© 2009.  All Rights Reserved

Features, functions, and technical capabilities may be the product of ingenious imagination, technical brilliance, and visionary insight – but have no tangible value at all, leaving top buyer decision-makers looking askance after an enthusiastic presentation, asking, “So what?”

The 23:50 Dilemma

Many years ago, I sat through a presentation by a Sales Rep from a Telecom company.  At the time, I was a network architect with a multi-million dollar annual budget to spend.  The Telecom Rep was giving a rousing pitch about their new high-speed digital line they wanted us to buy.  Mind you, this was in the days before the Internet, when most enterprise data networks were connected via dedicated circuitry.

Amid the hundreds of data circuits we had circumnavigating the world, we had one particular dedicated data line that went from our Texas headquarters to a backup data center in Colorado.  Our major database and file backups each night took between eight and ten hours to transmit over our “old and slow” existing data line.

The Telecom Rep boasted that his new high-speed digital line, a line that would cost about ten times that of our existing line, could transfer all of our data “IN ONLY TEN MINUTES!”

Wow.  Everyone in the room was impressed.  That was an order of magnitude faster.  They could do in ten minutes what we currently took ten hours to do.  That sure sounded like progress.

I raised my hand and asked, “So what, pray tell, do we do with this dedicated application data line the other twenty-three hours and fifty minutes of the day?”

Telecom Rep’s face went pale and he didn’t have an answer.

He could have said many things, such as our ability to use that line in conjunction with multiplexing and switch technology to eliminate many other circuits and potentially enjoy a net savings, or to add new applications such as video-conferencing, etc.  But he didn’t.  His pitch was simply “faster is better” and in his mind that’s all we apparently needed to know.

Yet, our “old and slow” eight to ten our file transfer each night worked just fine.  There are twenty-four hours in each day, and the fact that the existing process used between a third and half of them wasn’t problematic.  The job got done every day.  And paying ten times the cost for it to get done in a faction of the time didn’t yield any net new benefit.  Nothing else would be accomplished.  So what was the point?

Needless to say, Telecom Rep didn’t make a sale that day.

The Hybrid Disaster

With all the “green” hype about the urgent need for people to all run out and buy hybrid cars, industry statistics have shown them to be a business disaster.  Toyota’s Priius is by far the best selling hybrid car thus far– it’s just a shame Toyota says that they lose money on every unit sold.  There’s a killer business strategy for ‘ya!  “But don’t worry, Boss! We’ll make it up in volume!”

I also read recently that if you went out and bought a new Priius, the money you’d save in gas would only take you something like over 100 years to break even for the purchase.  Again, so what’s the point?  You honestly think you’re saving the environment?  If so, look up the study that showed that it takes more energy to build a Priius than it does to build a Hummer.  And then there’s those nasty batteries to consider, and their disposal, etc.

The point here is that some technologies don’t really solve the problems they are alleged to solve, and other technologies simply don’t solve any problems at all.

A Solution Looking for a Problem

Probably the most common business blunder made by many technology companies is to develop an idea purely based on the ability to do so, or to do something “new and different” with no associated idea of an actual commercial market for the manifestation of that idea.  Unfortunately, that kind of thinking is usually the precursor for the “If we build it, they will come” business strategy faux pas.

Remember the cliché, “Find your niche and fill it.”?  It’s twin in the technology world is, “Find a real business problem that technology can solve, and solve it.”

Sadly, this occurs far less frequently than it should.  And it is the primary source of consternation for technology marketing professionals confronted with a company who sincerely wishes to grow, but who has a very difficult time putting their finger on why it is exactly that their product or service is special, unique, or even exists.  Thus begins the process of “Reverse Engineered Marketing.”

Reverse Engineering Marketing is the creative and imaginative storytelling exercise of starting at the end of the story, with a defined product or service, and then conjuring up one or more viable business scenarios that could have led to that point.  It’s a lot like playing Jeopardy where they give you the answer and you have to come up with the original question.

Contestant:  I’ll take Healthcare Mystery and Miracles for $500, Alex.

Moderator:  Viagra

Contestant:  What failed blood pressure medication was found in during field trials to be a cure for Erectile Dysfunction?

Unfortunately, in many cases, a common conclusion may reveal that there is no unique business problem out there that a particular product or service was originally designed to address, rather it is but one of many common “me too” products or services that mimic the commodity offerings of large, established competitors.

Therefore, with the lack of any unique value proposition, and in recognition of the fact that rarely can be found any markets that are truly being underserved, the resulting business decisions for those kind of offerings tend to be more driven by low price competition and “big megaphone” saturation marketing for acquisition of mindshare – which, incidentally, yield some of the worst ROI for overall Cost of Sales (COS).

In a perfect world, your company should never be in this situation because your products/services were all designed based upon proper market research, and in-depth validation of a specific market need.  But the world isn’t perfect, is it?  So what do you do if you’re in this situation?

Go back to basics.  You really only have one of four strategic marketing alternatives.

The Four Horsemen of the Metamorphosis

Obviously, if what you’re currently doing isn’t working, you need to do something different.

Now if you’re sales are virtually non-existent, and that’s because not only does no one want what you have to offer, but you also really don’t have any competition out there offering anything similar, that may be because what you have to offer is “New Coke”, or the “Edsel”, or some other complete dud that has no chance and never should have been developed in the first place.  In that situation you need to go back the drawing board and start again – only this time, start with looking for a real problem to solve, not just something to make for creation’s sake.

On the other hand, if what you have to offer is legitimately viable as a product and/or service, as is evidenced by other competitors out there successfully selling something comparable and validating its need, then you must consider one of following four options.

