Technology Public relations is not just about getting products in the media. It is the key to engineering the perception that your company is a leader, an innovator, a market disrupter.
Good PR provides a powerful way to giving investors evidence of added intrinsic value that goes well beyond your balance sheet or forecasted future earnings.
And because large companies are often "strategic buyers," the best possible impression of a business must be engineered to create maximum market impact, maximum desirability and the highest possible market value.
Understanding that market perception is a crucial corporate asset has begun to take hold among savvy executives. Emerge, an M&A broker, lists twelve steps to maximizing a company’s market valuation.
Step seven on the list is:
- "Raise your company’s public profile."
Emerge explains that strong, positive publicity adds value beyond just exposure within your trade customer audience. Emerge concludes with the final advice on maximizing market valuation:
- "Invest in a reputable PR firm to make sure your company gets noticed."
While the value of a reputation is less tangible than property, revenue or cash, more experts are arguing it is possible not only to quantify it but even to predict how image changes through PR will improve a company’s share price or M&A market value.
Research conducted by the International Association of Business Communicators found a strong link between a company’s ability to leverage its internal and external communications – an intangible asset on the balance sheet – with a favorable market valuation, saying, "Wall Street is now more interested than ever in the value of intangibles," like brand perception.
Every company should spend as much energy engineering the market’s perception about them as they do engineering their products – every percentage point in increased perceived value will pay back those PR efforts handsomely
Steve Schuster is CEO of Rainier Communications, a leading U.S. technology-marketing agency that has been the creative force behind hundreds of PR campaigns for a wide variety of high-tech innovations from Fortune 500 to start-up companies. With BSEE and MBA degrees, Schuster served in various management-level roles throughout the high-tech industry. He launched Rainier in 1993 with a vision of providing technology companies with a credible resource for communicating "complex" technologies to the marketplace.
Rainier Communications is headquartered outside of Boston and has a business development office in Kadima, Israel.
Prospective customers operating complex Supply Chain and vendor selection functions tend to be far more sophisticated than the analytic tools and mind-sets traditional sales organizations use. To capture key accounts sales organizations require a structured approach to Strategic Account Management (SAM).
Your company is the industry technology leader, you have some of the very best products in your marketplace, your after-sale service is second to none and the economic argument for customers to adopt your proposals is irrefutable and yet… You are continually under price pressure, customers treat your offerings as commodities and there is scant evidence of loyalty from many of your customers. Of course, not all customers are the same. Some represent a disproportionate share of your business; some are more profitable to deal with than others, some do repay the efforts you make in serving them, and some are just more trouble than they are worth.
How do you tell the difference and how do you treat them differently? Is it possible to develop long term, sustainable competitive advantage that your competitors have difficulty in copying, can you choose who you do business with, and can you combat moves to drive your prices down and commoditise your product or service?
This article aims to provide answers to at least some of those questions by discussing how Strategic Account Management programs can be made more effective.
Traditionally, selling has been about applying the salesperson’s knowledge of their company’s products and services to the needs of their customers and through an effective sales process to persuade customers to buy. The skills used by salespeople have been the ability to investigate need, present the benefits and overcome objections through the application of a range of sales techniques. There has been growing consensus in recent years that selling should be consultative rather than coercive or adversarial but whatever approach has been adopted the aim was to get the customer to buy your solution rather than your competitors because you could demonstrate clear differential advantage. That was all well and good in the days when you could differentiate your product offering and when purchasing got involved very late in the process to negotiate on price, but things have changed.
So, what’s changed? The answer is "not a lot" and at the same time "a great deal".
One of the anomalies in this age of technological change is how many industries are reliant on "old" technology. The motor industry, aerospace, computers, and a dozen other industries look back 50-100 years for their base technology. Standardization of technologies and processes has led directly to the commoditization of products and has driven the major changes we have seen in the way people do business. As it became increasingly difficult to achieve differentiation from product technologies so companies sought competitive advantage through process improvements, cost reduction initiatives, quality improvement, collaboration within the supply chain, supplier base reduction and the like. Many of these changes have been affected by procurement and supply chain management, the very people who used to be called "purchasing".
The impact on sales people is that they find their role increasingly under threat. Some customer procurement departments don’t even want to see them and are insisting that the role of sales is to respond to requests for tender or participation in reverse auctions.
An astonishing degree of "professionalisation" has occurred in purchasing and supply chain management in the past twenty or so years. Look at the tools that are regularly employed by purchasing to assess, manage and (dare I say) coerce suppliers and compare those with the analytical tools employed by your own sales organization when dealing with customers. I suggest that you might be hard pressed to identify enough to count on the fingers of one hand.
