment that may affect the size and nature of the market in the future.

With this intelligence, the team can better develop a marketing strategy, focusing an organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market niche. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and explains how they will be achieved. Marketing strategy determines the choice of target market segments, positioning, marketing mix, and allocation of resources.

Marketing Intelligence consists of the following services, investments and assets:

  • Identifying target segment / differentiated target groups
  • Knowledge of target segments / groups
  • Intelligence based marketing strategies to achieve growth
  • Aligning sales and marketing towards common campaign goals
  • Measuring campaign ROI
  • Using campaign portfolio management to optimize campaign investments

The Bottom-Line
The Marketing Hierarchy of Needs can provide a framework for assessing current practices and investments, assuring a solid foundation for the next higher order projects and campaigns.
Marketing budgets, although growing, remain under pressure from current market conditions and Frugalnomics. Marketing executives can use the hierarchy of needs to communicate the reason for and value of marketing projects, improvements and investments in order to help marketing get it's fair share of the budget, and to help increase spending yield, driving better effeciency and effectiveness. Marketing service providers and technology vendors can use the Marketing Hierarchy of Needs to help support proposed projects, and assure that the proper foundation of practices is available to assure project / campaign success.

Thursday, October 07, 2010

Drive Budget Planning with the “IT Hierarchy of Needs”

For Information Technology, it’s not how much you spend, but what you invest in that matters. But as budget season looms for most organizations, how can you be sure IT is getting its fair share to drive innovation and bottom-line impact?

Let the Budget Battles Begin
Each year, about the time Halloween rolls around, most executives begin fighting it out for their share of next year’s budget. In the current climate of austerity, IT has been running on empty, with neglected infrastructure and overworked resources. With revenue growth demands returning but budgets still being managed at tightly as ever, even more pressure will be applied in 2011 to do-more-with-less.

So will this budget season prove to be scarier than most?

IT as a Cost Center
Tracking year over year growth in IT spending over the past decade, we see that growth trends follow the macro-economy, but with rather shorter periods of negative growth. To no surprise, a substantial decline occurred following the bursting of the technology bubble and recession in 2001, with a second more severe decline into the Great Recession in 2009. The good news is that most analysts are predicting 4-5% growth for 2011. The bad news is that even with this growth, most organizations annual IT budgets will remain below 2007 levels.
IDC IT Spending Growth

As part of this latest downturn, IT has been asked, more than most business groups, to do-more-with-less. Unfortunately, executives often view IT as a cost center where budgets need to be squeezed at all costs. Comparing IT spending versus revenue, we see that since 2004, IT spending as a percentage of revenue has been declining. As revenues increased during the last growth cycle, IT spending lagged revenue growth substantially, declining as a percentage year over year. This was not the case with many other groups like sales and marketing. Because of the hangover from the technology bubble, and lack of value proof points that IT was driving real enterprise value, IT was being pigeon-holed as tactical, and not getting its fair share of the budget as a result.


Alinean ValueBase™ IT Spending Metrics for 20,000+ worldwide corporations

But is there a strategy that CIOs can use to make the organization understand that certain IT investments should not be cut, and are required in order to provide a foundation of service, while others are essential for productivity, process improvements, competitive advantage? Is there a way for CIOs to turn IT from cost center to strategic asset in order to garner their fair share of the budget?

IT Doesn’t Matter
In his 2004 tome for the IT industry “Does IT Matter”, Harvard Business Journal executive editor and provocateur Nicholas Carr’s claims that Information Technology has become a commodity – a utility that offers little competitive advantage, and as a result, IT spending should be cut to the bone. CEOs and CFOs in the board room, armed with Carr’s book, made life even harder for CIOs still suffering from the bursting of the technology bubble and recession.

But did Mr. Carr have a point, that technology was maturing and becoming a utility, a commodity that does not deliver competitive advantage, and where budgets should be reduced at all costs? Didn’t we see this in the research in year over year declines in IT spending as a percentage of revenue?

If one examines core IT Services infrastructure like servers, storage and basic applications such as e-mail, Mr. Carr’s assertions are completely correct - that indeed most core infrastructure solutions have become commodities, and should be procured as a utility, reducing costs wherever possible. For these solutions we see little pricing power for vendors, higher performance / capabilities at a lower cost year over year, and standardization / consolidation. It is certainly true that Wintel Desktops and IP networks have standardized and rapidly evolved into widespread use – clearly resembling a commodity. As well, personal productivity applications such as word processing, e-mail and messaging are fast approaching commodities, with many organizations moving or considering software-as-a-service solutions – purchasing them as a utility from the cloud versus an installed asset. It seems that more and more of IT is indeed moving towards utility computing and fulfilling Carr’s assertions that IT Doesn’t Matter.

So Carr is right then, that IT is a commodity and we should cut investments. That the investment in IT does not drive competitive advantage and bottom-line impact, right?