The Superiority Strategy

Is your product or service already superior, or can it be made to be clearly superior, to the leading offerings in your particular market?  And when we say “clearly superior,” we’re not talking about winning the race with a photo-finish by a nose, but rather a far and away Secretariat-esque 22-lengths clobbering the competition kind of “superior” offering, and doing so for a comparable expense by the buyer.  The price comparability is important.

That is, it’s easy to argue that a Ferrari is a better car than a Chevy Cavalier, but you’d expect that from a million dollar car compared to a $20,000 car.  But what if you could buy a Ferrari for $20K?  Wouldn’t people line up for that?  Of course.  And if you can pull that kind of a value proposition off, this might be a viable path to clearly differentiate your offering and subsequently corner the market.  However, in most cases, this simply isn’t a practical option due to underlying costs needed to demonstrate a significant magnitude of superiority.

The New Argument Strategy

This one can be actually the most effective, if you can accomplish it.  This strategy involves redirecting your product/service either to a new target market (e.g. from hypertension to ED), or creating an entirely new rationale for its value to an existing target market (e.g. ground shale garage oil stain cleaner becomes Kitty Litter).

Another example: during the Router Wars of the mid 1990’s, the leading vendors were Cisco, Proteon, and Wellfleet.  Their products were networking gear that provided data connectivity between computers.  Period.  It was hard to sell a router other than one of those three in those days, and in a short period of time, the latter two fell away and all there was left was Cisco.

I worked for a networking company at the time that offered, among many products, a router.  In a router-to-router competition, Cisco was seen as the industry leader, and therefore the “safe” choice, and the lion’s share of the sales went to them.  I had to come up with a new idea.  That new idea came in the form of a special project we did for the federal government.  They wanted a router that not only provided connectivity, but also “security” – literally encryption of the data stream.  We made it for them as an enhancement to our existing product.  They loved it.  And then we realized what that could do for us in the commercial market.

Suddenly, the sales scenarios were no longer about just moving data from point A to point B, but it was then couched in terms of getting it there safely, securely, and privately.  With this argument I was able to take a business unit from virtually nothing to over $50 million in revenue in less than two years.

So what can you do to refocus your offering with a new message to a new market segment, or to completely change the rationale of the argument to your existing targets?  The answer to that question may be more than just a revamp of your story; it might mean changing the offering itself in a small way or a big way.  But if you can do it, you might find an entirely new spurt of revenue momentum and market share.

The Viral Infection Strategy

This is actually a function of a “Divide and Conquer” approach.  It’s used when you conclude that you are never going to get your target market to abandon their chosen #1 vendor.  This is, outwardly, a function of “peaceful coexistence” with that vendor, seeking out a multi-vendor story, where you are positioned as complementary and actually synergistic to the incumbent.

However, once you are in the door and installed, then, inwardly, the strategy becomes to “infect from within,” demonstrating value, adding new capabilities over time, and eventually nudging the other vendor out of the spotlight.  This is a much more long-term and patient strategy, but can be effective when the no compromise “them or us” proposition has failed.

The Delay Strategy

This strategy was perfected by IBM decades ago.  This is used when the competition’s offering is clearly superior and you are about to lose.  However, in the course of getting the bad news, you also are educated as to why the competition’s offer is seen as superior and you understand what yours is lacking.  Thus, your counterpunch becomes: “Oh, we’re just about to announce not only all of those features you want, but also a few more besides that in about six months.  You certainly don’t want to invest in a technology that’s going to be obsolete six months from now.  It would be better to just delay your decision for a short time and get what you really need.”

And if they buy that pitch, then you have six months to add whatever bells and whistles you’re missing.  The idea here in this strategy is that if you can’t win, then no one will.  It’s a strategic retreat: Live to fight another day.

Connecting the Dots

The common thread in all of the previous four strategies is the necessity to have to modify, enhance or evolve what you have to offer, specifically to accommodate a new storyline that leads from a real problem to your solution as part of the Reverse Engineering Marketing exercise.

So if your offering is something you conjured to life because you could, not because you should, and that didn’t work out so well for you, then you need to seriously consider your own Reverse Engineering Marketing exercise – not just if you can, but because you should.

About the Author

Robert Gelinas is the President and CEO of JPE Inc. Consulting (www.jpeincconsulting.com). He has spent over 20 years in the IT industry as a senior executive and sales and marketing leader, having built many national and international Enterprise IT sales and marketing organizations.  He has both an extensive Fortune 500 background as well as a wealth of successful Start-Up experience. He is also a published novelist, writer, publisher (www.archebooks.com) and frequent public speaker on both IT marketing and the writing and publishing industry.

© 2009.  All Rights Reserved

Outcome-Based Business Models synchronize vendor and client goals, eliminate adversarial dynamics, and create the best opportunity for a true “win/win.”

Allies Not Adversaries

When Ross Perot left EDS/GM and founded Perot Systems, one of the first market segments his new company sought to serve with IT Outsourcing services was the data center operations of State Governments.  What was unique about his approach was that his pricing model wasn’t based upon traditional man-hour rates, headcount, flat project fees, etc.  Instead, he simply asked to be paid as a percentage of the current operational cost savings he created with his services.

In effect, if Perot could reduce an organization’s existing IT operating costs by, say 30%, and he took a percentage of that, then the net savings was still a good deal for the client—with no “breakeven point” that had to be achieved at some theoretical point in the distant future before appreciating the savings, plus the cost of the operation was coming from existing budgets, and therefore already funded.  Plus, the more Perot was able to save them, the more he made.

A scenario like this puts both the vendor and the client into a business model of mutually compatible and synergistic goals.  The client values the tangible and desirable goal of lowering their costs/expenses, whereas the vendor believes their value proposition could genuinely result in major new operational efficiencies.  But rather than the vendor telling the client that they have to pay X in order to receive benefit Y, i.e. direct cause and effect, in Perot’s case, instead they made X a factor of Y.  If Y (benefit produced), then X (payment).

