MARKETING COMMUNICATIONS How EFFECTIVE

August 1998-How much do you spend on marketing communications If you are at all like the average information technology (IT) services provider you are probably spending one-third of your services marketing budget on marketing communications (marcom) The lions share of the marcom budget is devoted to collateral development and printing (Figure 1) Trade shows are a distant second Coming up close behind are industry analyst programs and electronic promotion vehicles such as use of the World Wide Web and interactive CDshyROM Are these the right marcom vehicles to be using to market IT services How effective are they How do you know if they are effective

ITSMA believes that it is very important to answer these questions Consequently we have

FIGURE 1 IT SERVICES MARKETING BUDGET

devoted a significant portion of our research efforts in 1997 and 1998 to studying marketing communications effectiveness In addition to the annual ITSMA customer survey Benchmarking Research and a Roundtable meeting and workshop devoted entirely to improving marketing communications effectiveness ITSMA teamed up with Expertise Marketing of Concord Massachusetts and seven other professional associations to measure the effectiveness of promotional vehicles across a wide variety of professional services categories (Table 1)

Nearly 1000 services marketers from information technology consulting law accounting and engineering firms participated in this first-time collaboration among several professional services organizations

SOURCE ITSMA BENCHMARKING STUDY ON SERVICES MARKETING PRAcnCES

Reproduction or disclosure in whole or in part to other parties shall be made only upon the express written consent of ITSMA C ITSMA-Reproductlon Prohibited

TABLE 1 PARTICIPATING ORGANIZATIONS AND GROUPS

American Association of Healthcare Consultants

Information Technology Services Marketing Association

National Law Firm Marketing Association

Law Marketing List Serv online participants

Society for Marketing Professional Services

American Institute of Certified Public Accountants

CPA Marketing Report Subscribers

Directory of Management Consultants (Kennedy Publications)

SOURCE EXPERTISE MARKETING

Although the number of respondents from the IT services sector is small in comparison to the total there is a good deal to learn from the marketing approaches taken by other categories of services firms ITSMA is pleased to be able to provide its members with this valuable data and comparative insights

MARKETING COMMUNICATIONS VEHICLES THE MOST USED

According to the survey results the communications vehicles used most by IT services providers are (Figure 2)

bull Brochures bull Websites bull Trade show exhibits bull Press quotes bull Participation in a professional association

These responses parallel the spending patterns reflected in the IT services providers marketing communications budgets

Marketers from other services industries also rely heavily on brochures as part of their marketing communications media mix However this is where they part company from the IT services providers They are more likely to use professional association participation listings in professional

directories speeches at professional events and advertising as ways to promote their firms services

There are some very interesting differences in marketing communications vehicle usage that are revealed in the study Not surprisingly IT services firms demonstrated the highest use of Websites In addition IT services providers make greater use of white papers to establish thought leadership and tag lines or positioning statements in their marketing materials In comparison IT services firms do less advertising community volunteering newsletter publishing and teaching than do their counterparts at other categories of services firms

WHICH PROMOTIONAL VEHICLES ARE MOST EFFECTIVE

Does the usage of promotional vehicles match the services providers perceived effectiveness In the case ofIT services providers it certainly does (Table 2) There is almost a one-to-one correspondence between usage and perceived effectiveness However the other marketers in the study did not necessarily vote with their wallets They believe the following to be the most effective marcom vehicles

bull Hosting a seminar bull Participation in a professional association bull Community volunteering bull Making a speech

Hosting a seminar is the clear winner voted number one in effectiveness by more of the study participants

Study participants had an opportunity to write in on their ballots other promotional vehicle candidates they felt were highly effective These fell into five broad categories

bull Getting close to the client personal selling (ie telemarketing one-on-one visits) obtaining references or testimonials customer satisfaction interviews

bull Using technology CD-ROMs videocassettes audio tapes

ITSMA bull ONE MILITIA DRIVEmiddot SUITE 4middot LEXINGTON MA 02421 bull TEL (781) 862middot8500 bull FAX (781) 674middot1366 bull EMAIL INFOITSMACOM bull WEBSm WWWITSMACOM ITSMA-Reproductlon Prohibited

