Why Participate in IDC's Marketing Barometer Survey

The CMO Advisory Service at IDC is conducting its annual barometer survey. This is the 10^th year of the survey.  All respondents will receive a free copy of the report produced from the results of the survey and an invitation to IDC's exclusive Client Telebriefing.

During The CMO Advisory's 2012 Marketing Benchmarks survey we collected data from ~100 of the largest and most influential tech companies, their combined revenue totaled nearly $750 Billion.  The barometer survey provides a "finger in the wind" follow up to the Benchmark Survey providing detailed guidance to senior marketers. Areas of focus include: budget ratios, program spend, headcount allocation, and in-depth insights into key trends in the industry and forward looking roles and programs.   

If you are interested in participating: contact Sam Melnick at smelnick (at) idc (dot) com

Below are some answers to questions you might have:

Q: A free report and webinar, cool! Wait what type of information will they contain?

A: The results of the survey will be used to analyze the direction of marketing resource expenditures and priorities during the next 6-12 months. So questions like the following will be answered:

• How aggressively are marketing budgets increasing or decreasing in my sector this year?
• What marketing staff positions or programs should I look to invest in?
• What up and coming areas should I be looking into this year to create a world class marketing organization?
•  What are next week's Powerball numbers? (Ok we won’t answer that question, if we knew we probably wouldn't tell you…sorry).

Q: Who should take the survey?

A: Marketing executives who are in a position of responsibility for worldwide marketing practices.

Q: How long will it take?

A: Depending on several factors, as quick as 15 minutes!

Q: I can’t get this done today, when do you need to have it completed by?

A:  To receive the report and an invitation to IDC's exclusive Client Telebriefing participants need to complete the survey by Wed Feb 13, 2013. Also, all of the information must be accurately provided in order to be included in the study and receive the free deliverables.

If you are interested in participating: contact Sam Melnick at smelnick (at) idc (dot) com

Q: I can't answer this question, I need input from my colleagues…help?

A: No worries, if you leave the webpage it will save your progress.

Q: What types of companies participate in this survey?

A: Some of the largest tech and tech related companies in the world participate (again total revenue of participants reaches upwards of $1 Trillion), but plenty of companies who may not have as many 0's in their revenue line, but are growing quickly and have exciting products, do participate and receive great value from the deliverables!

Q: Some of this information is kind of confidential, I want to trust you, but can I?

A: As stated above, the CMO Advisory Service has been doing surveys like this for 10+ years. All answers will be kept confidential by IDC and all data will be aggregated for the purposes of trend analysis.  No client or other participant of the study will ever receive your company-specific data and there is no way that any company can "reverse-engineer" the analysis to derive your data input. Your responses will not be used for any other purpose within IDC.

Q:  Ok I completed the survey…so… when do I get the free research?

A: Heh, I knew you'd ask this one. You can expect the deliverables to begin coming out around late March. For clients who are attending our March Board Meeting we will have in depth discussion around the barometer findings (want to know more about these board meetings? Reach out to the CMO Advisory Group team or send me an email).

If you are interested in participating: contact Sam Melnick at smelnick (at) idc (dot) com

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#CMOFact: IDC 2013 Marketing Investment Planner

With 2012 coming to an end, for many businesses planning for 2013 will bleed into the New Year. Marketers are no exception; in anticipation of the planning cycle each year, the CMO Advisory Service publishes our annual Marketing Planner in August/September, developing the B2B tech industry's leading marketing (and sales) benchmarking study. To anyone familiar with the industry, you are probably used to hearing that Marketing is transforming. What is so exciting about our Marketing Planner is we are able to provide specific guidance on changes, challenges, and successes within the industry through incredibly accurate industry data and qualitative information provided by you, the senior marketers. Marketers in turn are able to use this information to successfully plan for the upcoming year.

I’ve taken the liberty of pulling out some key facts below from our report that are particularly interesting or useful. Feel free to share them and remember to follow me on twitteror check out the CMOFact hashtag - we will continue to share some marketing goodness there.

#CMOFact Number 1:  In 2012 the average large B2B Marketing organization is in receipt of a 1.7% budget increase. This is 50% LESS than the 2011 rate.

#CMOFact Number 2:  The Marketing Budget Ratio for B2B tech companies has declined each year from 2009 through 2012. Marketing Investment is not keeping up with revenue growth.

#CMOFact Number 3: B2B Tech CMOs are spending approximately 30% of their budget on digital marketing programs. This is up from 12% in 2009. 

#CMOFact Number 4: For Large Tech Companies, only those in Software (vs Services & Hardware) are receiving increased budgets!

#CMOFact Number 5: The marketing automation train is picking up speed, and fast. Jump on now or prepare to be left behind. This is a new category in our survey and is already at 3.1% of programs budget and 1.6% of staff allocations.

These are just 5 nuggets from the 2013 Marketing Planner. The full version includes a complete overview of the current state of the B2B Tech Marketing it includes; program spend, staffing breakdowns, up and coming technology, and forward looking advice. For your own copy, reach out to Wendy Pemberton at wpemberton@idc.comor find it here. 

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Data Analytics wins 2012 US Presidential Election

Data analytics was the big winner in the 2012 US Presidential race. In fact, 11:17 PM (US ET) November 6th was the moment data analytics went mainstream. This was when Ohio was officially projected to go to Obama. It was the ultimate validation for Nate Silver and his data analytics approach to election forecasting. To much fanfare he accurately predicted the results of the election in all 50 states without doing any of his own polling. He used sophisticated analytic models based on data from as many third party polls he could find. To this he added the secret sauce of data analytics - a keen understanding of how different types of data from different sources relate to one another in context.

His FiveThirtyEight blog drove as much as 20% of the web traffic to the New York Times website - the 6th most visited US news site on the net - leading up to the election. As a result, data analytics is officially mainstream. Any business leader at any level that does not immediately embrace its power is putting his or her career and company in jeopardy.

Data analytics works. It does not produce miracles, but it does produce results that far outperform human judgment on its own. The Obama campaign employed an army of retail data analytics wonks to beat the Romney campaign in every battleground state. They did it by applying analytic techniques proven in the supermarket industry:

• Standardizing records: Unifying the customer (voter) database
• Widening perspective: Combining diverse data types: demographics; buying/voting history; response by media; donation/activity by trigger (celebrity dinner), model (contest) and method (mobile); group/church  membership, social networking activity (Reddit), etc.
• Judicious targeting: Carefully identifying the potential for influencing voters that could influence the election. Not worth targeting easily influenced voters if they don't live in a county that can help swing a state. Not worth targeting difficult to influence voters even if they live in a critical county. This is essential for achieving impact and ROI.
• Media mix modeling: which media channels have the greatest impact on which kinds of voters?
• Action oriented outreach: Understanding the specifics of why and how certain people act and designing multiple outreach experiments (progressive offers, channel mix, social references, etc.) based on that.
• Openness to innovation: data driven models may point to approaches that are counter intuitive for some decision makers. They can seem risky and mysterious. They will not be right all the time. Controlled risk is part of the evolutionary process to effectiveness. Without a tolerance for experimentation however, you will not develop a data driven culture, you will in fact kill it.