This logic effectively takes off the table the notion that the client could potentially end up paying X cost but maybe not receiving Y benefit as promised, essentially having to bear all the risk of the relationship and financial investment alone.  But the synergy of this approach goes further, creating the opportunity that the vendor might even deliver results superior to Y, and thereby increase their own ROI (2X?), by virtue of the business model structured to be in the vendor’s best interests to do so.  More value delivered to the client means the greater the vendor’s reward.

Fees for service as a percentage of savings isn’t the only example of this principle.  In some instances, direct costs savings might not be a practical objective – e.g. where an incremental investment is what is required to achieve a greater business goal.  That doesn’t mean that an Outcome Based Business Model is precluded.

For example, what if the goal for the client is to generate a specific revenue goal; or to achieve a certain degree of Gross Margin, Net Operating Income (NOI), Profitability, or Earnings Per Share (EPS); or perhaps to bring a deliverable product or service to market by a specific target deadline that gives the client a competitive advantage in their own market.  What about an Annual Growth Rate (AGR) target?  All of these goals can have a compensation component for the vendor who is able to make them happen.

Shared Risk

The obvious downside to the above thinking is that there exists the potential to shift virtually all of the risk of success over to the vendor, away from the client.  If the proposition is purely – “We’ll guarantee your success, Mr. Client, and after we do, then you can pay us” – who wouldn’t want that deal?

Sure, there’s always the inherent risk of operational disruption arising from any significant change to an environment or process, but one would think that after some proper due diligence, if you are talking about a credible vendor relationship that you would consider using anyway, if all other considerations are equal, and the only difference is a pricing structure that puts all the performance obligations on the vendor with no advance financial risk to the client until the success has been achieved – that’s a very compelling business proposition.

To be clear: the extreme interpretation of this idea here is analogous to the home contractor who tells you that their labor and materials are free until the job is done, when you’re 100% happy, and then you pay.  Unfortunately, the only vendors/contractors who offer such “deals” are those who are supremely confident in what their work will produce, the carrying cost of the job is not cost-prohibitive, and the risk of the client not being happy when done is highly unlikely.

This approach may be reasonable for small-scale endeavors.  But what about large, enterprise-class undertakings that might be months or even years in scope, involving many fulltime personnel and resources, where the ability to defer vendor compensation to the very end isn’t a financially viable strategy? Is an Outcome-Based Business Model still an option?

Yes.

When You’re Lost, Buy a Map

Embarking on a year-long or more, six- or seven-figure project, or multiple overlapping projects long-term, and doing so starting from scratch with a brand new third-party vendor, can appear to be a very risky proposition in terms of having any reasonable assurance of long-term success—regardless of how well-reputed or experienced a vendor is that you may be considering using.  The vendor may do everything right themselves, but a client’s own organization may have idiosyncrasies and nuances that just don’t integrate well with outside parties that create stumbling blocks and potential risks.

Plus, as noted above, it might be completely unreasonable/unviable for any outside vendor to be willing to take on most or all of the financial risk of a major, long-term endeavor prior to the execution and production of all deliverables and results.

In all likelihood, the client has some idea of what they wish to achieve, even if the roadmap to achieving it working in concert with an outside party isn’t fully understood.  The client may, indeed, have some idea of what it would take if they did it all themselves, hired and deployed all of their own resources, obtained all the requisite tools and implemented all the necessary best-practice processes, etc.  But knowing those facts is what likely prompted the client to seek out third-party help in the first place – i.e. in an effort to reduce costs, accelerate time frames, and produce a stronger result.  But the exact parameters of what it would take for a third party to achieve the client’s goals in terms of time and money and operational process are completely unknown.  And even if these variables were fully known, i.e. coming in the form of a traditional bid, a budgetary figure and target deadline does nothing to mitigate any of those risks and concerns associated with assuring long-term success.

So how can this dilemma be resolved?  Enter the expert Business Analyst.

All the pertinent variables in the “master equation” in terms of what needs to be accomplished and what it will take to do it successfully can be quantified.  Moreover, the business drivers that served as the catalyst for initiating and approving the project(s) themselves can be identified and quantified – i.e. in terms of the goal of increasing revenues and/or productivity, producing better margins, lowering operating costs, generating higher EPS, etc.  All of that data can then be synthesized into a Total Cost of Ownership (TCO) / Return on Investment (ROI) model.

That TCO/ROI Model can then serve as the foundation for an incremental Project Plan, broken down into phases/milestones, whereby “Success” can then be defined and quantified, not in terms of a single end result, but in terms of sequential achievements that a vendor can then potentially viably shoulder, taking on a measure of that risk and/or make an investment with sufficient confidence that their own operating costs are neither cost prohibitive nor is the outcome of the incremental deliverable uncertain.

For the client’s benefit, the production of this Gap Analysis, TCO/ROI Model, and Project(s) Development Roadmap is a relatively small investment in terms of both time and money – which is an investment that needs to be undertaken regardless of who ends up doing some or all of the work. That’s Key to understand.

Thus, the risk mitigation strategy becomes simple and clear:

1)     A client should first invest in a Development Roadmap, predicated upon objective and highly quantitative Business Analysis within the context of Client Defined Business Objectives

2)     The Roadmap then provides the Basis/Foundation for Incremental Win/Win Outcome-Based Business Model Transactions, with Shared Risk and Investment

3)     Vendor Integration and Partnering can then be evaluated moving forward based upon Pilot/Test projects to establish effective communication and collaboration processes, and the trust and confidence necessary to proceed with the execution of the full Development Plan

The Best of All Worlds

Outcome-Based Business Models, with shared risk and investment, is the most financially advantageous and lowest risk scenario for a Client-Vendor relationship – for both parties.  It is possible to enjoy such a business model, even in the context of large-scale business objectives if approached with the proper strategy and an incremental and evolutionary development process.

