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Dont let the mournful faces of the business-news pundits fool you.
There are still companies out there spending money.
And you can still sell to them — if you understand what their needs are, what their pain is and what theyre worried about.
“Maybe I have too much of an old-school view, but I believe that whether you have a down economy or an up economy, you need to fundamentally approach a market the same way,” says Kelsey Kennedy, vice president of marketing at 1Vision Software, a storage management software purveyor in Loveland, Colo.
Marketing to the corporate customer has always been part art, part science. After a couple of years during which business-to-business (B2B) marketing took on all the glitz and big-dollar spending of the consumer world, technology companies are returning to basics — pushing reliability, efficiency, speed, return on investment, stability and savings.
“B2B is a needs-based equation,” says Steve Silvers, partner at Clarus Public Relations, a high-tech shop based in Denver.
What does the corporate customer long for? In a nutshell: more bang for the buck.
Return on investment is the new mantra. Spending for the sake of spending doesnt happen when the capital markets have slashed companies worth and venture capital must be doled out with care.
Companies will still spend money for technology that enables better cost control or greater productivity in the still-tight labormarket. Information technology (IT) managers want to figure out ways to make the best use of their existing assets. Service providers are always looking for new products to offer their end users — especially if they add revenue to the top line as well. And in a down market, everyone takes a harder look at customer satisfaction.
“Companies are definitely tightening their belts,” says Bob Conlin, vice president of product marketing and marketing operations at Incentive Systems in Bedford, Mass. “In terms of IT spending, theyre going to spend the money on technology that will differentiate them from their competition.” Incentive Systems makes enterprise software that helps companies such as Genuity and Jamba Juice track and manage incentive compensation.
When marketing to corporate customers during these trying times, there are a few rules you should follow.
Rule One
Dont just think about your customers — think about your customers customers.
When the economy begins to slip, companies worry more about the customers they already have. Instead of spending the money it takes to attract new customers, the Holy Grail becomes keeping the customers that are already on board.
Compensation consultant firm Hewitt Associates estimates that most companies spend 10 percent to 14 percent of their total revenue on incentive compensation, ranging from sales commissions to performance bonuses for customer service representatives, support staff or retail managers.
Conlin says many large companies rely on “thousands of Excel spreadsheets” to manage incentive programs — creating silos of data that are difficult to wrangle and often unfairly administered. In a billion-dollar firm, those incentive programs can easily amount to $100 million or more.
Why would a company of any size entrust a $100 million budget line to a home-grown spreadsheet process? “Well say that and see the CFOs [chief financial officers] jaws just drop,” Conlin says.
This conundrum gives Incentive Systems a marketing trifecta, Conlin says. The companys products have the potential to boost revenue, as well as improve customer service and manage expenses.
Improved customer retention is on the minds of many companies. The old New Economy companies talked about stickiness; new New Economy companies have returned to the idea of customer satisfaction, augmented with cool new interactive tricks such as automated e-mail responses and Web-based help.
“Its a lot cheaper to retain a customer than go out and buy a new one,” says Stan Prescott, an analyst at Frost & Sullivan in San Antonio. “Whats old is new in this case.”
Rule Two
Help customers to manage the assets they already have.
Whether their assets are people or palmtops, bandwidth or enterprise software, companies are trying to do more with what they have.
The last few years saw an explosion of spending on infrastructure, from networks and servers to desktops and mobile devices. Now, managers find themselves having to squeeze more productivity out of existing resources.
Its not easy when you have no idea what you own, says Jeff Kohler, CEO of Reason, a wireless-device management company in Aurora, Colo. “We havent come across one company — not one — that knows what wireless devices they have,” Kohler says.
Years of ad hoc wireless purchases on employees expense accounts leave companies with no idea of whats out there or where. Rolling up wireless bills and running them through Reasons analysis software revealed that customers were spending 15 percent to 30 percent too much on service plans alone. And thats not the only expense. Lay off 2,000 people, Gartner Group estimates, and at least 200 phones, personal digital assistants (PDAs) and laptops will walk out the door with them.
Telecom managers at one of Reasons customers were taking 100 phone calls per day from co-workers asking basic questions such as: “Which phone should I buy?” The same telecom experts estimated that their company, a large broadband carrier, owned less than 10,000 wireless devices. After a month of encouraging employees to self-register their pagers, phones and PDAs in the Reason database, they discovered the real number was closer to 30,000.
The carrier — Reasons first customer — uses terms such as “the greatest thing since sliced bread” to describe Reasons database product. Says Kohler: “I dont think selling it is going to be a problem.”
Rule Three
Understand all of your customers constraints — not just money.
Sure, everyone has capital constraints. Despite what happened in the bull market, money never has grown on trees. But most companies operate under other constraints — limited bandwidth, limited people, geographic constraints.
Jarad Carleton, who follows Internet infrastructure at Frost & Sullivans San Jose, Calif., office, sees companies aggressively managing their bandwidth needs — and costs — by using private corporate content delivery networks, Web caching and local load balancing, which can cut bandwidth costs up to 30 percent without degrading quality of service.
On the network equipment side, Zolo Technologies is rolling out a line of Dense Wavelength Division Multiplexing devices whose small footprint is specifically designed to work within the tight spaces where metro network providers and multitenant operators do business.