Marketers in the world's largest high tech companies are finally acquiring the enterprise data services needed to apply data analytics to long cycle B2B customer creation processes. We are already seeing signs of how significant the impact of these new approaches to marketing and sales can be:

• $200M EU lift based on a sophisticated solutions recommendation engine
• 45% more subscription revenue with no increase in a multi-million dollar marketing budget
• Tens of millions of dollars in revenue uplift from simple web behavioral changes

Embracing data driven decision making is now a matter of survival. You simply cannot win against competitors that have faster, deeper market insight. They will beat you in every stage of the customer creation process. Your marketing will be months behind, your inside sales reps will be calling customers already committed to alternatives, your field sales reps will miss opportunity after opportunity to get more revenue from existing customers. Your funnel will collapse, your pipeline will dry up, your renewable revenue will shrink, and at that point it will be hard to recover. Hyperbole, you say? In the great A/B test of who uses data analytics and who does not, stay in the B group at your peril.

IDC EAG group has done extensive research on the key ingredients needed to create the enterprise data services that are a prerequisite for data driven customer creation and has ongoing research into how to create a data driven culture. To find out more please contact Gerry Murray - gmurray(at)idc(dot)com. 

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Six Key Table Stakes for B2B Sales and Marketing Alignment

The IDC CMO and Sales advisory services held their most recent client leadership meeting in Santa Clara on June 5th. One of the key topics of the day was sales enablement. The ensuing dialog between the sales and marketing execs in the room was as impassioned as it was ineffective. Many of the usual themes were expressed (in the nicest possible way): "marketing leads are crap", "sales doesn't follow up", etc. etc.

Whenever I hear this conversation it always sounds like the two sides are talking past one another. Neither really understands how to express their frustration in a way that has any meaning to the other. What's missing are some basic table stakes:

Sales 

1. Train marketing on sales process. It is impossible to effectively contribute to, much less consistently improve, an unknown process. No marketing team should be expected to deliver effective collateral or leads to a sales organization until they have been fully trained on sales process and methodology. In a large organization with multiple business units and product lines there will be many sales processes and the marketing teams charged with supported them must receive the same depth and cadence of training that the sales reps get.

Marketing 

2. Treat the sales force like a market segment. There are great variations in the needs of different kinds of reps in your organization and you must understand them on a rep by rep basis no less urgently than you do for your external marketing targets. The needs of an enterprise rep with two accounts are radically different than an SMB rep with 400 accounts or a territory where they may not know all the potential customers. Don't throw 10,000 leads a month at both of them. You get the idea. Nurture your sales reps like any other targets and tune the metrics accordingly.

3. Market sales collateral like solutions. Marketing tends to market its wares to the sales force like products whose benefits are self evident. Assets are often "published" or "distributed" generically with tags to help reps "find" them. Imagine what would happen to the funnel if that was the extent of external marketing efforts! Sales support assets should be marketed through targeted nurture campaigns. Once you get going on #2 above, you can start to address the needs of each rep and market your leads, collateral and other assets as solutions to the right sales problem at the right time!

4. Take an account centric approach to lead generation. Marketing is generally great at understanding the world in terms of segments and contacts. These are fundamental concepts for planning, budgeting, and executing marketing activity. However, sales reps think of the world in terms of accounts. Marketing needs to make leads more relevant to reps by delivering them in an account context.

Sales and Marketing

5. Define customer creation as an enterprise process. This is the most effective way to change the corporate culture and gain executive support for addressing the many alignment issues across all customer facing functions in the enterprise. The analogy here is supply chain. Before it was defined as an enterprise process the people, processes, technology, data, and budgets within it were managed on a purely departmental basis. Defining it as an enterprise process made it possible to optimize and continually improve the supply chain based on overall business performance. The customer creation process - from prospecting to closing to upselling - needs to be owned and measured in the same way.

6. Implement customer data as an enterprise service. Once customer creation is established as an enterprise process, it requires an enterprise approach to customer data management in order for the optimization and continuous improvement to take place based on core business metrics and not on a collection of disassociated departmental KPIs.

These six table stakes should be treated as urgent action items for all high tech Sales Operations and Marketing Operations personnel. Some organizations are doing some of these things, but no one has implemented all of them as organizational norms.

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Big Data Comes to Marketing?

What's the most commonly heard word in marketing organizations today? It is “Transformation.”

Dramatic transformational change is sweeping through marketing functions in most industries. And the main "change agent" is the customer. Or what we at the IDC Executive Advisory like to call the "New Buyer" . Our customers and prospects today are crafting their own routes to learning about products and services. They are motivated and skilled at educating themselves and learning from peers. They travel through numerous digital pathways in their exploration process. And by the time they come to a meeting with the vendor sales person, they are smart and savvy. They are empowered.

Marketers need to ask and answer these questions: Where did our Buyers come from? What do they know already? And above all: How do we  add new value to where they are in the process of discovery about our product or service? The New Buyer dynamic creates volumes of new data and customer intelligence analysis opportunities for vendors.

In turn, Those in the marketing job function must be able to bring better data into any planning meeting, including discussions on budgets and investments; programs and campaigns; or performance measurement. Hard data needs to complement the “softer side,” or the “art,” of marketing.

The tools for accessing and mining data, and turning data into insights, are now plentiful for today’s marketers. And, The marketing job function might be the last of all an organization’s major functions to become automated.

The marketing winners of tomorrow will be masters of rapid data management — able to turn data into intelligence, intelligence into analysis, and analysis into decision support and execution. Achieving this will be the first step in the rudiments of sales-to-marketing cost control.

For the CMO, there are three critical, inter-departmental, data-driven intersections that need to be created and nurtured. Marketing is now too important to run in isolation, so here are the three key intersections:

1. The Marketing and CIO intersection. New IDC research shows that the investment in marketing automation technologies in 2012 will be at three to four times the rate of 2011 levels. Automation technology development is going to sweep through sales and marketing over the next 10 years.

2. The Marketing and Sales (CSO, or Chief Sales Officer)  intersection. Today, the CMO needs to be able to connect sales technologies, such as CRM, with new marketing automation technologies.

3. The Marketing and CFO intersection. The CMO needs to deliver a return on investment in measurable terms in order to have meaningful budgeting and planning discussions with the CFO. Measuring impact of push programs in terms of conversion to leads, opportunities, and revenue is the game today.

