merkadoservices.com
THE PATH FOR CREATING CUSTOMER VALUE
AND BUSINESS GROWTH
INTEGRATED MARKETING FOR
TECHNOLOGY COMPANIES...
2!
merkadoservices.com
EXECUTIVE SUMMARY!
TECHNOLOGY COMPANIES: DEVELOPING IN A VOLATILE AND UNCERTAIN WORLD!
To succeed t...
merkadoservices.com
4 The path for creating customer value and business growth!
merkadoservices.com
EXECUTIVE!SUMMARY!
To be successful within...
Executive Summary
merkadoservices.com
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6 The path for creating customer value and business growth!
merkadoservices.com
TECHNOLOGY!COMPANIES:!DEVELOPING!IN!A!VOLA...
Technology companies: Developing in a volatile and uncertain world
merkadoservices.com
7
Carrefour4
(retail distribution),...
8 The path for creating customer value and business growth!
merkadoservices.com
Each one of today’s industry leaders boast...
Technology companies: Developing in a volatile and uncertain world
merkadoservices.com
9
! ICT Systems & Services – Today’...
10 The path for creating customer value and business growth!
merkadoservices.com
GROWING!TECH!COMPANIES:!THE!COMMERCIAL!CH...
Growing tech companies: The commercial challenges on the path to market leadership
merkadoservices.com
11
As a company gro...
12 The path for creating customer value and business growth!
merkadoservices.com
combined with a practical approach to exe...
Growing tech companies: The commercial challenges on the path to market leadership
merkadoservices.com
13
The most success...
14 The path for creating customer value and business growth!
merkadoservices.com
MARKETING! HELPS! COMPANIES! CREATE! AND!...
Marketing helps companies create and capture customer value, fuelling growth
merkadoservices.com
15
1. Marketing as a guid...
16 The path for creating customer value and business growth!
merkadoservices.com
Marketing:!5Lsteps!to!value!and!growth!
T...
Marketing helps companies create and capture customer value, fuelling growth
merkadoservices.com
17
Rather than focusing o...
18 The path for creating customer value and business growth!
merkadoservices.com
MARKETING!SUCCESS!CASES!
TFS!achieves!2x!...
Marketing success cases
merkadoservices.com
19
value to their existing accountant-client
relationships and streamlining th...
20 The path for creating customer value and business growth!
merkadoservices.com
OneAccess!captures!€300k!contract!with!cu...
Marketing success cases
merkadoservices.com
21
 Provide an updated market and customer-driven
view of OneAccess’ business...
22 The path for creating customer value and business growth!
merkadoservices.com
THE!WAY!FORWARD!
Never in recent history ...
The way forward
merkadoservices.com
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ustomer value and business growth!
About Merkado
Merkado helps technology companies
create customer value and business
gro...
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The path for creating customer value and business growth

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This strategic white paper, published in 2012, shows that to be successful in today's fast-changing world, technology companies must not only focus on developing their R&D and sales activities, but they must also improve their marketing capabilities.

It examines diverse commercial challenges that growing tech companies must face as they strive to become market leaders, and the crucial role that marketing plays in helping them generate value and growth.

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The path for creating customer value and business growth

  1. 1. merkadoservices.com THE PATH FOR CREATING CUSTOMER VALUE AND BUSINESS GROWTH INTEGRATED MARKETING FOR TECHNOLOGY COMPANIES Author: Juan Carlos Sanchez Advice | Assistance | Methods
  2. 2. 2! merkadoservices.com EXECUTIVE SUMMARY! TECHNOLOGY COMPANIES: DEVELOPING IN A VOLATILE AND UNCERTAIN WORLD! To succeed today’s tech companies must focus on more than R&D and sales! Today’s technology leaders also lead in marketing! Marketing-focus helps today’s tech leaders generate sustainable value in terms of sales, profit and growth! To develop, growing tech companies must adopt a strong customer and market focus! GROWING TECH COMPANIES: THE COMMERCIAL CHALLENGES ON THE PATH TO MARKET LEADERSHIP! Designing products with cross-customer appeal! Finding clients and generating sustained demand! Selling at the right price! Entering new product areas and markets! Accessing new skills and resources to fuel sustained growth! Managing cash flow while effectively investing in growth! MARKETING HELPS COMPANIES CREATE AND CAPTURE CUSTOMER VALUE, FUELLING GROWTH! Marketing is often a misunderstood discipline! …yet marketing plays an essential role within organizations! Compared to a product-focused strategy, marketing-focus delivers customer value! Marketing: 5-steps to value and growth! MARKETING SUCCESS CASES! TFS achieves 2x client growth rate in first 9 months after the launch of new SaaS offer! OneAccess captures €300k contract with customer business value-driven white paper! THE WAY FORWARD!