TABLE 1 PARTICIPATING ORGANIZATIONS AND GROUPS

American Association of Healthcare Consultants

Information Technology Services Marketing Association

National Law Firm Marketing Association

Law Marketing List Serv online participants

Society for Marketing Professional Services

American Institute of Certified Public Accountants

CPA Marketing Report Subscribers

Directory of Management Consultants (Kennedy Publications)

SOURCE EXPERTISE MARKETING

Although the number of respondents from the IT services sector is small in comparison to the total there is a good deal to learn from the marketing approaches taken by other categories of services firms ITSMA is pleased to be able to provide its members with this valuable data and comparative insights

MARKETING COMMUNICATIONS VEHICLES THE MOST USED

According to the survey results the communications vehicles used most by IT services providers are (Figure 2)

bull Brochures bull Websites bull Trade show exhibits bull Press quotes bull Participation in a professional association

These responses parallel the spending patterns reflected in the IT services providers marketing communications budgets

Marketers from other services industries also rely heavily on brochures as part of their marketing communications media mix However this is where they part company from the IT services providers They are more likely to use professional association participation listings in professional

directories speeches at professional events and advertising as ways to promote their firms services

There are some very interesting differences in marketing communications vehicle usage that are revealed in the study Not surprisingly IT services firms demonstrated the highest use of Websites In addition IT services providers make greater use of white papers to establish thought leadership and tag lines or positioning statements in their marketing materials In comparison IT services firms do less advertising community volunteering newsletter publishing and teaching than do their counterparts at other categories of services firms

WHICH PROMOTIONAL VEHICLES ARE MOST EFFECTIVE

Does the usage of promotional vehicles match the services providers perceived effectiveness In the case ofIT services providers it certainly does (Table 2) There is almost a one-to-one correspondence between usage and perceived effectiveness However the other marketers in the study did not necessarily vote with their wallets They believe the following to be the most effective marcom vehicles

bull Hosting a seminar bull Participation in a professional association bull Community volunteering bull Making a speech

Hosting a seminar is the clear winner voted number one in effectiveness by more of the study participants

Study participants had an opportunity to write in on their ballots other promotional vehicle candidates they felt were highly effective These fell into five broad categories

bull Getting close to the client personal selling (ie telemarketing one-on-one visits) obtaining references or testimonials customer satisfaction interviews

bull Using technology CD-ROMs videocassettes audio tapes

ITSMA bull ONE MILITIA DRIVEmiddot SUITE 4middot LEXINGTON MA 02421 bull TEL (781) 862middot8500 bull FAX (781) 674middot1366 bull EMAIL INFOITSMACOM bull WEBSm WWWITSMACOM ITSMA-Reproductlon Prohibited

bull Pursuing leadership radio talk shows bull Distributing logo products pencils newspapermagazine columns submitting notepads pocket calendars jellybeans and winning industry awards mugs and so forth

bull Developing allies networking with other services providers and referral sources

FIGURE 2 MEASURING THE EFFECTIVENESS OF YOUR PROMOTIONAL VEHICLES

HWi~aBrochure~~

Havi~ a Web Page I~~~~~~~~~~~~~~~~~~~~E~~Exhibiting at Trade Shows

Professional Association Participati~ in a~~~~~~~~~~~~~~~~~~~iiiiiii~iii]Getting Quoted in Press ~

Using Tag une~ _ bullbullbullbullbullbull bullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbull

Ma~ngaSp~ ~ iiiiiiiiiiii______~- Advertisi~ bullbullbullbullbullbullbullbullbullbulliiiibullbullbullbulliiiiiiiiiiiiibullbulliiiii~

