CONTENTS:

FEATURE ARTICLE - ADVERTISING, WHO NEEDS IT!
Whilst there has been a significant move away from a "tell and sell" to a consultative style of selling over the past 5 years, little has changed in marketing with the majority of the budget still spent on advertising and tradeshows. Is it the time for a rethink?

GOOD IDEAS & PRACTICES- HOW TO KEEP INVESTORS HAPPY?
With the importance of investor relations it surprising that only 37% of companies have an IR web page and even less provide the information on it that fulfils good practice.

BOOK REVIEW ~ PERMISSION MARKETING, SETH GODIN
This book will influence the way you set about prospecting and marketing in the 'wired world'.

e-CHAT ~ LEAD CHANGE OR HAVE IT FORCED ON YOU.
The entire Encyclopaedia Britannica, a 32-volume set that sells for $1,250 in book form, has been placed on the Internet free of charge

FROM THE EDITOR......

Selling capital goods to industry

In each Issue we will bring a mix of new approaches, best practices and resources for competing within this increasingly competitive 'wired world'.

The feature article on the value of tradeshows in Issue #1 raised some challenging questions, controversy, and new thinking worthy of
consideration.

We are continuing as we started. In this issue the feature article discusses the value of advertising and presents alternatives which you may judge are more suited to today's selling environment. We also continue with our pick of good practice, reviews and news.

" In a world of change, the learners shall inherit the Earth; while the learned shall find themselves perfectly suited for a world that no longer exists."
Eric Hoffer, The Ordeal of Change

Quote for today:

"Services is where big companies go to die."
Attributed, probably unfairly, to Scott McNeally, Sun Microsystems

FEATURE ARTICLE - ADVERTISING, WHO NEEDS IT!

Is advertising a worthwhile part of a company's marketing activities? Does it help the selling of complex IT goods and services in today's environment? Even if it does assist selling, as a marketing tool does it offer value for money? In today's 'wired world' are there more effective ways to support sales? To get some answers let us look first at the changing nature of sales.

Over the past five years, there has been a significant trend away from a "sell and tell" style to a consultative style of selling complex software applications. Part of this relates to the nature of software and associated services. If you are selling a product from soap powder to a computer, marketing speak, the product domain is fixed. With complex software, it is both automating the task and assisting the broader process. In this situation,
each buyer may only use some part of the product's full capability. Their use can depend on the capabilities of the user, interfaces with other existing software systems and the need for stability above capability. As such, one piece of software can fulfil many needs. The domain is fuzzy. To sell within this fuzzy domain, the primary task of sales staff is to understand the prospect's situation, hence the value of consultative selling.

I would argue that the primary role of marketing as a department is to support sales. So, with the major changes in the approach to selling it is perhaps surprising that the majority of the marketing budget still goes on what it did ten years ago - advertising and tradeshows. Tradeshows were discussed in the last issue, so let us focus on the role of advertising.

The effectiveness of advertising is not in doubt. In any gathering of people, you can mention the first two or three words of a common TV advert and the majority of people can respond by finishing the catch phrase. Advertisers know, and will advise you, that the most important part of any effective advertising campaign is frequency. Frequency builds trust, and trust leads to sales. When selling to a large group of buyers with a common need (a fixed domain) your advert can be focused to deliver one message.

For companies like Proctor and Gamble, getting the required frequency costs $100M per year. Even with the best agencies to support you advertising is a blunt marketing tool as recognised in the now famous quote from Lord Lever in the 1920's, " I know half of what I spend on advertising is wasted, but I don't know which half". In the past five years, there has been rapid growth in the number of journals, TV channels, and direct mail looking to get attention. Within this environment, even generously funded campaigns are
struggling to be heard over the background noise. PR companies develop even more novel or shocking adverts to get attention.

For marketeers supporting the consultative selling of complex software and services, advertising budgets are much smaller, the level of noise is still high and the audience has diverse needs (fuzzy domain). They often trade off advertising frequency with the need to send many messages. Usually they end up running a few adverts in various journals, maybe using different wording on the adverts. Not surprising, the results are poor. The investment is justified by the need to develop a corporate image, yet in practice the investment has gained the attention of few people for which that particular advertising message, at that instant, was relevant. In this years ISSM
(Institute of Sales and Marketing Management) annual conference it was noted that in 83% of sales, it takes seven contacts with a prospect to build the trust and confidence needed to achieve a sale. Within this context, advertising does little to make the selling more productive.