  3. 3. merkadoservices.com
  4. 4. 4 The path for creating customer value and business growth! merkadoservices.com EXECUTIVE!SUMMARY! To be successful within today’s fast-changing world, technology companies must not only focus on traditional research and development and sales activities, but they must also improve their marketing capabilities. In particular, small and mid-sized companies face a variety of commercial challenges as they strive to become market leaders. For such companies, in addition to maintaining their focus on technology, they must also adopt a strong customer and market focus to generate more value. Marketing plays a crucial role within tech companies by helping them better understand the marketplace; identify the best opportunities to target; offering inputs for designing and creating customer value propositions, and presenting effective ways to serve and satisfy clients, building lasting and profitable customers relationships in the process. When done right, effective marketing delivers measurable business results, including:  Recognizing new, viable business opportunities  Reaching clients in new and effective ways  Capturing additional customer revenue  Creating net customer growth  Developing client equity Without a continued investment in the right value and growth-driven marketing strategies and the associated resources, growing tech companies will miss many valuable and important opportunities waiting to be seized.
  5. 5. Executive Summary merkadoservices.com 5
  6. 6. 6 The path for creating customer value and business growth! merkadoservices.com TECHNOLOGY!COMPANIES:!DEVELOPING!IN!A!VOLATILE!AND! UNCERTAIN!WORLD! Until the early ‘70s, at the start of the PC era, to be successful, information and communications technology (ICT) companies focused primarily on developing, building and delivering new technologies to a growing market of receptive clients looking to benefit from high-speed computing, automation, increased productivity and new ICT capabilities. With the growth and related falling cost of computing power, the rapid evolution of the Web along with developments such as rapid product design, agile software development, flexible contract-based development and manufacturing, SaaS1 -based resources, and the growing reach of broadband connectivity, the investment needed for new companies looking to enter the technology market has fallen significantly. Furthermore, technology development cycles have quickened; competition has increased, and regional and global markets have become more accessible. This, along with other factors has made market conditions more volatile and uncertain. To! succeed! today’s! tech! companies! must! focus! on! more! than!R&D!and!sales!! To be successful within today’s fast-changing world, technology companies must not only focus on traditional research, development and sales activities, but they must also excel in quickly understanding and satisfying customers better than their competitors. In today’s volatile world successful technology companies are those best able to identify emerging market demands and capitalize on them through a combination of great products, services and superior customer experiences, in a way that delights clients, helping nurture lasting relationships. In short they must become leaders in both technology and marketing. Today’s!technology!leaders!also!lead!in!marketing! The most successful and long-standing companies in virtually every industry have become leaders by consistently creating the products, services and experiences that their customers value and trust, and engraining this marketing philosophy within their company’s culture. There are few sectors that adhere to the marketing philosophy more than the fast moving and highly competitive consumer goods and retail industries. Its leaders include companies such as Proctor and Gamble2 (food, beverage, household and personal care items), Coca Cola3 (beverage), 1 SaaS: Software as a service 2 P&G: No. 1 global consumer goods firm. Revenue of $82 B in 2011; 5-year average net profit2 P&G: No. 1 global consumer goods firm. Revenue of $82 B in 2011; 5-year average net profit margin of 13.7% vs. 1.3% industry average (Nasdaq.com) 3 Coca Cola: No. 1 global beverage company, present in 200 markets. Revenue of $46 B in 2011; 5-year avg. net profit margin of 20.7% vs. 5.8% industry avg. (Nasdaq.com) SUCCESSFUL COMPANIES ARE THOSE BEST ABLE TO IDENTIFY EMERGING MARKET DEMANDS AND CAPITALIZE ON THEM THROUGH A COMBINATION OF GREAT PRODUCTS, SERVICES AND CUSTOMER EXPERIENCES.
  7. 7. Technology companies: Developing in a volatile and uncertain world merkadoservices.com 7 Carrefour4 (retail distribution), Inditex5 (fashion distributor) and Nike6 (athletic equipment and apparel). These firms are all billion-dollar-a-year companies, occupying the 1st or 2nd spot within their industries. With a marketing-driven culture, each one continues outperforming its competitors within in its markets and generating healthy profit margins (usually greater-than-the-industry double-digit figures) by adapting to, and sometimes creating, new trends and satisfying customer demands with their evolving product and service offers. Within the technology sector the most successful companies also stand out in terms of marketing. Today’s global technology leaders include companies such as Cisco, Intel, IBM, Microsoft7 , Adobe8 , Apple9 , Samsung, Google10 , Amazon11 , and Salesforce.com12 . These companies are among the most successful and innovative players in IT systems and services, components, software, personal computing, communication and media devices, and Web-based services. Though the youngest is only 13 years old and the oldest just over a century, each has grown from an early start-up to capture a leadership position by chasing new business opportunities (e.g. on-demand computing, immersive conferencing, the social enterprise, e-reading), and in some cases revolutionizing markets (e.g. personal computing, online print and media production, online advertising, digital media consumption, mobile computing), by delivering innovative products, services and experiences that thrill customers in new and exciting ways, better than the competition. In the words of Amazon.com founder and CEO, Jeff Bezos, “we innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent." 13 MarketingLfocus! helps! today’s! tech! leaders! generate! sustainable!value!in!terms!of!sales,!profit!and!growth! Through this continuous customer and market-focused innovation process each leading firm has consistently delivered value in many ways to its clients, in turn capturing value through sustained sales, generating healthy profits and building its net value as a company (Figure 1). 