Purchasing has become increasingly "strategic" with ever more senior managers involved in purchasing and supply decisions. Striving to wrest cost savings and competitive advantage from the supply chain customers develop and manage portfolios of suppliers, positioning them in terms of relative power/dependency, the nature of the purchasing task, the value of the supplier long and short term, their position in the supply chain, levels of competition and technological ownership. The reality for many supply organisations is that if they are not "strategic suppliers" who provide value the customer cannot duplicate elsewhere, then they are commodity suppliers.
The response from sales has largely focused on developing key or strategic account management programmes. SAM is the process by which companies attempt to engage with their most important customers in such a way that, by giving them special attention, they increase their share of customer wallet.
These programmes acknowledge that in most industries the 80:20 rule applies – a disproportionate amount of your business (80%) comes from very few customers (20%) and companies set out to serve these important customers differently. Higher service levels, bespoke product-service offerings, dedicated staff, joint product or market development may all form part of the enhanced level of attention provided by the SAM programme.
Undoubtedly some SAM programmes deliver significantly higher levels of business and profitability than traditional sales approaches but many are difficult to maintain and there may be several "iterations" in the attempt to embed SAM processes into some organisations. In a recent (2006) HBR article Garry Hamel suggested that, despite its evident potential for creating real competitive benefits for supply organizations, account management had failed to deliver the promise. Data from a survey of its members carried out in 2002 by SAMA suggested that "SAM was great in theory but hard in practice" and that only "a small percentage of executives from supplier firms feel their SAM programmes are very successful and most executive are ambivalent about the success of SAM" .
If it’s so difficult, why try to do it? The answer is that unless you want your products and services to become totally commoditised and to be subject to constant erosion of your margins, then you have no choice. Learning how to manage the relationships you have with your customers more effectively for profit is the only game in town.
Develop Account Manager Skills
The harsh truth is that salespeople, and most account managers have a background in sales, have not developed in professionalism at the same pace as their counterparts in procurement and supply chain management. They do not apply the same degree of analytical thinking and planning, or anywhere near the number of management tools to the problem of customer management that are used by supplier managers.
The skills of the salesperson are not sufficient to meet the needs of this new role. Account managers occupy a unique position between the two organizations and have a dual function: influencing the decision making and resource allocation process in both organizations, very often without direct line authority; and identifying and realizing opportunities for value creation that go way beyond product to create a unique way of becoming “strategically” important to customers.
SAM is also difficult to implement because it threatens existing power bases within supplier organisations because serving strategic customers demands co-ordination, teamwork and resource allocation that cuts across traditional chains of command, functional specialism and territories. Without the absolute commitment of senior C-Level management to the change management process SAM is doomed to failure.
Part of senior level support is ensuring strategic alignment so that HR, finance, production, marketing and even your own procurement policies support the SAM programme.
Account management programmes begin by identifying the accounts that are strategically important to the supplier. The most often used selection criteria is volume of business and this is a major mistake. Size alone does not make a customer strategically important and focus on volume of business often looses sight of the end game which is to enhance profitability. The key questions are, "if we lost this customer what would be the impact on our business in terms of capacity, profitability, access to technology, access to markets, reference power etc?"
If you are not strategically important to your customer, then their importance to you is irrelevant, they will continue to treat you as a commodity supplier. Particularly in the early stage of your programme look for customers that do value your offering and that have experience of working closely with other suppliers.
To be a strategic supplier you need to demonstrate that you can add value to the relationship. You must deliver far more than the base product or service offering, and that value must be tailor made for each customer and it must be increased and changed over time.
The companies that are really successful at SAM, companies like P&G, DHL or even smaller companies like the Arcadis, a Netherlands based firm of consulting engineers are constantly looking for ways to enhance the value they deliver to customers. DHL focus upon seven market segments and have developed expertise that they deliver back to customers as diverse as processing in transit, product replacement and recycling. P&G have developed major competencies in supply chain management and data mining in order to help their customers compete and Arcadis apply their engineering skills to impact favorably on customer’s balance sheets.
Account management as a process offers a major opportunity for suppliers to develop an effective response to the increasing move towards the "commoditization of everything". If it is to be effective there must be recognition that it is different from the sales process. Account managers require broader skills than salespeople that facilitate managing without direct authority and focus on value creation. Senior managers must adopt the role of change agents and entangle themselves in the account management process in order to create strategic alignment. To be able to "manage" strategic accounts effectively, you need to be strategically important to them.
Michael Gally - Teaches in the MBA and EMBA programs at the Tel Aviv University Graduate School of Business Administration. He is an expert in international business development, sales and marketing for SMBs and has conducted hundreds of consulting projects in various sectors and more than 100 seminars in Israel, China, Spain, Morocco and Turkey. He trains executives at The Israel Export and International Cooperation Institute and is involved in export infrastructure initiatives initiated by the State of Israel. Mr. Gally consults Israel High Tech companies in European markets and select countries in the Far East.