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By | Roy Bamforth 18th August 2006 09:54

Do IT vendors gamble with their marketing budgets?

Well-targeted strategies better the odds

There are plenty of opportunities to "invest" a marketing budget - advertising, mailshots, events, executive influence programs - but few guides to measure their relative value to a comparison of where best to place bets.

Defining or demonstrating the success of a marketing program, except perhaps by the end result - how many sales were generated - is very difficult, and prone to the effects of many other influences.

In theory then, measuring the market share or shipments would be a good indicator. The problem is this is a snapshot of a moment in time, providing only a historical record and not much of a view to the future. It does little to show momentum, future buying intentions or expensive purchasing mistakes that will not be repeated. It does not represent the buyer's thought process, only one end result.

What else can be measured?

During a campaign, it is possible to measure who might have seen the collateral used - eyeball share - whether this is looking at an online advertisement, counting the number of mailings dispatched, or the throughput of attendees at events. Hopefully, this is using independently audited figures, with broadly acceptable definitions of job roles.

While useful in some respects, mainly for justifying further marketing spend, it does not give the more valuable indication of how much influence has been gained - mindshare.

The value of mindshare or influence depends not only on the numbers of people encountered, and their understanding and buy-in to the messages, but also crucially on their responsibility and role in the decision making process.

For IT investments, in particular, this has always been understood to be a complex issue. The needs of the business are tempered by the ability of IT departments to understand and deliver solutions that work, and by how the required level of financial commitment fits with the other priorities of those in control of the purse strings.

Clearly, selling just to technologists is not the right approach, even though many IT companies still believe their new "killer" technical, competition-beating features will win the day. But there are other influences with significant involvement in the decision to invest in IT.

A good marketing strategy should not rely solely on a scatter gun mass-mailing approach to stimulating demand, nor on executive contact on the golf course, but should try to understand the different groups in the decision making process, and how to effectively reach each of them.

Findings from Quocirca research have reinforced the view that simply pursuing a sale at the technical level will often result in failure, as the most critical decisions are not taken in the IT function.

The finance directors and managing directors are not only involved in approving individual significant IT investments, they are also more often those most likely to be prioritising and altering overall IT spend. Many sales opportunities that seemed only moments from closing will fail even though the right approvals have been gained, because budgets are re-prioritised outside the IT domain.

So while the sales and sales support teams are working hard to win IT budget and the technical arguments, marketing should be trying to make their lives easier by providing positive influence in other areas in the customer. Clearly, the IT or technology management will play an important part, but more emphasis needs to be placed on winning over the finance director.

The research highlighted how different sources and routes for information are valued differently by those with responsibility in finance and IT. It is important to recognise that outside the IT function there is generally a more conservative attitude to investment in IT, especially in those with financial responsibility. The lure is not the innovation or fascination with the technology, but what can it do for the business, and at what cost. That's total lifetime cost impact, not just the purchase price.

From a product marketing lifecycle perspective it's like marketing to the whole spectrum from early adopters to laggards at the same time. So different audiences with the same organisation have to be identified, segmented, and communicated with appropriately for the marketing bets to pay off. It may still be a gamble, but at least an informed and well-targeted strategy will shift the odds more into the vendor's favour.

For a more in-depth look at the decision making process, there is a freely available report on the Quocirca website, IT Investment Decision Making.

Copyright © 2006, IT-Analysis.com

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