Zolo, based in Louisville, Colo., focused on diffraction grating technology because it had the greatest potential to provide high channel counts in a small box: 7.6 inches across by less than an inch high.
When Water Pik Technologies grew frustrated with its attempts to share specifications with vendors around the world, it turned to its Internet service provider, Front Range Internet, for assistance. The ISP called on 1Vision to set up an off-site storage server that enabled Water Piks business partners, customers and divisions everywhere to reach a secure server as if it were a drive on their local machine.
As a result, Water Pik makes better use of its fixed-cost bandwidth from Front Range, for which it is already paying, and lets trusted partners have access to the files they need over a virtual private network — without giving them access to Water Piks entire network. And users can collaborate and manipulate files as if they were on their own desktops.
In addition, Front Range cuts down on the amount of traffic clogging its network and generates revenue in a new and straightforward way. And keeps a good corporate customer happy.
“Its very easy for an ISP. Theyre instantly a ministorage provider,” says 1Vision founder and CEO Dave Howard. “Weve got 1,500 ISPs that fit the profile — enough business customers and enough bandwidth to make it work. Its that business user that they need to satisfy.”
Rule Four
Emphasize brick-and-mortar values: stability, efficiency — and patience.
The corporate customer wants to deal with a company that will be in business tomorrow. In fact, the corporate customer intends to wait until tomorrow to sign on the dotted line.
In slower times, marketers agree, the sales cycle lengthens and decisions are made more slowly. “Uncertainty causes people to wait until theyre really sure about something,” says Stan Jasinski, vice president of marketing and products at iVB Network Solutions, a unit of Dallas-based InterVoice-Brite. “Our customers are still growing. The economy is still growing. But this uncertainty causes them to look carefully and think twice.”
IVB sells a package of integrated voice and data services that let communicationsservice providers offer unified messaging with e-commerce and payment components. The end user can check out the movie listings, line up friends to go along, buy the tickets and pay for them with iVBs product, known as Omvia. The provider keeps the customer, and collects revenue at every step.
IVB covered its bases by including both a software application suite and an application service provider option. “We think the current environment is to our benefit,” Jasinski says. “Customers want to hit the market window, so having the ASP option is stimulating demand. Were getting swamped.”
The ASP model “doesnt make the sales cycle longer — it makes the sales cycle different. The kind of questions they ask are more pointed,” Jasinski says.
What makes the current economic telecom downturn different? Its the first since the Internet emerged and moved all of the pieces on the board. But the core demands havent changed much: Services need to be delivered quickly and cheaply — but still reliably — and recurring revenue needs to include a constant stream of fresh, interesting offerings. Service providers, Jasinski says, are demanding, “Give me some new sources of revenue — now.”
On another front, Incentive Systems Conlin notes that instead of the us-and-them mentality, some companies with both online and offline business units have developed programs that actively encourage employees to “cross the wall” — then reward them for doing so. Internally, employees may perceive massive gulfs of understanding between online and offline operations. To the customers, its all one brand and one experience. They may not perceive the difference between traditional business processes and e-commerce — its all just commerce.
Rule Five
Learn from other peoples mistakes — and your own, of course.
1Visions Howard began developing his companys business plan by looking at competing storage management services business plans.
They were lousy. This made him very cheerful.
Driveway, Xdrive Technologies and others based their business model on providing services for free, supported by advertising, Howard says. These companies wound up attracting an unsustainable customer base. However, while some services have gone under and others are teetering on the brink, 1Vision is forging right ahead, signing up ISPs as resellers of its managed-storage service.
“Business customers are willing to pay for more reliable service,” Howard says. “Whereas if youre just trying to store your bootleg MP3s or hide your porn collection, youre not willing to pay.”
Reasons current asset management business was preceded by a wireless e-commerce site called Reasonware. When retail e-commerce started to look like a quick ticket to nowhere, Reasons management team “blew it up,” Reasons Kohler says. “Its gone. Its history. We had a moment of silence,” he says.
Then Reason took its proprietary software and, working with Blue Martini Software and Oracle, rolled it into a series of modules with great appeal to companies whose wireless assets had gotten out of control. The software still features an easy-to-use consumer front end, but now its used to guide employees toward the appropriate wireless device and service plan and can handle common helpdesk needs.
If the client wishes, Reason can set up an online storefront on the clients intranet, featuring the vendors, phones and service plans available for employees. Reason is not a reseller — it directs the purchase right to the vendors. But employees love Reasons software because they can review all their options in one place. “And telecom managers love it because it stops the phone calls,” Kohler notes.
Finally, in the “one mans poison is another mans meat” category, witness the explosion of interest in colocation in any state but California, where sporadic power outages are making many Web-dependent companies jittery.
In January, San Antonio-based managed hosting company Rackspace Managed Hosting touted its “Blackout Special” and signed up 10 companies from California in less than 30 days, Frost & Sullivans Prescott says. Rackspace ran the promotion again in late March, and within four days had signed up another three customers.
Outside of California, the mood is still pretty good.
“A lot of the captains of industry I talk to are not so concerned about the slowdown in the economy — yet,” Prescott says. “Theres still a lot of optimism.”
Will your company survive its trip through the doldrums? It depends on whether you see a slower economy as a threat or an opportunity.
“Everybodys been talking about the promise of the New Economy,” iVBs Jasinski says. “I guess what youve gotta do is deliver on the promise.”