Not yet, and maybe not ever for certain portions of the most innovative applications and services. We see that even though components of the foundational IT Services infrastructure have moved toward commoditization, there are higher-order elements of IT that are not commodities in how they are priced, implemented, integrated and delivered, These higher order components require a solid foundation of services in order to be delivered reliably and effectively.

All IT Investments are Not Created Equal
As a contributor of research to IT Doesn’t Matter, we felt Carr was painting IT investments in too uniform a way. We believed, as did Carr, that commoditization of certain segments of IT was occurring, and accelerating across various solutions as organizations implemented more austerity programs and sought substantial cost reductions. Frugalnomics, the need to do-more-with-less and drive bottom-line improvements was in full effect in IT budgeting. However, we found that organizations that weren’t investing enough in foundational services were faltering. As well,  those that cut business productivity, process improvement and intelligence investments were losing their competitive edge.

Examining these investments, we found that IT investments were hierarchically built upon each other, from basic computing, networking and application services, through business productivity, process optimization and information management. When we examined this progression, from the need for a solid foundation to achieve higher level capability and maturity, and a need for an organization to invest in higher order sectors of IT in order to achieve their goals, we found this hierarchy to closely resemble Maslow’s hierarchy of needs, and so the IT Hierarchy of Needs™ was born.

Maslow’s Hierarchy of Needs
The well traveled theory by Abraham Maslow asserts that people are motivated by unsatisfied needs, and that certain lower needs are the initial focus and require satisfaction before higher needs can be addressed or achieved. Foundational needs include physiological requirements such as air, water, food, and sleep, and safety which includes security of home and family. Higher needs include, in order, Love, Self Esteem and Self Actualization. When each of these needs in turn is satisfied, from lower to higher, new (and still higher) needs emerge, and so on. As each need is met, personal achievement rises and purpose is fulfilled.


Maslow’s hierarchy of needs

The theory has been extended from human behavior to economics, whereby marketplaces need to have foundational needs met before demand for higher needs can be pursued. For example, a third world economy focuses on the physiological and safety needs first – basic human survival. Until this can be resolved, whereby people have the water, food and shelter they need, higher level needs and the ability to have a consumer marketplace is not priority. For first world countries, the lower needs are viewed as commonplace commodities, while the focus moves towards meeting much higher end needs of careers, vacations, hobbies and spiritual fulfillment. As foundational needs are met and commoditized, the attention moves upwards towards higher order needs in order to achieve fulfillment.

The IT Hierarchy of Needs for IT Investment Management
If we compare IT investments with Maslow’s hierarchy of needs progression, a new understanding can be developed to guide investment decisions.

The levels within the hierarchy consist of a progression from tactical to strategic, from core infrastructure, to business intelligence and knowledge management as follows:
Alinean IT Hierarchy of Needs(tm) 

The IT Hierarchy of Needs categorizes projects and investments into a four level progression:

  • Tier 1: Computing and Application Services - a highly available, secure and scalable IT services infrastructure forming the foundation for growth, performance and reliable computing services 
  • Tier 2: Business Productivity Services - deliver to employees the basic tools needed to communicate and collaborate 
  • Tier 3: Business Process Services - automate key workflows and gather information about the business
  • Tier 4: Business Intelligence Services – leverage information and corporate knowledge to measure performance, aid decision making, and drive competitive advantage.
At the lower Tier levels, the organization should manage these investments as a commodity, focusing on delivering just the right level of foundational services for the lowest cost. Driving down total cost of ownership (TCO) is vital, but can be overdone.

Too little investment, and the foundation is not stable enough to build upon. Too much investment, and the foundation is overbuilt for supporting the users and business. In these overbuilt infrastructures, too much spent on the foundation leaves too little for innovative investments.

Unfortunately overspending continues in the lower tiers for most organizations, with 60% annually spent on managing the existing infrastructure (keeping the lights on) and 25% on upgrades to existing infrastructure, leaving a scant 15% for new applications, services and innovation.

Hierarchical Advancement
As technology has advanced, and companies have exploited these advances over the past four decades each successive capability within the hierarchy was the successive focus. Innovation and competitive advantage progressed from those who know how to implement the core technology and basic compute power to a handful of specialized tasks, to those who knew how to arm knowledge workers with tools to be more productive and collaborate, to driving business processes improvements such as CRM and ERP, to those who now are using business intelligence, dashboards, scorecards and real time information to drive superior performance and agility.

This hierarchical nature of IT though is not apparent to budget holders. Because executives tend to paint all IT investments the same, viewing technology investments through the IT-Doesn’t-Matter lens, this IT hierarchy of needs can be the tool to illuminate the reasons behind budget requests, drive more informed budget discussions and treat each successive layer in the hierarchy, from tactical to strategic, with the proper investment criteria. For the tactical investments, these should be treated as a commodity, where cost savings and IT as a utility applies. However, cut costs too much or neglected for too long the foundation will crumble.

