Software Companies Can Gain Competitive Advantage By Making Their Pricing Value-Based

Duncan Jones

I help hundreds of technology buyers each year to understand the impact of technology changes on their software contracts, but I also get questions from software providers about how best to price their products. Some are bringing new products to market and want to know how to maximize revenue, while others are struggling with obsolete metrics such as per processor and want to update their pricing for the modern mobile, cloudy world. The answer is usually to find licensing metrics that make their pricing value-based while balancing simplicity and fairness. The more value a customer gets from your product, the more they should be willing to pay for it. If you make your pricing too simple then you won't match value sufficiently closely, which will cause you to price yourself out of some deals and leave money on the table in others. If, OTOH, you try to match value too precisely you risk making your pricing so complicated that buyers will reject it, and you, completely.

For example, suppose you have a product that will help people do their jobs better, so you decide that charging for each user will be a good approximation for value. The potential problem is that not everyone will use your product the same, in terms of depth of functionality and/ or frequency of access. Your single per user price will be unfair to companies with long tails of light, infrequent users, for whom you'll therefore be too expensive. Conversely your pricing will be unfair to you when the customer is mostly power users. To make your pricing fairer you could have different prices for different categories of user, but then you risk being criticized for being too complex.

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Enterprises Are About To Get Tablet Fever. How Can Tech Vendor Marketers Reach Them?

JP Gownder

 

Marketers and strategists at tech vendors who sell tablets won’t want to miss a webinar co-hosted by Simon Yates and me this Friday, September 28th. Aimed at a CIO audience, our webinar leverages a great deal of data from Forrsights and Tech Marketing Navigator on the opportunity for tablets, how to engage enterprise tablet buyers, on the effects of bring-your-own (BYO), and other, related topics. Tech marketers and strategists won’t want to miss our presentation: You'll gain insights into the challenges tablets present for CIOs, and you'll also see hard data on both the opportunity for selling tablets and on how best to engage potential buyers.

When: Friday, September 28, 2012, 1:00 p.m. -- 2:00 p.m. Eastern time (17:00--18:00 GMT)

Overview: It’s safe to say that the early adopters of Apple’s iPad didn’t go out and buy the device because they wanted a new gadget for work. They purchased the iPad because of what they could do in their everyday lives. But it didn’t take long for employees to bring their iPads to the office. If we mark the modern tablet era by Apple’s 2010 iPad launch, then an astounding 84 million iPads and as many as 120 million tablets in total have flown off the shelves. Forrester’s global workforce and decision-maker surveys and client conversations show just how fast tablets are being adopted:

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2012 Tech Marketing Priorities – From 50 Tech Marketing Execs

Understanding the priorities of fellow tech marketers is a great way to tune one’s own 2012 initiatives.   Over the past two months, my Forrester Technology Council colleagues and I have spent quite a bit of time surveying and talking with members (~ 50 tech CMO’s and VP’s of Marketing) about their priorities for 2012.  Before the champagne pops up here in Boston, I wanted to share a few of the priorities my colleagues and I are hearing most about for 2012:

  • Demand management wins out across the board.   In years past, the top priority for our tech marketing members centered around "driving leads into the funnel."  In 2012, tech marketing execs still care about driving leads, but there is an increased desire to trade lead volume for better lead quality.   Quality that comes from strong nurturing activities to help leads move from the top of funnel into the middle and ultimately into a position where they are "sales-ready."  A vocal number of members expressed commitment to building a more comprehensive demand management process where they would balance their lead nurturing and lead generation initiatives appropriately.  
  • Brand/rebranding comes into vogue.  Many of our members have put brand and/or rebranding at the top of their lists for 2012.  The need to create greater market differentiation against competitors and to build market awareness in new markets (e.g. verticals, geographies) were cited as the top reasons for steering funds, resources and time in brand or rebranding initiatives.     
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Brand Advice For B2B Tech Marketers: Q&A With Siegel+Gale

"Branding & rebranding" is rising fast on the list of priorities for tech marketers in 2012.