4 Carrefour: No. 2 global retailer, operating in 38 countries. Revenue of €81 B in 2011; 2.7% operating profit margin (Carrefour, HBR) 5 Inditex: No. 1 global fashion distributor, operating in 81 countries. Revenue of €13.8B in 2011, 18.3% operating profit margin (Inditex, Economist) 6 Nike: No. 1 global athletic apparel maker. Revenue of $24.1B in 2012, 12.6% operating profit margin (Nike, Wikipedia) 7 Microsoft: No. 86 on Forbes’ 2012 list of the world’s most innovative companies 8 Adobe: No. 54 on Forbes’ 2012 list of the world’s most innovative companies 9 Apple: No. 5 on Forbes’ 2012 list of the world’s most innovative companies 10 Google: No. 7 on Forbes’ 2012 list of the world’s most innovative companies 11 Amazon: No. 2 on Forbes’ 2012 list of the world’s most innovative companies 12 Salesforce.com: No. 1 on Forbes’ 2012 list of the world’s most innovative companies 13 “Amazon’s Amazon's Jeff Bezos: The ultimate disrupter”, Fortune, Vol. 166 No. 9; Dec 3, ‘12 “WE INNOVATE BY STARTING WITH THE CUSTOMER AND WORKING BACKWARDS. THAT BECOMES THE TOUCHSTONE FOR HOW WE INVENT.” JEFF BEZOS, FOUNDER & CEO, AMAZON.COM
  8. 8. 8 The path for creating customer value and business growth! merkadoservices.com Each one of today’s industry leaders boasts billion-dollar-a-year revenue streams, and an enterprise value14 between $US 19 B (Salesforce.com) and $US 481 Billion (Apple)15 . Examining these firms by segment offers more insight into their performance: ! Web – Thanks to the continuing development of the Internet and the economies of scale it offers companies, the fastest growing, and the youngest of these technology leaders are Web pure-plays, each offering a range of new and innovative consumer and/or business- focused services. Over the past 5 years this group has generated an average revenue and income growth of 30% or more, significantly higher than in most other sectors. ! Software & Devices - The leading tech firms offering connected devices, software and related service have also benefited from the growth of the Web and other related ICT trend, generating an average 5-year sales growth of 10-35%, combined with a variable 5- year average income growth between 1% (Samsung Electronics) and 60% (Apple), depending on the company’s chosen market and commercial strategies. 14 Enterprise value: EV = Company market capitalization + total debt – total cash 15 EV figures as on Nov 12, 2012 Figure 1 – The business performance of selected technology leaders Sources: CNN Money, Forbes, Bloomberg, Yahoo! Finance, Cisco, IBM, Intel, Samsung
  9. 9. Technology companies: Developing in a volatile and uncertain world merkadoservices.com 9 ! ICT Systems & Services – Today’s technology leaders selling ICT systems, components and related services have grown steadily over the past 5 years, though at more moderate rates of 3-9% and 1-5% for sales and income respectively. This reflects pressures from the market’s demand for standardized systems and increased competition from lower-cost suppliers. It also reflects the relative shift from investment in the underlying network infrastructure (now in place in most major cities and regions worldwide) to the increasing focus on developing diverse customer devices and the growing range of services that clients use and value. Industry leaders like these may represent less than 1% of all technology companies, but can in some cases grab more than 50% of revenues and market share, and take home up to 70% or more of profits within a given market. To!develop,!growing!tech!companies!must!adopt!a!strong! customer!and!market!focus! Leading companies, whether from technology, consumer goods, retail or other sectors, generally share a number of common market and customer- oriented characteristics, including:  Strong image and branding  Memorable and compelling advertising  An unwavering focus on satisfying customer demands  A knack for creating great products, services and experiences that customers can count on  Constant focus on innovation and new developments centred around (and sometimes before) emerging market trends  Broad presence within their markets and across client channels  The ability to consistently deliver a great overall customer experience, driving customer loyalty and advocacy Across the other 99% of technology firms, there are tens of thousands of small and mid-sized companies trying to develop and break out into successful, local, national and international market leaders. For such companies, in addition to maintaining their focus on technology, they must also adopt a strong customer and market focus if they are to generate more value in the form of customer sales, profit, growth in clients, increased market share, and client equity. INDUSTRY LEADERS REPRESENT LESS THAN 1% OF ALL COMPANIES, BUT CAN GRAB MORE THAN 50% OF REVENUES AND MARKET SHARE, AND OVER 70% OF PROFITS WITHIN THEIR MARKET
  10. 10. 10 The path for creating customer value and business growth! merkadoservices.com GROWING!TECH!COMPANIES:!THE!COMMERCIAL!CHALLENGES!ON!THE!PATH!TO!MARKET! LEADERSHIP! A technology company has to face many challenges from its early beginnings as a small company producing its first set of products and services, to when it becomes a successful and profitable billion Euro/Dollar (or more) market leader. This is particularly true during the early stages of growth, when it faces diverse and sometimes seemingly opposing challenges, such as: Designing!products!with!crossLcustomer! appeal! Most start-up tech companies start out serving one or two clients with a customized product or service. It is usually developed based on a set of characteristics matching a client’s requests and needs, and is often the first step for creating a commercial product or service offer. However, the product design choices made will have a direct influence on the company’s ability to satisfy its later clients and compete. For example, a software company creating the first version of a business management software suite for SMBs16 may be asked by a lead client to develop a set of integrated modules. This might include specific business applications for managing commercial leads, new contracts and existing customer relationships. It might also include modules for managing the company’s purchasing cycle, internal resources and accounting. However, since not all SMBs will require all modules, and each user will want to further customize his set of options and functionalities, the software firm should find a way to create a common product platform allowing it to easily deploy and manage a family of related products appealing to a wider set of customers. 