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Marketing high tech services.

High tech services such as technology consulting, systems integration and implementation of enterprise-wide software applications like customer relationship management (CRM) are predicted to become a $700 billion industry by 2005. Intangible services require a more relationship-driven approach to marketing and sales -- which can be challenging to those with strong technical backgrounds. The article discusses three approaches to marketing high tech services: 1) professionals-who-sell; 2) bigger hammer marketing; and 3) the funneling approach.

Introduction

With computer hardware becoming a commodity in many industries (14), high tech companies are focusing more on services. Services include technological consulting (design, education and management services), technical support, systems integration and implementation of enterprise-wide software applications like customer relationship management (CRM). Market research firm IDC forecasts 12 percent annual growth in tech services, reaching $700 billion by 2005 (8). Due to intangibility and other factors, the marketing of services is inherently different from marketing products.

This article's purpose is to help companies avoid costly trial and error approaches in this new area. Many startup firms or divisions have failed due to inappropriate marketing approaches. More mature firms have clung to past practices when new ones were needed. We argue that the nature of high tech services requires special techniques -- the traditional product-oriented sales cycle must be radically modified. Our discussion responds to the comment of one interviewed executive, "Tech services are hard to buy and hard to sell but can be extremely beneficial to buyers and profitable to sellers." In this article we discuss such difficulties and three marketing approaches for firms to consider.

High Tech Services

High tech services include a range of firms. Some companies derive all revenue from services and include Accenture and Electronic Data Systems (EDS). Other companies derive a portion of revenues from services. For example, divine Inc. provides professional, software and managed services to improve collaboration and knowledge sharing across a company's entire value chain, from suppliers to internal departments and final customers. Also there are specialized service units in traditional technology companies such as IBM, Oracle, Microsoft and Yahoo. More than half of IBM and Oracle revenue is generated by services. Microsoft Consulting Services (MCS) focuses on educational and integrative services to implement Microsoft products. Importantly, it serves as Microsoft's front-line effort in many large corporate engagements. Yahoo has a growing Enterprise Solutions division including Portal Solutions, Broadcast Solutions and Small Business Services, which offer software, hosted services and consulting. Many startup firms or divisions are based on tech services. MediaMap, a privately held firm, is a provider of communications management solutions for public relations agencies and corporate communications departments and integrates software packages, online services and consulting.

Services are bought when internal resources are not available or it is not economically feasible to develop them in-house. They may increase the efficiency of operations or provide competitive advantage through lower cost or enhancement of a marketing program. Laggards may buy tech services for defensive reasons to maintain competitive parity (13). EDS and Saturn provide an example of successful partnering (for further discussion of partnering, see (3). Saturn's tier-one customer care advisors assist people who contact Saturn for general product, service, feature and option information. But, in the past, these agents often functioned more as "air traffic control" directing calls to the next level -- customer assistance managers who provided tier-two support to owners needing additional assistance. Saturn and EDS developed the One-Call Resolution strategy, which empowers advisors to resolve inquiries in the first contact. EDS training programs gave advisors the extra skills and knowledge needed for their enhan ced roles. The main advantage of One-Call is that the solution did not call for any new technologies -- only an improved methodology and better use of Saturn's first-tier advisors. Ninety-five percent of Saturn owner concerns are resolved in a single contact. Customer service and satisfaction improved, without additional staff (7). Another example involves tech services provided by Accenture to enhance Dell's strategy of letting each customer build his or her own computer. Such customization can interrupt supply channels, but the Accenture-designed system allows Dell to place over 90 percent of orders electronically with suppliers. This allows Dell to schedule worldwide factory lines every two hours, keep only six hours of materials in factory inventory, and maintain four days of total inventory (1).