Robert Gelinas is the President and CEO of JPE Inc. Consulting (www.jpeincconsulting.com). He has spent over 20 years in the IT industry as a senior executive and sales and marketing leader, having built many national and international Enterprise IT sales and marketing organizations.  He has both an extensive Fortune 500 background as well as a wealth of successful Start-Up experience. He is also a published novelist, writer, publisher (www.archebooks.com) and frequent public speaker on both IT marketing and the writing and publishing industry.

© 2009.  All Rights Reserved.

Successful Marketing is based on Credibility. There’s nothing that establishes your credibility better than being the author of a book that explains your expertise, value, capabilities and perspectives.

Imagine this scenario: A business executive (who is one of your top target prospects) receives a mysterious box or express mail envelope.  There might be something important inside, so he/she opens it, and finds an attractive book with an intriguing title like: The Six Things All Executives Need to Know, or The Solution to the [something you know about] Problem.  It’s written by you.  It’s autographed and personalized for its recipient with a hand-written note which says, “I thought you might enjoy this.”

The executive thinks, “Wow, that was thoughtful.”

Does the executive even need to read the book?  Not necessarily.  And certainly not right away, unless it really appeals to them.  And if they do, that’s great. It does indeed contain a lot of helpful information.  Most likely it gets set aside on their desk with the intention of “getting to it” at some point in the future.  And there it may lay for a week or so.

However, what happens next is that a couple of days after its “confirmed” arrival you call them. You get their “gatekeeper” (administrative assistant) who is there to screen out any sales or marketing types from their boss.  You simply say, “Hi, this is [your name].  I’m calling for [the executive].  I sent them a copy of my latest book last week, and I just wanted to make sure it arrived okay.”

The gatekeeper replies, excited to be speaking to a published author, “Oh, yes, it did!  I’ll let him/her know you’re calling.  Hold please.”

The executive answers.  You introduce yourself.  Your name sounds strangely familiar, but they can’t quite place it.  Your name should sound familiar, since they’ve been glancing at it every now and then for a couple of days.  They suddenly remember and pick up your book sitting there on their desk.

A cheerful voice replies, “How can I help you?”

See how easy that was?

Okay, I know, you’re saying, “Sure a cold call like that sounds easy.  Just one problem.  I haven’t written a book.  I don’t know the first thing about how to write a book.  And even if I did, getting published is nearly impossible.”

If you’re a novelist, your concern is valid.  Getting traditionally published as a storyteller is nearly impossible if you’re not already famous for some other reason.  Then again, there are always Vanity Presses that will publish anyone, but the finished products of most of them are…oh, how shall we say?…not that attractive.

So you have two challenges standing in the way of you employing this powerful marketing technique:

1. Writing a Book
2. Getting it Published

Solution to Problem #1: Hire a Ghost Writer.  Collaborate on a text, let the writer turn it into something substantive and credible.

Solution to Problem #2: Hire a Commercial Publisher to publish your book.  Don’t go to a Vanity Press, but a publisher who will produce a book of the same quality as those in any major bookstore and who can get it posted on Amazon.com and other online retail venues and in all the major retailer databases so it can be special ordered by any bookstore.

In addition to using it as a marketing tool, you can also take it with you to speaking engagements where you can sell it and make a extra money.  Or you can give it away as a promo.  Whatever you can think of.

It happens every day.  You really don’t think all those politicians, celebrities, talking heads, TV and radio pundits, diet gurus, self-help mongers, detectives, criminals—and yes, even business leaders “Captains of Industry”—write all those books all by themselves, do you?  Maybe a few do, but come on.  You know better.  So why can’t you do it, too, if perhaps only on a little smaller scale?

You: The Consultative Expert

Think about it:  Most companies seek to apply a “consultative” approach to high-level selling.  You know all too well that you don’t ever want to come across merely as a “bag carrying peddler,” which you also know will just get doors slammed in your face; rather, if you can, you’d prefer to position yourself as an “expert” in the area of your products and services with valuable insights and recommendations to offer.

What better way is there to create that impression of you as a consultative expert in your field and reinforce it, than by offering a physical artifact of your latest “major published work”?  And that’s the reality of what we’re talking about here.

A book with your name on it can serve as a powerful marketing artifact.

Shouldn’t at least someone in your company, ideally someone who serves as your de facto spokesperson in Press Releases, at trade events, to analysts, etc. have an accolade behind their name that says, “…author of Title of Book”?  And then, even if someone goes to Amazon and looks it up, why, sure enough, it’s there!  If they actually read it and like, they may even recommend it to a friend, who can buy it online, or have their local bookstore order it.  That might even result in some word-of-mouth referrals and leads.

Are you starting to see the power of this idea?

It’s very powerful because, culturally, we’ve all been trained to view “authors” as being in a class of unique achievement, which for the most part is true.  Intuitively, everyone believes investing the time to write an entire book is hard to do, something that most people don’t possess the wherewithal to do.  Therefore, those who have done it must be “special.” In the business world, especially in a sales and marketing context, that’s powerful.

“Okay,” you say, “but how do I find a good Ghost Writer and Commercial Publisher?”

Obviously, you simply need to find a marketing company who specializes in such services.  You contact them and tell them what you need.  Let them take it from there.

“Okay,” you say, with just a tinge of frustration in your voice, not knowing of any marketing companies who might specialize in Ghost Writing and Commercial Publishing, “How do I find one of those animals?”

Shameless Plug Alert: Email me.  bob@jpeincconsulting.com.  Let’s talk.

Seriously, if you have an interest in exploring a Calling Card Book project, please contact JPE Inc. Consulting www.jpeincconsulting.com for more information.  We can make it happen for you.

By Robert Gelinas.

© 2009.  All Rights Reserved.

