it sales & marketing: trends, priorities, and best practices for 2006 executive advisory...

IT Sales & Marketing: Trends, Priorities, and Best Practices for 2006

Executive Advisory Services

IDC Client TelebriefingSeptember 8, 2005

IDC CMO Advisory – Confidential2

AgendaAgenda

• 12:00 (EDT) Presentation

Rich Vancil Vice PresidentCMO Advisory Service

Donald MacDonaldVice PresidentSales Executive Service

• 12:45 Q&A• 1:00 Adjourn


Peer Networking and “Issues” Identification

IDC Invests in Significant Research Foundation for Executive Advisory ServicesIDC Invests in Significant Research Foundation for Executive Advisory Services

IDC analyzes and advises on:Benchmarking & Metrics

Best PracticesCustomer Influence

User Surveys on the Buy Cycle

Experience

Buyer Experience Database

• IDC Panel of 1500+ users

• Supplemental surveys

• Awareness/ consideration

• Consideration/ purchase

• Application/ leverage

• TDM’s & BDM’s

Buyer ExperienceDatabase

Executive Benchmarking Database

• Unique Access• Unique

Methodology normalizes activities

• 100 + Vendors• $400 B Revenue• $60 B Sales &

Marketing Spend

Vendor Surveys on Sales & Marketing

Expenses and Practices

BenchmarkingDatabase


$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1960–1999

$ Billions

Worldwide IT Spending(1960–1999)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Worldwide IT Spending(1999–2008)

~15% CAGR ~4% CAGR

1999–2008

$ Billions

The Sea Change in Tech Marketing & SalesThe Sea Change in Tech Marketing & Sales

Double Digit Growth Single Digit Growth

IT PastIT Past IT PresentIT Present

Selling Product to Early Adopters

Selling Solutions to Sophisticated Users

Bargaining PowerHeld by Vendor

Bargaining Power Held by Buyers

Limited Marketing Required

Sophisticated Marketing Required

Sales = Demand Management

Sales = Demand Creation

Trends in Tech Sales


Donald MacDonald


Donald MacDonald:IT Sales Trends, Priorities, and Challenges for 2006Donald MacDonald:IT Sales Trends, Priorities, and Challenges for 2006

Trends In a word—complexity Solution selling is ubiquitous and remains the major focus in IT sales IT vendors continue to expand vertical offerings and routes to market Need for increased demand creation has led to channel rationalization

Priorities Creating new business opportunities Maintaining profitability Better sales planning & budgeting More effective and efficient resource allocation

Challenges Alignment remains the top challenge


Figure 40

Significant Influence (65.2%)

Moderate influence (26.1%)

No influence (7.6%) Don't know (1.1%)

Total = 92

The Customer Experience: What Do Customers Look for in an IT Vendor?The Customer Experience: What Do Customers Look for in an IT Vendor?

Respondent’s Opinion of the Importance of Vendor Alignment *

Source: IDC Solutions Selling Paradox Study, 2005


Sales Alignment ChallengesSales Alignment Challenges

Alignment with the customer

• Too short sighted

• Focus on “C” level somewhat misguided

• Solutions havemarginalizedthe role of the sales rep Alignment

with the market • SMB space attractive but

getting crowded

• Channel conflicts need constant attention

• Future challenges from unlikely competitors

Alignment within the company

• Financial metrics inadequate

• Non-sales resources critical to sale’s success

• Cultural challenges of solution selling


Productivity

IT Sales Challenge: The Recent PastIT Sales Challenge: The Recent Past

Made for markets

Repetitive activity

Done quickly

Cost effective

Features-selling

Low content

Highly controlled

Product Selling High

Low

N= 26 executive interviews

Product selling drives productivity but does not address increasing customer

demand for solutions


The inability for the industry to neatly define a solution is, in part, due to the fact that a solution is ultimately defined by a customer.

Customers we talked to describe a solution as an intangible. They expressed its meaning in terms of knowledge, expertise, and experience.

Customers define solutions in terms of the impact it has on their employees, the cost involved, the risk it represents to their company, the difference makes to their customers, and the potential to make money or save money—each of which is unique to that customer and no one else.

The Solution Selling ChallengeThe Solution Selling Challenge

“ When talking about solutions, the old adage seems to fit in that the whole is greater than the sum of the parts.”

