• Acquisitions raise the barrier to entry: as large companies eat up smaller companies, they bring extended capabilities to offer clients endless services. Now smaller firms will find it difficult to work with clients, as they prefer to work with a few vendors
• Differentiation is critical: clients will still need specialist services, and building niche service capabilities is critical. One of our clients is in the enterprise content management space. Their client list is enviable, and PE firms are beating their doors down to help sell the business
• Sales strategies and positioning changes: your sales strategy and marketing positioning will now have to tackle new complexities–what is your core, how can you add value, and what difference can you bring to the table

It is a good time to sit back and think about what niche you could explore, and how to build expertise in it. Yes, revenues will waver and margins may topple, but you will be building a valuable business, instead of the commodity you are toiling in.

Cheers, and happy independence day weekend.

Karthik

To rise from the commodity of service non-differentiation, why not think up of Customer Risk Mitigation Surveys? If you can gain insight into your client’s initiatives for the coming quarters (this should be easy if you are brave enough to plan a CSAT in the first place), why not put together a risk model and mitigation plan on your own? This could be around project scopes, people requirements, timelines, budgets, ROI, …you get the picture.

What will this get you? Super Brownie points for intelligent proactive thinking. Reaffirm your client’s faith in your value for their business.

Oh yeah, in this survey, you could weave in your CSAT that will help you get a better handle on how the client perceives your performance.

Cheers
Karthik

• A Premier Pass card that allows me access to all business lounges worldwide, a product worth $400 a year
• A Global Entry pass worth $100 every five years
• No fees on foreign transactions
• $250 in ticket change fee at domestic airlines

No, I have not been paid by AMEX to write this, but wanted to point out how we service providers could think up of ways to engage with our customers relevantly, in real-time, and in ways that will delight them. It should become a quarterly marketing plan to figure out how your sales and delivery teams performed, and how you could bring these to your customers’ attention in innovative ways that show you really care for them.

This flies in the face of normal: we are always on the look-out to bill clients for change requests and additional resources. Fair enough, but where have you built in ways to study what your customer has been doing, and developed plans to see if you can surprise them with ideas that could help them achieve goals?

I would be delighted to hear your opinions.

Karthik

Change is good, but change for its own sake shows poor judgement. Oracle hasn’t changed much in the last 7 years even while gaining tremendous market share (and skinning SAP for a billion dollars), yet it remains a high point of Silicon Valley brands.

Welcome your thoughts on this latest SAP overhaul.

While my team was eager to pursue the project at all costs, my sales lead was silent. If we took out her commission, our cost of delivery, and the support we would have had to extend post the project launch, the math did not work out well. She then came with a brilliant plan. In the scope of the project was included a 30-day warranty. She extended it to a full 90 days, and also added a round of revisions at half our normal billing price. Her logic: If we discount our price, the client will feel obliged to keep his requirements to a tight plan–but he was still thinking through the concepts. Why not allow him the freedom to change requirements mid-way, but we charge changes at half the price?

Our client finance team came around to the proposal.

If you are fighting on price, it is a race to the bottom that no one wins. If your sales team is pitching your services on a “priced-to-sell” model, good luck with adding to your top line.

If you have examples of how you priced your services creatively, please feel welcome to share your thoughts here.

Best
Karthik

In stark contrast, look at the top 200 websites of IT services firms: IBM, Infosys, CSC, TCS, Wipro, Accenture. Why is it all about themselves? Why is your website all about yourself? And yet, not about yourself?

It is time to rethink the way you have designed your website. Getty and iStockphoto are running out of typical services marketing images (see my samples.) If you are in the services marketing business, here are some thoughts for your website:

• How can we design it to create a conversation with a prospect? This means it is more them and less us. More tools, offers, stories.
• What can you say in it that will help a prospect want to realize something she is missing in her business? This means you say one thing, and say it damn well. Again and again.
• Why should you have a website where you are just not seen on it? Like a healthcare practice, your company is known by the team you work with. Why do you slink behind an inane Management page that says nothing about your skills and team expertise?
• Where will you position your website in a client’s buying cycle? Discovery phase? Engagement phase? Post-engagement phase? How is your site then designed to offer the prospect enough tools and touch points to keep them engaged?