I like to say that there will be more change in Marketing in the next five years, than we have seen in the past 25 years combined. These Marketing data and IT automation issues will be at the forefront for the next generation of successful CMOs.

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CMO's report universal lack of preparedness for key challenges

IBM released the findings of their Global CMO study yesterday and one of the primary conclusions is that CMOs feel unprepared to address key challenges. The most surprising thing is how consistent the feeling is across regions and vertical industries. CMOs generally face the same issues and report very similar levels of "unpreparedness" in the face of them. Top challenges include: data explosion, social media, growth of channel and device choices, and shifting consumer demographics, among others.

The findings are based on 1,734 structured in-person interviews with CMOs in large organizations conducted between February and June of 2011.Regional and vertical representation was reasonably well balanced. The sheer scale of the effort and the willingness of so many CMOs to participate indicate a role under siege.

In our research, IDC has learned that marketing is undergoing fundamental and painful transformations on several levels: new and expanding datasets, new channels and forms of communication, new tools and infrastructure requirements, new dynamic in customer acquisition, new pressure to prove business impact, new skills required for success. It is a multi-dimensional change that has many marketing leaders struggling to keep up.

The IBM study provides a strong basis for CMOs to educate their C-level peers on the challenges they face. However, by design, it does not offer practical models for addressing the issues. IDC has strong evidence that the customer data record is the fundamental design principle around which all customer facing activities and systems should be (re-)built. The customer record is increasingly the source for strategic insight, tactical planning, and performance metrics. Any marketer working in an organization without an enterprise customer creation process (with the requisite standards for customer records, data governance, and the infrastructure to support it) is set up for failure.

Unfortunately hardly any companies today manage customer creation as an enterprise process. We believe that this is the root of the universal "unpreparedness" revealed in the IBM Global CMO study. Having a practical model for implementing an enterprise customer creation process is the first step toward mastering all the key challenges CMOs and their marketing organizations are facing today.

ENTERPRISE customer creation is not something that only happens in marketing and/or sales. It encompasses every customer touch point over the lifetime of the relationship. It goes beyond the jurisdiction of any departmental leader and therefore must have C-level (CEO) endorsement and active support. It is the demand side equivalent of supply chain automation and we all know how WalMart conquered the world by mastering that side of the economic coin. On the demand side, the challenge is finding and forming relationships with prospective customers much earlier using channels and resources not traditionally thought of as marketing (or sales.) In addition the relationship needs to be tracked consistently from marketing to sales to finance, provisioning/fulfillment, support, etc - i.e. the customer data record must be uniformly defined and managed across departments. All the information associated with a customer record must be available to everyone involved in the process. It is a massive undertaking on par with the supply chain automation effort, but the reward is being months ahead of your competitors in terms of customer contact and relationship building – a key competitive advantage that will be very hard to displace.

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The Four Stages of Data Driven Marketing

Who is your customer? It is a deceptively complex question that a surprising number of B2B companies cannot answer. The difficulty stems from several causes:

• Inconsistent definitions for customer attributes (account name, industry, segment, organizational hierarchy, contact name/email, etc.)
• Fragmentation of the data across multiple databases and applications
• Departmental perspectives on customer relationships
• Lack of an enterprise customer data management approach

The impact of all this is a severe slow down in decision making and an inability to optimize critical processes in customer facing functions, most poignantly in marketing and sales. The solution is to define customer creation as an enterprise process – not something that happens only in marketing and/or sales – and the implementation of data standards and governance to support it. This enables marketing to be data driven, but there are four distinct stages of data driven marketing and not all of them lead to success:

1. Stage One – Fast Failure. This stage is characterized by response-based decision making. Marketing decisions are based on response data from marketing systems – web hits, landing page registrations, and myriads of other campaign performance data. All of this is important, but leaves marketing unable to tie any of its activities to key business metrics such as revenue performance.

2. Stage Two – Slow Failure. This stage is introduces conversion-based decision making. Marketing and sales systems are integrated along with customer data definitions and structures. This provides a quantum leap forward for both sales and marketing. However, marketing is still one degree of separation from linking its activities to business performance. Sales pipeline is a good proxy but it is no substitute for the critical business data that comes from the next two stages.

3. Stage Three – Measurable Success. At this stage marketing finally is able to measure contribution to revenue. However, it is not enough to rely on initial contract data alone. Account A that closed for $1 million and account B that also closed for $1 million may be very different in terms of margin and lifetime value. Account A may have cost $250,000 to sell, install, and support where account B cost $500,000. If that's the end of the data set, then of course marketing should bring on more account A profiles.

4. Stage Four – Market Mastery. At this stage marketing understands the long term profitability of customer relationships. If over time account A buys nothing more and account B upgrades and expands its investment by millions of dollars at improving margins, marketing can refine its activities accordingly and begin to drive overall business performance.

The key lesson is that marketing is greatly influenced by the depth of data available to it. At each stage in IDC's data driven marketing model, new data can completely change all facets of marketing activity from strategic targeting and messaging to tactical campaign investment and roll out plans. As a result, it is crucial for companies to get to Stage Three as quickly as possible and remain ahead of competitors on the journey to Stage Four.

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The Marketing Operations Role: Where To, From Here?

Looking Back, Briefly:

Marketing Operations has been the fastest growing job role in tech marketing over the past few years. When IDC first started its surveys of marketing spend and staffing back in 2003, Marketing Operations wasn't even on the job roster at most organizations. Today, the "MO" role represents about 6.5% of the total staff and it is the fourth largest job "category" for a large marketing department. So, what happened? The rise of this role was the response of the CMO to the general condemnation that marketing was not acting like a business. The Marketing area was perceived as offering up no accounting, and no accountability... but also offering no end to the pleas for more budget. And so Marketing Operations as the "staff accountant" role started to turn up at the larger and more complex marketing organizations. As the MO role really took off, the general job description would include four areas: budgeting and planning; measurement and reporting; technology deployment (marketing automation technology); and process improvement.

Looking at Today:

Of the four job areas described above, the most problematic, right now, is technology. There is a vast new set of IT tools available for marketing organizations: Marketing Resource Management; Content Management; Performance measurement; Analytics; Social Media Platforms and Monitoring; and the list goes on. The problem is that in general, marketing organizations do not have the staff skill sets to effectively evaluate, deploy and use these tools. In our 2011 Role Survey of Marketing Operations professionals, respondents said that their number one problem today is the sorry state of the "Automation Infrastructure" and that their number one goal is "Finding the People that know how to fix this". There is an equally large and underlying issue "below" the technology level, and this is the database and data management issue. With so much marketing automation now in place, the first output that this new technology is producing is crystal-clear visibility to the fact that: "Wow, we have REALLY POOR customer records". And so a very major issue for the Marketing Operations role is finding the database-savvy personnel who can help with this challenge.

