Best Practices Report. How CIO s buy and How Technology companies sell

Transcription

1 TM Best Practices Report How CIO s buy and How Technology companies sell The preferred partner for demand generation solutions to global technology companies

2 Introduction& Executive Summary When we embarked on launching the research for this report, we were not really sure in terms of what kind of data we would collect. But as the data started pouring in, we realized that this would be an extremely exciting exercise. And I can assure you, we were right in our feelings! The core purpose of this report was to understand the typical factors that a CIO considers when he/she is evaluating a new technology partner. We hoped that this would give Marketing and Sales professionals constructive insights on how to leverage this information effectively. On the other hand, we wanted to also capture the typical channels used by Technology companies while reaching out to the prospect market. Clearly, if the two sides thought alike, we could conclude that both sides knew what was best for them. The survey clearly suggested that most CIO's tend to be conservative when it comes to choosing a new vendor, in the sense that they prefer to go with a known devil rather than an unknown one. And therefore, their dependence on Procurement recommendations, peer recommendations and Analysts is extremely high. To the extent that they don't seem to give much weightage to the marketing material that they receive through campaigns etc. As of date, Social Media seems to figure really low on their list of vendor evaluation channels. It is our belief that Digital Marketing- Social Media Marketing tend to play bigger roles with respect to Branding and Establishing Thought Leadership than actually generating Sales leads. The Objective We have been reading a lot about how the entire sales & marketing landscape within IT Service companies & offshore outsourcing companies specially is undergoing a revolution right now. The traditional focus areas of only growing existing accounts is now shifting to actually reaching out actively and hunt new ones. In this scenario, we want to give a holistic view of how buyers perceive sellers and what their thought processes are while purchasing. Therefore, the survey we conducted covered the following aspects 1. Buyers View a. How do I buy (whom do I reach out to when I want to buy technology products or services) b. How do I view off shoring of IT services (relevance today and future potential) and views on i. Challenges in finding skilled man power ii. Off shoring & cost advantages (is the advantage still there) iii. Global delivery models c. How do I evaluate offshore IT vendors 2. Sellers View a. How critical is New business acquisition for me b. What channels do I leverage for winning new business as of date c. The Seller s views on Demand Generation as a function d. Current initiatives taken and challenges faced with regards to Demand Generation

3 CHAPTER 1 SURVEY DEMOGRAPHICS The survey was run across a global list of IT decision makers. The channels used were Social Media and QEDbaton s own repository of IT decision makers. Total number of respondents were 87, with close to 53% of them being > USD 500 Million companies. Most of the targeted companies were from the developed markets comprising of US and Europe. Company Size Company Type Which of the following best describes the role you play in your organization?

4 CHAPTER 2 How global corporations buy IT services I. Channels of influence and their relative weight When I have to procure an IT Product/ Service How much of an influence do the following have on the choice of a vendor? It is consistent that CIOs use the Procurement channel to evaluate vendors while Peer recommendation comes a close second. Clearly, CIO s prefer to make safe choices when switching vendors. CIOs also rely on Analyst recommendations when considering a vendor. The data also throws an interesting observation where buyers would dismiss marketing messages as a channel, At least for now, Social Media forums & chatter do not seem to influence buyers significantly. Phone communications and past exchanges seem to figure fairly high in their list of vendor evaluation. This means that judicious use of inside sales and focused communication (gaining mind share and establishing Constructive connects) can influence a CIO when evaluating new vendors.

5 II. Considerations while selecting vendors What are the parameters used to evaluate an offshore vendor how critical are they? (Only CIOs) The overwhelming evaluation criterion for buyers is, Skill sets required in an area. This means vendors with deep domain knowledge and technical capabilites stand a better chance in winning the deal as compared to those that provide generic services. Clearly, companies need to start playing to their strengths to be able to sell more effectively. Company stability, delivery capabilities, and overall maturity are also important. Cost arbitrage being one of the parameters suggest that buyers are considering this as a given condition. CHAPTER 3 Status Quo: Off shoring now & beyond I. Emerging outsourcing destinations & factors driving choice Which of the emerging outsourcing destinations are you thinking of moving work to? India hogs the lion s share as the current & future destination of choice for IT outsourcing. East Asia, South America & Eastern Europe are bubbling under with 30% of the respondents considering these destinations. China is an absolute NO for IT off-shoring as of now!

