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e-Expertise in Industry Issue #16
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February 2003

Countdown to The Cambashi Seminar 2003:
The seminar is now less than 6 weeks away. To guarantee your place, register at http://www.cambashi.com/events/registration/semform.htm


In this issue...

Feature Article: The Right Stuff by Edwin Ecob

Amongst our clients, the current #1 focus is sales force execution - getting sales folks standing in the right place, facing in the right direction, talking to the right people at the right time about the right things. But who determines what is "right"? Step forward Marketing.

The marketing function plays a critical role in linking sales, development, customers and prospects, and the company's executive management. Marketing has traditionally been thought of as a combination of market research, strategic planning, product planning, and sales support. As Richard M. Levy, President and CEO, Varian Medical Systems observes, "While all of these disciplines are necessary, more is expected, especially in the high technology world. Two factors in particular are changing the focus of marketing: new organizational concepts, and a new balance between short-term results and long-term investment." In this new balance, short-term results have increased in importance. As a prominent venture capitalist once said, "Good ideas are a dime a dozen. Good implementation is very rare." It is no longer sufficient for a marketing manager to present a good idea. That manager must demonstrate the ability to make money - every quarter, starting today.

Marketing is the company's window on the world outside the company. Other customer facing roles, such as sales and service, provide major inputs, but marketing must provide the interpretation that explains and predicts buyer behaviour. By accurately observing customers' business initiatives and, even more importantly, anticipating future initiatives in target markets, marketing can identify priorities and equip the sales force accordingly.

Most IT solution providers understand the different marketing "roles" and typically have product marketing, industry marketing and marketing communications as separate functions. Often, there is an overall "Program Manager" who needs to resolve the organizational network and be responsible for business issues. The importance of understanding the world from the customer's point of view is reflected in the people being recruited into industry marketing positions. Most often industry marketeers are recruited either from the industry in question or from vendors with substantial experience of selling into that industry.

Knowledge of a particular industry sector or subsector can be a critical source of differentiation in positioning for products and services, as well as a vital ingredient for sales success. Consider how often, after an IT investment decision, the buyers explain their choice by pointing out that the selected vendor "understands our business".

Industry marketeers play the lead role in positioning a product in a particular market. They need to identify and predict both generic and company-specific business initiatives and source, adapt or extend solutions to fit. Also, they need to ensure that the sales force is equipped to sell the solutions into the marketplace by providing not only training on the solutions - together with supporting materials, reference accounts and so on - but also training and information about appropriate industry issues so that sales reps can identify the right people to call on, and can develop discussions in a way that exposes the full value of their offer. Industry information needs to be focussed on a specific area to the maximum extent that time and resources allow.

And don't forget the ROI! After all, one aspect of being the vendor that understands the prospect's business is the ability to articulate the business case - (but be aware - the customer may have already done the analysis). Extra points are available if you can help with "difficult to quantify" areas such as risk avoidance and data security.

In conclusion, I offer the following hypothesis regarding industry focus. "The more difficult it is to find information about particular industry solutions on a vendor's website, the less interested that vendor is in the particular industry segment and the less likely it is that the vendor's products will meet the requirements of that industry, whatever the information says when you finally locate it." Marketeers take note. Do you have "the right stuff"?

mailto:edwin.ecob@cambashi.com

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Hot Topic: Selling IT in 2003 by Dan Roberts

All companies are subject to external pressures that affect the way they do business. Most feel some sort of competitive pressure, whether to reduce prices, or to innovate. Public companies feel pressure to increase shareholder value. The pressures, or business drivers, are usually the key factors that affect a company's business initiatives. While business drivers will largely be the same for all companies in the same industry sector, their responses - business initiatives - will depend on each company's specific circumstances. In turn, it is then these business initiatives that drive the targets and goals for each department and line manager. If you are trying to sell IT solutions, sales will be much easier if you can demonstrate that you can help managers reach those targets. This is not just Return On Investment (ROI), but "Personalised ROI" - returns measured by steps towards an individual's performance targets. If you can then make Personalised ROI cases to several key managers, then your sales case will get even stronger. As Edwin Ecob points out in "The Right Stuff" sales reps are increasingly required to talk in business terms.

However, not only are industries different from each other, but so also are the individual companies within a single industry sector. There's no substitute for extensive knowledge of an account, both of the business drivers and of how each company is responding to those drivers. The final piece of the jigsaw is to discover what IT solutions companies are buying to address these business initiatives. As an example, let's look at a couple of example industries.

Automotive

The automotive industry is strongly affected by the economic cycle - for instance, volatile and shifting demand has led to over-capacity. Competition and globalisation are leading to very tough sales environments. Although many automotive sector companies supply OEMs or Tier 1 suppliers, the ultimate driver of demand is the consumer. As such, fashion can affect automotive demand - recently, global manufacturers have seen a trend towards premium brands, rather than family cars. This has led to over-capacity in specific model production.

Environmental regulations are increasingly important in all industries and several issues affect automotive companies. Governments and consumers are demanding fuel efficiency and engine emission improvements, while governments are also issuing directives on recycling after use, such as the European end of life vehicle directive. There are also requirements to develop alternative fuel vehicles.

Many of the corporate responses are the same, such as consolidation, cost reductions, capacity reduction, innovation and price reductions. But some of the responses are very different - for example, BMW sold Rover to concentrate on the premium car market, while Ford bought Jaguar and Volvo to expand its premium car range. All companies are investing heavily in research and development.