With the advent of the broad use of e-mail a new alternative has emerged, the Ezine. Its main advantage is that postage of emails is free, so there is zero cost to achieving frequency. With frequency, you have the opportunity to develop trust and with trust, you can sell. Email is a new medium. Only two years ago it had limited usage and was unreliable, now most business people view their email several times a day and it is as reliable as post.

Best practice requires an Ezine to be relevant and useful to customers and prospects. The answer is to provide something in it that is free and has value. It can be considered as taking the best aspects of customer magazines, combined with the focus of direct mail. After the first or any subsequent Ezine, the recipient can opt out of receiving further copies, or send comment. This fulfils the requirement that any communication is set up to handle a response. In addition it has tremendous value in that, unlike advertising or direct mail, you get feedback on who finds your information relevant and who does not (they opt out).

Within the Ezine, you are being explicit with a reward in exchange for the attention of readers. The nature of the explicit rewards needs careful consideration. Sending unsolicited advertising messages direct to an individual's email address, frequently protected with jealousy, is like direct mail, but worse. In a business environment, a free report or a tape of a speech by a world-renowned authority is considered acceptable.

With each new issue of your Ezine, your prospects receive explicit rewards, typically in the form of relevant information, in return for their attention. Through this attention they learn more about the full scope of your capabilities, see what parts are appropriate to their particular needs and build trust in you. This effect was illustrated when someone recently commented to a colleague that she had been less than sharp taking out a pension policy with a financial adviser. Her calm response was that she had received objective and knowledgeable advice from this individual over a period of time and she certainly did not begrudge him the large commission he no doubt received.

Importantly, you have the recipient's permission to send the Ezine, so it does not depend on novelty to overcome the noise and gain their attention. It depends on the quality of the information you provide. The recipient looks forward to the next communication with you, the chance to learn more about how you can address their needs. The Ezine is consistent with today's style of consultative selling, providing the opportunity to build trust at zero placement cost.

I hope we are achieving those objectives with e-Xpertise -please let us know what you think.

Ian Dabney, BrainSells

What is your view on the role of marketing?
Is the primary function of the Marketing Department to support Sales?

Cast your vote:

For yes send the email yes.survey@brainsells.com
For no send the email no.survey@brainsells.com

The results of the poll will be given in the next issue.

GOOD IDEAS & PRACTICES - HOW TO KEEP INVESTORS HAPPY?

According to Inter@ctive Investor on November 19th there were rumblings in PTC about a buyout, to quote, "shares of the software vendor rose more than 24 percent this morning as message boards buzzed with rumours of a buyout". Is this a case of 'ramping'? Who knows! To check what was going on I ventured to the PTC web site. I was pleasantly surprised to find a well- organised and informative Investor Relations (IR) page which gave me the full range of financial information, although there was nothing to confirm or deny the rumours!

Back in March, Richard Holway Limited ( http://www.holway.com) took a look at the IR web pages of 100 UK Software & Computing Services Industry companies. The findings, reported in "System House", were worrying! Of the companies that had a web site, only 20% had an IR page, and an additional 23% presented their share price. They took another look in July, and things had definitely got better, although there was still room for improvement! 37% of companies now had an IR page and 33% published their share price.

To create a 'Quality' IR website, Holway suggests you need the following things:

* IR button on home page
* Share price
* Annual report
* Financial result
* Corporate activity
* Press releases
* Financial calendar
* Financial presentations
* IR contacts

Following these guidelines, PTC are close to perfection with their IR web site, Mentor Graphics have all but a few of the 'top tips' covered and UG Solutions simply have a share price on display. Take a look at some of your web site favourites and you will notice the different quality of the IR page. Who do you think will attract the new investors?

With the WWW, information supply is the level playing field regulators demand. Giving one group of investors special access to information will surely lead to a class action suit against the directors. It is more critical than ever to get IR right, this is why companies are investing more time and money finding the right IR Officer to look after this part of their business. The IR Magazine, www.irmag.com covers a whole range of issues including the importance of the corporate web site as a communication medium, reaching out to your current and future investors.