Over the past few months, my colleagues and I in the Tech Marketing Council have been engaging in a rising number of client discussions around the topic of “brand.” These conversations with our CMO and VP of marketing clients have come in a few different flavors:

  • Branding for Emerging Firms. Small, but not startup, vendors seeking to create better brand position and differentiation to take on the established sector players. (e.g., David and Goliath)
  • Rebrand for Maturing Firms. Midsize growing tech companies ($250M+) with designs on being the next $1B+ firm in their sector. (e.g., “Good to Great”)
  • Post M&A Brand Integration. Both emerging and large tech firms are working to integrate newly acquired companies, personnel and products. (e.g., House of Many Brands)
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Understanding Your Customers’ Habits Can Make A Difference

Earlier this month, I had the pleasure of hosting a Technology Marketing Council Roundtable for a number of Austin, Texas-based members. Gathered around the table were VPs and senior technology marketers from AMD, IBM, Planview, OpenText, Socialware, Troux Technologies, and a soon to be renamed Austin Ventures startup.

Always with an eye toward seeking out relevant and thought-provoking ways to push the thinking of our members, I invited Art Markman, Ph.D., Annabel Irion Worsham Centennial Professor of Psychology and Marketing from the University of Austin, and Principal Advisor Tyler McDaniel from Forrester to talk about how companies can make themselves into a habit with their customers. While there were a number of great insights and peer conversation, I wanted to share my top two takeaways:

Takeaway No. 1: Getting Your Customers To Act Without Thinking. We all develop habits and rituals that become automatic and instinctive. The marketers in companies like Starbucks and Apple spend a lot of time and treasure examining these habits so that they can seamlessly embed their products and services into the lives of their customers. They’ve learned that utilization happens far easier when there’s instinctive action over contemplative thought.

The lesson for B2B tech marketers - it’s time to break our habit of building campaigns that tell customers to “think of us often” and design a new level of marketing that makes customers instinctively act without thinking. Through careful study (see next takeaway), it’s feasible to start laying down consistent, repetitive messages that over time will trigger customers to instinctively act on our products and services versus actually having to think about them.

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Sneak Peek At 2012 For Tech Marketers And Strategists

Daniel Klein

Last week at the Four Seasons in Palo Alto, CA, a select group of senior tech marketing and strategy executives from a who’s who list of tech titans joined Forrester analysts Andy Bartels, Chris Mines, Peter Burris, Tim Harmon, Ellen Daley, Manish Bahl and Kim Celestre for our 2012 First Look event to understand the key trends and marketing best practices that they must employ in 2012 and beyond. 

While I can’t deliver 4 hours of content in one blog post, I’ll start by outlining my three key takeaways. Curious about other trends or marketing best practices for 2012 not listed below?  Leave a comment and we’ll do our best to address them.

Takeaway #1: Emerging markets are still emerging (aka small) compared with the largest IT market – the US.

While there has been a lot of excitement (rightfully so) in fast IT spend growth markets such as China (17% year-over-year growth), India (21% year-over-year growth), and Brazil (28% year-over-year growth), the relative size of these markets are still a small percentage compared with the US.  For example, the IT spend in China is only 15% of what it is in the US, while the percentages are even smaller for Brazil at 6% and India at 4% compared with the US.[i]

WIM (what it means): Tech marketers and strategists with a global remit must keep both relative size along with growth in mind as they balance their investment, program activities, and other resources in 2012. 

Takeaway #2: IT consumerization means big changes for marketers.

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Kosten Metreweli, CMO Of Zeus Technology, Talks Demand Management And Lead Nurturing

“If you think demand management and lead nurturing is just automating your process to create, track and passing leads over to sales — you’d be wrong.”