Usti~ a Firm in a bullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbull===~=~ Professional Directory EjIiiiiibullbullbullbullbullbullbullbullbullbullbullmiddot ~ -~-----middotbullbullIii~bullbullbull=~---------

Publishi~ Articles ~

Sending a Direct Mailer bullbulliiiiibullbulliiibullbullbullbullbullbullbullbullbullbullbullbullbullbullbull=~

H~~aSemnarl~~~~~~~~~~~~~~~~~~~~~~- Publishing a White Paper

Sponsoring an Event iiii~iiiiiiiiiiL

Community Volunteering bullbullbullbulliiiiibullbullbullbullbullIL==_~= _~ Publishing a Newsletter ~bullbullbullbullbullbullbullbullL~===e===----~

Teaching bullbullbullbullbullbullbullbull=====~~----- Publishi~ a Book _ bull iijiiiiiiiiiiiiiiiiiil~---=-------

Other

20 40 60 80 100

bull IT Professional Services (N=30) Gd All Respondents (N=963)

SOURCE EXPERTISE MARKETING

ITSMA ONE MILITIA DRIVEmiddot SUITE 4 bull LEXINGTON MA 02421middot TEL (781) 862-8500middot FAX (781) 674-1366middot EMAIL INFOITSMACOMmiddotWEBSITE WWWITSMACOM 13 C ITSMA-Reproduction Prohibited

TABLE 2 THE MOST EFFECTIVE PROMOTIONAL VEHICLES

Ranked By Number of First Place Votes

IT Professional Services

N=30

All Respondents

N=963 Having a Brochure 13 7 Having a Web Page 13 1 Getting Quoted in Press 10 4 Exhibiting at Trade Shows 10 3 Hostinga Seminar 7 14 Sending a Direct Mailer 7 6 MakinJj a Speech 3 8 Advertising 3 2 SponsoriflQ an Event 3 2 Publishing a Book 3 1 Participating in a Professional Association 0 8

Community Volunteering 0 8 Publishing a Newsletter 0 6 Publishing Articles 0 2 Listing Firm in a Professional Directory 0 2

Teaching 0 1 Using a Tag Line 0 0 Publishing a White Paper 0 0 Other 10 11

SOURCE EXPERTISE MARKETING

DETERMINING

EFFECTIVEN ESS

The science of measuring marketing communications effectiveness in the services business has not progressed very far Most approaches are ad hoc non-analytical and internally focused Furthermore there is no one method that is universally applied Standards are sorely lacking throughout each of the professional services represented in the study sample Metrics currently in use are not solidly defined nor understood

The true judge of marketing communications effectiveness is the client or prospect Unfortunately professional services providers do not always have the luxury of this type of input when they are making their marcom investment decisions Consequently they must rely on information that acts like a proxy for the target markets opinions and behaviors

Approximately half of the study respondents actually measure the effectiveness of their

promotional vehicles (Figure 3) In this respect IT services providers are no different from the other respondents Effectiveness measures can be either quantitative or qualitative Services marketers across all services industries tend to use a mix of measures as demonstrated in Figure 4 the measures used to evaluate the most effective promotional vehicles Just one-third (34) of all respondents could link their most successful marketing communications efforts to bringing in new clients andor revenue For IT services providers the picture is even bleaker Only 12 of the IT services providers indicated that they could trace their most effective promotions to new business andor revenue increases IT services providers rely more on feedback from customers or employees salespeople in particular

The most commonly used quantitative measures across all study participants are

bull Number ofleads inquiries or referrals bull Return on investment (ROI) calculations bull Number of new clients or revenue gained

It is interesting to note that the ROI calculations in use often do not include investments of both time and money Services firms tend to favor one of these inputs to the return on investment calculation but not both Only 2 of all study participants consider time and money in their calculations a truer measure of ROI

The qualitative measures used by IT services providers are very similar to the marketing counterparts in the other types of services providers

The most commonly used qualitative measures across all study participants are

bull Receive feedback and anecdotal comments bull Proactively gather feedback via evaluation

formssurveys

bull Informal interviews

IT services providers are less likely than their colleagues in other services industries to do informal interviews preferring the more structured focus group format

