Can IT's Image Among Marketers Be Repaired?

"Typically, the smallest proportions of resources are dedicated to innovation, which represents the biggest opportunity to increase shareholder value."

--A.T. Kearney

Anyone who makes a living selling IT to business will be interested in the A.T. Kearney article. "Why Today's IT Organization Won't Work Tomorrow." The article says that significantly fewer senior business executives believe that IT is extremely important to the marketing function than do senior IT executives. One implication is that IT marketers must work smarter at targeting their own counterparts in user organizations, as opposed to IT leaders. At least that should make the psychographics easier.

The paper reports on a 2004 Harris Interactive survey of 200 business executives in the U.S. and Europe.

Another finding is that, compared to two years ago, fewer dollars (20% versus 30%) are flowing into innovation-type projects versus "meat and potatos" projects. That's another warning light to IT marketers, most of whom are in the business of selling innovation.

Finally, I liked the part about how organizations should look at SOA (service oriented architectures) as a key enabler for future proofing IT investments. In fact, SOA could be a virtual metaphor for the paper's discussion of how to organize the IT function itself for the future.

By the way, I have noticed a distinct pattern in how A.T. Kearney frames the premise of many of its thought leadership pieces -- which is to ask why something (or someone) doesn't work. In my last post, I looked at an A.T. Kearney article on wireless providers' failure at selling online. This time the strategy firm writes about why it thinks today's IT organizations won't work in the future. As a writing strategy, this can be very efficient.

Why Wireless Operators Don't Sell Online

"Most operators … spend less than 1 percent of their advertising and sales budget on the online channel."

--A.T. Kearney

A.T. Kearney has an article on its thought leadership page titled "Selling Wireless Services on the Internet: Turning Clickers into Buyers," by Suman Sarkar, Bruce Klassen, and Martin Fabel. It reports a very interesting fact and what to do about it: that marketers of U.S. wireless services sell only about 3 percent of their products online versus U.S. retailers that sell about 12%.

The premise of the article is that wireless operators are missing out on a good thing by not catering to niche buyers who are either A) smart enough to buy high-end offerings without help from a store associate; or B) only want the basics anyway so they don't need a lot of help. The cost of sales online is a tiny fraction of brick-based retail, and 70% of buyers are already visiting operators' sites before they buy. So what's the big deal here? Let's just go out and buy some online marketing talent and have at it.

It's not that they can't -- or that the thought hasn't occurred to them -- so it must be that they don't want to -- and here's my theory why: To marketers, wireless services present a delicious mix of complex product and plan options that offer commissioned human salespeople a major upsell opportunity as they "help" customers navigate the fog. Higher web conversion rates would mean cannibalizing those sales at much lower margins. You can only cut a finite amount of cost out of anything, but you can always raise prices if you can get the customer to pay more.

And wireless operators know too that sooner or later their products may very well become commodities -- but they're not there quite yet. For now, their "product" is really the service plan, not the device or the minutes. There will be time enough later for niche and skimming strategies -- web based or otherwise. Staples. Lands End, and Apple do well online because a no hassle customer experience is part of their brand. Right now, the U.S. wireless market is a completely different game.

Welcome To My Mental Sandbox

"Categories with high consumer involvement … attract a higher concentration of heavy spenders …."

--Boston Consulting Group

In their July 2005 BCG Perspectives article "Sizing Up the Heavy Spender," authors Joe Manget, Karen Sterling, and Garrick Tiplady drill down into the old 80/20 rule that says most of your revenues, and even more of your profits, come from a fraction of your customers. The size of that fraction varies, depending on factors like whether products are expensive and durable or inexpensive and consumable.

(To find the article, go to the publications page on the Boston Consulting Group site and type the title into the search box.)

The variable I found most intriguing was involvement. The authors measure involvement by how much time buyers spend in a store; whether they'll window shop even if they don't plan to buy right now; and the importance of features over price -- among other metrics. To increase sales and profits, the authors recommend improving the quality of the product experience throughout its lifecycle from initial sales contact through ongoing customer support. Such moves will help retain more of these big spenders while increasing share-of-wallet.