SVP, IT


IT Sales Challenge: The PresentIT Sales Challenge: The Present

Solution SellingCustomer Centric

Managed process

Done right

Resource Intensive

Consultative-selling

High Context

Highly collaborative

Productivity

High

Low

N= 26 executive interviews

Solution selling diminishes

productivity but responds to increasing customer

demand for solutions


Sales PerformanceSales Performance

Last year only one out of every ten IT sales organizations met or

exceeded their annual revenue plan

During the same period, only one in three sales representatives made quota



The Buyer Experience: The Solution Fulfillment CycleThe Buyer Experience: The Solution Fulfillment Cycle

Opportunity identified

FormalTeam

assembled

InitialResearch& Analysis

List of

VendorsCreated

BusinessCase

Developed

Vendor RFP

review & ROI

analysis

Consensus&

DecisionTeam

Recommend

Sentto

SeniorLeadership

For Approval

RFPGenerated

The Solution Fulfillment Cycle

IT vendor sales teams that recognize the customer’s solution fulfillment cycle will be more productive and successful then those

more short-sighted teams, that only focus on their own selling efforts

SolutionDesign

SolutionDeveloped

SolutionImplemented

Solutionput into

Production

Decision-Making Cycle Implementation Cycle


The Buyer Experience: Vendor Interaction that Customers Value MostThe Buyer Experience: Vendor Interaction that Customers Value Most

13.4%

15.5%

17.5%

17.5%

19.6%

26.8%

27.8%

29.9%

33.0%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Knowledgeable People

Follow Through/Support

Honesty/Integrity/Communication

Technical Briefings

References/Client Visits

Attentive to Client Needs

RFP Response

Proof of Concept

Demonstrations



Figure 39

More aligned (81.1%)

No change (6.3%)

Less aligned (7.4%)

Don't know (5.3%)

n = 95

The Buyer Experience: What Do Customers Look for in an IT Vendor?The Buyer Experience: What Do Customers Look for in an IT Vendor?

Respondent’s Opinion of Vendor’s Alignment



The Sales Executive: Challenges for 2006The Sales Executive: Challenges for 2006

Managing sales expenses Selling, General, & Administrative costs

– Better expense tracking and reporting Selling Expense (the “S” in the SG&A line)

– Benchmarking your sales expense ratio Go-to-market planning (GTM)

– Benchmarking sales resource and program expenses

Maintaining sales performance Driving revenue by creating new business opportunities

– Sales training and upscaling sales teams More effective solution selling

– Measuring Customer Fulfillment Profitability Alignment

– Deploying the right sales & marketing resources at the right time

Tech Marketing Trends: Inside the Successful Marketing Organization


Rich Vancil


Marketing & Sales Alignment Continues to be an Area for Significant Improvement Marketing & Sales Alignment Continues to be an Area for Significant Improvement

Source: IDC’s 2005 CMO Tech Marketing Benchmarks Study (n=92)

Q. Please explain any planned initiatives in the upcoming year for improving marketing and sales alignment

0% 5% 10% 15% 20% 25%

CRM/MRM/SFA/CallCenter Application

Refine Marketing andSales Metrics/Processes

Better Engage Sales asa Customer

Improve the LeadGeneration Process

Better Align FieldMarketing & Sales

Joint Marketing andSales Meetings

% of Respondents


Inside the Successful Marketing OrganizationInside the Successful Marketing Organization

Alignment with a more complex IT marketplace will require a more highly functional marketing organization.

“Six for ‘06”1. Increase Overall Investment

2. Develop the Organization Chart

3. Improve Skill Sets

4. Focus on Global Alignment

5. Invest in the Marketing Operations Role

6. Invest in Marketing Performance Measurement


$0

$200

$400

$600

$800

$1,000

$1,200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%IT SpendingIT GrowthMarketing

Source: IDC’s 2003, 2004 and 2005 CMO Tech Marketing Benchmarks Study

#1: Tech Marketing Investment Climbs to the Highest Growth Rate in 4 Years, Outpacing IT Spending#1: Tech Marketing Investment Climbs to the Highest Growth Rate in 4 Years, Outpacing IT Spending

$B Avg. %

-1.7%

6.0% 6.4%

Services(8.9%)

Hardware(5.3%)

Software(7.0%)


#2: Marketing Organization Charts – A Work in Process#2: Marketing Organization Charts – A Work in Process

Product/LOB

Region

Marketing Function

#2

1. By Marketing Function+ Optimizes marketing expertise- Fosters empire building

3. By Product or LOB+ Optimizes product knowledge and

interaction with product management- Increases alignment challenges

2. By Region+ Optimizes local touch and sales

interaction- Increases potential for redundancies

and inconsistencies

Marketing Function

Region

Product/LOB

Product/LOB

Marketing Function

Customer

Region

The 4th Dimension: Market-Driven Structure Optimizes solution and vertical marketing Improves marketing & sales alignment Optimizes Voice of Customer


#3: Building Skill Sets and Staff: Expected Staff Allocation Levels#3: Building Skill Sets and Staff: Expected Staff Allocation Levels

