Focus on the future

01 Oct 09

How you treat customers who can’t spend now will affect your business in the future.

As a result of the current economic situation, the channel must expect that while a portion of its customer base still  needs the new technology, they lack budget to spend on projects or have severely limited capacity to do so.

For many of these customers it is not a matter of establishing a business case to justify IT spending; rather they have no  ability to spend under any circumstances. The term ‘frozen budgets’ has been heard from CIOs as it relates to discretionary spending. Eventually the pendulum will swing the other way, but until that time they need to be nurtured.

In the process of its research into new marketing, messages or solutions vendors and channel partners are bringing to market today in response to the economic situation, Gartner has found a disconnect between IT providers’ actions and  customers’ requirements. Many IT vendors are offering 0% financing, discount on licences, or pushing technologies that  will provide cost savings within the year. But these optionsstill imply a capital expenditure. If capital expenditure is  on hold or has decreased for that particular customer, there doesn’t appear to be any approach for continual customer engagement.

In terms of sales engagement, it is difficult to have field sales people, who are primarily compensated on sales revenue,  spending anything other than perfunctory time with this type of customer. However, two issues do require you to have  an organisational response and marketing programs to maintain engagement with these customers:

  • Customers are often very sensitive to the importance of ‘relationships’. IT providers who disengage non-spending clients today can expect to lose future IT spending when economic circumstances improve.

  • Incumbent IT providers must assume that if you aren’t continuing engagement with all customers, including non- spending, then your competition will. It is times like these where relationships are critical and unhappy customers become targets for competitive IT providers.

Marketing teams must take on the primary responsibility for continual customer relationships, especially for current    non/low-spending customers, so you need to have a mid- and long-term perspective on the role of marketing and client  engagement. This will prove challenging for some marketing teams that are primarily judged on how many leads they have generated and which ones will close in a current quarter.

The marketing team should consider customer engagement that:

  • Maintains a connection with the customer – albeit in a low-cost, indirect manner

  • Provides some value to the customer, even if not resulting in revenue

  • Is particularly focused on cost optimisation, since that aspect is generally paramount (and will remain so for the  foreseeable future) in the mind of customers.

Gartner suggests three phases for programs around customer engagement, in sequence:

  • Excel in cost reduction/avoidance advice: Provide information and insight (advice, research, etc.) that helps customers reduce or contain IT costs themselves.  This is generic advice not necessarily related to a vendor’s technology, eg: which laptops could extend the replacement cycle.

  • Focus on OPEX not CAPEX: Provide services that help the customer reduce or contain costs without buying more technology.

  • Conduct a zero-based budgeting exercise: With 60-70% of IT budgets allocated to ‘keeping the lights on’, this is a prime target to identify opportunities for cost savings and to free up budget for investment in priority IT projects.

It is important not to go straight to phase three, as customers will view such an approach as demonstrating a lack of  understanding of their needs.

By taking an intellectual property- driven or thought-leadership approach you can maintain engagement with your  customers, keep discussions open, and ensure that you are present when IT spending picks up.

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