To apply practically, CIOs should categorize investments in support of each level in the hierarchy.

Classifying Investments to Minimize Costs and Maximize Returns
To gain visibility into current spending, and make better decisions on future investments, it is recommended that organizations categorize their current IT spending and planned investments according to the IT Hierarchy of Needs. Using this methodology, the team can document which investments are tactical - forming the core infrastructure, and which are more strategic - helping to deliver competitive advantage.

By selecting investments across the IT hierarchy of needs, spending can be optimized such that IT capital and operating costs can be reduced on core infrastructure investments to the proper levels, freeing up precious funds for higher-order needs.

The hierarchy can assist an organization in classifying and benchmarking investments into their proper place in the hierarchy, helping to determine the proper criteria for head-to-head comparisons of various spending scenarios, as each investment classification has a different goal, business contribution and value.

Tier 1: Computing and Application Services
Computing and Application Services is the foundation required to deliver IT services that meet the needs of the business and higher order services. Typically Information Technology includes the plumbing of IT, such as computers, storage, data, networks, as well as the software to manage and maintain the infrastructure, including operating systems, virtualization software, security software, system monitoring, configuration management, data protection, and services management tools.

IT Services includes the people and process that use these solutions to deliver IT services to the organization through disciplines such as Service Level Management, Availability Management, Capacity Management, Continuity Management, Security Management, Financial Management, Incident Management, Problem Management, Change Management, and Release Management. Computing and Applications Services investments form a solid foundation for further advancement, and if not maintained or advanced, can cause issues with availability, security, performance, scalability and agility (ability to handle change).

While not delivering competitive advantage itself, it is hard to advance to the next hierarchical level beyond the core infrastructure unless there is a solid foundation for growth. Try to deploy applications on a shoddy foundation and the applications will have delivery, performance, availability, and scalability issues.

These core infrastructure projects should seek to reduce total cost of ownership (TCO) but at the same time assure the correct manageability, delivery, quality of service, disaster recovery, security, scalability and agility.

Part of the Computing and Application Services includes the Application Lifecycle Infrastructure (ALI), the underlying tools supporting a continuously repeating cycle of visualizing business requirements then designing, building, testing and deploying application software. The ALI encompasses: Requirements Visualization, Requirements Management, Modeling, Design, Project Management, Build Management and Testing. Service Oriented Architecture (SOA) is included.

Tier 2: Business Productivity Services
Business Productivity Services delivers personal productivity capabilities to employees, helping workers be more efficient at authoring and publishing content, finding information faster, and communicating / collaborating more effectively.

Business Productivity Services includes office applications such as word processing, spreadsheets and presentations, but also includes collaboration tools including e-mail, instant messaging, meeting applications, unified communications, collaboration portals, and enterprise content management.

The Business Productivity Services layer has been commoditizing over the past decade, and is now viewed by many organizations as a cost center vs. competitive advantage. However, organizations have not been willing to sacrifice services and capabilities for cost savings, realizing that worker productivity is worth the investment in business productivity infrastructure and that many services solutions are limiting. Solutions that help balance the proper services / capabilities versus user needs versus costs should be sought so as not to sacrifice productivity for IT cost savings.

Tier 3: Business Process Services
The Business Process Services focus on automating key business processes, and streamlining the supply chain and driving customer transactions. Related projects will strive to improve customer and partner care and user experience, reduce business operating expenses, increase business efficiency and productivity, improve business processes and agility and reduce business risks.

Applications include sales force automation, marketing automation, e-commerce, supply chain management, procurement, compliance management, ERP, financial management and accounting, portfolio management, HR automation, custom business applications and more.

Competitive advantage can still be gained by these applications via superior adoption, automation and intelligence, however, commoditization is occurring. Costs are being cut with as-a-service applications such as Salesforce.com. In Business Process Services, cost savings focus is growing, but still takes a back seat to process efficiency and capability improvements.

Tier 4: Business Intelligence (BI) Services
The Business Intelligence Services focus on enabling an organization’s knowledge access and decision making capability with actionable information to track key performance indicators, create on-demand reports and queries, integrate complex information sources, , enabling M&A programs, launching new businesses, driving new go-to-market and direct marketing programs, launching new channels or competitive programs. Technologies and techniques typically incorporate tools for knowledge systems, scorecards, dashboards, portals, and data warehouses. BI investments will strive to empower business innovation and strategic agility to drive top line growth and overall competitive advantage.

Most organizations are not taking advantage of the information available, nor are they using this information to drive performance to empower decision making and drive great strategic advantage. Cost savings and commoditization practices in this tier are not a focus.