In the grand and eternal marketing search for “silver bullets,” secrets, tricks, and magical manifestations of cleverness – there does exist one marketing technique that actually achieves the elusive goal of capturing attention, stimulating interest, generating attraction, and compelling action. Read on to find out what it is.

It isn’t Freebies or Bribes, Coupons or Discounts, Email Blasts or Direct Mail, Pay-Per-Click Search or Banner Ads, Telemarketing or Cold Calling, TV or Radio broadcasting, Print Pubs or Mobile, Social Networking or Blogs, Infomercials or Webinars, Billboards or Flyers, Humor or Sex, or anything else of the kind. In most instances all of these things are but tools, venues, and mediums – i.e. a means to an end, but not a destination.

No, the problem is that far too many marketing initiatives are simply a variation on a single theme consisting of the message: “I want you to buy something from me” in an intrusive fashion.

What you end up communicating loud and clear to your prospects is: “I, the vendor, have an urgent need (for revenue), and am therefore making some form of a demand of you, my desirable customer (regardless of how polite or clever), a demand vainly disguised as an offer of some kind, for the expressed goal of extracting money from YOU, and I’ll say anything, or make any manner of promise, to get YOU to give it to me.”

Rather off-putting, wouldn’t you say?

If not simply ignored, common reactions to “intrusive sales attempts” range from somewhere between amusement at the attempt on the positive side, to outright offense and repulsion on the negative side. Is it then any wonder then why so many Marketing Campaigns have response rates measured in single digits? That’s another way of saying over 90% of a target audience ain’t buyin’ what you’re sellin’.

And yet, there are some things both Consumers and Businesses line up to buy—from SmartPhones to Handgun Ammunition.

Why?

Why do some products and services “sell like hotcakes” and others languish in relative obscurity, regardless of how loud and long they are promoted by all manner of marketing efforts, venues, and mediums?

The answer is quite simply: Value. Or better said…

The PERCEPTION of Value.

Buyers of all kind respond to Genuine Value. Hence, most marketing campaigns are ineffective because they are inherently “vendor selfish”, i.e. all about the vendor and vendor’s needs, and not the buyer and the buyer’s needs. Value is a personal perception. Buyers really don’t care about helping you make money.

People line up to buy products and services that they perceive to offer them “Genuine Value.” Consequently, a proper understanding of exactly what that phase means—Genuine Value—is the key to crafting marketing campaigns that really work.

Genuine Value doesn’t simply mean: low price. It’s been aptly said, if you can’t communicate value, then you wouldn’t even be able to sell hundred dollar bills for a dollar each. Most people know if something sounds too good to be true, it usually isn’t true.

Nor is Genuine Value about great features and benefits. Articulating ad nauseum about why you think your offering is really swell means nothing if the audience doesn’t translate that into personally appreciated and applicable value.

The Ying and Yang of Perceived Value

The Perception of Value has two important Core Elements: Intrinsic Value and Experiential Value. The perception of one or the other has the potential to strike a positive chord within a buyer – but when both are present, the synergy is exponential, not merely cumulative.

For example, Gold, as a precious metal, has intrinsic value. It is bought and sold as a commodity, and in many environs is exchanged as legal tender. Yet for most people, owning it has very little experiential value beyond financial security or a sense of wealth. By itself Gold doesn’t really do anything but sit there and look shiny.

Skydiving, on the other hand, is all about experiential value to its aficionados, without offering a whole lot of intrinsic or lasting value.  When the experience is completed—assuming you live to tell the tale—it’s over, save for the memories. To appreciate its value again requires the experience to be repeated, or purchased again.

Now think about an iPhone.  It has both intrinsic value as a tangible, physical thing, as well as experiential value in terms of how its user feels when using it. It’s both a product and an associated  service that enables specific behaviors and experiences.

It isn’t worth its weight in Gold, nor is it as exhilarating to use as skydiving.  But for around $200 to purchase a unit, plus buying a monthly service plan causes many people to see that as valuable and worth standing in line for the privilege.

Intrinsic and Experiential Value in B2B Technology Marketing

Now when it comes to marketing products and services like software, computer systems, networking products, security systems, consulting services, and professional services, the same concepts apply: Hawk your wares, no one cares.  Provide lasting value and/or experiential improvement, you’ll get takers.

The fact is – technology buyers (especially of the big-ticket variety) have two primary “needs” pools for you to appeal to: business needs and personal needs.

In the Business Needs pool you find things like the need for employees in the business to communicate with one another as efficiently as possible, for work to occur without interruption, for the business to be able to market and deliver its own products and services, to solve problems, to grow, etc.  How does the product or service your company offers help to accomplish any of those things?  Better yet: How does your marketing “hook” address one of the “Six Fires.”

What are the Six Fires?

The six fires are the eternal business challenges faced by every CIO and VP of IT in any organization of any significant size.  They are:

1. To Lower Costs / Expenses – they are always being asked to do more with less, and never have enough Time, Money, and People to do everything they’re tasked to do
2. Migration / Evolution – things become obsolete almost as fast as they can be implemented, and staying up to date is a near-impossible mandate
3. Integration / Innovation – there’s always a new mousetrap coming out that enables their competitors to do more, better, cheaper, faster, and they constantly have to keep up with what’s new to remain competitive
4. Compliance / Audit / Governance – there’s always an auditor, reviewer, or 3^rd party breathing down their necks making sure they have all T’s crossed and I’s dotted
5. Security – there’s the constant vigilance that is required to ensure there are no informational breaches, loss of IP, or screw-ups from employees
6. Performance – users are constantly demanding more of everything, to do more, and that demand must somehow be satisfied

These six areas are the kinds of puzzles that keep CIOs up at night worrying about how to solve them. If you have the solution to one or more of these things, then you have something of intrinsic value to offer. And chances are, that CIO with these problems might be interested in what you have to say. But if you just “want to sell him something” he honestly doesn’t have time for you—he’s busy trying to solve these problems.