Providing the complete suite of IR information at the top level of your web page could make all the difference. Potential investors can find the information they need. Consultants like Cambashi are more likely to include your point of view in their analysis. All that said, for visitors to gain real value from the IR page it has to be dynamic, easy to navigate, up-to-date and served by something other than just a link to a 'NASDAQ' or 'E*'TRADE' page.

It is worth remembering that while equal access to information is vital, investors differ. When investors build a portfolio the key consideration is to build a balance between risky but potentially high price, growth stocks and slower growing but safer stocks. The perception of risk varies, but in general US investors take bigger risks than Europeans. How they assess stocks varies too. Some investors are looking for growth regardless of profit; others are looking at the fundamentals of profit and cash flow growth. In particular
European investors value services revenue more than US investors. Attempts at simple one-size fits all message over the world wide web could actually reduce the number of investors wanting your stock, not increase it!

The development of an IR web site will require additional effort, but the rewards should be worth it.

Beverley Small , Cambashi

BOOK REVIEW : PERMISSION MARKETING, Seth Godin

Simon & Schuster 1999. Hard cover ISBN 0-684-856360, Audio tape ISBN 0-671-04642-X
Price £13.59 available from Amazon.co.uk

The central argument of this book is that the traditional marketing method of 'interrupting' your prospects with mailings and commercials is just not appropriate in today's world. Godin uses the analogy of a man approaching a woman in a singles bar with a proposal of marriage; he should not be surprised if she refuses. If he had asked for her telephone number, and therefore permission to call her, she might have co-operated. After a call she might agree to go on a date and after a few dates they might meet each other's families. A bit further down the line marriage may enter the equation.

What he is advocating is to deal only with people who have volunteered some personal information and given you permission to contact them. Then adjust that contact according to the degree of permission granted and offer them something in return. Yes, it does involve patience but you will be creating a sales pipeline of qualified prospects who are gradually increasing their trust in you. The emphasis is on using current technology to make e-commerce really work. It may just be common sense and old fashioned relationship marketing but it is delivered in a provocative and entertaining style.

Seth Godin founded Yoyodyne, the first company to create promotions and direct mail campaigns on-line. He sold the company to Yahoo! in 1998 so he probably knows what he is talking about. With clear guidelines on how to adopt 'permission marketing' and lots of success story examples, this is informative and enjoyable material; definitely worth a look or listen.

Recommendation : A must for marketing management

Jennifer Hand, BrainSells

e-CHAT

If you did need further evidence that the web is changing the way you need to do business, this recent press release may give you food for thought.

'ENCYCLOPAEDIA BRITANNICA GOES ONLINE FOR FREE
by Michael Conlon, Reuters

CHICAGO (Reuters) - The entire Encyclopaedia Britannica, a 32-volume set that sells for $1,250 in book form, has been placed on the Internet free of charge, the publishers of the 231-year-old reference work announced Tuesday.

Company spokesman Tom Panelas said the development did not mean Britannica was giving up the compact disc versions of the reference work or the printed word -- sold door-to-door for decades by salesmen who urged parents to put the world's knowledge on the home bookshelf with easy monthly payments.

He said the Chicago-based company still planned to publish a new 40- volume set "and will continue to serve that market.''

But Tuesday's announcement was a capitulation of sorts for a company caught swimming upstream against the information river. It entered the CD and online markets later than others and the cost of its product in disc form was higher than some other computer-driven encyclopaedias.

The new company will be supported by advertising revenue from the site. In addition to the full text of Britannica, the site -- www.britannica.com -- carries news feeds from newspapers and news wires around the world; selected articles from more than 70 popular magazines including Esquire, Sports Illustrated, and The Economist; and a searchable directory of the Web's best sites, chosen by Britannica's editors.

Britannica's first edition was issued in 100 parts from 1768 to 1771 in Edinburgh, Scotland, the brainchild of three Scotsmen. It calls itself the "oldest continuously published reference work in the English language.''

Postscipt. At the time of writing the Britannica site was shut down as demand had overwhelmed the capabilities of the site server!

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