Looking Forward:

Given how fast the MO role has grown and given the significant challenges of today, I want to offer three areas of "Essential Guidance" for CMO's and their MO "lieutenants". The first step is to re-visit the job description. In a series of executive interviews that I recently completed, many MO professionals complained that "Our Marketing Operations area has become the dumping-ground for all the unwanted marketing tasks that no one else wants to do!". Now, whose fault is that?

Job number one, therefore, is for the CMO with the MO team to define and then re-articulate its role to other parts of marketing; so that it does NOT become the dumping-ground! Job number two is to then conduct an "Activity assessment" of what the MO personnel are actually doing, as held against that job description This may all sound like a junior league management exercise but my strong suspicion is that because the role has grown SO fast over the past four years that it MAY be the case that role clarity and scope are due for a closer look. This assessment should also include the organizational placement of the MO role. Why are so many of our MO staff at corporate headquarters? Why are these staff not within our product lines and in the field? These are questions worth asking. Job number three is then to ask "Where do we go from here?" regarding the role and staffing. I believe that the "future" of MO role effectiveness and impact is not in more staff as measured by headcount. In fact, the MO role as a percentage of staff is likely reaching an upper limit at this point. My hunch is that it may "cap out" at perhaps 8 to 10% of staff. However, the MO roles of tomorrow will be more strategic than they are today. The nature of the role will evolve. While today's MO staff are largely involved with individual execution (within the job description mentioned previously), the MO role of the future will be more about educating and infusing other parts of the marketing organization with a marketing process-excellence mentality, skills, and tools. In this way, the MO staff will become a more "leveraged" function. This leverage will include improving the influence and impact of MO across the entire marketing organization, not just at the corporate marketing location(s). As you further deploy the MO role, think about not hiring more Marketing Operations staff....think about driving the existing "smarts" and influence of MO down and through your entire marketing organization.

-- Rich Vancil

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The Product Marketing Reporting Structure Dilemma

Where should product marketing report into within a technology organization? Marketing? Business Units? Product Management? The CEO? IDC's 2008 Tech Marketing Benchmarks study indicated that product marketing reports directly into marketing at approximately 45% of technology companies. This is by no means a clear trend to be replicated by every company. In fact, based upon years of research at IDC in this area as well as my own experience in the product marketing function, I continue to believe that the correct answer for product marketing's reporting structure is. . . . it depends. Yes, this may seem like a cop-out initially, but there really is some support for my opinion here.

The first question to consider is what is your definition of product marketing? IDC's official definition is as follows:

• Marketing professionals accountable for developing and executing the strategy to increase market share for specific products. Activities include market sizing and opportunity assessment, proposing future product development, developing market requirements documents (MRDs), crafting key product messages, conducting competitive analyses, and determining pricing, packaging and program offerings. (this category does not include product management, industry marketing or solution marketing) - refer to IDC's Sales and Marketing Taxonomy

Regardless of your reporting structure, your first step needs to be the definition of this role within the organization including how this role will interact with other parts of the company. (i.e., roles, responsibilities, performance measurement strategy) Many companies have overlapping responsibilities between product management and product marketing depending upon the business unit or individuals' skill-sets. Combining these two roles is also quite common.

So back to the reporting structure dilemma. Not only have I seen product marketing report into different parts of an organization, but I've seen it oscillate within the same company between marketing and the business units every couple of years. Regardless of what has happened historically in your company, product marketing should report into the part of the organization where the greatest misalignment exists today as well as where the greatest opportunities for improvement exist. (assuming these areas of misalignment cannot be fixed more easily from a process or tactics perspective)

For example, Citrix, a company recently cited in the Leadership Quadrant of IDC's 2009 Marketing Performance Matrix, shifted product marketing's reporting structure from the CMO (Wes Wasson) to the business units in early 2009. Wes described it as follows: "we occasionally shift the hard line reporting of field and product groups, depending upon where we most need to optimize". Another factor to consider is who owns the budget. Wes and his team decided to keep the budget within his control. The result is a strong sense of balance between control of staff and related processes (by the business units) and control of the budget (by the CMO/marketing).

What is your product marketing reporting structure and who owns your product marketing budget? Please share your thoughts below or feel free to contact me directly at mgerard@idc.com.

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Rise of the Social Media Function

Many opportunities exist for B-to-B marketing organizations in the social media space. . . .and they're not all limited to what you can do with Twitter, Linked-In and YouTube. Just a few of these opportunities include:

• Establish a direct, relevant connection with your customers as a source of voice of the customer for new product development (e.g., through an on-line community)
• Improve customer satisfaction (e.g., enable customers to share experiences on-line by creating a self-running community where customers can interact with and learn from their peers)
• Increase the speed for troubleshooting and R&D by reducing the distance between customers and engineering
• Join the on-line technical conversations about your products that your customers are already having, by either leveraging your own community or listening to and participating in other companies' communities

Best-in-class organizations are adding a new social media role to their organization to capture these opportunities. The social media manager may report to the digital, interactive or web marketing team; integrated marketing communications; directly to the CMO if it's a new and/or especially important area; or even within product teams within more decentralized organizations. Potential responsibilities include:

• Establish the social media strategy in collaboration with the digital marketing team, PR, events, product management as well as other parts of the organization. (Refer to a prior post: BtoB Marketing's Response to Social Media: Have we Lost all Control and Impact?)
• Provide the training and infrastructure to empower your organization to interact with customers and prospects on-line (e.g., ambassador training program by Logitech, Intel's digital marketing training program)
• Develop community sites within the company web site (e.g., Citrix's community site offers a clean, comprehensive community site design with many unique features)
• Collaborate with product management, engineering and customer service to monitor and contribute to on-line communities. (internal and external) In some cases the social media team may act as direct contributors to on-line content or they'll provide the infrastructure and guidelines to facilitate contribution by other internal teams.

This role is only in the early stages across the technology industry; however, those companies that best leverage this new area to connect with prospects, customers and their markets will increase their differentiation in this increasingly mature technology industry.

Contact me at mgerard@idc.com for a copy of our recent telebriefing on "Key Success Factors for Your B-to-B Social Media Strategy". Do you have a social media role within your company?. . . please share your insight in the comments section below.

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A Preview of IDC's 2009 Tech Mktg. Benchmarks: A Focus on Marketing Automation

As discussed in my last blog entry, Are you Ready for Marketing's 2010 Annual Planning Process? , the IDC CMO Advisory Practice is “in the thick” of collecting surveys for our 2009 Tech Marketing Benchmarks study. We expect to collect detailed marketing investment data from nearly 100 hardware, software, and services vendors. With this is hand, we will be well prepared to provide our insight and guidance to tech marketers for their annual planning process.

I'd like to invite Seth Fishbein, a senior IDC analyst on our team, to provide a preview of some of this research, focusing on CMOs’ marketing automation priorities for the coming year. A more comprehensive analysis of this topic will be included in IDC’s 2010 Marketing Investment Planner, due out in late September/early October.