Keep in mind The 30-Second Rule, which states: If you happen to call a technology Decision-Maker and manage to get them on the phone for the first time, you have roughly 30-seconds and no more to convince them to give you any more than 30 seconds of their very valuable time.

Therefore, if the technique you employ to try and gain that grant of more than 30 seconds is an offer to help them put out one of those Six Fires burning on their desk, that person just might be inclined to want to hear what you have to say.

Contrast the following two scenarios:

Version 1

Decision-Maker: Hello?

You:  Hi there, I’m calling to talk to you about our new Wonder-Widget, that slices and dices and makes thousands of julienne fries.  It’s on sale this week for 50% off!

Decision-Maker: (annoyed) How’d you get this number? [CLICK…dial tone]

Version 2

Decision-Maker: Hello?

You: Good morning. Thank you for taking my call.  I’m calling today regarding an issue with your CRM system deployment.

Decision-Maker: What about it?

You: I’m wondering if you’ve encountered any integration issues with respect to compatibility of its databases and application interfaces with your ERP and Financial system.

Decision-Maker: Actually, yes.  We have been trying to do just that for some time.  Our financial system is a legacy system of custom code.  Our ERP is an enterprise deployment we’re only about 30% of the way in rolling out.  And CRM is still in development and customization.  It’ a mess.  We have an integration project planned, but all of that is still in the design phase.

You:  Then it’s ideal for us to talk about it.  I’d like to make you aware of the fact that there’s an adaptation layer technology now available specifically designed to bring those three domains together without special customization for seamless integration. Plus, this new technology can also accelerate each subsystem’s deployment and user adoption across the entire enterprise. Everyone gets access to everything they’re authorized to access in half the time and for a fraction of the customization expense.

Decision-Maker: Really?  Tell me about this technology.

See how that works?  Perceived Value – i.e. perceived by the prospect. The decision-maker’s business needs must get the focus not your business needs.  Please note in the illustration above, the entire conversation is about solving a business problem, not about selling a product.

Obviously, this principle certainly isn’t limited to a phone call.  It can be also employed in any marketing communication, medium or venue.

Everything is Personal

Now let’s look at the Personal Needs side of the equation.

In a separate article entitled, People by from People, available on the JPE Inc. Consulting website, which is found at (http://www.jpeincconsulting.com/JPEDocs/People%20Buy%20from%20People.pdf) we looked at the human relational aspects of B2B enterprise selling. But there’s another aspect of “personal selling” that’s relevant to this discussion on effective marketing techniques.  It specifically  has to do with our definition herein of value as it relates to Experiential Value.

That is, in the mind of the big-ticket technology Decision-Maker, their personal experience in doing business with you is important, too – not in the sense of “having fun” per se (which isn’t a bad thing), but with respect to individualized experiences that are highly desirable for them.  These experiences can be very motivational to a Decision-Maker, and also serve to define Perceived Value for them.

Some examples are:

• The Joy of Getting Promoted
• The Relief of Avoiding Getting Reprimanded, Demoted, or Fired
• Enjoying the Respect of Colleagues as an Expert in their Field
• The Satisfaction and Pride of Accomplishment
• The Compliment of having their Opinions and Views taken seriously and acknowledged

Beyond direct compensation, every business leader has an emotional investment in their job. As such, some of these previous examples contribute directly to their level of job satisfaction or dissatisfaction and can also affect their career path long-term.  What you need to realize is that your products and services can potentially have a significant impact on these areas – if you bother to position it as such.

That same technology that is able to solve a perplexing business problem may also directly contribute to improving the performance of the business as a whole and thereby result in decision-maker recognition, promotions, raises, etc.

Furthermore, more organizations these days are asking their CIOs to become more “strategic” in their thinking and contributions to the organization.  Is your business solution a possible strategic advantage for anyone?  If so, imagine Ad Copy or messaging that touts how technology business leaders are using what you offer to advance their company’s strategic initiatives and gain market leadership. Subtext: “This stuff is not only good for your company, but is also good for you personally.”

If that’s the value that is perceived by a decision-maker – you’ve just found someone who really wants to listen to what you have to say.  Isn’t that the primary goal of your marketing efforts?

Hitting the Bull’s-eye

So the next time you’re crafting a new marketing campaign, first set aside all considerations of why you believe your offer is exceptional and your company is so wonderful for having created it.  Instead, start by asking yourself questions along these lines:

• What are the specific “fires” burning on the desk of our target market (assuming you’re wise enough to have already defined a target market)?
• How does our solution help extinguish at least one of those fires?
• How do we get our target market to understand that we can do that for them?
• And what’s in it for the buyer, personally, if they choose to do business with us?

This train of thought will help you conceptualize and articulate Intrinsic Value. True Intrinsic Value brings with it the opportunity for Experiential Value elements. The combination of the two is your marketing arrow fired dead-on at the bull’s-eye of the target.

Creating “Perceived Value” is what always works.

That is because the solution that decision-makers are actively looking for is what always captures their attention and stimulates genuine interest; and if the solution is understood to be conceptually applicable to their needs, it will therefore be perceived as attractive and subsequently compels them to take action to at least investigate its potential.

Is there a better definition for an effective marketing campaign?

If you need help crafting Value Perception Campaigns, please contact JPE Inc. Consulting at info@jpeincconsulting.com.

Robert Gelinas is the President and CEO of JPE Inc. Consulting (www.jpeincconsulting.com). He has spent over 20 years in the IT industry as a senior executive and sales and marketing leader, having built many national and international Enterprise IT sales and marketing organizations.  He has both an extensive Fortune 500 background as well as a wealth of successful Start-Up experience. He is also a published novelist, writer, publisher (www.archebooks.com) and frequent public speaker on both IT marketing and the writing and publishing industry.