The Study

Brief case histories were collected from a convenience sample of firms involved in tech services. The cases were contributed by 32 executive participants in an MBA program under the guidance of a professor. Participants were asked to contribute, where possible, cases from each of the following entities: 1) their own firm; 2) a customer; and 3) a supplier of their firm. Given the nature of their businesses, some participants were able to collect cases for all three entities, while others provided one or two examples. Data were collected by personal interview, telephone or email. The interview protocol consisted of questions pertaining to the challenges of buying and selling tech services due to intangibility, perishability, variability and inseparability, as well as effective marketing-sales approaches. A brief company overview was also collected. Some respondents asked that certain data be collected from a company web site such as the overview and certain case histories.

In total, 71 cases were collected from firms, some of which preferred to remain anonymous. The cases were analyzed by the authors to develop themes and patterns of behavior. The theoretical structure of three marketing approaches in this article is an outcome of that analysis. The most illustrative cases are included and discussed throughout the article.

The Nature of Services

It can be difficult for product-centric companies to make the transition to marketing services for the following reasons.

Intangibility. Services are intangible and cannot be tried out or inspected in advance. The outcome cannot be seen until the service is performed. Because of this, the basic idea and benefits of a new service may be difficult to understand. A buyer's perception of what is being "bought" may be different from what is being "sold." Each service package may contain dozens or hundreds of features, but only a few may represent benefits for a particular buyer.

Consider the case of a computerized pension fund evaluation service whose Web page states "...provides complete system management through a real time monitor that provides for online diagnosis, tools that allow customers to monitor virtually any aspect of the system to identify conditions that disrupt performance, and a comprehensive tool for monitoring network activities." From the seller's viewpoint, this was the service being sold. The seller discovered, however, that customers infrequently accessed the data. In fact, what customers were buying was the expert advice on a wide range of technological, investment market and industry topics of the professionals who designed the service. "It took forever for us to figure out that customers were buying consulting from us, not software solutions," said a manager.

Perishability. Services have been characterized as perishable, implying they cannot be inventoried for later sale. An unsold service is lost forever. The temptation is to cut price in order to guarantee a steady flow of sales. Service marketers may attempt to coordinate production and consumption to reduce perishability, but this tactic does not easily apply to tech services. Use of part-time help during peaks may work for McDonald's, but advanced training is often required for high tech -- and such individuals are seldom available part-time. And, while in other service businesses providers may strive to increase customer self-service participation in the production/consumption process (e.g., salad bars in restaurants), this rarely succeeds in high tech due to the sophistication of the work.

Variability. Variability in services may come from several sources. Variation may result from unwanted or random levels of service quality caused by the human element or by system malfunctions. Quality control may depend on the qualifications and skills of the service provider. Sellers also face the challenge of variation in customer knowledge and expertise brought into the service process. Most high tech services add another variable -- the burden of implementation and customization at the customer site.

Consider the case of a firm wanting to buy a CRM system because its closest competitor just bought one. The firm purchased a "kit" solution (a level above shrink-wrapped software because it includes basic installation), but the system crashed frequently because of an inadequate technology infrastructure and shortage of technical people to run it.

Inseparability. Services are produced and consumed simultaneously. They are inseparable from the source that provides them and the buyer who benefits from them. This "direct" buyer-seller relationship is significant in high tech. Buyers must have confidence in the person or organization from which they buy because buying risk is high and special skills are required. According to one expert [20], buyer uncertainty can be reduced if the seller uses professionals who will also act as problem-solvers for the client Another expert [11] adds that service satisfaction is highly dependent on the quality of the interaction between the service provider and customer. Ideally, in high tech the seller and producer should be the same person or group. This contrasts with most B2B products where the sales and manufacturing organizations are separate functional "stovepipes."

It is natural and inevitable that technical as well as operations managers will become directly involved in high tech selling (15). But how should this effort be structured? Given the characteristics of high tech services, what is the role of marketing? Of sales? Who sells? Who produces? For consumer marketing the answers are well known, but in high tech the answers are not obvious.

Marketing Challenges: An Example

Intangibility, perishability, variability and inseparability create challenges when marketing tech services.