6 II. Relevance of Off-Shoring 80% of the respondents are either offshoring already or considering it in the near future. Interestingly the number does not decrease much for smaller companies. suggesting that the SMB segment is slowly warming up to the concept of global delivery. III. Considerations while selecting an offshore location Driving factors to choosing an outsourcing destination? All the 5 factors viz: Cost competitiveness, Resources & Skill availability, Business & Economic environment, Political Stability & Cultural fit are critical while buyers choose the destination of Offshoring. Skills & Resources availability is little more important than others. SECTION II: HowTechnology Companies Sell CHAPTER 1 SURVEY DEMOGRAPHICS The demography of respondents was fairly evenly distributed with respect to their area of responsibility. 47% of the companies however were small ($1-50 Mn). The respondents mainly belonged to IT product & Services companies. Geographical Spread of Respondents Respondents size of the company

7 CHAPTER 2 Exposing some Gospel Truths with hard data I. Importance of a new acquisition % Revenue for the new customer The emphasis on new customer acquisition seems to reduce consistently with the size of the organization. Evidently, as organizations grow in size and maturity, their revenue contribution starts getting skewed significantly towards their existing customers. The reasons for this are rather clear; Most Technology Services companies have well developed robust Account Management frameworks which are leveraged to penetrate deeper into their existing client accounts. Even if the companies were to have a significant focus on new logo acquisition, the volume of business from new relationships always tends to get dwarfed as compared to mature relationships where the capability and trust factors have already been addressed. II. Top channels that impact business acquisition Table showing distribution of percentage of responses for five types of sources Key Source One of the key sources Not a source Analysts & Consultants Referrals & stakeholder movements Sales team network & past relationships Demand Generation :Marketing programs & Inside Sales Most companies continue to leverage Sales team rolodexes are their key new client acquisition source. The second favorite is Referrals & Stakeholder movement. Bottom line- RELATIONSHIP SELLING!That is where the biggest bang for the buck is. Analyst Relations and consultants continue to be useful, though one would assume that they tend to play a bigger role with larger deals and larger companies with regards to Services Companies. However, with Product companies, Analysts and Consultants tend to play a critical role in winning new customers. Clearly, the impact they have on branding and PR seems to rub off on the sales process!

8 Marketing, Inside Sales and Demand Generation play a critical role with respect to new customer acquisition again with Software Product Companies. However, it was interesting to note that IT services companies also seem to find these channels critical with respect to winning new logos. With the hugely commoditized & competitive market place, and the increasing need to reach out to new markets/ market segments Demand Generation will continue to play a critical role across all types and sizes of companies. Add to this the pressures of globalized sales, reduced cost of sales and serious advancements in telecom infrastructure, we at QEDbaton feel that virtual sales is going to become an important channel for every company to leverage in the near future. II. Customer acquisition costs across channels Table showing summary of distribution of percentage of responses about channels Extremely High Moderate Extremely Low Analysts & Consultants Referrals & stakeholder movements Sales team network & past relationships Marketing programs (Field & Digital marketing) Inside Sales From the table it appears that Customer acquisition costs are the lowest across the "Referral and Relationships" channels which, is obvious. However, Analysts and Consultants get a mixed response with an equal number of people stating it as High AND Low! Upon deeper research, we feel that larger companies perhaps find this channel to be more cost effective in terms of ROI, while smaller companies tend to burn a lot of money while leveraging these channels. The motives also tend to be different across large and small companies where larger ones look at these channels more from a Customer acquisition perspective, while smaller ones would tend to look at these more from a branding and PR perspective. What was also interesting to come across through the survey data was the fact that cost of acquisition seems to reduce significantly as you sell higher up in the organization. This could be associated with the fact that as you go higher up, the sales cycles tend to be lesser, and perhaps deal sizes tend to be larger. CHAPTER 3 Status Quo: Demand Generation now & beyond I. Current drivers/ considerations made when designing a Demand Generation strategy Table showing distribution of current drivers driving Demand Generation strategy by size of company Startup Small Medium Large Rapid growth in emerging markets 27% 44% 11% 18% Recovery in traditional markets 25% 44% 17% Incorporating Digital Marketing in programs 28% 33% 17% 22% Incorporating Lead Nurturing in Programs 5% 50% 25% 20% Designing touch points based on sophisticated scoring 57% Supporting sales with Intelligence 22% 49% 12% 18% Pure Lead Generation 18% 39% 24% 18% Growth in new verticals/ market segments within existing markets 15% 54% 17% 13%