"Thanks Michael. Based upon interviews with leading tech marketing executives over the past month, the following three areas represent some “low-hanging fruit” in the marketing automation space for 2009/2010:

• Development of a formal marketing automation roadmap: Tech marketers should take a fresh look at their marketing IT tools and applications to look for redundancies and cost savings. Not only has IDC observed that most marketing organizations under-invest in automation tools, but most have not developed a roadmap or formal taxonomy to align their systems to strategic goals and related processes. A couple of verbatim comments from our study:
  
  - “We are reviewing all of our marketing systems, from owners to costs to measurements, to see what is truly being used and what is needed…”
  - “We are hoping that an audit of our marketing automation systems will help us integrate our lead management system with SF.com in order to automate and measure the flow of marketing opportunities to sales…”
  


• Simplification of marketing processes and systems: A common thread among tech marketers is the lack of data quality and consistency in their lead management/CRM systems. In particular, a frequent challenge is field marketing’s adherence to data-entry standards. IDC is observing that more marketing organizations appear to be moving in the direction of simplifying their marketing automation strategies and taxonomies in order to make processes easier for global users.
  
  - “More [investment in] automation is not a priority, [but] process improvement is…and we will then automate more where it makes it easier.”
  - “We are trying to streamline our campaign management systems so all users, from North America to Japan, can select from a list of 10 campaigns as opposed to 30-40.”
  


• Improvement to sales enablement and marketing asset management technologies: IDC research shows that over 40% of all marketing assets handed over to sales are not in use today (IDC’s Best Practices in Sales Enablement – Content and Marketing (to be published end of July)). This includes assets that have been developed for sales, channels, prospects and current customers. IDC estimates that at least 30% of companies' marketing investment, including program and people spend, is dedicated to creating content and marketing assets. Clearly, marketers can leverage cost reduction opportunities if they take the time to improve their content management process and technologies.
  
  - “Our content is all over the place…a more formalized content portal is being created to get our sales team the most relevant materials when they need them.”
  - “…marketing is funding an improved marketing asset management system and we are hoping to achieve 3% - 5% reduction/reallocation of spend on annual asset development and improved production efficiencies.” (improvements in production efficiency, reduced program time-to-market, and reduced re-work).
  
  In the next several weeks, IDC will be publishing a sales enablement report highlighting best practices in marketing content management from a lifecycle management, technology, and measurement perspective. Detailed company case studies will be also be included.
  

Please keep in mind that we are currently in the process of collecting surveys for our 2009 Tech Marketing Benchmarks study. If you are interested in participating in this study and have not received a survey, please let us know as soon as possible. Thanks!"
Seth Fishbein, Senior Analyst, CMO Advisory Service (sfishbein@idc.com)

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Are you Ready for Marketing's 2010 Annual Planning Process?

Have you started planning for your 2010 fiscal year yet? Our best practices study in planning – people, process and technology indicates that the average marketing planning cycle begins about 6 months before the fiscal year end. (for CMO Advisory Service clients, refer to "Marketing’s Planning – People, Process and Technology, IDC Doc. #216134) If you're one of the more mature organizations, planning will be part of the fabric of your weekly, monthly and quarterly team meetings.

Regardless, a significant part of this annual process is assessment of your current "operational" metrics and development of next year's projected investment strategy. I define "operational" metrics as those metrics that track your marketing investment strategy, including:

1. Key Performance Indicators (KPIs) – such as Marketing Budget Ratio (marketing spend as a % of revenue), Program to People KPI, Revenue per Staff, Staff Throughput (program spend per marketing staff), Centralization KPI (% of marketing investment that is centralized vs. decentralized), Awareness-Demand KPI, etc.
2. Staff Mix (fixed spend) – such as advertising, product marketing, marketing operations, etc.
3. Program Mix (discretionary spend) – such as advertising (print, broadcast, corporate sponsorship), digital marketing, event marketing, etc.

IDC has published a complete taxonomy of these KPIs and staff and program mix areas to help marketing operations and marketing finance executives best manage their investment. (for CMO Advisory Service clients, refer to IDC’s Worldwide Sales and Marketing Taxonomy, 2008: A Blueprint for Cost Control, IDC Doc. #211900)

Tracking and evaluating these KPIs, program and staff mix levels across the organization, over time and versus other companies will best prepare you for your upcoming planning sessions; for management of your resources as well as for increasing marketing's credibility with other parts of the organization.
IDC's CMO Advisory Practice is in its 7th year of its Tech Marketing Benchmarks study. If you would like to participate in this research, including receiving a copy of the above Taxonomy, an overview of the results of the study and an invite to our annual marketing benchmarks telebriefing in August, please contact Seth Fishbein at sfishbein@idc.com. You will be joining the 100+ global companies that work with us year after year as part of this industry study.

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Sales Enablement and The Year of the Sales Rep

I've spoken about sales enablement quite a bit in this blog, and I'll continue to do so as marketers improve their ability to better enable the sales process from an internal as well as an external perspective. With this in mind, Clare Gillan, IDC's SVP of Executive and Go To Market Programs, will share some of her insights in the sales enablement area. . .

Thanks Michael. At IDC's recent annual Directions event, I gave a presentation titled "The Year of the Sales Rep." In response to The Year of the Sales Rep notion, an SVP of sales asked me, "Why does this year have to be my year?" "Precisely," I responded. Let me explain. . . . never have we more needed our sales reps to be successful and never have they needed us more — those of us in sales, marketing, and executive management.

The crisis in sales is driven not by the economy alone but by an evolution in how buyers buy. Sales organizations, in general, have not kept up. The economy heightens a need for change in how the IT industry "sells" — better mapping to how buyers buy.

For nearly 10 years, sales organizations have emphasized the desire to become "trusted partners" with their B2B customers. Nearly every sales organization has been through "solution selling" programs of one form or another. However, only one in five buyers will tell you that he/she is generally approached by sales reps prepared to discuss solutions. Too often, the sales engagement continues to be product led. Further, buyers will tell you that the pre-purchase experience is becoming a more important indicator of post purchase value. Buyers increasingly consider "relationship ROI" as well as product ROI. And, buyers will tell you that, in this economy, they no longer have tolerance for uninformed vendor representatives who come through their doors. The sales rep must come to a meeting prepared to discuss the buyer's specific business — yet 31% of sales reps are not prepared with even a basic level of Web available information before taking a buyer's valuable time. Only 16% are extremely prepared — these are the reps positioned to take share for the companies they represent.

The technology purchase decision is rapidly moving from a product decision to a relationship decision. Buyers can generally find a number of products that can do the job and within the same price range. They will select the vendor that will make them successful over time even if the vendor does not offer the very best up-front price. The shift from product-led selling to relationship-led selling calls for a significant transformation of sales — enabled by a transformation of marketing.