Consider a knowledge management (KM) firm that sold a system to a property and construction company of 6,000 employees with globally dispersed teams needing a single point of access to the enterprise's documents and knowledge. Previously, with information stored on departmental servers and personal computers, its project managers, contractors, suppliers and clients accessing and sharing data had to search multiple locations for information and then disseminate it manually. The new system solved many problems.

Soon thereafter another firm in the same industry contacted the knowledge management firm. Said a vice president, "They called us up and basically said, 'I want one, too.' We visited the company, heard them speak enthusiastically about knowledge management, and wrote a proposal, pricing the system at $500,000 based on the pricing and features of the other one. However, after numerous visits with the customer business sponsor and technical organization, we started to hear a new story -- they wanted to add these two-three things and subtract another two-three things to better fit their special needs. We modified our proposal at considerable expense in terms of development and selling time. Then they 'nickeled-and-dimed' us during every meeting, asking for a price reduction on this or that feature because they said it wasn't key. Or they asked if we could eliminate this or that feature would the price go down by $10,000? We wanted that sale at almost any cost given our investment of time and effort But they neve r bought Later we learned they only had $400,000 budgeted. And as time moved on, it became clearer to us that they did not have the infrastructure to implement our system without additional investments. We ended up educating a company about knowledge management at our cost -- not theirs, and got nothing in return."

Three Marketing Approaches for High Tech Services

Responding to intangibility, perishability, variability and inseparability, the firms in our study used three marketing approaches: 1) professionals-who-sell; 2) bigger hammer marketing; and 3) the funneling method.

Professionals-Who-Sell

Many startup firms or divisions are based on tech services. They may want to implement what the authors call the "professionals-who-sell" approach. The classic Marketing of Professional Services makes the distinction between this and a traditional sales organization (paraphrased to improve gender considerations):

Professional salespeople see themselves first and foremost as individuals with an outstanding ability to sell virtually anything. Salespeople perceive their role as limited to selling and charisma is a major skill. Salespeople may of course have professional qualifications, but they are not viewed as major strengths. In contrast professionals who also possess sales ability perceive themselves first and foremost as wholly competent in and committed to their profession. Their ability to identify and isolate key factors of a problem provides their main business, intellectual interest and job satisfaction (21).

Technology professionals who invent a new service should function as senior management and sales force [9]. Professionals who sell can make the service tangible to buyers. Quality control, key for technology purchasers (16,17), is assured because the service "seller" and "producer" are the same. A chief scientist said, 'The professional who develops the service has the greatest competence and commitment, and this comes across in every selling situation. It can be very powerful." Said another interviewee, "Business success in tech services comes from slavish devotion to customer needs and a sense of shared success, as well as potential failure, with the customer. It comes one customer at a time."

The professionals-who-sell approach is indispensable during the startup stage, but growth will be slow if sales effort is limited to a few key officers. Said a company president. "My sales territory was the entire world."

Other issues may arise in zealous application of the approach. We have seen entrepreneurial geniuses start sophisticated companies and perceive that only they have the expertise needed to sell, and only they had the power to commit company resources. To hire "sales types" and provide these newcomers with expertise and resource control means diluting the power and status of the technologists already on board. Also there is the potential problem of volunteer customers. Said a manager, "You can get tons of tough, low profit, over-the-transom jobs." Prospects that come forward and volunteer to become clients are often undesirable business because they are frequently "desperate" and have problems that cannot be solved economically.

Finally, the professionals-who-sell approach can turn into a product-orientation (sell what we make) rather than a marketing-orientation (understanding needs and developing offerings to meet them). For a world's expert, it may be hard to realize that users may see the technology differently. Listening to the "whining" of unsophisticated users may grate on the ears of the professionals-who-sell.

Bigger Hammer Marketing

While a startup's goal is to foster the possibility of a large emerging market, the next step involves growth and the hiring of technical salespeople (16). While new hires may not be as effective as the professional who sells, their sheer numbers may prevail. The "bigger hammer" theory means more salespeople making calls -- and more calls mean more demonstrations, beta tests, price quotes and closed sales.