The Bottom-Line
Categorizing investments as a hierarchical progression, from foundational infrastructure, to empowerment, through intelligence and awareness can help to improve the budgeting process and assure that all IT investments are not judged by the same criteria. Using the hierarchy of needs classification, CIOs can better make the case for a solid foundation and the right level of investment for the right hierarchical need, while executives can be assured that the correct goals are being placed on these needs – to drive lower costs for the foundational core infrastructure, while assuring that innovation is maximized.

Tuesday, October 05, 2010

B2B Companies are Really Content Companies, But is Content Publishing Enough?

With the Internet, B2B buyers have access to more information than ever. As a result, most buyers have taken charge of the buying cycle, engaging with sales representatives later and later. Buyers are clearly in control, and marketers are scrambling to address this power shift.

As a result, Internet fueled buying cycles have required B2B marketers to deliver more content and tools over more and more channels to actively engage ever more empowered, skeptical and frugal buyers.

"Publish or perish" is the defining tag-line driving many new B2B marketing strategies. How important is content marketing becoming to B2B marketers? Research by Junta42 & MarketingProfs indicates that:
  • 9 of 10 B2B marketers leverage content marketing as part of their marketing programs, with marketers using eight content tactics on average. The most popular tactics are social media (excluding blogs) (79%), articles (78%), in-person events (62%) and eNewsletters (61%).
  • 51% of B2B marketers are increasing their spending in content marketing over the next 12 months
  • Over a quarter of the total marketing and communications budget now goes toward content marketing
Content Marketing Driving Results?
However, although content is required, the increased spending and content marketing efforts are not driving desired results.

The good news is that today's buyer wants to be engaged, with 9 out of 10 actively relying on vendor provided information on their way to making a purchase decision. Using this content, buyers are taking control of the buying cycle from direct / channel sales, making the content that marketing delivers more important than ever in driving shorter sales cycles and increasing the number and value of transactions.

Unfortunately, most of today's buyers suffer from Information Overload as a result of current "carpet bombing" marketing strategies. Today's buyers have more sources of information than ever including traditional, on-line and social media sources. For example, the typical buyer receives over 20 e-mail marketing messages a week, up 32% over the past 4 years. Worse, the information is often not customized for the buyer, and is viewed as irrelevant "noise". Instead of being engaged, buyers are now inundated with more meaningless product information and offers than ever before, creating "marketing fatigue".

Content Marketing Challenges
As a result, many of the survey participants indicated their number one challenge is producing enough engaging content (36%), content which enables marketers to break through the clutter to make a meaningful connection and have a compelling dialogue with a prospect.
 
As a result of investing significantly more on content marketing year over year, but struggling to overcome overloaded, skeptical and frugal buyers, the study indicated a large “confidence gap” in which marketers use tactics but are unsure of how effective they are. Return on investment in content marketing is not assured.
 
The Bottom-Line
With so much being invested in content marketing, the question any B2B marketer needs to ask - Are your content marketing efforts adding to the clutter, or engaging with prospects to advance the buying cycle?
 
The current tactic of producing more and more content is unsustainable. Marketers cannot keep up, and buyers are overloaded and not being engaged effectively.
 
Interactive Smart Content(tm) is one of the keys in helping to overcome marketing fatigue and produce engaging content. This intelligent content customizes presentations for each individual user. Using an interactive profile, the buyer indicates key information that differentiates their needs. Simple profile information such as industry, location and size can be used to promote relevant case studies.
 
Research from MarketingSherpa and KnowledgeStorm, proves that targeted / personalized content is more effective, viewed by buyers as more valuable in the decision making process when customized for Industry (82% more effective), Role/job function (67%), Company size (49%), and Geography (29%).
 
However, today's more skeptical / frugal buyer is harder to engage, and more interactive and advanced profiling is needed:, for example:
  • A survey of pain points can help determine which solutions and features to highlight;
  • A survey of current solutions can drive content to make the case for change and quantify the cost of doing nothing;
  • Understanding current issues can help tune and quantify the value proposition;
  • The role and stage in the buying cycle can help determine what call to action / next steps are recommended.
Creating content that is dynamic, adaptive and personalized in real time, fundamentally changes the way content attracts and engages buyers. Delivering interactive white papers, executive assessment tools, and calculators can deliver the customized content that buyers demand. With this interactive smart content, buyers know they will receive personalized advice and are more likely to engage, while marketers know customized content will be more effective at generating qualified leads, and educating buyers to accelerate the buying cycle.
 
Source:
http://www.contentmarketinginstitute.com/2010/09/b2b-content-marketing/
2010 B2B Content Marketing Benchmarks, Budgets and Trends, American Business Media, Business Marketing AssociationJunta42 and MarketingProfs surveyed over 1,100 North American B2B marketers from diverse industries and a wide range of company sizes. Published: September 15, 2010