This transformation requires marketing to gather intelligence and create assets that better map to what buyers value and then make the intelligence and assets "accessible" at key points along the go-to-market chain for use by sales and partners. This requires researching buyers (and I stress--from the buyer's point of view), auditing program investments against what buyers value and other related investments your company is making, creating strong content assets (and then making these consumable in a variety of formats), and, finally contributing to a sales enablement process developed in partnership with your sales "partner".

Thanks Clare! Contact me at mgerard@idc.com for a free copy of a recently published report by Clare entitled "Sales Enablement 3.0: A Transformation of Sales Enabled by a Transformation of Marketing".

More to come from IDC's CMO Advisory Practice on the emerging practices in this area of Sales Enablement.

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BtoB Marketing's Response to Social Media: Have we Lost all Control and Impact?

For decades marketing has been desperately trying to connect with their customers in a controlled, one-way fashion. We had control of the brand, all marketing content as well as the traditional channels that were used to communicate with the market. And even on occasion, we cautiously exposed our executives and engineers to our customers while all the time holding our breath that they didn't say the "wrong thing" that would hurt our image, costing us millions of dollars in marketing investment and countless hours including nights and weekends executing our marketing strategy.

It reminds me of a time when I was a product marketer in the semiconductor industry. I would visit customers quite frequently with our lead engineer. In one meeting this engineer exposed our greatest product flaw to one of our key customers. As I cringed in my seat, I expected the ROI from millions of dollars of investment into the brand value of this product to be instantly destroyed not to mention the lifetime value of this customer as they quickly switched to our competitors' products. To my surprise, the candor expressed by this sincere engineer did not doom our company's success at all. In fact, it was a key factor in gaining credibility with our customer, including serving as the basis for a joint discussion and future research to solve these problems in a collaborative fashion. This new problem-solving process served as a key differentiator for our products in a very commoditized market.

What's the connection? Imagine 100s or even 1,000s of your engineers, developers and/or product managers interacting directly with your customers through their own blogs, contribution to other blogs, interaction through Twitter or countless other social media applications. Sound familiar to anyone?. . . How do we stop this PR nightmare?. . . How do we control them?. . . How do we ensure that they stay on-message with our brand?. . . How can we review every bit of content that they put on the Internet? The simple answer is that we "don't" try to control them.

Not to say that we should hang up our marketing hat and make wine in Napa Valley. In this new social media model we need to devise new ways of helping our organization to best represent the company while keeping the needs of the customer at the forefront of our communications; and even better leveraging this new found connection to the customer. Some ideas include:

• Increase your resources dedicated to internal communication. We've always said that everyone needs to be a salesperson. With the new social media model, we all have to be marketers as well, more than ever before. [CMO Advisory Service clients should refer to a recent publication entitled Intel Launches a Comprehensive Digital Marketing Training Program for its Global Marketing and Sales Staff, IDC doc. #218416]
• Ensure that specific marketing staff are accountable for your company's social media strategy.
• Don’t “control” the social media strategy, “guide” it (e.g., evangelize, train, share best practices)
• Provide the infrastructure for your social media "ambassadors" to communicate and interact with your markets (e.g., social media applications/platforms, basic guidelines for communications)
• Integrate social media across the organization’s existing efforts
  - Develop private communities for customers to provide a self-serving environment for peer-to-peer interaction, as well as providing a great source of voice of the customer for product improvement and new product development
  - Establish public communities on your web site to share insight into new solutions for customers' challenges; and contribute to other communities (no one will go to your party if you don't go to theirs)
  - Integrate on-line and in-person social networking strategies (e.g., facilitate collaboration for an in-person event amongst prospects and clients before (on-line), during (in-person) and after (on-line) the event
  - Include social media as part of the overall marketing mix [CMO Advisory Service clients should refer to a recent marketing mix study entitled 2009 CMO Tech Marketing Barometer, IDC Doc. #217640]
• Ensure that your social media strategy aligns with your customers' needs. For example, relevant content from independent sources continues to be the greatest magnet for attracting our customers' attention. Ensure that your communities remain on target to your customers' needs.
• Don't forget performance measurement. Sample metrics for measuring the impact of social media include: customer satisfaction and retention, marketing reach and engagement (e.g., click-thrus, time spent on-site, more qualitative insight such as types of conversations)

Taking a more strategic perspective to leverage the power of new social media channels without stifling their potential will enable marketing to significantly increase its impact on the organization.

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Intel's Digital Marketing Training Program

In many marketing departments, the technical competency required for marketing execution is often consolidated in the hands of a few experts on the marketing staff. A marketer might be the direct mail guru, an "adman," a PR specialist, or the trade show expert. In general, the execution of these marketing mix elements, while technical and complex, has not changed too much over time. The fundamentals of public relations, copywriting, event management, and so forth, are tried and true. Digital marketing is transforming this in two important ways:

• First, there is a crush of new marketing techniques and program elements that need to be mastered. The digital marketing mix has quickly added 10 or so (and counting) new elements of execution to the standard mix palette of about 12–15 classic program types. (e.g., email, webcasts, virtual events, SEO, display ads, social networking)
• Second — and even more important — digital marketing by definition does not rest in the hands of just a few experts. The portability, interactivity, and cost effectiveness of digital marketing are placing the execution benefits and pitfalls into the hands of marketing and nonmarketing staff throughout your company.

Today, all marketers need to become digital marketers. Marketing management needs to make sure that all staff are trained and skilled.

The IDC CMO Advisory team is impressed with the Digital Marketing Training program rolled out over the past 10 months by Intel. The Intel Digital Marketing Training program has been rolled out to the entire global sales and marketing staff. Job functions required to take the training include end-user marketing, channel marketing, market development managers, field sales engineers, field application engineers, and retail marketing managers. In total, about 80% of Intel's thousands of global sales and marketing staff are engaged in the training. Intel has developed role-based training levels and digital IQ certifications. Additional details about Intel's program are available for clients of IDC's CMO Advisory Service. (IDC document #218416, http://www.idc.com/getdoc.jsp?containerId=218416)

What steps are you taking in your organization to help your employees become "digital marketing certified"?

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Marketing's Role in Sales Enablement

The Sales Enablement (SE) role is fast taking root at many of our client companies. But it is interesting to see that its position on the organization chart is somewhat fluid. Does the role take root in sales? In marketing? Does it have to make an effective straddle across both functions , or is it bound to get hung up on the fence between the two?

Our IDC marketing and sales research teams are surfacing many good techniques for improved sales enablement. Here are some practices specifically for marketing's side of the sales enablement challenge as presented by Rich Vancil, VP IDC Executive Advisory Group.