Potentially, professional salespeople can solve problems experienced by the founders. The company should have more control over who becomes a customer, resulting in fewer volunteers. Sales specialists should be less enamored with wizardry and more responsive to customer needs and quirks. The use of knowledge transfer consultants is one approach to pass expertise from company founders to a larger sales organization. The professionals-who-sell are interviewed and even observed or recorded during sales activity, and training programs can be developed for sales reps in the two key areas below.

Structured Requirements Planning.

Potential disappointment in technology purchases can be high. A well-trained sales force can help a buyer determine more precisely what technology is needed. Tech services tend to have layers of dependencies that complicate selling. The idea that a core service layer must be purchased in order to obtain a highly desired secondary feature can be dismaying to customers. High-tech often requires customization to fit buyer requirements. Extracting them -- and minimizing sudden and unexpected changes -- is a management challenge.

The sales organization should use a structured approach to understanding customer requirements. An example is provided by Sapient. which designs, develops, integrates and implements information systems in large organizations. To understand needs, the firm uses Fusion Learning Systems workshops where potential customers visit Sapient headquarters. Said an executive, "The idea behind the workshop is simple: Get the right people in a room with the right kind of facilitation and you can do in days or weeks what might usually take months. Through the workshops, we help clients drive critical decisions, develop a project roadmap and shared vision, and define measurable business outcomes quickly and collaboratively."

The workshop starts with a high-level view of the problem to be solved, and then works down to the lowest possible level of detail. The seller team listens by day and works by night to compile the results of each day, and presents it the following morning. At the end, a contract with detailed specifications is presented for signature. Said a manager, "It is the yes-yes-yes close. Get the buyer saying yes."

The larger marketing benefit is important. It clarifies the deliverable for the buyer, heading off the dreaded "is this what I bought?!" reaction.

Other firms have headquarters-based relationship managers who work with field sales after initial discussions have generated buyer interest Some send a team to the customer to develop requirements and even charge for it Said a manager, "It seems counterintuitive to make a customer pay to understand its own needs, but if it works, the customer is satisfied. And we have nearly a 100% close rate on such projects. Plus it leads to cross selling of additional products."

Deliverables are a concern in high tech. Every vendor promises solutions but at what level? Said a manager, "Rather than a full solution -- meaning your problem is completely solved -- many tech firms have delivered kits that have to be 'glued' into existing systems. To obtain the promised, perhaps over-hyped results, buyers may have to integrate sophisticated products themselves or hire information technology consulting firms to do it" In one study of CRM systems, it was estimated that the initial purchase was only 24% of the total system cost including training, service and upgrades to fully implement the system (8). Structured requirements planning can reduce such surprises.

Pricing Strategy. Experienced sales people can assist the professionals-who-sell in making difficult pricing decisions. Even if requirements have not been fully articulated, many prospects will press for a price quote.

A sales executive can analyze various pricing approaches. He or she may recommend "range" pricing where prices are tied to minimal or extensive customization. Alternatively, if the customer's budget can be determined, a fixed price may be used. However, it will require the seller to later resolve the proposed price with the delivered solution. Offering services on a time and materials basis is usually an option only when buyer and seller have an established strategic relationship. Sales specialists can also respond to aggressive buyers who press for "transparent" pricing, where each element of the service must be individually identified and priced. This allows the buyer to negotiate almost endlessly. Finally, experienced sales people can articulate the business case (rather than the technical case) for purchasing new technology. For example, the seller may use Total Costs of Ownership (TCO) models to help buyers deal with sticker shock. TCO worksheets (samples are available on the web) strive to show that the product with the highest initial price may actually be the least expensive in the long term. Said a sales manager, "When coupled with the substantial cost savings generated by our system, we tell buyers, 'It's free."'

Having a technical sales organization push a product or service can be effective (4,19), but companies in our study suggested caution. The unexpected problems seem rooted in the intangible characteristics of tech services. Several companies hired salespeople under aggressive incentive plans and basically "turned them loose." To their dismay, they found that senior management and technologists were spending just as much time as before on sales calls. Said one executive, "The sales force wanted senior management to accompany them on almost every call, under the untested reasoning that it would improve the probability of a sale."