Standing Out in the Crowd

Managed Professional Services (MSP) exist in a crowded and highly competitive marketplace, where many small companies or individual consultancies frustratingly vie for new business as they struggle to increase their revenues. This is no small challenge, where “luck” can’t be viewed as a market penetration or growth strategy, nor can hard work and perseverance alone ensure success.  It takes a keen understanding of how the game is played, and playing it to win.

What are Managed IT Services?

Fundamentally, a Managed Service Provider (MSP) is someone who provides IT support services to a client organization that typically either doesn’t want or can’t afford to have a dedicated in-house IT technician or IT group/department, and therefore elects to contract those services to an external third party.

Such services may consist of PC and Server hardware and software support (configuration, troubleshooting, repair and routine maintenance), software updates and revisions/patches, upgrades and migrations, network router and connectivity support, Internet access, website and database maintenance, e-commerce support, cabling and set-up, monitoring various infrastructure and security logs, ensuring antivirus software and proper authentication and access control processes are configured and functioning properly, maintaining firewalls, VPNs, etc.

And that’s a lot of the normal stuff – as opposed to the abnormal stuff: like recovering from hardware crashes, software glitches, viruses, worms, hacker breaches, vandalism, theft, and the impact of just plain “haven’t seen that one before” instances of employee stupidity.

The Bottom Line is that if a business has any significant number of employees who depend on PCs, software, a network, etc. to do their jobs – then someone needs to be available to keep it all running and functioning properly. That’s the idea of basic IT support.

It is therefore axiomatic that technology-dependent businesses either have someone (or more than one someone) on staff who is capable of performing all these functions, or they don’t.  If they don’t, then, when invariably something isn’t functioning properly, or any kind of a change is needed, they must call someone in on a T&M basis. That’s typically a very expensive support strategy, and is also inclusive of business downtime and therefore lost productivity until it can be completed.

Conversely, a business without internal IT support has the option to subscribe to the services of a Managed Service Provider (MSP) who is readily available to come to the rescue when needed, but more importantly, is involved on regular intervals, onsite or remotely, to provide ongoing maintenance and support services to prevent major downtime catastrophes from happening in the first place.  This is obviously the wiser strategy for the client’s business.

However, for the MSP, their biggest business challenge hindering the growth of their own practices is connecting with businesses who could genuinely benefit from using their services – but either don’t know they exist, or don’t understand why they should do so.

MSP Marketing 10

There have been a lot of articles written about marketing Managed IT Services, and professional services in general. Some of that information tends to be rather general, and “heavy” regarding targeting prospects and networking, but often tends to be very “lean” when it comes to what needs to be said and accomplished once an MSP has the occasion to make their case for the engagement of their services.  Finding businesses who could use an MSP isn’t the hard part – rather, getting them to hire the MSP is.

There are two major questions that have to be answered for an MSP to win a new client:

1. 1. Why use an MSP at all?
2. 2. Why You?

We’ll look at both of these questions in some detail.

Why Use an MSP?

Failure to adequately answer this first question is where most MSPs stumble. The mistake comes in thinking that the premise of the question has to do with validity and credibility.  It doesn’t.  That’s the second question.  This first question is a financial question.

“Why use an MSP at all?” is really a business person asking, “Why should I dedicate precious monthly cash-flow to a function that isn’t even a given that I really need it all the time?”

More often than not, this question comes from organizations who have managed to get by on the technical skills and talents of internal personnel – even if it wasn’t their primary job, or via store warranties, or favors from friends and colleagues.  It mostly comes from small organizations who have circumstantially managed to avoid any major mishaps related to lack of proper IT maintenance, neglect, or security breaches.  For them, using an MSP can legitimately be a very tough sell – like trying to sell a college student a health insurance policy (when they believe they’re invincible and indestructible).

The truth is, typical small organizations are fairly comfortable operating in a posture of “self-insurance and do-it-yourself support,” i.e. taking their chances.  Consequently, this dynamic is also one of the best reasons not to make very small companies a prime marketing target, even if there are many of them

On the other hand, with that said, if a small business happens to be very high-dollar in terms of its revenues (like a law firm or medical practice), then despite a small physical footprint of hardware and software—meaning that IT impairments can still result in major revenue or cash-flow disruptions—then there still may be a valid argument to make for using an MSP.  But this is the same argument that needs to be used for the mid-sized prospect: ROI & TCO.

Therefore, the correct answer to the “Why use an MSP at all?” is: “Because it is a lot less expensive than any other alternative.” Being able to defend that assertion is the first MSP marketing objective.

Keep in mind, unless you are offering some very unique and specialized managed services, then most large organizations will undoubtedly have their own internal IT staffs to handle their normal IT support functions, or they may outsource many IT functions to IT/BPO providers.

Therefore, for the independent MSP, the real viable prospecting targets are most likely going to be either small (high revenue risk) to medium sized organizations that have small to non-existent IT staff. The marketing challenge for capturing them is to help them understand that using an MSP is far less expensive on a monthly cash-flow basis than fulltime dedicated in-house resources—and it is certainly less costly than experiencing a major IT failure.

Thus, the objective is to construct a solid Return on Investment (ROI) and Total Cost of Ownership (TCO) argument, using solid ROI/TCO tools.

Building a strong ROI/TCO case involves an investigative presales exercise, whereby, in the context of an interview and consultation, an inventory is taken of the prospect’s support requirements. Based on the number of computers, servers, peripherals, storage, applications, network architecture, security infrastructure, etc. that they have in use, a determination of support workload can be made.