16 SMBs: Small and Medium Businesses Such a strategy can help address evolving market demands more easily, and lead to further innovation andnew revenue streams by leveraging existing brands, modules or core technologies. The shift from creating 1-off, customer solutions, to producing a more flexible and customizable offer is non-trivial and requires making a number of informed, strategic decisions about the platform design and the product variants, based on extensive market analysis, customer testing and continuous feedback. Applying a systematic customer and market-driven approach will allow a company to capitalize on the best set of opportunities with the lowest long term investment. The failure to do may limit the business potential of a great, but unique customer solution. Finding!clients!and!generating!sustained! demand! One of the main challenges for companies trying to grow is finding prospective clients and effectively creating demand for its offers. In particular smaller B2B17 companies, with more limited budgets, tend to depend more on referrals to generate business leads, a strategy that is limited by the company’s network of existing contacts and satisfied clients. 17 B2B: Business to business
  11. 11. Growing tech companies: The commercial challenges on the path to market leadership merkadoservices.com 11 As a company grows it can invest in more varied and sophisticated demand generation programs, allowing it to branch out further and attract a broader base of potential clients in adapted ways. This can include being present at industry fairs, using dedicated information sessions, performing ROI18 simulations or offering client trials. Convincing a prospect to try a new product or service is not always easy, especially if the investment required – in the form of time, change management efforts or financial resources – is significant and the benefits are not easily shown. Breaking out of situations like these requires understanding the blocking points and designing adapted client-focused initiatives to support business growth by creating awareness, interest, consideration and facilitating the purchasing decision process from potential clients. Selling!at!the!right!price! Pricing is a strategic tool for companies to communicate and capture value from clients. It represents the value that customers will pay to gain the benefits of a product, service or an overall experience. In many growing companies, the management team, rather than the marketing or sales function, often handles pricing. As a company grows this day-to-day responsibility may be transferred to product teams or sales directors, with management setting price objectives and providing their final approval. In many industries like mobile services, where pricing is a key competitive factor, firms may even have dedicated functions to optimize price decisions. A technology company must consider a multitude of factors when setting the right price strategies. In general, the right price should consider the customer’s perceived value of a company’s offer. If they perceive that the price is greater than the value offered, they will not buy. At the same time a company will have a set of fixed and variable costs for delivering its offer. If the company prices below that level its profits will suffer. Aside from the min/max price range, the right product or service price must also account for other internal and external factors such as a 18 ROI: Return on investment company’s strategy – it might choose to compete as price leader, to gain market share, or by offering tailored products each at a unique price; their product portfolio mix – prices should reflect the various products and related options offered; existing reseller relationships – prices should allow the resellers to earn margins; the nature of the economy – in a tough economic context many clients might expect more value for the same price; and basic market demand. Price is only one part of the marketing mix19 , but it is the one that can be changed with the least effort. Given its direct impact on revenue, and its key role it in determining a company’s profit and markets share, it must be managed effectively. Overpricing will lead to lower sales, while under- pricing can negatively impact a firm’s position. Entering!new!product!areas!and!markets! The initial growth of most small and mid-sized companies is usually achieved by serving known, easy-to-reach clients in familiar markets. Once these possibilities have been exhausted, to continue on the growth path a company must look beyond low-hanging opportunities. To generate continued growth a tech companies has several options. This includes creating and selling adjacent products to their existing clients – like an IT provider that offers an e-commerce suite; targeting new segments with adapted offers – a large-enterprise ERP vendor that goes after the SMB market; selling into new geographic markets – a French-based SaaS provider that creates an English-language version of its offer to target the Anglophone and international markets. New product and market development efforts require rethinking and adapting sales and marketing strategies, as well as establishing adapted channels to deliver on their customer promises within the new context. This requires additional efforts like dedicated channel programs, adding complexity and new challenges to a company’s growing pains. Careful planning 19 Marketing mix: The tactical business tool-kit used by companies to establish a strong market position with clients and influence demand. These possibilities are summarized by the 4Ps - Product, Price, Place, Promotion