Other companies experienced excessive customization. One executive said, "Our sales group was promising customers anything to get a sale. Everything being sold was a custom solution, when in fact it wasn't necessary. Our sales guys were not selling what we made; they were selling something else."

Finally, some companies found that a growing sales organization was accompanied by a growing number of low margin jobs. Said an executive, "We would have preferred a smaller number of high margin jobs, but the sales force couldn't seem to find them." These problems can mean slow growth, or indeed failure, despite being in a major growth field. More direction and control are needed, but how? The next section proposes a framework.

The Funneling Approach

Brilliant scientists, engineers, technologists, entrepreneurs, venture capitalists, tireless road warriors and 60 hour work weeks -- this is the culture of high tech.

It seems almost unnatural to add the quiet discipline of marketing planning to this volatile mix, but it is needed if the firm is to grow to sustainable size. However, the recommendation of "we need more marketing" is rarely greeted enthusiastically in high tech. Engineering groups may resist marketing-led requirements since they believe that they alone have a close understanding of the technology. Also, marketing planning may establish goals that cannot be reached due to technical barriers. Past marketing efforts may have been unsuccessful because of schedule pressure and limited resources. Such problems can create resistance that may reduce the role of marketing to developing brochures, writing press releases and running trade-shows (5,10).

Next we suggest that the most convincing argument for re-emphasizing marketing planning is that it focuses a company on their most productive prospects. The objective is to turn the traditional sales cycle "upside-down," since scarce sales, technical and senior management resources are released late in the cycle. The funnel approach (see Exhibit 1) utilizes the Awareness-Interest-Desire-Action (AIDA) framework and other planning concepts such as market segmentation adapted to fit high tech services.

Market Segmentation. We found in our case histories that market segmentation is an underutilized tool in high tech. The biggest single mistake a company can make is to use personal selling as the primary method of finding customers. For example, when asked to identify segments, a CEO said, "We don't view the world as segments. When we put together the marketing plan, we do not decide to sell to just one group of people." This plan may lead to dozens or even hundreds of unqualified prospects in the general marketplace that want "to hear about the new technology" but will not buy. Simply put, it is too expensive to sort through prospects of unknown quality by using personal selling.

Marketing analysis should be the first step to find customers [6]. Qualitative and quantitative analytical techniques can isolate customer groupings with the greatest potential. Segmentation is a marketing department activity that provides information about growth rates, buyer motivation, competitive offerings and costs of selling for various segments. It begins with secondary data available from the Web, libraries, trade associations and government reports. Statistical analysis may reveal factors correlated with segment growth.

Almost any attempt to segment the market is better than none. Rather than trying to "be all things to all customers" (shotgun marketing), companies should divide broad technology markets into segments and place priority on only key ones.

For example, one company formerly defined its market as "senior IT managers in financial institutions." After embracing segmentation, the company focuses on "key end users" such as corporate treasury, financial advisory, brokerage bond trading, insurance, international banking and mutual funds. Two have been targeted for emphasis.

Also consider the case of a CRM provider whose prospects are scored using three-dimensional segmentation: the value of CRM to the customer's type of business (e.g., complex product, long sales cycle, large and far-flung sales/service organization); the buyer's budget versus anticipated cost of delivery; and buying urgency as measured by the number of buyer contacts and management level of the person making contact. "If it's a tech analyst calling us, we give them a zero score for a sales call, although we send them a package of information electronically," said an interviewee. By using this approach, the company was able to increase revenues by 40% while reducing sales staff by nearly one-quarter.

A firm's web site can be structured to assist in segmentation. One web site segments visitors into eight segments ranging from small business and state/local government to health care. Customers cannot get beyond the home page without clicking on to a segment. After a short series of questions, buyers are grouped into additional sub-segments and prioritized for a possible sales call. In sum, many segments are investigated and a few targeted for rifle marketing. Said an interviewee, "Don't focus on the logistics of rolling out the new service. Focus on the customer segment. The goal is to maximize the upside potential in a given segment. You want to get every technology dollar they spend, now and in the future."

