Cloud Computing - Vaporware?

The Merriam-Webster’s Online Dictionary defines a cloud as a “visible mass of particles of condensed vapor.”  According to CIOs interviewed for an article in the June edition of the Harvard Business Review magazine, cloud computing might as well be defined as “vaporware.” 

The article includes research by Gartner Group VP, Mark McDonald, who found that CIOs interest in the cloud has grown from 5% in 2009 to 37% earlier this year.  However, three out of four respondents who said they were interested, reported little interest in the three key technologies it entails: server virtualization, service-oriented architecture and SaaS (software as a service). 

These figures may entice you to conclude that this is a great opportunity for a salesforce to provide value in explaining the Cloud and define a company’s solution; a rare situation where the salesforce can be “solution sellers”. Unfortunately, this is not necessarily the case, according to a Forrester’s Technology Buyer Insight Study: Are Salespeople Prepared for Executive Conservations?

IT executives interviewed for the April 19, 2010 study, only 15% of executives believe that their meetings with salespeople are valuable and live up to their expectations.  

Reasons given according to the report:

• Business leaders (24%) don’t believe salespeople are knowledgeable about their specific business.   
• Only 34% of buying executives said salespeople understand their roles and responsibilities. 
• And across the board, only 38% feel that reps are prepared to answer their questions. 

Could this be a case of the blind leading the blind?  Confusion around cloud computing even occurs at the highest levels of leading Information Technology conglomerates. One story accounts for the CEO of a large information technology firm asking his senior executives to explain cloud computing to him. When no one could convey a clear answer, the CEO fired back that if they can’t sell it to him, then their company cannot sell it to customers.

There is no doubt that the Cloud is making as much noise as any good thunderstorm.   Companies are reallocating resources and investments to the Cloud.  Countless marketing dollars are being spent to get companies in the consideration set.  As with any good technology trend the hype exceeds the reality.  

The real challenge seems not to be marketing the Cloud, but rather selling it.   Those companies who best enable their sales people to break through the noise will reap the greatest benefit.   

The New Partner Marketing Model

In the “good old days” companies like IBM built a ubiquitous brand with unique products and then dictated their terms and funds to sales channels. Brand advertising was typically done on one of the three major TV networks aimed at the mass market to create a “pull” that would have customers do whatever it took to get those products regardless of price, location or availability.

Product marketing teams would assemble sales and marketing material, and route it to partners via partner portals or directly to their offices assuming that the partner had everything they needed to sell the company’s products or services. And that worked, especially with those partners who were former employees.

Business was good and predictable, but then things began to change. More channels became available, and as a result, it was harder to reach and influence key customers; the window of having a truly unique product shortened, and partners started gaining a greater choice of products to recommend, with various incentive programs.

Gradually the power of the transaction was shifting further down the value chain leaving companies with less influence over the point of sale. Partners, now armed with options and leverage, became less willing to cooperate with the demands of the manufacturer.

In response, the manufacturers began exploring how to realign themselves as a key influencer and along the way they discovered the following:

• Inconsistencies in communication about marketing programs, incentives, service and who owned the customer, left partners confused and frustrated.
• Partners felt like they were getting little, to no, marketing support from manufacturers despite having piles of marketing material and funds.
• A concerning trend was starting to develop, in which partners were using less of the marketing development funds (MDF) available to them.

The old “push” product and programs through partners and “pull” customers to your products through mass marketing was no longer working. It was time to rethink the model.

To learn more about the future direction of partner marketing request a copy of the Channel Insight white paper by register for the live webcast by June 15th 2010 at www.gyrohsr.com/channelforum.

The webcast is scheduled for 12 PM on June 16th 2010 and will include a discussion of the New Channel Marketing model that is evolving in the Technology Industry.  I will be co-hosted the webcast with Bob Ray, President of the San Francisco office.   Hi-Tech clients managed out of that office include VMware, Sybase, Adobe, as well as others. 

B2B Social Media and the Upside Down Funnel

THIS POST WAS NAMED 1 OF THE BEST B2B SOCIAL MEDIA POST OF 2010, also a TOP 111 POST ON B2B MARKETING ZONE FOR 2010

In my post on 6 Steps to Getting Control of Social Media, I mentioned the concept of an “upside-down funnel”.  I thought I’d spend some time explaining it in this post.  

As with most new technologies, social media is starting to “settle in” and common applications of the platforms are becoming known.   In many large B2B organizations, that means social media is finding a home in the marketing communications group, often landing in PR.  That seems fine for B2C organizations, however, I’m convinced that it’s the right spot, and/or the only spot for social media in B2B companies.  

The Upside Down Funnel

In most B2B organizations corporate marketing’s role is related to driving “top-of-the-funnel” activities.  From advertising,  PR, and now social media,  the focus is on creating awareness…and hopefully, driving consideration and preference. 

There is another opportunity that may not be considered, a part of the funnel where marketing, in particular social media, can play a valuable role.  

It’s at the very bottom of what I’ll refer to as the “upside down” funnel.   To find such an opportunity you have to think about a funnel that starts with once a prospect becomes a customer. 

Just as a sales funnel has stages so does customer relationship management (and I’m not talking about the technology).  Companies should be actively pursuing strategies and tactics to retain, expand, grow and then leverage customer accounts to win business.  This is where I think the “sweetspot” is for social media in B2B.