  12. 12. 12 The path for creating customer value and business growth! merkadoservices.com combined with a practical approach to execution can reduce the time and resources needed to develop new offers, prepare new channels, effectively serve customers in new markets, and continue down the growth path. Accessing! new! skills! and! resources! to! fuel!sustained!growth! A technology company is often born from an idea, some capital and the technical and creative skills needed to crystallize the concept and serve the first clients. The priority is usually placed on delivering and selling a minimum-viable offer. Within early-stage tech companies the founders usually manage the basic marketing activities, like defining products and services, establishing pricing policies, creating basic promotional material, and seeking resale partners. As a technology company grows, the founders usually shift their attention to other, more important areas such as overseeing operations. At the same time marketing responsibilities grow, and often end up being shared among existing staff, including sales, business development and product development, who have to manage other duties and may lack the time or expertise needed to deliver effective results. At a certain point, to continue growing a company will have to invest in the skills of experienced marketing professionals. Effective marketing professionals work with product, sales and other functions to define and carry out specific tasks to reach individual targets profitably. Starting from the firm’s strategy and its growth targets, a seasoned marketer will help identify and refine opportunities, devising a workable marketing plan to achieve the objectives. This might include adjusting current product roadmaps to reflect market realities, designing a plan to maximize the launch of new offers, or creating client-oriented programs to ensure new and satisfied clients. Using seasoned marketing expertise to fuel growth can make the difference between letting key opportunities slipbyandtakingatop competitive spot. Managing! cash! flow! while! effectively! investing!in!growth! A great concern for all growing tech companies is managing cash. This is especially true for growing companies with large capital needs for designing and delivering cutting-edge tech-based products and capabilities, or who exhibit long operating cycles and require significant sums of working capital to function. Companies with such cash constraints are often faced with the choice between investing in near- term, sales-related activities, like sales staff and related selling expenses; or in other areas such as customer research, market testing, developing an existing product portfolio or creating a new one, investing in professional sales tools or establishing client satisfaction programs, whose value and outcomes may not always be well understood by management. In most cases sales come first. While a ‘sales-first’ philosophy can generate sales in the near-term, to continue growing companies must also invest in future opportunities appropriately. They need to focus on creating new value for customers and assuring future growth in the form of additional sales opportunities, new revenue streams, better ways to service clients, improved customer loyalty and increased customer equity. The challenge for technology companies then becomes how to invest in future growth, while effectively managing their cash. Many young technology companies are confident in their technology and the reliability of their products and services, believing that they can market themselves. However, the most successful companies know that without a continued investment in effective value and growth-driven marketing strategies and the associated resources - to drive them to more places, to organize technologies for new purposes, and to pave the way for additional sales – they will miss out on many valuable and important opportunities waiting to be seized.
  13. 13. Growing tech companies: The commercial challenges on the path to market leadership merkadoservices.com 13 The most successful companies know that without a continued investment in effective value and growth-driven marketing strategies and the associated resources, they will miss out on many valuable and important opportunities waiting to be seized
  14. 14. 14 The path for creating customer value and business growth! merkadoservices.com MARKETING! HELPS! COMPANIES! CREATE! AND! CAPTURE! CUSTOMER! VALUE,! FUELLING! GROWTH! Marketing is fundamental business activity that when done right helps new and established companies alike create value for customers and find new ways to grow. At the same time, based on some of the views that we’ve heard from many technology professionals, marketing often seems to be misunderstood. Marketing! is! often! a! misunderstood! discipline! While marketing is a well-developed and established practice in successful companies, in many growing technology firms it occupies a secondary role to other seemingly more important disciplines. While there are many reasons for this, the result is that management teams at many technology companies end up missing many of the benefits and the value that a marketing-driven approach could deliver to their business. Throughout our experience working with technology companies in sectors such as telecoms, IT, software and Web, we’ve heard many different and sometimes mistaken ideas of what marketing is about. Some people believe that marketing is:  Communicating the company brand through advertising, events and client gifts  Simply promoting products and services  Making idealized and sometimes hard to deliver promises  A necessary expense with no clear ROI and little (if any) direct impact on sales  A department with no links to technology development or product design  An activity with no direct relation to serving or satisfying clients While marketing does in fact deal with some of these ideas, it does much more. In order to understand the purpose of marketing and true value it offers companies, we should first consider the strategic role it plays in established organizations. …yet! marketing! plays! an! essential! role! within!organizations! Management teams at most established world-class technology companies periodically participate in mapping out a corporate plan to ensure their company’s survival and continued development in light of their current situation, opportunities, objectives and resources. This strategic planning process20 , which often produces annual, long-term and strategic plans, helps outline the businesses that the company will operate in and the objectives targeted for each. Guided by this strategic planning process, a company’s major functional activities – sales, marketing, finance, purchasing, production, IT, customer service and satisfaction – must work together to accomplish the goals. Within this strategic-planning framework, marketing plays a crucial role in several ways: 20 Strategic planning: The process of creating and maintaining a strategic focus between a company’s goals and capabilities and its changing marketing opportunities. The essential role of marketing in organizations