As shown in Exhibit 1, Marketing Managers are the resource responsible for the activity discussed above.

Attention and Interest. While it seems counterintuitive for a complicated innovation, impersonal forms of communication can create buyer attention and interest and "pull" the product through the sales cycle. 'Two Scoops!" of raisins in Kellogg's Raisin Bran has pulled millions of boxes of cereal through the retail channel. Pull or vision marketing can also work in high tech, but will need careful adaptation to craft the message and vehicle.

Brand Advertising, Trade Shows and Mailings are important, but high tech buyers probably prefer high tech communications. Below are two effective approaches we saw in our study.

Viral Marketing (referral marketing) is electronic word-of-mouth and relies on users to pass along catchy messages to colleagues and friends. It is powerful because it is the antithesis of hard sell or "shout" paid advertising (15). Hotmail experienced this in the on-line buzz it received when it offered free email. Hotmail attached its URL and a brief marketing message to the bottom of every Hotmail. The approach allowed them to acquire millions of customers without any advertising spending.

Viral marketing can work in mysterious ways. At Akibia, a CRM and IT support services firm, its Career Opportunities web site and monster.com postings tout "a unique focus on attitude. In fact, the first rule in our hiring manual is 'No Jerks!' -- so we undergo a highly selective interview process to make sure that the people who work for us and for our clients have the right attitude about people and their job." Since many potential employees are also prospective customers, the no-jerks message communicates that buyers will like working with Akibia. Its client renewal rate is nearly 100% (2).

Interactive Advertising on a firm's web site can effectively build buyer interest. Any buyer considering a big-ticket purchase will research it, and today that means starting with the web. Oracle's "See, Try, Buy" site is illustrative. The firm uses banner ads announcing its "Unbreakable" benefit on other sites known to draw high tech buyers. A click takes them to Oracle's site where interest is heightened with a general proposition: "Unbreakable. Can't break it, can't break in. Oracle has always been a pioneer when it comes to database security. See, Try, Buy." Visitors may see online security videos and demonstrations, analyst comparisons of superiority versus competitive offerings, calculations of the cost of database downtime, third party business and technical white papers on security, customer case histories, invitations to live seminars and "how Oracle Consulting can build an unbreakable business for you." Visitors may try the technology online, download free software, and participate in upcoming onlin e conferences. It is also possible to buy online, through 1800 or having a sales rep call. There are icons to Talk to Experts Now and Arrange a Demo. The site accomplishes much of the back-and-forth interaction associated with an initial face-to-face sales call (18).

Marketing Managers and the Sales Force (Exhibit 1) resources jointly plan activity to build attention and interest.

Desire. Personal selling remains the best vehicle for creating desire and action to close sales (12). The key is to focus on those accounts most likely to buy. It is easy to become entangled with too many prospects, which for various reasons decide not to buy. According to a manager, "Our sales reps came back from a call saying 'we have a fit' any time a prospect said 'we need an investment tracking system.' We would unleash a major effort with the whole management team chasing that vague promise and ended up closing a low percentage of sales."

Probing Questions. Today companies train their sales forces to test the fit of its systems with a prospect by using open-ended probing questions. Instead of asking customers, "Do you need an investment tracking system?" which could lead to a superficial reply, the seller asks broader questions related to the basic business proposition of buying.

Sample open probes might be:

* "What objectives are you trying to achieve when you buy a system?"

* "What other computerized tools and internal operations would the system be linked to?"

* "When would you be ready to implement the system?"

* "What internal resources are available to accommodate the system?"

* "Is there a budget established to fund the system?"

This questioning should quickly reveal what the buyer wants before the seller commits to further technical assessments and demonstrations only to find out the service does not meet a key need.