This is an edict from Kosten Metreweli, CMO of Zeus Technology*, during a presentation he gave to a group of CMOs and VPs of marketing in Forrester’s Technology Marketing Council regarding his approach to generating demand and lead nurturing.  For those who don’t know Zeus — the organization is now part of Riverbed Technology and is a cloud-based elastic application solution that helps IT organizations deliver fast, secure, and scalable web applications with the economics of cloud (ex: BBC, Disney, and Domino’s Pizza).

Kosten acknowledges the importance of a solid marketing automation infrastructure, but emphasized that effective technology marketing professionals also need to:

·         Take ownership for ALL revenues (yes, all)

·         Have tight alignment with sales (not just the leadership)

·         Study, define, and evangelize the target personas (don’t admire them just within your office)

·         Map the content strategy to the funnel — from prospect — to deal — to customer success (oh, and by persona too)

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Let's Talk Geography And Marketing Vehicles In The Tech Industry

Daniel Klein

Based on strong interest from my previous blogs on choosing the right marketing vehicles, I figured I'd continue the discussion with another angle that's often vexing for tech marketers - how do marketing vehicles vary by geography?

Cultural preferences factor significantly into how technology decision-makers consume information as they go through the purchase process. In analyzing more than 20,000 interviews across the US, Europe, and Asia Pacific, we see that vehicle selection varies by region by up to 40%. For tech marketers, this means that straightforward localization of global programs won’t work. Instead, you must understand how cultural preferences shape vehicle preferences and build programs that map to the specific vehicles appropriate for each market. Let’s look at a detailed example and then some broad guidelines.

We get a lot of questions about vehicle preferences for the C-suite, so I’ll pick CFOs as our example. Across the US, Europe, and Asia Pacific, the CFO is a critical player at the beginning and end of the purchase process for investments in collaboration and virtualization technology. When we take a look at vehicle preference for CFOs across these regions, we find that CFOs in the US prefer a balanced mix approach (vendor site, search, in-person sales discussion, and online business print such as Forbes and The Wall Street Journal). CFOs in Europe prefer web vehicles (online business print, online tech print, and online tech info sites) and CFOs in Asia Pacific favor events and sales over web vehicles. In all regions, the CFO is involved and tech-savvy. However, a marketer needs a unique regional mix to reach and influence the CFO.

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Choosing The Right Marketing Vehicles In The Tech Industry — Timing Matters

Daniel Klein

Today’s launch of Forrester Tech Marketing Navigator seemed like a good catalyst to dig a little deeper into my previous blog post about how many marketing vehicles are needed for a B2B tech solution (How Many Marketing Vehicles Do You Need? Guiding Principle Number Two.)  If you read that blog, you’ll recall that I identified that on average 7.6 marketing vehicles are used by IT or business professionals during a technology purchasing process (with considerably more than 30 available for marketers to use.) Note that you’ll need to use more than 7.6 marketing vehicles in your overall marketing mix because you’re likely need to influence various stakeholders whose use of marketing vehicles varies. This makes a tech marketer’s job challenging.

 

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The Goldilocks Approach to Messaging: Guiding Principle Number Five

Daniel Klein

Much like in the story of “Goldilocks and the Three Bears,” tech marketers must find the right balance between too many and too few messages. Common pitfalls include standardizing on a one-message-fits-all philosophy to having so many messages that sales and marketing are unable to deliver them to the right people, at the right time, and in the right context. That’s where Guiding Principle Number Five fits in.

Guiding Principle Number Five: Messaging 3x2

For almost all technology solutions, it’s necessary to have variances in messaging to reflect the different roles or titles, geographies, size companies, different industries, etc., that tech marketers are targeting. The good news for tech marketers is that Forrester Tech Marketing Navigator data shows that by focusing on the top three shared messages that are relevant across multiple segments and the two messages that are uniquely relevant to a specific segment/target, tech marketers can achieve the Goldilocks’ “just right” quotient for messaging.

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