"Thanks Michael. Depending on your resources and ambitions, these SE practices are noted as: easiest, harder, and hardest.

1. Easiest: IDC defines Sales Enablement as "Delivering to the sales representative (direct or channel) the right material at the right place, at the right time, and in the right format, to move a specific opportunity forward." Yes, there are a lot of moving pieces in that equation. But the place to start is with all the material that is clearly and blatantly in the wrong place/time/format. Sales executives consistently tell us that only a fraction of marketing content and collateral is used by them. Marketing's first move in SE starts with marketing content audits and asset management strategies that clean out all the lowest underbrush of what is not used. The easy pickings might happen quickly. An incoming CMO at one of our client companies ordered an immediate marketing-asset inventory which identified 550 separate items of marketing assets that were in constant need of updates and re-touches and re-prints and all sorts of expensive maintenance procedures for materials that were found to be marginally distributed.
2. Harder: "People, process and technology" is a guideline of places to look for operational change. But managers often jump to the technology first and this is often a mis-step in emerging automation areas (such as marketing and sales) because there are so many alluring new applications one might try and buy. Bear in mind the old adage "all software is merely someone's else's idea of how you should run your business" to be mindful that you need to examine and re-work your own processes first - with your own thinking - and then find or develop the technology to assist and automate. The critical Sales Enablement process between the marketing and sales functions is the lead hand-off and lead-nurturing activities. Executives really need to understand this process before buying and applying technology towards it . A marketing professor of mine wrote a famous case called "Staple yourself to an Order" which suggested a process audit approach that one could use to understand a customer's experience with one's company. Could we suggest that you "Staple yourself to a Lead" and observe the process path that you travel, in and around marketing and sales, at your company?
3. Hardest: Even more challenging is advanced marketing re-engineering enabled by comprehensive sales forensics. More complex "upstream" engineering of marketing cannot de done without a great deal of "downstream" sales intelligence. This was hammered home in an excellent briefing that we took this week from Drew Clarke and Brendan Grady who are senior marketers in IBM's Cognos division . I have known Drew for years and he is one of the industry's most diligent practitioners of the science of marketing. At IBM/Cognos his team is making a deep examination of the sales processes and prospect-communications sequencing that leads to pipeline acceleration and productivity. All sales and marketing "touches" to active leads in the pipeline are monitored by and analyzed in laborious detail. With these data in hand, the team can make important decisions about changes to marketing programs. It turns out that event attendance for certain prospects can be achieved with fewer email touches versus previous practice. This and reduces expenses and annoying re-touches. It also turns out that the direct mailing of the highly produced and expensive glossy corporate brochure has less than desired lead-velocity impact. There will be other cost savings and process changes that the Cognos team will achieve through analysis of the sales data.

The key point is that after the "easy" pickings are taken, the harder and hardest upstream decisions can only be made if you have excellent downstream intelligence. This is the crux of the B2B marketing paradigm: long sales cycles , multiple touch points and significant marketing-to-sales interplay makes the ultimate attainment of marketing ROI accessible only to those who can master the sales forensics. Please feel free to comment below or contact me at rvancil@idc.com."

(Interested in a taking a 3 minute survey on sales enablement? Click here: tinyurl.com/ctc6gs)

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Tracking Marketing Budgets - Use it or Lose It?

There are many ways to track the success of marketing's planning process. One metric that is often mentioned by marketing operations teams is the percent variance of actual vs. budgeted marketing investment. One of a few good metrics to track if your processes and systems have matured to the point of being able to do this. . . even if you use Excel today. What variance is acceptable? I've seen targets range from 2 to 10% variance. 2-3% variance of actual expense vs. budget would be considered "very good" for a 1B+ revenue company.

Assuming that marketing budget allocation is optimized throughout the year, it makes sense that managers should motivate their staff to spend all monies that they are allocated; including ensuring that certain percentages of budget are targeted to specific segments, campaigns, etc. This leads to a "use it or lose it" mentality if not an official guideline. The problem with this strategy (or culture) is that market shifts requiring budget changes may occur at a faster pace than the company's ability to react to these changes by reallocating budgets. The result is that market opportunities may be missed as a result of insufficient distribution of funds to where they're needed most.

Today, few companies encourage different business units, countries or functions to reallocate budgets amongst each other based upon changes in demand, priorities, etc. In fact many companies penalize marketers for not being "on budget" regardless of the circumstances. Will we or should we ever encourage our marketing teams to increase the transparency of their budgets or to even share budgets amongst each other based upon the needs of the market? And who will provide the objective market insight to help these teams best optimize budgets from a more macro perspective? One thing is for sure -- the increased optimization of marketing planning processes coupled with greater adoption of marketing automation will improve marketers' ability to react appropriately to these challenges and reduce reaction times to changes in the company and/or the market.

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The Fruits of our MRM Investment

Five or six years ago I was frequently asked the question "What is the one key metric to track the impact of our marketing investment?" Without even breaching the open-ended topic of what is ROI, I typically responded with my own question of "Do you even know how much you're spending on marketing, let alone what the return is?" In most cases the response would be a simple "no". After working with 100s of companies on analyzing their investment as well as seeing the progress that marketing operations and marketing finance people have made, I can comfortably say that as an industry we have matured significantly in our ability to track marketing investment . . . at least at a high level. (e.g., Marketing Budget Ratio (mktg. spend/revenue), Program-to-People KPI, etc.) I consider these to be operational metrics as opposed to execution metrics. (refer to past posts for more details re: execution metrics)

Greater sophistication in investment management, which is enabled by better processes and greater availability of MRM applications, may include tracking marketing investment along one or more of the following criteria: (to name a few)

• Customer size (e.g., named accounts, enterprise, large, medium, small, consumer);
• Product and/or solution;
• Campaign;
• Existing, more mature business areas or product lines vs. newer, higher growth business areas or product lines; and/or
• Low growth vs. high growth regions and/or countries.

About 60% to 70% of technology companies manage their marketing investment along one or more of these areas. [IDC CMO Advisory Practice Tech Mktg. Benchmarks Database] For example:

• tech companies invest on average 60% of their marketing budget on existing, more mature business areas or product lines with the remaining budget allocated to newer, higher growth business areas or product lines; and
• tech companies invest on average 52% of their marketing budget to low growth regions and/or countries with the remainder to high growth areas.