USP Approach. The Unique Selling Proposition (USP) concept from consumer marketing, where a unique benefit is emphatically communicated, may also be useful. "Remember what you gave her last anniversary? Our Point Exactly." "A Diamond is Forever" is an effective USP stressing that the gift, its meaning of love and the relationship will last forever. "Unbreakable" is an Oracle USP.

High tech firms may want to develop a separate USP for each segment. "We reduced our initial sales pitch to a single relevant USP that our sales force could use to test the fit of our offering with the customer's need," according to a manager. "We now know that these USPs must be accepted as clear benefits by the buying organization before we have a qualified prospect."

Match to Service and Feature Value. "Match to service," a term used by a sample company, begins by understanding that many prospects have either intense requirements or barriers. Some may have standardized on Windows and resist services depending on another platform. Others may require high computer security. It is not that these considerations cannot be sold around, but that time and effort is better used elsewhere.

The "feature value" approach is illustrated by Genuity, the enterprise network solutions provider, which pursues prospects that value scalability and near perfect service response time when it sells its Black Rocket storage system. Said a manager, "Some buyers think storage is a commodity, so you have to force them to look at features. Go after those who value your feature."

Bigger Hammer: Structured Requirements Planning & Pricing Strategy. At this stage in the funnel, the sales force -- the firm's bigger hammer -- will be interacting with a highly select market segment consisting of prospects that are aware of the tech service and have shown interest and desire. The sales force, as discussed, can assist in critical requirements planning and pricing.

The Sales Force and Technical Managers shown in Exhibit 1 are the resources for desire-building activity. A bigger hammer can make more sales calls than the professionals-who-sell and also reduce volunteer customers. Technical managers are also required at this stage to conduct demonstrations and documentations, but only of those selected features and benefits of interest to qualified buyers.

Action. Finally, the funnel approach means corralling Professionals-who-sell and Senior Management until late in the sales cycle during the action/closing step.

Said a marketing director, "My job is to turn over 'staged events' to our president. I have set the stage for a highly probable sale at this particular account at this particular moment."

One company illustrates the approach. First, its history, as told by a manager, "We used to go to trade shows, meet a lot of interested prospects, solicit RFPs (requests for proposal) and for any large company which asked, our team would make a two day visit to demo our product Our pitch was, We can do anything you want' We almost went bankrupt using that approach. Now we do not perform demos or write proposals on demand. We wait until we have established that our company is really their specific need-satisfier."

How is this done? Sales people--not technical people--are used for initial customer contact using the probing question approach. Rather than wait for the customer to issue RFPs to suppliers, the company writes a pre-proposal letter that restates areas of agreement between buyer and seller, and more importantly outlines areas that need further clarification. If this communication yields its intended results, the seller responds to the RFP or concludes it is dealing with an unqualified prospect and withdraws early.

Overall, a seller moving down the funnel will engage "value" customers rather than less interested "price" customers. The objective of customer visits is not to build attention and interest, but to provide evidence of the previously agreed-on fit to generate action. Said a manager (italics added), "Our senior people only get involved when we are the preferred vendor. Their objective is to prove the benefits of a product that the customer really wants to buy. There should be no surprises for anyone, and the sale should be closed immediately to the satisfaction of both parties." Exhibit 1 shows one closed sale of $2,000,000 at the bottom of the funnel.

Conclusion

Many argue that technology drives the economy, so it is critical that technology firms are well managed. Services, more than hardware, will drive growth in high tech. But services present special marketing-sales challenges. Professionals-who-sell are ideal, but a handful cannot cover the globe, so a sales force must be hired. The bigger hammer approach will require direction and support. which can come from marketing planning tools such as segmentation and AIDA.

Exhibit 1 summarizes how to market high tech services using the funnel approach. It works best at larger firms with multi-functional resources, but even startups can utilize many activities in the funnel.

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Title Annotation:services will drive growth in high tech rather than hardware
Author:Dunn, Dan T., Jr.; Probstein, Sidney C.
Publication:Review of Business
Geographic Code:1USA
Date:Jan 1, 2003
Words:6122
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