Involvement, I think, can also be a magnet that attracts more heavy spenders (not just retain the ones you already have) who look for opportunities to get involved with a particular kind of product. I also think that where things get particularly interesting is when you consider products of the knowledge economy like the intangibles discussed in the February 6th Business Week cover story "Why the Economy Is A Lot Stronger Than You Think." As intangibles comprise an ever bigger piece of product content, involvement gets to be more about giving customers opportunities to participate in and feed back into product ideas. In higher value, more customer-iinvolving products, one way to attract bigger spenders is to let them play in your mental sandbox. Think blogs, market research, user groups, conferences, white papers -- anything that lets them feel like they're players, not just bystanders.

What Does InfoSys Consulting Think?

It just could be ... WORLD'S COOLEST COMPANY

--Tom Peters

As a commentary on thought leadership presentation, this blog usually covers what people say, not what they don't say. That's why there hasn't been coverage of InfoSys Consulting. The firm appears not to favor publishing white papers or articles on its website as examples of its thinking or to demonstrate problem solving capacity at a strategy level.

InfoSys Consulting is the three-year-old strategy consulting arm of Bangalore-based InfoSys, the very successful systems developer. Among InfoSys fans is change guru Tom Peters who says in his blog: ". . . they're winning top-of-the-market work because they are good and aim stratospherically high, not because they are cheap! In fact, the hook for me is their audacious vision for leading the revolution in IS/IT—and the Talent they're amassing from around the world to pull it off."

Much of that talent is now coming from BCG, Booz Allen Hamilton, and other strategy firms, according to Stephen Prat, InfoSys Consulting's president, himself an eight-year BAH alumnus. You can see a February 10th interview with him at Consulting Magazine's website. In that interview he highlights his firm's "disruptive business model" and talks about how they focus on "big change opportunities." The interviewer, Jack Sweeney, Consulting Magazine's editor-in-chief. contrasts that mission with "coding" and "lowering application costs" -- in other words, you're not just a systems developer anymore, are you? As if that would be somehow bad.

InfoSys Consulting doesn't do white papers or articles, but it does have a "Soapbox" section on its website in which it challenges other strategy firms to have a more inclusive vision. "We must change our business models to encourage global delivery," the page says. Another challenge: "We must break away from the notion that a firm has to specialize in either strategy or technology."

Most competitors would probably say that this vision is actually exclusive. Most buyers know they can choose between best-of-breed and one-stop-shop for almost any product or service that exists. The variables that go into making that choice are complex and organization-specific, and sourcing strategy has become a field unto itself.

A firm wedded to disruptive change would understandably try to create market advantage by claiming the competition is obsolete -- both on the IT side and the business strategy side. If you can't win under the old rules, you make up new ones. What's missing here is the reasoning behind the assertions. Of course, that would be following an old rule.

A Couple of Program Announcements

I have a couple of brief announcements about the greatwriting.com website. First, I am starting a new service called Copy Protection. (Click on the graphic for detailed info.) A lot of times I get calls from potential clients asking if I wouldn't mind just taking a look at something that either they wrote or their outside agency wrote -- to see if there are any improvements I would make on the brochure, white paper, or whatever the document happens to be -- before it goes out the door.

So it occurred to me that this might be something that companies would want as a regular service -- not to mention it's an easy and low-risk way to introduce myself to new clients. The service costs $199.00; you pay online by credit card, and I offer a money back guarantee if you're not satisfied.

You'd be amazed at how many things even a relatively quick document review can uncover. For a complete list of what I look at, click the link.

The second announcment is about the blog. This week we crossed over the 500 mark for page views (and the week's not even over). That's particularly gratifying when you consider that most of the people reading this blog have a professional interest in business strategy and writing.


Thanks to everyone who is looking at this blog on a regular basis. And don't be afraid to be the first to comment on an item.

