Stealing Customers – Indicator of a Saturated Business Software Market?

A fundamental marketing strategy decision is whether to generate sales and business growth by developing and growing the target market or stealing customers from other vendors in an established market.  In saturated markets with no or low growth projections, the tendency would be to focus on stealing customers.

Recent marketing campaigns from a number of business software vendors primarily focus on stealing customers from other vendors.  Another major business software vendor just announced this type of campaign targeting a particular competitor.  Does this mean that the business software market is saturated with limited growth prospects or are there other factors influencing these decisions?

Reviewing 2009 revenue performance for business software vendors, there’s a distinct dichotomy between two classes of vendors:

1. Legacy On-premises vendors showed significant and continuing declines in license revenues.
2. SaaS vendors showed significant and continuing increases in subscription revenues.

So it’s no surprise that many of the legacy on-premises vendors’ current marketing and sales tactics focus on stealing customers from other vendors – usually other legacy on-premises vendors.  No question that SaaS vendors are taking customers from on-premises vendors, but that seems to be more a result of customers motivated by a more appealing value proposition and solutions that meet their current needs.

There is good anecdotal evidence that prompting companies to consider switching business software, expands the evaluation to consider all alternatives.  An unintended consequence of legacy on-premises vendors raiding each other’s customer bases is that they’re probably creating additional opportunities for SaaS vendors.

Discounting is usually considered as the last resort in sales negotiations.  Is stealing customers the last resort marketing and sales tactic for vendors who are unwilling or unable to contribute to the development and growth of target markets?  Several of the customer-stealing campaigns also include substantial channel and buyer incentives and discounts.

Projections from analysts and other research sources show positive market growth, development and expansion opportunities for business software in most market segments.  Vendors that create real value for customers relative to current needs are in the best position to pursue these opportunities.  Vendors that contribute to the growth, development and expansion of their markets will reap long-term rewards while vendors trying to steal customers as a short-term revenue tactic will continue to see long-term business declines.

While stealing customers has always been a customer acquisition tactic in the software industry, the current focus on stealing customers as a primary marketing and sales tactic by so many business software vendors is unprecedented.

What are your thoughts about the marketing and sales tactic of stealing customers and how this relates to the current state of the business software market?  Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Are Businesses Measuring the Right Social Media Metrics?

The results from a recent survey done by MarketingSherpa caught my attention.  They asked over 2,000 marketers what metrics they use to monitor and measure the impact of using social media – here are the results courtesy of MarketingSherpa:

Three significant observations about these survey results caught my attention:

1. The top 2 metrics are about presence – number of visitors and network size.  These are interesting data for analysis and market intelligence that could produce tangible results for targeted campaigns.  While having a large number of social media visitors and followers doesn’t necessarily translate into business results, it appears that companies are currently primarily focused on establishing and building their social media presence.
2. The 3rd and 4th highest ranked metrics are about reputation – no question that brand, product and company reputation are huge considerations for social media and should be diligently monitored and measured.  The surprise is that only 56% and 50% respectively use these metrics which means that almost half of the companies surveyed don’t know what social media commentary and sentiment is expressed about their brand, product or company.
3. Leads generated only ranks 6th with 48% monitoring and measuring this outcome from their social media activities.  This is an alarming observation for me.  Marketing shouldn’t do anything unless it eventually supports and/or produces sales for the company.  Presence and reputation are all important contributors for supporting and producing sales, but leads generated is a more tangible measure that everyone in the company understands.  But more than half don’t bother to measure this!

The sole purpose of marketing is to sell more to more people, more often and at higher prices. There is no other reason to do it. ~ Sergio Zyman

The results of these types of surveys can be interpreted in many different ways depending on one’s perspective.  The results of this survey are very similar to my own observations and anecdotal information.  Maybe it’s an evolutionary process that will shift focus and measurement to more tangible outcomes over time.  It will be interesting to see the results of this same survey in subsequent years.

How does this survey correlate with your social media monitoring and measures?  What observations do you have about this?  Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Adaptive Brand Marketing – More Than Just Four New Ps

Forrester Research published a research paper titled ‘Adaptive Brand Marketing – Rethinking Your Approach To Brands In The Digital Age’ in October 2009. Much of the subsequent comments and discussions about this paper concentrate on the proposed four new Ps of Adaptive Brand Marketing that will shift the brand marketer’s focus from the original four Ps to deal with new realities:

1. Permission – better understanding of whether and how someone wants to engage so that marketers engage and communicate according to buyer and customer preferences.
2. Proximity – moving away from the “one-size-fits-all” approach to more closely connect with local markets and specific consumer / buyer / customer groups.
3. Perception – in using the social Web for marketing the marketer should respect the distinction between a person’s social and commercial personas and not try to make or use social connections for commercial purposes.
4. Participation – there is no central command and control for communities on the social Web. Marketers should facilitate and participate with communities of consumers / customers for developing trust, loyalty and advocacy.

However, there are much more interesting and important concepts and proposals in this paper than the four new Ps that have received most of the attention.

Much of the traditional marketing approaches are based on a command-and-control and/or hub-and-spoke approach where marketing exercises complete control over all things related to marketing. However, in today’s interconnected world of social media, globalization and 24/7 always-on communications, control has shifted to consumers and customers who are more informed and more engaged to find the best deals on their terms.

Some of the principles of Adaptive Brand Marketing in this report that should be of particular interest to most marketers are:

• Channels – rather than deciding on channel strategy from the inside-out in traditional approaches, channel design (part of the Place P in the original 4 Ps) is determined from the outside-in by first understanding the needs and behaviors of prospective customers.
• Intelligence – in traditional approaches most marketing intelligence comes from formal research sources. Today, the intelligence from other sources such as social media, online communities, websites, eCommerce activities, customer interactions, etc. are more current, dynamic and possibly more important.
• Spending and Planning – traditionally these decisions are annual events with possible quarterly adjustments. No more – marketing spending and planning decisions should be a daily event based on the availability of dynamic, real-time data in unprecedented volume and detail.
• Brand and Segment – traditional approaches relied primarily on taking a brand to the masses. New media and marketing capabilities now enable taking a brand in specific contexts to multiple different segments with common shared attributes for each segment.

There is much more to this report that marketers should consider about how they operate in the current and evolving environment and adapting their marketing approach to their customer and market environments.

Have you reviewed the Forrester ‘Adaptive Brand Marketing’ report and implemented any of the recommendations? Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com