The key here is not to put the weight of the inventory solely on a cumulative workload of man-hours, but rather on the different skill sets needed to support it all. Sure, there are a few technical superstars out there who can do everything in the IT universe, but in most IT environments you have a need for a variety of highly skilled specialists – e.g. a Hardware person, Application support, Sys-Admin, Security Guru, PC support, Network Tech, etc.

Even if there is some functional overlap in a smaller number of personnel, it can always be argued that a particular prospect’s IT support needs necessitate at least one support person, and often more than one person to address all of those needs.  It then becomes a simple task to go to www.salary.com and pull up the average costs of these personnel for a given market to establish a baseline IT Support Cost overhead.  To that can be added support tools and resources—and most importantly, the cost of downtime in terms of lost revenue.  The total of it all becomes your key reference point.

Armed with that data, it is therefore highly likely that an MSP can then offer a comprehensive managed program of maintenance and support services for far less than the cost of an internal IT person or team.

The argument breaks down to:

1. Mr. Prospect, here is an inventory of your support needs and risks to your business.
2. Here’s what it would cost you to address these needs by yourself (along with the personnel management burden that goes along with it)
3. Here’s what our MSP program would cost to deliver your company an equivalent or superior level of quality (without any personnel burden) for X% saving per month.

Ergo: Why use an MSP?  Because it’s a better business decision.

In addition, for the MSP, you yourself therefore have an important business decision to make: Are you competent and equipped to develop ROI/TCO business case proposals?  If so, fantastic.  If not, then you will need help.  JPE Inc. Consulting can assist you with ROI analysis tools, coaching, and output proposal preparation.

OK, But Why You?

This may be the harder of the two questions to answer – but it shouldn’t be, if you’re prepared.

That is, you may win the argument of convincing a medium-sized business that they would be far better off using an MSP than paying someone fulltime to accomplish the same function, or the folly of going without support.  But in the next breath they may be inclined to go “shopping” for an MSP and not necessarily automatically sign up with you.

Therefore, your next objective is to convince the prospect you are their best choice.  How?

With prepared artifacts designed to establish your Credibility and Capabilities.

Specifically:

• Services Portfolio – detailing all the Managed IT Services you can credibly provide, intervals of interactions, and levels of service explained clearly for a non-technical person with an eye on benefits not technical functions.
• White Paper – on your service methodology, philosophy, support approach, etc. This is your chance to clearly differentiate yourself as unique and special.  And by the way, a Vertical Market focus is a great way to differentiate yourself.
• Case Studies – two or three detailed documented success stories of existing clients, with quotes and testimonials.  This is the happy-ending reference that doesn’t need to be called.
• Additional Reference List – of many happy customers that can be called and verified (although, in practice, few people check references as they should – figuring you’d never give them a bad one to check).  Not having any can be an issue.
• A Credible Website – well-designed, professional looking, creative, easy to navigate, helpful, and informative.

All but the last item consist of marketing messaging in the form of artifacts/collaterals that can be emailed or printed and physically mailed or presented to a prospect. However, the last item is one of the most neglected and often overlooked in terms of its prospecting importance.

A credible website needn’t be a vast investment of graphics, prose, and multimedia technology. It just needs to not do any disservice to your credibility when a prospect goes there to “check you out” as they ALL WILL DO.  If your website needs a tune-up to check off this item, get one. (for more info on a website tune-up, go to http://www.jpeincconsulting.com/websitetu.htm)

Find Your Niche and Fill It

Technology marketing achieves momentum and velocity faster when it is focused on “depth” before “breadth.”  Managed Services are no different.

It behooves an MSP to seek to find some area of specialization in some specific business segment – not to the exclusion of all else, per se – but purely for business development purposes.  It can be a vertical business segment like law firms or medical practices, or a horizontal technology sector like e-commerce providers, or any other market segmentation that makes sense.

The point is that the more an MSP works with a common business type, the faster they are going to accumulate references in that area that will then allow them to credibly target more businesses in that same area with common needs, issues, and who speak the same language.

For example, if an MSP develops some subject matter depth with Insurance companies, then when asked by a new Insurance prospect, “Do you really understand what it takes to keep a firm like ours up and running?” the MSP can respond, “Absolutely!  Many of my current clients are in your industry, and we’re keenly aware of [XYZ issue] and [ABC problem], and know how to take care of those things.”

Just as in the business sectors of law and medicine, the specialists make the big bucks, as compared to the generalists.

Imagine being able to walk into a law firm and hand one of the managing partners a White Paper entitled, “Managed IT Services for Practicing Attorneys from [Your Company Name].”  And in that paper it discusses everything from protection of Intellectual Property to Contract Workflows via Enhanced Wireless Networking to Data Backup Strategies to Remote Information Access – i.e. everything a lawyer might care about in terms of the management and availability of their information.

Now contrast that capability with an MSP competitor walking in with a generic brochure about doing revisions and patches and monitoring logs.  Who is the prospect going to feel more comfortable doing business with?  Obviously, the one who demonstrates a better understanding of his specific environment and needs. And only those MSPs who have made the investment to gain focused market segment and subject matter “depth” can accomplish that.

In time, the MSP can branch out into more and more market segments – but the goal in any segment must be to achieve credible depth that is replicable to common prospects.

That’s the marketing path of least resistance.

The MSP Marketing Paradigm

Therefore, marketing Managed IT Services as an MSP basically boils down to three main success elements:

1. 1. Making a strong ROI/TCO Case (with ROI/TCO tools) that validates and cost-justifies the IT Support Model
2. 2. Presenting a Credible Case for Comprehensive MSP Capabilities via Informational Artifacts and a Credible Website
3. 3. Choosing a Market Segmentation Focus to achieve Referenceable Subject Matter Depth and Referrals

JPE Inc. Consulting is uniquely able to provide consulting and marketing tool development for MSPs in all three of these areas.

Please contact us today for a free initial consultation to learn more: info@jpeincconsulting.com.