[UDATE: Three months later, how would these numbers change? Click here to find out.]

When Customers Should Pay To Be Sold

"An RFID 'reality check' can ensure your organization overcomes the greatest barriers between your strategic goals and measurable value."

--Diamond Cluster International

Diamond Cluster's article about RFID adoption says almost as much about how to get customers to pay to be sold as it does about RFID. The paper is titled, "Achieving RFID’s Full Potential" and the authors are Darin Yug, Bill Gilliland, and Steven Legnine. It's currently the first white paper listed at the top of the firm's website.

The white paper does a thorough and thoughtful job of taking the reader through the minefield of implementing a technlogy that the authors openly admit won't be quite ready for prime time for a number of years.

Which, if you think about it, is really a great marketing strategy for a firm that has identified future RFID implementations as a hot market. Most technology white papers, by contrast, do their best to sell the reader on whatever technology the author's company markets. Those papers often have titles like: "The Five Essential Ingredients for X" or "The Perils of Not Having Y." While such papers follow a classic approach, and very often an effective one, there are times when circumstances simply won't let you make that strong a case.

What Diamond Cluster does instead is sell its expertise on helping organizations deal with a lot of potentially troubling issues -- rather than paper over those issues in hopes of enticing readers to just go out and buy anyway. The strategy is to get organizatons to buy the consulting firm's expertise well before adoption -- so the firm is strongly positioned when the time to actually implement something does arrive. In effect, what they're doing is selling you now on the opportunity to sell you later. Brilliant.

Almost any technology vendor can write a "reality check" white paper and more should.

What Customers Want Most -- A Choice

"Our studies show that price (17% out of a possible 100%) is nowhere near as important a selection factor as product features (65%); service features (11%), and other features (7%) account for the rest of the decision making."

--Mercer Management Consulting

The current issue of the Mercer Management Journal includes an article titled, "Putting an End ot Ad-Hoc Pricing," by Krishnakumar (KK) Davey,Paul Markowitz, and Nagi Jonnalagadda. There are several key take-aways from this article, among them:

• Customers often will pay a price premium for choice
• Customers often don't know what they want

As does the Fred Reichheld (Bain) research on loyalty -- this Mercer research shows that you can't rely on customers to simply tell you what they value. If you ask them if low price is high on their list of values, they'll say yes. But if given the opportunity to configure a product offering themselves, they'll often consciously raise the purchase price in exchange for attributes they might not have otherwise considered. The article relates example after example of customers pushing price down on their priority lists once they have freedom to elevate other things they value more (but did not know it without help).

Simply having a choice carries a price premium -- which requires bringing into focus what that choice is.

This may also simply be a case of you don't know what you have until you miss it. Customers always have a choice -- even if it's between buying your product, a competitor's, or going without. Yes, they will value the opportunity to select product attributes provided those are brought to the surface -- which is what occurs if they happen to be a subject in a marketing study. The hard part is how to communicate, in the real world, the consequences of the choice. In a B2B environment, those consequences are not always cut-and-dry, and not always easy to convey in the time-compressed world buyers inhabit. But if marketers want enticements other than price to attract buyers, they'll not only have to offer good choices, but communicate what's good about them.

Knowledgestorm's Intelligent Content Strategy

This blog reviews how organizations that are thriving in the thought leadership business write about what they do. Theirs is state-of-the-art work and hence full of lessons about how other organizations can use words as a competitive weapon.

You can understand then why I was eager to hear Jeff Ramminger speak at the Business Marketing Association meeting this week outside Boston. Jeff is executive vice president of Knowledgestorm, a company that distributes content online for technology vendors. Companies partner with Knowledgestorm to get their messages in front of decision makers who use the Internet to do research in advance of purchase decisions. Knowedgestorm is very successful at what it does and has collected a lot of data on what works and what doesn't work for converting content into awareness, credibility, and qualified sales leads.