  15. 15. Marketing helps companies create and capture customer value, fuelling growth merkadoservices.com 15 1. Marketing as a guiding philosophy – Adopting a customer and marketing-driven focus implies that a company’s strategy should be focused on creating value-driven relationships with selected customer groups. 2. Marketing inputs for strategic planning – Marketing provides inputs to the strategic planning process, helping understand and identify the worthwhile market opportunities, while assessing the company’s ability and potential to take advantage of them. 3. Designing and implementing marketing strategies – Collaborating with the business units, marketing helps design and execute strategies for achieving their business objectives. From this standpoint marketing, as a key strategic practice, helps technology companies better understand the marketplace; identify the best opportunities to target; it provides inputs for designing and creating customer value propositions, considering both direct customers and their end- clients; and it presents effective ways to serve and satisfy clients, building lasting and profitable customers relationships in the process. Despite these clear benefits, there are still many companies that continue focussing on creating leading edge, high performance technology at the expense of focusing on addressing the evolving demands of their customers. To understand the implications of this approach it’s worth contrasting the product-driven concept they follow, with one focused on meeting customer and market needs. Compared! to! a! product)focused! strategy,! marketing)focus! delivers! customer!value! Under the product concept it is assumed that clients prefer products and services that offer greater quality, performance and more innovative features. In this case a company’s marketing strategy focuses on making continuous product improvements to create better products. At the same time a product-driven approach can be a short-sighted strategy. For example a book publisher may believe that by producing better books with higher quality paper, better ink offering brighter colours, and added story features, readers will be more delighted and buy more books. In fact, what readers may be looking for is a better solution to learning and entertainment through stories, not a better book. Better solutions to this customer demand might include audio books, downloadable e-books and interactive stories including sound, video and other sensory experiences. Furthermore a better book won’t sell unless the publisher is able to design, package, price and promote it in an enticing manner. This includes finding the right market channels, getting the attention of potential clients and convincing them that the book offers more value than alternatives. For a technology company, the shift from a product- driven strategy to a marketing-driven strategy usually requires a fundamental change in mindset. Rather than focusing on making continuous product improvements, a company must begin focusing on ways to create value for its customers by organizing and managing itself in such a way to systematically create, communicate and deliver what clients really value and will pay for. This is the very basis of the marketing concept. This marketing process can be described in 5 fundamental steps.
  16. 16. 16 The path for creating customer value and business growth! merkadoservices.com Marketing:!5Lsteps!to!value!and!growth! The marketing concept21 (Figure 2) is the process by which a company applies market insights to design a strategy to find the best ways to offer value to customers and build strong client relationships, all while defending its position against competitors. In return the company is rewarded by capturing value from clients, leading to growth. There are 5 distinct steps in this marketing concept: 1. Understand the marketplace and customer wants and needs - A company must research and understand customer needs and wants, and manage this market information in order to create market offers that clients value and will want to buy. 2. Design a customer-driven marketing strategy – A company must decide which markets to serve and find the right ways to create profitable client relationships using their superior customer value, compared to its competitors. 3. Build an integrated marketing program delivering superior value – A company’s marketing team must transform the marketing plan into actions using the marketing mix tools. By combining these tools into a coherent set of offers and integrated marketing programs, the company can communicate and deliver its value propositions to its clients. 4. Build profitable relationships and create customer delight – Through its offers or customer value propositions, a company must build and maintain a profitable relationship with clients by consistently delivering superior customer value, assuring satisfaction and growing its client base. 5. Capture value from customers and create profit and client equity – By creating superior customer value, a company can create satisfied and loyal customers who will continue buying. This translates into captured value for the company in the form of growing revenue, profit, market share and long-term, profitable client relationships. Within this concept, customer-focus and creating customer value are the paths towards revenue, profit and sustainable growth. The following case examples illustrate how two different technology companies, each at different stages in their development and growth, are using an enhanced marketing focus to help create value for their customers, while capturing value and fuelling business growth. 21 G. Armstrong, P. Kotler, “Marketing: An introduction”, 11th Edition; Pearson Publishing, 2013 Figure 2 - The Marketing Concept
  17. 17. Marketing helps companies create and capture customer value, fuelling growth merkadoservices.com 17 Rather than focusing on making continuous product improvements, a company must begin focusing on ways to create value for its customers by organizing and managing itself in such a way to systematically create, communicate and deliver what clients really value and will pay for.