IT Services Marketing professionals have frequently confided to us: our management does not see value in marketing spend, it is all about sales and numbers. Of course, the management will not see value if the marketing does not provide tangible results. And that brings us back to the question: what are we doing differently that will bring us different results?

Rethinking the website is a good start.

Delighted to hear your feedback.

Karthik

• The tier 1 vendor has won the project on a fixed price: meaning the firm gets paid only one fixed amount no matter how complex the project turns out
• The contracting firm now farms out the requirement to the staffing market place
• Staffing firms scramble to submit resumes of candidates
• Since the firms don’t own the candidates (not on their direct payroll), many firms submit the same resumes of the candidates

The contracting vendor now interviews the candidates and chooses the most relevant one. All well? No, this is where it all comes unravelling:

• The tier 1 vendor has set its profit margin and will not negotiate on it. So the rates they offer will be aggressive.
• The staffing firms will want to make at least $10-2o on the candidates, so they will not negotiate either.
• The consultant is finally pushed to accept a lower price.

He or she is now already unhappy with the price EVEN before the project begins. The consultant is now on the project but is already scoping the market for projects offering better hourly rates. In about a month or so, he finds a new gig and moves on.

• The contracting vendor is now forced to fill in the position with someone less qualified
• The project meanders and fails
• The client is livid

In a business that is solely dependent on the human being for success, the IT services market is uniquely remarkable for stunning failures. Motivation finds a second place (if at all) to margins, whereas it should be the other way around.

As a services company, how are you set up to market your offerings that can command a premium? Remember, your sales can be only so powerful as your marketing can help you differentiate your services.

How are you transferring the premium to your consultants? Remember, your margins can be thicker only if your consultants are motivated to perform. With tightening visa rules, it is becoming difficult to attract consultants, and if you are doing the same things you did last year you will be achieving only last year’s results.

What are you doing differently today?

Karthik

• The immigration looks at the crappy services company site and rejects all H1B applications from the company
• The founders are now quite ashamed of saying they run a staffing company (some have even called it akin to pimping) and want to be a “product” or “solutions” company
• When the market is hot (like 2011 is turning out to be), the contracting talent pool finds premium pricing and turn choosy, leaving the company with no choice but to place them for $5 and $10. The last I heard, McDonald’s offers minimum wage at $7.75 per hour plus health. One could be better-off flipping burgers
• Most firms have now put vendor management systems (VMS) in place, and pure-play services companies don’t stand a chance. So appearing to build a product of sorts snuck them under the VMS radar, if some poor manager is fooled into believing that the product is worth anything
• Lastly, VC money (when seen from the outside) is seen as easy, lumpsum money, compared to the cashflow from the services business

Many services companies have become highly successful by building on top of a product platform. One of my clients has built tools and modules around Oracle Argus, to offer clients a regulatory and compliance solution. In fact, Oracle has taken them to their client base. Of course, the client invested in the process, and was smart enough to keep testing their solutions with clients even as they built the modules.

How have you moved from the pure-play staffing business to emerge into a value-driven business for your clients? We’d be delighted to feature your case study here.

Karthik

• Products need services: not all of them work out of the box, and services are key to a product’s continued success. In fact, many companies build products with the thought of services completing the sales process.
• Services ARE the products: in many instances, like Amazon EC2, the product is consumed as a service.

What can this teach us in the services marketing? There is a product within your services firm waiting to come alive!

Some of our clients have smartly packaged their cross-industry expertise on a particular set of tools (for example, independent testing for banking products) and offer them as solutions to customers. This gets them the ear of the CIO, a premium pricing, and entry to upsell other services.

What can your firm find within your services portfolio that can be packaged as a product/solution and presented to a prospect client? When was the last time you looked within your firm’s capabilities?

Time for a bit of navel-gazing?

Have a wonderful Friday, folks!

Karthik

It maybe worthwhile to let go of such assumptions and ask the client for a feedback session. As someone said, “If you need money, ask for advice.” To draw a parallel, if we need the business, why not ask for feedback? Clients have typically know to give honest review, and then gone beyond the request to help the vendor find their next project. A good marketing ploy in the services market is to ask for feedback sessions, because it will open up a dialogue that allows you to find unmet (and unsaid) opportunities at the client business.

If you have used feedback in a more inventive manner, please feel welcome to share.