Marketing High Tech Services

By Dunn, Dan T., Jr.; Probstein, Sidney C. | Review of Business, Winter 2003 | Go to article overview

Marketing High Tech Services


Dunn, Dan T., Jr., Probstein, Sidney C., Review of Business


High tech services such as technology consulting, systems integration and implementation of enterprise-wide software applications like customer relationship management (CRM) are predicted to become a $700 billion industry by 2005. Intangible services require a more relationship-driven approach to marketing and sales -- which can be challenging to those with strong technical backgrounds. The article discusses three approaches to marketing high tech services: 1) professionals-who-sell; 2) bigger hammer marketing; and 3) the funneling approach.

Introduction

With computer hardware becoming a commodity in many industries (14), high tech companies are focusing more on services. Services include technological consulting (design, education and management services), technical support, systems integration and implementation of enterprise-wide software applications like customer relationship management (CRM). Market research firm IDC forecasts 12 percent annual growth in tech services, reaching $700 billion by 2005 (8). Due to intangibility and other factors, the marketing of services is inherently different from marketing products.

This article's purpose is to help companies avoid costly trial and error approaches in this new area. Many startup firms or divisions have failed due to inappropriate marketing approaches. More mature firms have clung to past practices when new ones were needed. We argue that the nature of high tech services requires special techniques -- the traditional product-oriented sales cycle must be radically modified. Our discussion responds to the comment of one interviewed executive, "Tech services are hard to buy and hard to sell but can be extremely beneficial to buyers and profitable to sellers." In this article we discuss such difficulties and three marketing approaches for firms to consider.

High Tech Services

High tech services include a range of firms. Some companies derive all revenue from services and include Accenture and Electronic Data Systems (EDS). Other companies derive a portion of revenues from services. For example, divine Inc. provides professional, software and managed services to improve collaboration and knowledge sharing across a company's entire value chain, from suppliers to internal departments and final customers. Also there are specialized service units in traditional technology companies such as IBM, Oracle, Microsoft and Yahoo. More than half of IBM and Oracle revenue is generated by services. Microsoft Consulting Services (MCS) focuses on educational and integrative services to implement Microsoft products. Importantly, it serves as Microsoft's front-line effort in many large corporate engagements. Yahoo has a growing Enterprise Solutions division including Portal Solutions, Broadcast Solutions and Small Business Services, which offer software, hosted services and consulting. Many startup firms or divisions are based on tech services. MediaMap, a privately held firm, is a provider of communications management solutions for public relations agencies and corporate communications departments and integrates software packages, online services and consulting.

Services are bought when internal resources are not available or it is not economically feasible to develop them in-house. They may increase the efficiency of operations or provide competitive advantage through lower cost or enhancement of a marketing program. Laggards may buy tech services for defensive reasons to maintain competitive parity (13). EDS and Saturn provide an example of successful partnering (for further discussion of partnering, see (3). Saturn's tier-one customer care advisors assist people who contact Saturn for general product, service, feature and option information. But, in the past, these agents often functioned more as "air traffic control" directing calls to the next level -- customer assistance managers who provided tier-two support to owners needing additional assistance. …

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