Much of what Jeff said is contained in a white paper you can download here, titled: "What Technology Buyers Want You to Know about Online Content". The paper is not copyrighted and can be freely distributed to colleagues. The only restriction is that to read the document you first have to register. The white paper is a summary of a new study, Define What's Valued Online, conducted jointly by Knowledgestorm and the CMO Council. The study surveyed 1,400 decision makers and decision influencers of technology purchases by business organizations.


Here are a couple of key points from the study I want to highlight. The first is that technology buyers dislike hype and puffery about as much as they hate poor communication of the business-value propoosition. These were the two annoyances most frequently cited in response to the question: "What are your pet peeves about online technical content and information sourced from the Internet? (select top three)"

This is interesting because it shows the challenge writers of white papers and case studies confront every day: how to convey the value proposition in a compelling way using language most readers will not perceive as hype -- and there are a number of techniques professional writers employ to do that. By the way, this is also the kind of challenge trade publications pose when inviting companies to contribute technical articles.


The second point is that vendor white papers are the content buyers most frequently use (58.3%) to base purchase decisions. Product literature (51.6%) and vendor case studies (29.6%) also ranked high. I would suspect that one reason vendor-supplied content is relied upon so much is that no one knows more about the technology vendors provide than the vendors who provide it. Readers are apparently willing to discount vendors' obvious self-interest in exchange for information that is highly relevant and (potentially) highly factual. The key is having the writing expertise to ensure your content is perceived that way wihout hype.

McKinsey Makes a Good Case

"Deciding how aggressively to push the new offers proved difficult."

-McKinsey & Company

Writing about strategy is hard work. What is even harder is making a complex solution easy for non-specialists to understand and appreciate. McKinsey & Company associate principals Ari Buchalter and Humam Sakhnini show how it's done in a just-published case study "Fighting Cannibalization." It works on so many levels it's hard to know where to begin.

First the overview: The case is about how marketing executives can apply the same kinds of optimization tools typically used to solve operations problems (like production schedules). Specifically, marketers can balance the mix between high profit/lower-revenue versions of their products or services against substitutable offerings that earn lower unit profits but sell a lot more.

There are some good lessons here for anyone writing a case about a complex solution who has the goal of selling similar solutions to others.

The writer says just enough. This case is just under 400 words; yet, it could have easily been thousands. The authors accomplish their objective by leaving much unsaid. For example, they gloss over the complexity that there are actually multiple tradeoffs that marketers need to make to avoid cannibalization. There's the tradeoffs between product A profits and product B profits. But there is also the tradeoff between product A profit and product A marketshare -- and likewise for product B. They don't say what specific quantitative techniques were employed. They reference a class of techniques, but don't say which ones were actually used, never mine discuss the actual analysis. They also don't say if there were any issues that could not be mathematically modeled. For example, were there long-term relationships with key suppliers or customers that might be affected by a decision to cut back or increase sales of either offering?

In other words, the authors wet your appetite for more information and make a case that looks very credible. And that's all they really need to do. More detail would not have added "punch" to the story -- at least not for the intended audience of high-level generalists. On the contrary, added detail might have just gotten in the way of the main points.

Another good lesson is the writing strategy underlying this article about strategy -- which is to take a solution that works in one domain and apply it to another. In the article on writer's block in the winter issue of my newsletter Writing & Strategy, I talk about how you can create interesting topics just by taking a B2B solution and applying it to a B2C situation (or vice versa). The McKinsey case of applying production solutions to marketing is basically the same idea.

At the risk of coming off a bit geeky, I'll just finish by mentioning the subheads: Situation, Complication, Resolution, Implications. This is different from the tried-and-true: Problem-Solution-Result. I think I like McKinsey's version because it better reflects the reader's world where problems and solutions tend to be less clear cut. And "implications" opens the door to showing how the case might apply to the reader, rather than simply reporting the outcomes in the story. Often those outcomes might be sketchy, given that many organizations like to write cases as soon as possible after implementing a solution.