Here’s why: social media is about “consumers selling to consumers”, or “professional-to-professional.”  If a company does its job of nurturing and retaining customers, it should be able to transition from having a relatively unknown prospect, to a known customer, to hopefully, a well-understood customer advocate…at least that’s the goal.  

                        The Opportunity

If a company enables those customer advocates with social media it gives them a platform to spread the good word.  The potential of this opportunity is huge, and for the most part, being missed at most companies today.     

As we all know, word of mouth is the most effective marketing there is, enabling it with technology creates scale, and the ability to track it. To do this successfully, companies have to first identify this opportunity within their organization;  second, they have to change their current way of thinking about social media beyond its present use in marcomm and PR.  It means finding uses and opportunities within sales and customer service. Yes, listening to customers chat about your service on Twitter is important, but I’m talking about creative ways to use it for: 1) customer-to-customer referrals, 2) community building, and 3) facilitating user groups.  The goal is to find ways to emotional connect avid customers to the company and/or products, and then provide them with an outlet to communicate that passion. 

What to Do

As relationships deepen, customers begin interacting in more personal channels.  Through those interactions they are likely to share more intimate details about themselves, and their relationship with products/services and the company.   Companies have to be able to collect this information across channels to create a complete profile of a customer.  If this can be achieved, an organization will have everything it needs to begin enabling, influencing and studying cusomer advocates.

Finally, watch out for the “silo” effect.   Typically at least three different organizations will be interacting with the customer as the relationship develops.  But it’s only one customer interfacing with what the customer expects to be one company.  The organization has to be “in sync” because the last thing a company wants is to provide a customer with a platform for communicating the wrong message.  Turning an advocate into an adversary is not the goal.  

Channel Strategy and the Recession

“Because things are the way they are, things will not stay the way they are.”
 Bertolt Brecht

I have been surprised with how executives perceive their channel strategy in battling the "Great Recession."  Through recent conversations, it has become clear to me that many executives have not completely thought through the impact of the events of the last 24 months on their go to market models

They have downsized, cut budgets, and exited markets but that has been a reaction to declining demand and revenue. Cutting cost is not change; it is doing more with less and should only be considered a short-term solution.

Executives must now explore what changes will impact the way future financial results are delivered to the company.  To begin, it’s helpful to look at what shapes and informs an organization’s channel and go-to-market strategy. There are four main forces at work:

1. Market Dynamics  
2. Customer Preferences
3. Product Attributes
4. Organizational Economics  

The four areas are interconnected - they’re like atoms bumping into each other and often – a change in one area sets off a domino effect in that changes in the market environment (the health of the economy, technology and regulatory changes, etc.) impacts customers’/consumers’ buying behavior, which may cause changes in product design, and so forth.

Smart and successful companies recognize and anticipate market shifts and, as a result, use market data to create, modify, and improve products, pricing, and channel strategies. Ultimately, these changes impact the organization’s revenue outlook and profits; in other words, their “organizational economics”, and ultimately how they go to market.

The “Great Recession” has been a significant disruptive event and it has impacted all four of the key forces. Companies who fail to recognize this will awaken to new competitors eating their lunch, customers who will just “disappear”, and more budget and resource cuts.

For example 

Years ago, I did some work for a technology company who was missing opportunities in a certain segment of the market and could not determine why. We uncovered that a new product innovation had given rise to a new buyer/key influence that was not being covered.  As a result, we developed a new value proposition, messages specific to that buyer, and a specialist sales force.

Two years later, we were re-hired because they were getting beat in the small/medium business (SMB) segment by a competitor, and couldn’t figure out why. Everything that was put in place two years prior had been working; they made sizable market share gains.

Finally, we discovered that the key consideration driver in the SMB had shifted dramatically from Product to Price (the cost of product and service) because of a downturn in the economy.

All the new messaging developed two years prior for the new buyer about their innovation was now being used against them. The smaller competitor was telling the company’s customers that they overbought, and that they had the right solution for their budgets.

“Because things are the way they are, things will not stay the way they are.” 

Things change, and typically faster than most people understand, and companies can digest. Included below are three tips to get your started:

1. Recognize that change has occurred - your mission is to discover it. Here’s another tip, static research will not be enough to unlock the insight you’ll need, look for YOY changes. 
2. Set up a system - monitor the four forces on an ongoing basis. Change can come from any direction.
3. Determine the key market driver(s) in your industry - for example in Healthcare: Regulatory/Legislative changes.  Establish research tracks in order to detect trends and do scenario planning on a ongoing basis.

And finally, recognize that channel strategy (actually any strategy), should be considered alive and fluid, it’s not “set it and forget it.”

How has your organization been impacted by the recession?  

6 Steps for Getting Control of B2B Social Media

A version of this post can also be found as a featured article on the Demand Gen Report website. 

I had the opportunity last week to speak on social media at a couple of B2B conferences. It gave me a chance to get out of the bubble and speak with folks in the trenches. It turned out to be an eye-opener.

Attendees at the conferences were marketers representing original equipment manufacturers (OEMs) heavy industry, and the financial services industries. As a group, they market complex, long sales cycle products to a well-defined B2B audience. As a result, understanding the value of social media is more difficult.

I found that many of the marketers I spoke with to be somewhat exhausted by social media. From trying to stay current to learning the application in their business, they felt like they just couldn’t stay current.

Based on what I experienced, I’ve put together six tips that might be helpful:

1. False Prophets – Combine high employment with a fast-moving space like Web 2.0, and suddenly everyone is an expert. Buyers beware. If you need outside expertise, go with a firm that has experience in this space.

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