Most are trying to add value above and beyond the product by offering services such as insurance, financing and even traffic avoidance systems.

Despite all the advances that have been made to reduce supply chain costs - at least for the OEMs - companies are still trying to get further improvements in supply chain efficiency through initiatives like the electronic procurement hub Covisint. Covisint was set up by DaimlerChrysler, Ford and GM to enable them to streamline purchasing. Renault, Nissan and the PSA group have also now joined.

Electronics

The electronics industry is also strongly affected by consumer demand and is also dictated by fashion - mobile phone handsets are a case in point. In addition, mobile phone manufacturers have been hit by the slow introduction of 3G networks that could have spurred consumers to upgrade their handsets. Consumers are not replacing their models as quickly as expected, leading to over-capacity in the industry. Contrast this with computer hardware adoption, which is spurred on by introduction of new software that requires more powerful computers. If the current economic uncertainty leads to companies and individuals postponing software upgrades and replacements, then this could also have a knock-on effect on the computer hardware manufacturers.

Competition and globalisation make sales in the electronics industry tough. With so many competitors it can be difficult to establish a differentiator, whether it be on price, quality or service. What happens is that low-cost manufacturers bring out lower-priced models, while quality brand competitors bring out better models. As a result, prices are constantly falling, with new products being developed to replace older models.

As with all industries, regulations affect the direction of new products, such as the directives on mobile phone radiation. Additionally, global companies have to track regulatory requirements country by country to ensure that products meet or exceed the rules in place in the end market.

Business initiatives to cope with these pressures include consolidation, capacity reduction and, most importantly, initiatives to speed the introduction of new products. In particular, a new outsourcing structure, where the product owner debugs the production process on a small pilot plant next to the design office, and then rolls out production globally with Contract Electronics Manufacturers is gaining ground.

Summary

We have identified a number of key initiatives that companies are exploiting to cope with the problems they face. Which initiatives are your specific target accounts employing? What IT solutions are businesses using for these initiatives? These are some of the questions that my colleague, Allan Behrens, will be addressing at the Cambashi seminar in April.

mailto:dan.roberts@cambashi.com

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Book Review: CUSTOMERS.COM reviewed by Mike Evans

Customers.com: How to create a profitable business strategy for the Internet and beyond, Patricia B Seybold with Ronni T Mashak, Random House, ISBN 0-375-41557-2 $29.95.

Patricia Seybold is the doyenne of the document management analysts. This publication, originally written in 1998 and now in its 15th edition, is a well organised set of case studies exploring how a series of companies successfully exploit the Internet. The focus is on how these companies make it easy for their customers to do business with them - also the theme of Michael Hammer's latest book "The Agenda".

This is not a conventional Customer Relationship Management pitch. There is a brief introduction that explains the author's strategy of making life easy for the customer. She suggests that a business should view itself from the position of the final user of its products and services and consider what would make that customer more loyal to the business. It can then design customer interactions that profitably ease the burden on customers, using IT as an enabler.

The main part of the book comprises 16 case studies including American Airlines, Amazon, Babson College, Bell Atlantic, Cisco, Dell, General Motors, and National Semiconductor. These are organised into eight chapters, each related to a critical success factor such as "Target the right customer" or "Let customers help themselves". Finally, there is a synthesis of the lessons to learn.

I can thoroughly recommend this book. Rather than building a concept around a customer acquisition and retention process, it takes real world examples and draws specific good practices from these. The result is to show how the Internet can be used to identify customer interests and preferences.

A lot of investors' money and jobs have washed down the dot.con drain since this book was written. Whatever false expectations were raised and dashed, these case studies bring us back again and again to concrete examples. It reminds us how the basic innovations of the Internet can enhance our customer's experience.

I understand that "Beyond customer.com" is about to launch with 13 new case studies (http://myfsi.hp.com/magazine/wf11_2/seybold.asp). Seybold has simplified her message for tougher times. Her key points today are that customers are in control; that the quality of the customer relationship determines the value of the company; and that the customer experience defines the loyalty and the brand. However, don't wait for that, this original book is well worth a read.

mailto:mike.evans@cambashi.com

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Noticeboard

The Cambashi Seminar 2003 - Sales and Marketing of IT to Industry
9 April 2003, Cambridge

"We already know that 2003 will be tough. Vendors need to focus on improving sales execution. Sales people will have to work harder and be more effective in proposing creative solutions to match the users' demands." Mike Evans.

Senior Sales and Marketing Executives working within the IT industry come to the Cambashi Seminar to find out users' requirements first hand, to hear the latest market analysis and predictions, and to network with their peers.

Topics during the day will cover:
- users' reasons for doing business with vendors
- pointers to the right portfolio of product and service lines
- future market directions

This year's guest speakers will be
- Brian Frame of Texol Technical Solutions
- Mike Twelves of Corus Automotive.

Other speakers during the event will include Cambashi's Mike Evans, Peter Thorne, Allan Behrens and Julie Fraser, who will bring a North American perspective to the day.

Find out more, including programme details at http://www.cambashi.com/events/seminar2003/

To guarantee your place at the seminar, register at http://www.cambashi.com/events/registration/semform.htm

Contact Melanie Bradley for further information: mailto:melanie.bradley@cambashi.com or telephone +44 (0)1223 460439.

First delegate rate - £450
CSF Members - £405
Second delegate rate - £185

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