  18. 18. 18 The path for creating customer value and business growth! merkadoservices.com MARKETING!SUCCESS!CASES! TFS!achieves!2x!client!growth!rate!in!first!9!months!after!the!launch!of!new!SaaS!offer! The Floating Stone (TFS) is a French Web and software design agency founded in 2007. TFS combines the creative energy and the technical know-how of its two founders, Andres Gleixner and Greg Fournel. In addition to carrying out custom web projects for a range of institutional clients, TFS offers a range of slick, fun and easy-to-use professional SaaS-based tools catering to the needs of independent workers and small businesses. Their current Web-based services include Pictomos, an online image gallery for artists and designers; Tomosfactory, a point-and-click, object-oriented Web design platform; and Factomos, an online invoicing service targeted at small businesses operating in the services sector. TFS’!Business!Challenge! Following on the success of Factomos, and with the support of reputed Paris-based accounting firm, TFS began developing Factomos Xpert, a new SaaS offer directed at accounting firms, allowing them to quickly and easily access their clients’ invoice data stored securely within their respective Factomos account. This online client-accountant connection would allow accountants to eliminate data re-entry and reduce possible accounting errors, while helping to forge a closer and more collaborative relationship between accounting firms and their businesses clients. While experienced in creating and selling Web- based services for independents and small businesses using mostly online B2C marketing techniques, TFS was unsure on how to approach the more traditional and highly regulated accounting sector. To successfully introduce Factomos Xpert TFS faced a number of issues that they needed to resolve: " Building a sellable offer – The product development of Factomos Xpert started out with a technically driven process of developing specific functions allowing accountants to access and manage their clients’ invoice data. While this gave their first accountant users the ability to read and import their clients’ data, it did not address the full range of requirements and demands needed to commercialize the online service to other accounting firms and their respective users. Further capabilities were required to allow group registration and payment, user support for accountants and their clients, as well as additional management and collaborative capabilities between accountants and their business end-clients. " Targeting professional institutions – Up until now TFS had been successful at commercializing online services to small businesses like themselves, using the Web. However, to successfully indentify prospective accounting firms and create awareness for the new service would require a different approach. Previously accustomed to dealing with creative- sector professionals who live and work on the Web, TFS had to find new ways and more appropriate channels to engage with the more traditional and institutional accounting firms. " Effectively marketing a B2B offer – Beyond simply developing an effective online software suite to help accounting firms save time and reduce accounting errors, TFS needed to create an attractive value proposition to properly address this group. This required promoting the benefits of its new SaaS offer to accountants, and to firms interested in adding
  19. 19. Marketing success cases merkadoservices.com 19 value to their existing accountant-client relationships and streamlining their current processes. This would require developing new methods and tools to create awareness and interest around the customer value offered by Factomos Xpert. The! Solution:! Deliver! its! product! to! market! using! an! integrated! commercial! launch! program! To help TFS ensure a timely introduction and effective commercialization of Factomos Xpert, Merkado designed and kicked-off an integrated commercial launch program with several aims:  Gain an clear understanding of the customer value offered by Factomos Xpert  Create a customer-centric plan to introduce an improved, market-driven offer to the French market  Provide some key processes and tools to further develop its Factomos Xpert business The 3-month project began with an audit of their initial situation. Based on the finding a number of related actions where taken to prepare for an effective introduction of an adapted product. Key steps taken include:  A study of the usage and expectations of existing customers  Design of an adapted marketing strategy  Implementation of a market-driven product roadmap process  Creation of various sales and marketing tools and client testimonials to support a successful commercial introduction  Management of external partnerships in the areas of e-mail marketing and IT systems. With these areas covered Factomos Xpert was ready for commercial introduction in early 2012. Business!Result:!2x!client!growth!in!the!first!9! months!after!launch! The Factomos Xpert service was launched at the end of Q1 2012 with a dedicated Website (Figure 1) to specifically address accounting firms and spotlight the service and its benefits for that market. Factomos Xpert currently offers prospective accounting firm customers the ability to try the service for a limited time, while giving existing customers the means to easily help their business end-clients make the switch from their existing invoicing tool to the Factomos online invoice service. To create awareness and demand TFS began targeting accounting-specific channels – both online and offline – including French business registries and the yearly French Accountants National Congress. Finally, by leveraging the existing Factomos invoicing service, Factomos business end-users now have the ability to give their existing accountants access to their invoice data, effectively generating new demand for Factomos Xpert, from the bottom-up. In the first 9 months after the commercial launch of Factomos Xpert, the number of client accounts grew by over 2x. With its innovative Factomos Xpert SaaS offer, which helps accounting firms be more productive and forge stronger relationships with their end-clients, TFS is well positioned to further grow its business in the promising collaborative accounting tools market. Figure 1 - Factomos Xpert Homepage
  20. 20. 20 The path for creating customer value and business growth! merkadoservices.com OneAccess!captures!