4.3%

1.7%

1.8%

2.0%

2.5%

2.8%

5.2%

6.0%

6.6%

6.6%

6.9%

7.2%

10.1%

17.5%

18.7%

0% 5% 10% 15% 20%

Executive Marketing & Other

Advertising

Analyst Relations

Market Research

Marketing Operations

Technical Marketing

Web Development and Marketing

Public Relations

Industry Marketing

Event Marketing

Partner Marketing

Direct Marketing

Marketing Communications

Field Marketing Support

Product Marketing

#3

Source: IDC’s 2005 CMO Tech Marketing Benchmarks Database

New Role: Improve marketing’sefficiency and effectiveness

Driving a market-driven strategy

Increasing marketing and sales alignment


#4: Achieving Internal Marketing Alignment: A Special Challenge for Fast-Growth Vendors#4: Achieving Internal Marketing Alignment: A Special Challenge for Fast-Growth Vendors


Marketing staff & strategies are fully aligned globally[6]

Regional/BU mktg. operate independently

of corp. mktg.[1]

IDC asked CMOs to indicate their level of alignment within marketing:

AverageRank

6

5

4

3

2

1

4.5

33.2

3.43.63.8

44.24.4

4.64.8

5

Level of Alignment

within Marketing

<$500M $500M-999M

$1.00B-2.99B

$3.00B-9.99B

$10.00B+

Revenue Range


# 5: Invest in Marketing Operations# 5: Invest in Marketing Operations

Q. What marketing roles/programs do you intend to deploy in the next 12 months to increase your efficiency and effectiveness?

9%

12%

15%

19%

38%

0% 10% 20% 30% 40%

Internal Alignment Processes

Marketing Ops. Role/Team

Campaign Execution Processes

Mktg. Resource Management (MRM)System

Marketing Measurement Processes

% of Respondents

#5



#6: Marketing Performance Measurement is on the “To Do” List of Virtually Every Tech CMO#6: Marketing Performance Measurement is on the “To Do” List of Virtually Every Tech CMO

AverageRank

6

5

4

3

2

1Marketing provides limited or no performance metrics.

A comprehensive marketing performance measurement program is in use.

3.6

#6


IDC Analysis: • Hardware sector is higher than software and

services (3.9 vs. 3.4)• Services is low due to its higher Awareness-

Demand ratio(64%) measurement is a greater challenge

• Mid-range software companies are struggling with MPM development

Essential Guidance:• Culture of measurement• Process development is first, technology is

second• MPM should expand using a step-wise

process – no big bang strategy

IDC asked CMOs to indicate the maturity of their marketing performance measurement program. . .


2005 Key Performance Indicators for Tech Marketers2005 Key Performance Indicators for Tech Marketers

KPI 2005 2004

Marketing Investment Change (most recently closed fiscal year to current fiscal year)

6.4% 6.0%

Marketing budget ratio (marketing spending per revenue for the most recently closed FY)

3.1% 3.2%

Program-to-People (P-to-P) ratio 63.5% 66.1%

Marketing Centralization Ratio 62.9% 59.6%

Awareness-Demand Ratio 49.4% 55.6%

Marketing Throughput (program spend/staff) $288K $336K

Outsourcing Ratio 55.3% 60.5%

All data is for the current fiscal year unless stated otherwise.Source: IDC’s 2004 and 2005 CMO Tech Marketing Benchmarks Database


Essential Guidance: Get Aligned for Success in 2006Essential Guidance: Get Aligned for Success in 2006

• Mis-Alignment is Expensive !!

• Get Aligned Inside the Organization Sales with Marketing Operations

• Get Aligned with your Customers How and why they buy How they are Influenced by your marketing messages What they think of your sales team

Better Alignment Means Better Results


Additional Resources from IDC’s Executive Advisory Services (sample deliverables)Additional Resources from IDC’s Executive Advisory Services (sample deliverables)

Benchmarking Studies for Budgeting and Planning Marketing Budget Planner: 2006 Program & Staffing Benchmarks, August 2005

Sales Performance and Solution Selling Metrics and Benchmarks, Fall 2005

Management Best Practices Marketing Programs that Drive Revenue Growth, Fall 2005

Solution Selling Effectiveness, Fall 2005

Customer Program Alignment, March 2006

Events and Peer-to Peer Forums Marketing Performance Measurement Forum, East and West Coast locations,

Winter 2006

Executive Roundtables and Breakfast Briefings, quarterly, East and West Coast locations

Consulting Resources Analyst inquiry

#1


Rich VancilVP, CMO Advisory [email protected]: 508-935-4327

For more information . . . For more information . . .

Donald MacDonaldVP, Sales Executive [email protected]: 508-988-6794

it sales & marketing: trends, priorities, and best practices for 2006 executive advisory...

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