9 Targeting emerging markets and new markets seems to be a major consideration for most start up/ small companies today while designing their demand generation strategies. The low scores across larger companies could perhaps mean that they are a year or two ahead and already have strategies around new market penetration. Among the Large companies, Digital Marketing and Lead nurturing & scoring are the big ticket items with respect to their current demand generation programs. The need to gain prospect mind share, and optimize every touch point established has become critical for these companies. Furthermore, their maturity in running structured nurturing programs allows them to take the next step and build more complex nurturing program. Small companies also put serious emphasis on nurturing and sales intelligence. All companies, large and small have realized the need to grab prospect mind share, and be in front of the customer when the time is right. Given that the prospect is bombarded with sales calls and s, every touch point you are able to make is becoming that much more precious. And therefore, prior knowledge of the prospect environment goes a long way in increasing sales effectiveness. Digital Marketing is emerging as a serious leveler when it comes to branding & PR. And hence, you find the smaller companies spending a higher %age of their marketing budgets on Digital marketing programs. Table showing distribution of current drivers driving Demand Generation strategy by size of company Rapid growth in emerging markets IT Services Company 27% IT Product Company 18% Engineering Services 9% Recovery in traditional markets 25% 11% Incorporating Digital Marketing in programs 28% 28% 17% Incorporating Lead Nurturing in Programs 5% 15% 10% Designing touch points based on sophisticated scoring 29% 0% Supporting sales with Intelligence 22% 20% 12% Pure Lead Generation 18% 24% 12% Growth in new verticals/ market segments within existing markets 15% 19% 10% IT Services companies have now realized the need for embracing integrated Demand Generation as a sales & marketing channel. The high activity levels across these companies suggests that they are rapidly following the best practices laid down by the Software Product companies in leveraging Demand Generation programs. As regards the Software Product Companies, their emphasis seems to be around developing more sophisticated nurturing programs and leveraging Digital Marketing / Social Media Marketing to generate more leads. Clearly an indication of how much more mature they are then the IT services industry. Engineering Services companies seem to be still finding their footings with regards to their demand generation strategies. This industry itself is perhaps a few years behind the IT Services industry, and hence would still be leveraging more of the Relationship Selling model as yet.

10 II. Challenges faced while executing a Demand Generation strategy Tabulation of responses for Demand Gen Challenges by size of company Startup Small Medium Large Poor Quality Output 36% 36% 7% 21% Poor Quantity Output 10% 55% 20% 15% Inability to incorporate digital marketing 45% 25% 10% 20% Do not understand prospect buying behavior 61% 11% Inability to deliver message/ value propositions 16% 42% 16% 26% Tabulation of responses for Demand Gen Challenges by type of company IT Services Company IT Product Company Engineering Services Poor Quality Output 39% 29% 7% Poor Quantity Output 30% 20% 25% Inability to incorporate digital marketing 40% 20% 5% Do not understand prospect buying behavior 46% 25% Inability to deliver message/ value propositions 58% 16% 3% The medium & large companies obviously face lesser challenges while executing Demand Gen program with the degree increasing in Small companies & Startups. Small companies find almost all aspects of Demand Gen challenging except when incorporating Digital Marketing. One observation here was that mid sized companies seem to be facing lesser challenges than the large ones. This perhaps has to do with the fact that larger companies have too much data to manage, and could indicate that inefficiencies have crept into their overall sales and marketing processes. Many IT services companies find almost everything in Demand Gen to be challenging. We believe that is on account of their lack of focus on Demand Gen owing high concentration on revenue growth from existing customers than initiate Demand Gen program for new customer acquisition. Whereas IT product companies have to get their Demand Gen program right since inception & therefore seem to have people, process & technology in place. The data shows lesser challenges being faced by Engineering Companies. We suspect that it is on account of their lower awareness & nascence of their industry itself.