41 ITSMAmiddot ONE MILITIA DRIVEmiddot SUITE 4middot LEXINGTON MA 02421 bull TEL (781) 862middot8500middot FAX (781) 674middot1366middot EMAIL INFOITSMACOMmiddot WEBSITE WIfflITSMACOM ICIITSMA-Reproduction ProhIbited

TABLE 2 THE MOST EFFECTIVE PROMOTIONAL VEHICLES

Ranked By Number of First Place Votes

IT Professional Services

N=30

All Respondents

N=963 Having a Brochure 13 7 Having a Web Page 13 1 Getting Quoted in Press 10 4 Exhibiting at Trade Shows 10 3 Hostinga Seminar 7 14 Sending a Direct Mailer 7 6 MakinJj a Speech 3 8 Advertising 3 2 SponsoriflQ an Event 3 2 Publishing a Book 3 1 Participating in a Professional Association 0 8

Community Volunteering 0 8 Publishing a Newsletter 0 6 Publishing Articles 0 2 Listing Firm in a Professional Directory 0 2

Teaching 0 1 Using a Tag Line 0 0 Publishing a White Paper 0 0 Other 10 11

SOURCE EXPERTISE MARKETING

DETERMINING

EFFECTIVEN ESS

The science of measuring marketing communications effectiveness in the services business has not progressed very far Most approaches are ad hoc non-analytical and internally focused Furthermore there is no one method that is universally applied Standards are sorely lacking throughout each of the professional services represented in the study sample Metrics currently in use are not solidly defined nor understood

The true judge of marketing communications effectiveness is the client or prospect Unfortunately professional services providers do not always have the luxury of this type of input when they are making their marcom investment decisions Consequently they must rely on information that acts like a proxy for the target markets opinions and behaviors

Approximately half of the study respondents actually measure the effectiveness of their

promotional vehicles (Figure 3) In this respect IT services providers are no different from the other respondents Effectiveness measures can be either quantitative or qualitative Services marketers across all services industries tend to use a mix of measures as demonstrated in Figure 4 the measures used to evaluate the most effective promotional vehicles Just one-third (34) of all respondents could link their most successful marketing communications efforts to bringing in new clients andor revenue For IT services providers the picture is even bleaker Only 12 of the IT services providers indicated that they could trace their most effective promotions to new business andor revenue increases IT services providers rely more on feedback from customers or employees salespeople in particular

The most commonly used quantitative measures across all study participants are

bull Number ofleads inquiries or referrals bull Return on investment (ROI) calculations bull Number of new clients or revenue gained

It is interesting to note that the ROI calculations in use often do not include investments of both time and money Services firms tend to favor one of these inputs to the return on investment calculation but not both Only 2 of all study participants consider time and money in their calculations a truer measure of ROI

The qualitative measures used by IT services providers are very similar to the marketing counterparts in the other types of services providers

The most commonly used qualitative measures across all study participants are

bull Receive feedback and anecdotal comments bull Proactively gather feedback via evaluation

formssurveys

bull Informal interviews

IT services providers are less likely than their colleagues in other services industries to do informal interviews preferring the more structured focus group format

41 ITSMAmiddot ONE MILITIA DRIVEmiddot SUITE 4middot LEXINGTON MA 02421 bull TEL (781) 862middot8500middot FAX (781) 674middot1366middot EMAIL INFOITSMACOMmiddot WEBSITE WIfflITSMACOM ICIITSMA-Reproduction ProhIbited

