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2004 Review and an Eye on Marketing 2005
Planning Budgets for a Slow to Moderate Growth Economy

Launch International clients serve as a great barometer for monitoring marketing behavior. From industry giants through distributors, VARs, ISVs and even the occasional start-up, we share in our colleagues’ constant struggles of too few people and too much work. Yet, we’d all agree, things are starting to look up. Here’s a look at what we’ve seen in 2004 and what it means to you for 2005.

Customers are not just buying; they’re investing.

Tech vendor spend in marketing is, of course, largely driven by customer behavior. And for the first time in several years, customers will focus on driving growth versus protecting profitability. In fact, Gartner projects that the year will close with a 5.4% growth in tech spending. As budgets open, customers want to see how you can help them positively impact performance—instead of just helping them fix what’s broken. This more visionary directive will also potentially lengthen sales cycles as customers more carefully select which vendor(s) will become long term partners.

Vendors have a renewed focus on marketing.

Research giant IDC reported that tech vendor marketing spend will be up 6% by the end of 2004, versus a decline of 1.7% in 2003. Among the challenges getting the most attention this year has been upgrading company messages and value propositions. Messages that help customers react to problems (of the last five years) are very different than messages that help customers proactively capture market share (next year and into the future.) Nearly every senior executive we meet notes that their company’s messages are lacking for a growth economy or that their company has invested in new messages and that they need to drive acceptance.

Consider IBM’s on demand and HP’s Adaptive Enterprise—both campaigns in response to the need for more visionary messages. Said Michael Gerard, research director with IDC’s CMO Advisory Service, “Successful technology firms will leverage the brand-building expertise of their marketing organization to develop the differentiation required to compete in today’s more competitive, slower-growth market.”

There is reorganization within the brands.

Once new corporate messages are established, the philosophy trickles down to the brands. We’ve seen a tremendous amount of reorganization within business units, and a “rebucketization” or realignment of individual offerings into new solution categories that validate corporate messages. That translates into creating new sales and prospecting tools to ensure that field sales organizations are properly equipped to carry these messages forward into prospect and customer audiences.

Investment in one-to-one marketing programs is growing.

There’s been a quiet, almost surprising increase in the amount of marketing funds dedicated to key customer programs. And we expect this trend to increase significantly through 2006. That’s because the lifetime value of a customer (LVC) will increase exponentially, since most are now carefully selecting vendors with the goal of “partnering” for the long term.  

Thought leadership programs are expected.

If customers intend to partner with you for the long haul, they expect you to be smarter than everyone else. Last year, being a thought leader was a differentiator. Next year, it’ll be a requirement to be in the game.

Marketing must embrace and support all five stages of the sales cycle

A client once described his philosophy toward demand gen and sales support using the analogy of being a baseball outfielder. Once the ball was hit, he explained, his job was to get it as fast as he could and throw it with precision to first base. When the ball reached the first baseman, it was his job to tag the runner. Demand gen was the same, he believed. His job was to fill the pipeline and let sales close the deals.

If you’re one of the many marketers who believe that’s true, consider this: Nearly half of the engagements we’ve done for Fortune 100 technology companies in 2004 have been focused on other stages of the sales cycle—with the specific goal of helping salespeople move deals through the pipeline smoother and faster. Remember, prospects who are trying to build a vision are being “courted” by salespeople with messages and solutions that they are not totally comfortable with. While it’s not exactly the blind leading the blind, maybe it can be considered the impaired leading the scared? The result is a longer sales cycle that requires more support than ever before.

The following table identifies sample tools for each stage of the sales cycle. But remember, it isn’t enough to have these tools. Programs have to be created to help people understand how using them will help them close business.

Advertising

PR

Leads from 
trade shows
Websites
Demand gen

Looking ahead to 2005

Remember the bad old days when nobody knew what marketing did and, worse, when we could never tie results to our efforts? Today, marketing has at last earned its place at the executive roundtable as a discipline that has measurable impact on the success of a company. And, marketers will be busier than ever in 2005, implementing more visionary programs in response to customer demands. Bottom line?

1. Make sure your company’s messages are appropriate for today’s growth economy.
2. Build your message campaign strategy (awareness).
3. Create appropriate sales tools to ensure messages reach your target audiences.
4. Support salespeople through every stage of the sales cycle.
5. Invest in one-to-one marketing programs for key accounts.
6. Build visionary marketing programs that use thought leadership as a baseline.

For more information or to share your thoughts on any of the ideas presented in this article, contact Jody Canavan at jcanavan@launchintl.com