11 CHAPTER 4 Future role of Demand Generation Table showing percentage showing opinions about different views about Demand Generation Agree Neither Agree nor Disagree Disagree Demand Generation is a critical component of my new customer pipeline generation activity Demand Generation plays an instrumental role in delivering intelligence to my sales teams while selling Demand Generation ensures that all my prospects are engaged with the right messages delivered through the right mediums all the time Demand Generation is the engine that helps me build, refine & deliver the right message to the right market segments Demand Generation as a function is not critical to my business The objective of this question was to gauge across stake holders the importance of Demand Generation as a function. There seems to be a unanimous opinion that demand generation is increasingly becoming more critical for almost all companies. Sales Intelligence and messaging stand out as key expectations, suggesting that content marketing is going to become more and more critical in making your demand generation program successful! In Conclusion After studying the responses from both sides, I.e the buyers of technology and the sellers, it is clear that there is a lot of change coming into the entire buy/sell process. Traditional channels of relationships and recommendations continue to dominate the scene, but market outreach components such as digital marketing and lead nurturing are becoming increasingly critical to any organization's buying/ selling process. Most Technology Sellers are looking at growth coming from non traditional markets, and mother of all battles seems around gaining prospect mind share. There the key channels being leveraged are: 1. Analyst Relations and Consultants 2. Digital Marketing & Content Marketing 3. Nurturing programs While, the CIO survey seems to indicate that points 2 &3 have little or no impact on their buy decision, we feel that the process of gaining mind share is a subtle and indirect process, which does impact the decision making process in the long run. The bottom line- Focus on; 1. Knowing your prospects well by gathering relevant sales intelligence on them. 2. Ensure that you establish multiple touch points with your DEFINED prospect market so as to maximize the effectiveness of your outreach programs 3. Identify your strengths in terms of domain expertise, leverage that in your messaging and gain your prospect's mind share so he has no option but to consider you during his evaluation process.

12 About QEDbaton QEDbaton delivers high impact Demand Generation Solutions for Technology & ITES companies across global markets. Our team of Demand Generation professionals converse with more than five thousand ( 5000) technology decision makers monthly while tracking companies. We understand the finer nuances of: Driving multiple activities within the market place so as to establish constructive touch points with the prospect universe. Identifying & tracking complex organization structures within corporations. Understanding prospect pain points and identifying triggers impacting buying decisions. Positioning services/ solutions so as to generate interest within the prospect environment once a need is identified. Working closely with client sales teams to maximize face time with prospects. Designing structured communication programs through an optimum blend of Digital Marketing, Inside Sales and Content Marketing so as to keep the prospect universe engaged till such time that they are sales ready. We have worked with over 70 technology companies over 6 years and our experience spans tracking companies in North America, Europe, Middle East, APAC and India. Our services portfolio includes Demand Generation Consulting & Training, Sales Intelligence services, Lead Management services, Digital Marketing and Content Development services. Our clients range from multibillion dollar corporations to start-ups including names like Honeywell, Progress Software, Hexaware Technologies & Mphasis Ltd. Our values and differentiators With our track record and experience of successfully delivering multiple database projects, we have developed a robust and effective process of list building, contact discovery and CRM cleansing. Each step of this process is supported by automated tools and the end deliverables are maintained in a CRM friendly format. 90% plus accuracy in the databases developed or cleansed by us. CRM and Marketing Ready database. Experience of Building Databases for 70 plus Clients of QEDbaton Experience of building databases across multiple geographies and verticals Proprietary products like SAP / Oracle Users, Top Telecom Companies etc. It has been a great experience both in terms of professional services offered as well as the personal touch in all communications. The result delivered was exactly the way expected and clearly showed the effort put in by the entire team. We are also extremely satisfied with the timeliness of the core project as well as readiness to adapt to last minute requirement adjustments. Service delivered with professionalism. Amar Saleem - Marketing Middle East, Honeywell Building Solutions TM QED Enabled Services Private Limited Kumar Cerebrum IT Park,Tower No. B-3, 2nd Floor,Kalyani Nagar, Pune , Maharashtra, India. Sales: Enquiry: Web: qedbaton.com Blog: blog.qedbaton.com