T H E T EC H M A R K E T E R ’ S R O L E I N C R EAT I N G T H E “ M A R K E T - D R I V E N ” F I R M

Operational Relevance: A Mandate for High-Tech Marketers

Mark W. VigorosoSVP, Global Marketing & Alliances

Servigistics, Inc.

Agenda2

What is “operational relevance”?

3 examples: Product Development, Sales, and Service Ops

Payoffs

Hypothesis3

Marketing needs to achieve operational relevance in order for the company to realize the strategic and financial benefits of being a “market-driven” firm.

Is Your Marketing Team Operationally Relevant?4

What’s the subject of most inquiries you get from other functions in the company?

“Pretty up” a powerpointpresentation

Logo’d swag to bring to a client meeting

Latest report from an analyst firm

Where are the sales leads?

Order lunch?

How should we allocate R&D capacity?

Which indirect sales channels will deliver the fastest time-to-value for us?

Which of our clients are most profitable?

Which emerging markets deserve our investment?

Which product lines should we grow vs. run for cash?

How should we organize and incent our sales and services teams to achieve client expansion targets?

How do we coordinate sales and marketing teams and systems to eliminate pipeline leakage?

IrrelevanceStrategic

RelevanceOperational Relevance

Tradeshow booth duty

What is “Market-driven”?5

“Companies that are not market-driven believe the role of Marketing is to create the need for their products. You can see this in their behavior. Marketing is where t-shirts and coffee mugs come from. Marketing is the department that runs advertising. Marketing is the department that generates leads. Most of all, Marketing supports the sales effort.

But mature companies realize the aim of marketing is to make selling superfluous. Marketing defines products based on what the market wants to buy.”

Strategic Relevance…6

Strategy without Operations is “tooth-less”

… Paves the Way for Operational Relevance…7

Operations

R&D / Product Development

Sales Operations

Client Services / Support

Strategy

What should we build?

How and to whom should we sell it?

How do we earn the right to keep selling it?

Just get a seat at the table. Don’t try to OWN it.

Think/act cross-functionally

Agenda8

What is “operational relevance”?

3 examples: Product Development, Sales, and Service Ops

Payoffs

… But Needs to be Founded in Fact, not Opinion/Experience

9

A. What should we build?

• Segment/region/ product line momentum via TTM and E(FTM) revenues

• Current / future product competency relative to competition

B. How and to whom should we sell it?

• Segment prominence by region

• Competitive momentum

• Market sizes

• Market growth rates

• Installed-based sellability

• Win/Loss

• Pipeline stage conversion rates

C. How do we earn the right to keep selling it?

• Client sat / NPS

• White space analysis

• Account mapping

QM2

Build & Smoke Testautomated testing to drive continuous quality

General Release

Release Plan

Beta Release

Cycle Reviewsperiodic reviews of work-in-progress features

QM3

QM4

QM5

QM1

Code Complete

QA StableBeta Ready

QA CompleteG/A Ready

Requirements Due

Sprint 1 Sprint 2AlphaSprint

Beta Sprint

Scope Frozen

Build & Smoke Testautomated testing to drive continuous quality

Portfolio CouncilCOOCMOCTO

VP, Prod MgtProgram Mgt

Finance

Product Mgt A

Product Mgt C

Product Mgt B

Product Mgt D

Product Mgt E

PRP: Product Release ProposalsNPI: New Product Introductions

Product Release Defined

BRD

QM0

Portfolio / Platform

Mgt

Sales

Tech Support

Execs

Pro Services

PRP

NPI / CBA

Client Community

10

A. Product Development Operations

Traditional Product Management

Product 1

MarketAnalysis

Competitive / Win-lossAnalysis

Product Strategy / Roadmap

Product Plans & Priorities

Product 2

Product 3

MarketAnalysis

Competitive / Win-lossAnalysis

Product Strategy / Roadmap

Product Plans & Priorities

MarketAnalysis

Competitive / Win-lossAnalysis

Product Strategy / Roadmap

Product Plans & Priorities

Corporate Goals &

Objectives

Fragmented value propositions

Difficult to differentiate

No game-changers

Biased views of the same markets

Redundancies & conflicting goals

Competition for resources

11

Portfolio Product Management

Segment 1 Dynamics

Segment 2 Dynamics

Segment 3 Dynamics

Corporate Goals &

Objectives

SALES &

MARKETING

PRIORITIESShort Term Revenue

PORTFOLIO

INVESTMENT

PRIORITIESLonger Term Growth

High-Value Solutions

Product 1

Product 2

Product 3

12

Scorecard for Marketing Relevance in Product Dev Ops

13

Allocating R&D resources towards building products the market wants to buy should result in portfolio REVENUE and PROFIT growth.

