Who doesn’t want to be the big gorilla?
Truly, it’s a fine time to be a high-tech business. As organizations search for new ways to increase productivity while employing fewer people, vendors of enterprise software and hardware have seen their profits surge.
Productivity-wise, the high-tech industry likewise practices what it preaches. It’s long been one of the most enthusiastic — and successful — adopters of the latest CRM technology. To date, for example, Innoveer has worked with at least 50 high-tech hardware and software businesses with annual revenues of $1 billion or more who are diehard CRM aficionados.
Accordingly, when identifying the best way to get the most from your sales, marketing and service investments, as well as partner relationship management (PRM) programs and social enablement strategies, pay attention to the below best practices from the high-tech industry.
High-Tech: Live On The CRM Bleeding Edge
What does it take to succeed in high-tech? According to Geoffrey Moore of Crossing the Chasm fame, whoever becomes the “market leader,” aka gorilla, stands to command 50% of the market share and 80% of the profits. Accordingly, being first counts for a lot, not least because once customers see a clear winner emerge, they’re more likely to adopt its products en masse, and stick with them.
The alternatives aren’t pretty. Non-winners will constantly face the threat of extinction. But a bit more long-term, that goes for market leaders too. Novell, for example, was the leading technology company of its time; it invented networking. But the company failed to beat Microsoft in the 1990s, struggled to reinvent itself for the open source age, and was finally sold largely for its patent portfolio.
Heavy Sales And Marketing Investments Pay Off
In their push to become the market leader, software companies typically invest millions or billions of dollars to develop a product. But once the product goes to market, the marginal cost involved in selling a DVD or online subscription is quite low. Innoveer client Citrix, for example, which sells virtualization and networking technology, and cloud application solutions, sees gross profit margins of 86%, and its end-of-fiscal year revenues increased from $1.87 billion in 2010 to $1.99 billion for 2011.
To make balance sheets like that a reality, high-tech companies tend to channel a lot of their profits into sales and marketing. The goal: expand faster, gain more market share, keep an eye on the company’s social profile, and route the best customer feedback to their engineers, to help them continue to develop market-leading products.
Automation Eliminates Friction
The imperative for high-tech companies is to remove as much friction from their customer-facing practices as possible. Accordingly, they pay close attention to sales automation, including sales process optimization, SFA system and order entry system integration, product configuration tools, lead management improvements, and sales territories. Indeed, while the typical company reorganizes sales territories every year, rapidly growing high-tech companies may do so every three months.
Automating the pricing, discounting, and related approval process for sales is likewise essential. Oracle, for example, is notorious for starting its sales discussions at 80% off list price. Only a company with profit margins in the neighborhood of 90% can afford to do that, but it still needs to do so carefully.
Obsession: Case Resolution
When it comes to service, the main driver for high-tech companies is simple: resolve cases. The mantra: “How do we intake a customer’s problem and solve it as fast as possible?” That happens via knowledge-bases, self-service tools, as well as automated systems that determine entitlement, meaning the service level to which a particular customer is entitled.
This push for maximum automation as well as case-resolution speed has seen many high-tech companies successfully turn service and contact centers into profit centers. Furthermore, many companies are tasking their field service personnel to gather intelligence about customers’ existing technology investments and in-place technology from competitors, so that salespeople can pitch replacements.
PRM Handles Mass Distribution
For selling more, as quickly as possible, high-tech companies have perfected the art of selling via business partners. Because once you become the big gorilla, the problem is no longer having to sell your software or hardware, per se, but rather distributing it as far and wide as possible, while continuing to burnish the brand.
High-tech companies typically build an independent distribution network to handle these demands, and offer profit incentives to distributors or third-party resellers. But at the same time, high-tech gorillas must carefully manage their partners. The goal is to reward successful distributors by funneling more business their way, as well as to identify and help underperformers to improve.
Social Enablement Spells Market Traction
The latest must-have high-tech capability: social enablement. We’re seeing significant increases in funding for social business endeavors, including managing and monitoring companies’ reputation on Twitter, Facebook, as well as other social networks.
High-tech companies are on the leading edge when it comes to creating bespoke communities — self-service or otherwise — devoted to their own products. These communities not only demonstrate to prospective customers that there’s a rich user ecosystem ready to handle any product-related challenge they may encounter, but also provide an inexpensive, crowdsourced knowledgebase that helps high-tech companies spot emerging issues, close trouble tickets quickly, and increase the quality of future products.
Going Forward: Go Social
By and large, high-tech companies excel at CRM. If they have one weak point, it’s that their data-loving leaders have historically been enamored with creating a 360-degree view of their customers. We’re not against that, but the concept is often pitched as a panacea for solving all customer-facing challenges.
In fact, for solving challenges today, the clear call to action is now to become more social. The mandate isn’t to know everything about a customer, but rather everything essential. Increasingly, that information is arriving via social networks, and as customers spend more time there, those networks become the go-to space for conducting marketing, sales, and service. At least, if you want to be the big gorilla.
Learn More
Do you see social CRM rising? Think that a 360-degree view of the customer should remain a top business priority? Want to lodge a complaint about the over-abundant use of animal metaphors for describing sales and marketing dynamics? Get your feedback in now, as we’re preparing our predictions for 2012 CRM trends.
Post and thumbnail photos courtesy of Flickr user Duncan McKinnon.