Yes, we've made some progress in tracking our marketing investment. This has certainly put us in a better position to manage our investment and improve our credibility with the CEO, CFO and sales peers. But we still have quite a distance to go; especially in making the connection between this investment and the subsequent return. (e.g., increased awareness, greater engagement, increased number of leads, high velocity through the pipeline)

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Insight from IDC's Annual Sales & Mktg. Effectiveness Summit

We recently finished our 6th annual IDC Sales & Marketing Effectiveness Summit. You would think after years of us working towards greater alignment between marketing & sales that we would have figured it out by now! However, as recent IDC research indicates, both marketers and sales still remain unsatisfied to say the least with their current working relationship. (Marketing and sales give marketing a score of 64 and 45 respectively for marketing's effectiveness at supporting sales) That said, we spent 8 hours with over 80 of the industry's top marketing and sales folks during this summit discussing marketing and sales alignment; moving beyond the traditional platitudes that you'd expect at your typical conference to actually discuss solutions to our challenges. Here are just a couple of the key insights that I took away from the event:

• One of the root causes of marketing and sales misalignment?. . we need to better collaborate on shared metrics, including agreeing on which metrics to track and what objectives to set. A few metrics examples?. . . . . Lead aging (e.g., average time that it takes marketing to qualify [or reject] a lead; average time for sales to follow up a marketing-qualified lead in aggregate or by each salesperson); % of marketing qualified leads accepted by sales; % of sales' pipeline that should be marketing-generated vs. marketing-enhanced; new customer revenue; sales enablement metrics such as time to onboard a new salesperson or an indicator of value of marketing assets to sales.
• "10% to 20% of sales teams are the 'A' players that can close deals no matter how bad the economic environment is. The real challenge is to get the other 80% to 90% of the sales teams to the same level as these 'A' players; or at least close to that level. Sales enablement provides the opportunity to leverage this knowledge across the company. Yes we need to improve the formal content, however, the more difficult resources to tap into include the subject matter experts and the best practices of the 'A' players."[Jeff Summers, COO, SAVO]
• "We found key sound bites, elevator pitches, value propositions and customers' stories to be extremely valuable to help enable sales; not just lengthy marketing assets and PowerPoint presentations. We established managed business objectives for our marketers that require them to get X number of customer stories and/or key success factors from our 'A' player sales folks to share with the rest of the sales team. (e.g., in the form of a 1/2 page write-up or a video tape of a top performer giving their pitch)" [Tom Miller, VP Marketing, ADP]
• "90% of the time the conversation about your company, its products or solutions or services, is happening without you being present. Marketing and sales need to collaborate on how to best influence this conversation; and that includes increasing the relevancy and overall value of your interactions with the market. To do this we need to permanently change how we view our jobs, having more of a two-way, information sharing exchange with the market versus a one-way spouting of our product features." [Jocelyne Attal, President JAgency (former CMO, Avaya)]
• "At a cost of $800 to $1,500 per marketing-qualified lead, we need to apply more rigor to our lead management process, from marketing through to sales; and we won't be able to accomplish this goal at a systematic level until we better align our marketing AND sales lead management processes and systems." [Jocelyne Attal, President JAgency (former CMO, Avaya)]
• Sun has developed an in-house application that provides the applications and an online, interactive repository to personally create sales enablement videos (e.g., product launch training, market intelligence, solution information). Examples of unique features: anyone in Sun can create this content, either for internal and/or public use; all content can be scored and receive public comments, thereby encouraging marketers to improve value of their content; and videos and other media can be downloaded to iTunes. (http://slx.sun.com/)
• Carol Carpenter, VP Trend Micro, did a nice job reminding us that we need to improve our alignment between corporate, business unit and field marketing versus simply focusing on aligning marketing and sales. You could say that we need to "get our own house in order" as a first step in improving sales and marketing alignment; including strategic planning, budget management and campaign execution. (further strategic insight on field marketing is available for CMO Advisory Service clients)

Based upon the highly interactive, problem-solving nature of the discussion throughout the day, it is evident that we are progressing as an industry in solving the marketing and sales alignment dilemma; but is improvement rapid enough? Please do feel free to comment below or send an email directly to me at mgerard@idc.com.

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Marketing Shared Services - An Alternative to Centralization

While the notion of shared services is prevalent across many management functions including IT, HR, and finance, it is for many marketing organizations a business technique that is in its infancy. A marketing shared services (MSS) model offers the opportunity for improved service delivery, greater economies of scale, greater concentration and leverage of expertise, and more rapid and effective program/campaign execution. IDC defines marketing shared services as:

• Organizing two or more areas of repetitive and redundant marketing activities into a fewer number of activity areas that are offered to internal customers at a cost, quality and/or timeliness that is competitive with internal or external alternatives. Marketing shared services result in cost reductions and an overall increase in efficiency and effectiveness of operations.

Given the difficult economic environment that we are all navigating through in 2009, tech marketers' who are developing shared services strategy should be prepared to respond to the following challenges:

• Company-wide mandates to reduce marketing costs: IDC is forecasting a 10% decrease in marketing investment for FY09 (with a 15% decrease for the first half of the calendar year). Tech marketers are and will be forced to permanently eliminate entrenches silos of program costs as well as target duplicative marketing costs.
• Rigid marketing budgets in the product/lines and field: Given the current nature of marketing investment, comprised of tight marketing budgets and slimmed-down marketing staff levels, the overall flexibility of spend across corporate, BU (business unit), and field marketing is quite limited. With stringent cuts in BUs and field likely, it will be challenging to solicit these groups' buy-in for a MSS strategy. Moreover, asking the regions and product lines to "give up" some control of their marketing spend will be challenging, and a very thorough business case will need to be developed to even begin the process of obtaining buy-in.
• Developing an effective worldwide structure for the MSS organization: "Where to start ?" becomes quite relevant here as marketers will be challenged to not only identify the prime functions for MSS but also how to structure their MSS strategy. Which countries and regions will most benefit from a MSS strategy? Where can you best leverage low cost countries? What functions can these countries provide? How can you best leverage your current marketing staff? What will be the impact of language/cultural barriers?

Based on a recent study conducted by IDC's CMO Advisory Practice as well as findings from IDC's recent Marketing Operations Board meeting, I'd like to provide some brief guidance and insight around shared services:

1. Successful MSS strategies start with a “pilot test". Marketing shared services still remains an emerging area across tech marketing, particularly for vendors <$10B in revenue, so the importance of "testing the waters" before moving forward is a critical successful factor. Marketers must first gain executive buy-in, lock down the process, demonstrate overall success and usability, and then roll-out to other areas.
2. MSS organizations should target marketing's most repetitive operations and also better leverage marketing automation and related infrastructure.
3. MSS organizations must be run like a business (not an overhead corporate function) to be successful. A company's MSS center should outperform the competition (internal and external vendors in areas such as pricing and customer service), build internal success stories, so that the "brand equity" of MSS starts to carry weight and impact within the organization.

The IDC CMO Advisory team is currently in the process of publishing a detailed study that analyzes best practices in marketing shared services with case studies from Microsoft, SAS, and IDG. Look for it in the coming weeks. However, please do feel free to comment below or email us directly.

Seth Fishbein, Senior Analyst, CMO Advisory Practice, sfishbein@idc.com

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