How we sell Sometimes you've got to think small to think big. When Christchurch-based human resource management software firm Pivot Software first entered the Australian market three years ago it didn’t herald its arrival by splashing out on flash offices. Instead the company got friendly with an Aussie outfit. HR consultancy Hewitt had a great list of clients in sectors Pivot wanted to target, such as the professional engineering space. “So we used that as a kind of test ground to gauge the interest,” says Pivot managing director Pip Youngman. “We tried to create a beachhead.” Through working the relationships, Pivot gained a key customer — engineering services company Sinclair Knight Merz (SKM). The company is an important player in that market, says Youngman, “and as a result anything that was happening with them was very interesting for their competitors”. The win also generated talk amongst the close-knit HR community, she says — and the buzz was infectious. Aecom, a direct competitor of SKM, is now also on Pivot’s client list. “And we’ve got a couple that are moving through the pipeline as well that are also direct competitors,” says Youngman, “so word’s getting out.” With wind in its sails, the company opened a one-person office in Sydney last October; other Australian clients include Origin Energy, the University of Sydney and a subsidiary of a major bank. Between 25% and 35% of Pivot’s business now comes from Australia, and Youngman expects that to be around 50% in a year’s time. Youngman says it’s tempting to take a blanket approach to marketing when entering a large market like Australia. “But I think [creating] an awareness within a vertical or a really key area where you know your industry and you know your customer and can prove to your customer that you know them is actually a lot better than trying to convince masses of the value.” Owen Scott and Greg Williamson — directors of Concentrate, a Christchurch-based technology marketing consultancy — call this effect ‘moving the flock’ “You get a much better long-term effect if customers are all connected, so when they network you start to get that word of mouth happening,” says Scott. “That’s when markets take off.” As part of the second annual Market Measures study, Concentrate and business advisers PricewaterhouseCoopers surveyed 76 Kiwi technology companies about how they take their products to market. The survey found the highest performing companies were taking a more strategic approach to their marketing — focusing on selecting target markets, developing strong brand positioning, building brand awareness and working with partners. However a different picture emerged of the bulk of the companies surveyed. Some 77% of companies export, but they mainly sell directly with a small team (69% have two or less sales staff) focused on the transaction of each sale. “The study reveals brave Kiwi technology companies battling it out largely alone in tough world markets, resolutely growing sale by sale,” it states. Williamson says the survey’s findings gel with Concentrate’s experience of working with more than 100 New Zealand technology companies. Many of our tech companies are doing very nicely, he says, with the survey finding average annual turnover grew 39.6% in the surveyed period, despite the recession. “The thing they don’t necessarily see,” he says, “is they could go to a whole other level with a more planned approach.” Kiwi tech entrepreneurs tend to be artisans, says Williamson, focused on the product they’ve created, but with limited understanding, particularly offshore, of their customer. “What they’ve got to realise is they’re not in the product business; they’re in the business of solving customers’ problems and that’s a completely different way of looking at it.” They’re not lazy or unmotivated, says Scott. “But they think the only way to build your business is just by working harder and knocking on more doors.” The surveyed companies spend a huge amount on sales and marketing — an average of 40.1% of turnover in the 2009 survey — but it’s focused on the sales transaction. “A big chunk of it is this lone person getting on a plane and knocking on doors,” says Scott. “They’re not investing in trying to make that sales process easier in the future.” The study also found a small proportion using resellers or distributors — 9.8% in the domestic market and 24.2% when exporting — despite shorter lead times reported among those selling business-to-business this way. Williamson has observed it’s easy to sign up resellers, but it’s hard to make the partnerships work. The margins companies pay allow them to embrace the reseller’s brand, their networks and their customers. “The partnerships that succeed are where you sign up a distributor and help them sell it.” Auckland-based Greentree International sells its business management software exclusively through channel partners and the company’s marketing manager, Janine Witham, says about half her time is spent helping partners with their strategies. The company runs workshops, conferences, meetings and roadshows to keep them engaged. “My job is to give them as much information and excitement to be able to run with it but not actually do it for them,” says Witham. Another apparent disconnect the study found was that while our tech companies overwhelmingly sell on product quality or great service, most price their offerings similarly or lower than competitors. Lower Hutt based Tekron International makes sophisticated GPS clocks primarily for the power industry, positioning itself at the quality end of the market. Marketing manager Charles Norwood says in North America, for example, competitors offer significantly cheaper products. However the two leading utility companies in that market are standardised on Tekron clocks. “In some sales it will cost us,” says Norwood. “But we do sell on quality.” The company has worked hard to position itself as a thought leader, he says, taking a punt a few years ago on a new precision time synchronisation protocol, which has now become standard. Its sales people develop personal relationships with the small pool of specialist engineers in its target market and the company provides a forum for technical discussion through its blog. Another characteristic of high-growth companies in the survey was effective use of social media — a subject close to the heart of serial tech entrepreneur Rod Drury. Drury says when founding the online accounting software firm Xero the team knew it couldn’t literally knock on all the doors of the tens of thousands of customers Xero wanted to target. And as a company in the online world it was difficult to measure the effectiveness of traditional marketing in offline media, such as newspapers or radio. Instead Xero’s strategy has been to use its blog and Twitter to get people talking about the company and building a brand. “In our space nobody buys accounting software because they’ve heard a catchy jingle; they go and ask three or four people,” says Drury. Social media isn’t free; it’s a different kind of spend. Of Xero’s 90-odd staff, between eight and ten are active bloggers, three or four spend part of their time monitoring Twitter and feeds, and two staff work full time looking at social media. No one’s cracked a formula to get people talking, admits Drury. You’ve got to experiment, challenge some norms (Xero welcomes competitors to post on its website, for example) and keep measuring effectiveness, because what worked six months ago might not today. “It’s a brave new world and one of my favourite quotes is ‘it’s not the big that eat the small, it’s the fast that eat the slow’.” |
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Is the pioneering spirit of our tech companies holding us back? |
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