FIGURE 3 Do YOU MEASURE THE EFFECTIVENESS OF YOUR PROMOTIONAL VEHICLES

IT Professional Services All Respondents N=30 N=963

bull Yes bull Yes [J No 0 No Response

SOURCE EXPERTISE MARKETING

FIGURE 4

MEASURING THE EFFECTIVENESS OF YOUR PROMOTIONAL VEHICLES

FOR YOUR TOP-RANKED VEHICLE HOW DO YOU KNOW IT WAS SUCCESSFUL

NumberoflIlIlIlIlIlIl InquiriesReferrals f-~---------------------J

Feedback from bullbull111111bullbullbullbull11bullbull11 CustomersEmployees

~--------~----~----~

Increased Market bullbullbullbullIIIIIIIIII AwarenessNislbility f---------~

New ClientsRevenue L ____ ~~_ _ _________ Gained

~--------------~------------~--~

Dont Know

0 10 20 30 40 50

bull IT Professional Services (N=30) o All Respondents (N=963)

SOURCE EXPERTISE MARKETING

ITSMA bull ONE MILITIA DRIVEmiddot SUITE 4middot LEXINGTON MA 02421 bull TEL (761) 662middot6500middot FAX (761) 674middot1366middot EMAIL INFOITSMACOMmiddotWEBSITE WWWITSMACOM Is c= ITSMA-Reproductlon Prohibited

IMPLICATIONS FOR IT SERVICES PROVIDERS

IT services providers can likely learn some useful lessons from their brethren at other types of service firms The use of and perceived effectiveness of marketing communications activities varies from one type of professional service firm to another Each vehicle is used to further the common goals of building visibility andor credibility Interestingly IT services providers seem to emphasize marcom vehicles that promote visibility (eg Websites and trade show exhibits) over those that build credibility (eg hosting a seminar participation in a professional association making a speech) Furthermore IT services providers appear to be less involved in their local communities making little use of community volunteering opportunities for marketing purposes

A professional service purchase is typically perceived as high risk and consequently emotions play an active role Anything a services provider can do to alleviate discomfort will help make the sale Service feature descriptions and capability statements are not going to be as effective as communications vehicles that offer proof of capabilities and service benefits or service product trials IT services providers need to describe their services and capabilities less and get out and demonstrate them more

Effectiveness measurement as a process has not yet been introduced as an integral part of professional services firms marketing communications programs This is true regardless of the service category in which the firm participates No particular quantitative or qualitative measurements stand out as being

universally applied Surprisingly few service firms calculate ROI or if they do calculate ROI do not include both marketing staff time and non-personnel related expenses in their calculations

ITSMA RECOMMENDATIONS

Few IT services providers are making a direct connection between their marcom efforts and revenue and new client generation preferring to track the number of leads and inquiries as an intermediate step IT services providers must do a better job of measuring the effectiveness of their marketing programs They must link their marcom efforts directly to revenue generation and introduce systematic methodologies to track market awareness preferences and behaviors ITSMA advocates that services marketers interview a representative sample of their new clients on an ongoing basis and ask

bull How did you first learn about our companyservice

bull What influenced you the most to consider our services

bull What was most important to you in reaching the decision to purchase our services

Answers to these questions will best help services marketers fine-tune their marketing communications strategies and measure their impact As IT providers centralize their marketing communications strategies in support of integrated marketing communications programs they must also centralize their ability to track investments and especially results

Julie A Schwartz August 1998

ABOUT EXPERTISE MARKETING

Expertise Marketing ofConcord Massachusetts is a busine55 dedicated to providing marketing counsel for professional servicesfirms andpractitioners Expertise Marketing helps identifj buildand market the intellectual

capital offirms in a broad spectrum ofconsulting specialties as well as accounting law executive search architecture and engineering healthcare and information technology services For more information about Expertise Marketing and their research study on Measuring the Effectiveness ifYour Promotional Vehicles please contact Suzanne Lowe

at (978) 287-5080

6l ITSMA bull ONE MILITIA DRIVEmiddot SUITE 4 bull LeXINGTON MA 02421 bull TEL (781) 862-8500 bull FAX (781) 674-1366 bull EMAIL INFOITSMACOM bull WEBSfTE wvwITSMACOM ITSMA-Reproductlon Prohibited