€300k!contract!with!customer!business!valueLdriven!white!paper! OneAccess is a leading, worldwide provider of business multi-service routers, Ethernet access devices and managed service software, enabling communication service providers to deliver profitable communication propositions to business customers of different types. It supplies routers to over 120 service providers in over 50 markets worldwide, including 4 of the 5 largest European providers, and currently holds over 30% of unit market share of branch office routers in EMEA. The companies was incorporated in 2001 and employees over 400 people in 13 locations worldwide. OneAccess’!Business!Challenge! As an established player in the business router market, OneAccess’ strength lies in working with its clients to design and build custom devices tailored to their particular requirements. Its commercial, engineering and operations teams work in close collaboration with their client counterparts to quickly define and deliver adapted products. While this approach has helped OneAccess develop its client base and consistently grow its business despite a tough economic environment, when compared to the market leader, it is sometimes perceived by service providers as a router vendor rather than a key partner capable of helping them create and jointly go-to-market with new business communication value propositions. To make the shift from a network device supplier to a business partner it faced several issues: " Instilling greater client business focus – OneAccess’ customer-facing teams, including engineering, operations and field support, are one of its key assets. However to accelerate the company’s shift from network device supplier to business partner it needed an effective way of internally capturing and transferring business and market-specific knowledge based on its experiences, including past client successes. " Offering clients value for creating successful services – As part of its offer OneAccess delivers product design, technical support and other services related to the customized devices it sells to clients. While its technology portfolio is an important part for delivering successful communication services, there are other equally important business issues and considerations for developing successful services. As a global supplier to service providers around the world it has access to such valuable information that other clients would find beneficial. OneAccess needed a way to share these insights and best practices with clients and prospects, thus confirming its commitment to their business success. " Broadening and strengthening client relationships – OneAccess has been quite successful at establishing client relationships with its commercial, engineering and network operations client counterparts. However, to be viewed more as a strategic business partner and increase its circle of influence, it needed to broaden and strengthen its customer relationships with other client decision-makers and influencers, including the marketing and strategy-focused teams. The!Solution:!Offer!customer!business!insights! using!strategic!white!papers! In order to help OneAccess improve its commitment to its clients’ business success, and help further broaden its relationships, Merkado designed, researched and developed a comprehensive strategic report on creating successful communication services, targeting its clients’ strategy and marketing leaders. This value-driven strategic white paper had several objectives:
  21. 21. Marketing success cases merkadoservices.com 21  Provide an updated market and customer-driven view of OneAccess’ business voice services portfolio  Demonstrate to service provider strategy and marketing leaders the business value offered by OneAccess’ business IP voice portfolio, as shown through successful customer cases.  Provide OneAccess customer-facing teams with valuable, business-oriented discussion points for engaging with other client executives, thus helping broaden and deepen client relations The custom report included an overview of current business communications market trends, a discussion of the business end-user market and an overview the key considerations for successfully commercializing new business IP voice services. These points were further highlighted through a set of comprehensive service provider success cases, clearly demonstrating the value from partnering with OneAccess. Business! Result:! Strategic! white! paper! helps! net!a!€300k!contract! The strategic white paper was published in early 2012 and is currently being used as a strategic commercial tool for value-selling OneAccess’ business communication offer to prospective clients, while helping broaden and strengthen client relations. The customized report (Figure 1) offers business- minded readers’ relevant information and insights – in the areas of product strategy, marketing, sales, and distribution, operations and customer satisfaction - for creating successful business IP voice services for today’s clients. The recommendations are further reinforced with a set of success cases focusing on two distinct European communication service providers. Each case example clearly shows the qualitative and quantitative business benefits that have been achieved by working with OneAccess. In one particular instance, the white paper was distributed to some staff at a prospective client that was in the process of evaluating several router vendors, including OneAccess. One of their senior business managers read the report and found it particularly compelling and relevant to his business. To influence an upcoming investment decision from his management team, he extracted various key points and insights from the report and included them directly within the project-funding request. Following the management review, the funding request was accepted and the project was given a go-ahead with OneAccess as supplier, leading to a €300,000 contract for them. Figure 1 – Value-driven, Strategic White Paper
  22. 22. 22 The path for creating customer value and business growth! merkadoservices.com THE!WAY!FORWARD! Never in recent history have there been so many technology companies battling it out to win clients and attain a leadership position. The most successful ones know that to stand above the rest they need to focus on what’s important: tuning in to the market and listening to their customers in order to provide what they value and are ready to pay for, all without fail. For growing tech companies this is especially critical if they are to continue on the upward path. Whether it is a 5-person tech start-up setting its sights on its first set of clients or a 500-person technology firm targeting its next quarterly results, tech companies face many commercial challenges when developing and delivering winning customer value propositions, ensuring satisfied clients, and investing in business growth. An integrated marketing-focused approach offers technology companies a true, customer and market-driven philosophy, paving the way to success. When done right it helps companies create and deliver customer value, and fuel business growth. The benefits include:  Recognizing new, viable business opportunities  Reaching clients in new and effective ways  Capturing additional customer revenue  Creating net customer growth  Forging broader and stronger, profitable client relationships With its full range of integrated go-to-market service solutions, combining professional advice, practical assistance and proven methods, Merkado has helped many types of technology companies bring new offers to market, capturing value and creating new growth. To see how Merkado can assist you in achieving your company’s business objectives, contact us through our website: merkadoservices.com
  23. 23. The way forward merkadoservices.com 23
  24. 24. ustomer value and business growth! About Merkado Merkado helps technology companies create customer value and business growth through our integrated go-to- market solutions. From characterizing new market opportunities to providing customer value-driven sales support, we deliver a full range of tailored go-to-market services, combining proven international experience with a first-hand understanding of the latest consumer and business technology trends. Contact Us To see how Merkado can help your organization create customer value and generate added growth, please contact: Juan Carlos Sanchez Managing Director jcsanchez@merkadoservice.com For more information visit: www.merkadoservices.com Merkado SAS 10 rue de Vouillé 75015, Paris France Copyright © 2012 Merkado Services. All rights reserved

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