KPI Baseline Target Actual

Product 1 direct contribution margin (DCM)

Product 1 share of target markets

Product 2 direct contribution margin (DCM)

Product 2 share of target markets

Product 3 direct contribution margin (DCM)

Product 3 share of target markets

A&DConsumer

Elec&Appl

High

TechIndustrial

Medical &

Scientific

Motor

VehiclesUtilities

118% 91% 161% 87% 91% 101% 44%

SK/SC 124% 47% 36% 194% 209% 183% 121% 18%

CC 92% 70% 108% 144% 103% 54% 60% 39%

SPM 136% 155% 40% 355% 191% 80% 159% 8%

FS 96% 0% 56% 201% 189% 85% 31% 41%

SPP 82% 0% 72% 172% 0% 0% 349% 0%

SL 99% 0% 116% 412% 166% 58% 0% 0%

WTY 72% 11% 8% 203% 121% 51% 103% 80%

Average Score: 100%

SPM 54.82% 9.13% 21.12% 19.49% 15.68% 19.36% 4.18%

SPP 0.00% 16.59% 10.23% 0.00% 0.00% 42.35% 0.00%

FS 0.00% 12.90% 11.94% 19.28% 16.62% 3.80% 22.13%

SK/SC 16.68% 8.33% 11.57% 21.36% 35.79% 14.73% 9.53%

SL 0.00% 26.51% 24.54% 16.99% 11.39% 0.00% 0.00%

CC 24.64% 24.61% 8.54% 10.51% 10.57% 7.25% 21.12%

WTY 3.86% 1.93% 12.05% 12.36% 9.94% 12.50% 43.04%

B. Sales Operations

For 2012 planning, the Portfolio Prioritization tool contemplates the following inputs by product line…:• TTM Financials• E(FTM) Financials• Market sizes• Market growth rates• Competitive threats• Installed-based sellability

…And provides fact-based and market-driven guidance for industry segment, region, and product line bookings targets.

Translation?

Paths of least resistance to achieving top-line targets: • Shorter sales cycles• Higher win rates

14

Scorecard for Marketing Relevance in Sales Ops15

Harmonizing marketing and sales efforts should result in increased sales VELOCITY and EFFICIENCY.

KPI Baseline Target Actual

PQL/MQL Conversion Rate

MQL/SQL Conversion Rate

SQL/Promising Conversion Rate

Promising/Upside Conversion Rate

Upside/Commit Conversion Rate

C. Client Services Operations16

“Client Leadership Team” Goals:

Maximize Client Lifetime Value (CLV)

Revenue (i.e. SELL MORE SOFTWARE to our existing clients)

Profit (i.e. align our “care and feeding” investments with clients’ top-line contribution)

Grow referenceable base

Exec sponsors: COO, CMO

Team members from: Finance

Sales

Marketing

R&D

• Client Services

• Account Services

• Pro Services

• BIS

Scorecard for Marketing Relevance in Client Service Ops

17

Sensitivity analysis on client sat data and prioritized plan for client expansion should result in highly profitable recurring revenue streams from “tier 1” clients.

KPI Baseline Target Actual

NPS by product, region, segment

Cross-sell opportunity:close ratio, Tier 1 accounts

Up-sell opportunity:close ratio, Tier 1 accounts

Cross-sell opportunity:close ratio, Tier 2 accounts

Up-sell opportunity:close ratio, Tier 2 accounts

Average Annual Client Value (ACV), Tier 1 accounts

Average Annual Client Value (ACV), Tier 2 accounts

Average Client Lifetime Value (CLV), Tier 1 accounts

Average Client Lifetime Value (CLV), Tier 2 accounts

Practice Sound Change Management18

Awareness

Desire

Knowledge

Ability

Reinforcement

Agenda19

What is “operational relevance”?

3 examples: Product Development, Sales, and Service Ops

Payoffs

Payoffs20

What matters most in company valuation? PROFIT (OPERATING)

PROFIT GROWTH

An operationally relevant marketing organization bridges the gap between the top-line-only incented sales organization and the often bottom-line-blind delivery and service organizations. Source of operational cost is often not the best source for driving

operational efficiency

Go-to-market strategy drives operational decisions and organizational structure

Operating profit is created and grown via selling the right product to the right companies in the right markets

Parting thoughts…21

1. Data sets you free

2. Think cross-functionally

3. Be ready to manage change

Thank you!22

Keep in touch!

mvigoroso2011@kellogg.northwestern.edu

www.linkedin.com/in/markvigoroso

@mvigoroso