Business Scenario

Mainframes were the backbone of information technology (IT), in the 1970’s and 1980’s. In the 1990’s the development of the IBM PC (and over time distributed servers) allowed businesses a more flexible approach to using computing and this allowed innovation to spread quickly around the business community. This bifurcated IT, leading to two distinct operations coexisting in the industry. Mainframes continued to be used for large centrally maintained environments for large-scale business applications, while the PC/server-based distributed environments grew into every corner of the business infrastructure. Mainframes are still used by approximately 95% of Fortune 2000 companies in the world and store the majority of the world’s business data. The level of reliability and raw processing power per dollar invested has proven itself, and for massive secure data processing requirements, the mainframe continues to be the dominant platform.

The sellers’ market for mainframes has shrunk from 8 platform vendors in the 1980’s to a single platform vendor today (IBM). While the cost per unit of processing power is smaller than any other platform, this equation only holds for very high levels of scale. At these large scales the overall costs are large and customers are wary of being locked into a single vendor. So to mitigate the risk of losing their negotiating position, customers look to include other vendors (not IBM) in the mix wherever possible. This means there is a healthy competitive market for software and services on the mainframe platform demanded by the customer community. The challenge for vendors comes in the form of market growth. The size of a business (or government organization), that requires a mainframe is large, in fact the largest. There are only really about 6000 businesses and organizations in the world that can take advantage of this level of scale, and the simple fact is that they all have mainframes from IBM today. This means that the chance of getting a truly new customer is very small, but there is huge competition for the customers that do exist. But due to the complex nature of mainframes, changing vendors is a complex and expensive proposition. Customers tend to stay with the vendors they have until a significant event takes place prior to a contract renewal cycle.

This all makes for a very stable market with very high margins. It is hard for a vendor to justify significant investment (outside of staying current with the platform), as the chance of growing in the space appears small. Basically there has been a lack of marketing for, and innovation of software on the platform for a number of years. This has also led to a lack of new blood in terms of new users of the platform and an overall aging workforce population with the average age of a mainframer in the mid to high 50’s. As the workforce ages this brings up a significant risk to the businesses that use this technology.

“What happens if my skilled staff retire and I can’t find good replacements? Does this constitute a risk to the business?” - Questions asked by mainframe-powered companies.

So overall we see a highly efficient yet stagnant market and a risk in human capital. This could lead customers to more seriously consider moving off the platform.

Company Challenge

Tasked with looking at how we could possibly grow our revenue in this market I was given a tiny budget and the ability to commandeer some select staff cycles.

Our company had been providing management tools to mainframe customers for about thirty years. We had a large installed customer base that had been acquired through numerous company acquisitions supplemented by some sales of internally developed products.

Our market share in the area of mainframe management software (the market we served) was approximately the same as IBM, and together we were about half of that market. Two reasonably large competitors together made up a further 15% of the market and a long tail of smaller vendors made up the remainder of the market. Our pure “retention” rates were in the 75-85% range (depending on how you looked at them), but we didn’t know if that was necessarily good, bad, great or something else at the time.

Due to the nature of this business, where relationships were measured in decades, users of these solutions could literally spend their whole careers learning and using the same small number of highly complex management tools. Change was resisted at many levels.

But without the impetus for innovation or creativity, and with a small number of customers using very expensive and complex products, there was naturally a measure of frustration, that when combined with the market conditions listed above, would lead to some churn. Customers would consider changes when the frustration or costs grew too great. Traditional competitors and outsourcers were the viable options for these cost and frustration-based sales cycles.

The industry analysts ( and press who cover IT) were generally negative on the mainframe market as a whole with a shared view that the market was dying and would in fact decline by 1-3% per year. This was partly a reflection of the concern that customers had an aging workforce and weren’t replacing them. This “expert” view was also due to the lack of new customers and to the simple fact that businesses don’t spend money to purchase information (and to converse with the analysts), on a market space for which they are not planning to change their investment. Industry analysts do perform an important role, particularly in IT, and they are extremely influential, so views like these have the potential to become self-fulfilling prophecies.

 

 

MF1Understanding the Customer

 

 

A key to meeting the challenge at hand, we felt, was to deeply understand our current customers – so we “immersed” ourselves in them. We realized management, marketing and sales were making decisions, creating messaging, etc. based on incomplete information and assumptions and overall a non customer-centric view. This drill took a little time, but very little money. We made phone calls, lunch discussions, no-cost surveys, piggybacked on support calls, joined user groups, etc. – we used every “free” customer touch point we could think of (and more). What did we learn? Plenty.

There are two stereotypes of people who go to college to study information technology.

The first is the scientist, these people focus on the purity of technology and when in business these people strive to deliver the best possible experience from the technology they oversee.

The second stereotype is of people who measure success by their ability to solve problems, or become heroes. These people look for challenges and rewards, tend to like to take more risks and measure their success in a career by how others see them.

The first group tends to become actual scientists while the second group tends to become managers. The stereotypical mainframer fits squarely in the first group. And while obviously no one fits a pure stereotype, you do tend to find that people who end up being managers in IT focus on the leading edge of technology, which for the past few decades has been in the distributed (aka PC/server) side of IT.

 

mainframemoversAll of this has meant that while the mainframe has continued to offer an incredibly efficient business-driving experience, there has been “political” pressure from analysts and rising IT managers (and of course big server/PC sector manufacturers), to move off the platform. The simple fact that even with this pressure very few companies have made such a drastic change says a huge amount about the technology and the people who run the mainframe.

Having said this though when asked what they thought about our company, mainframers would typically say the 6 following things (3 bad and 3 good):

  1. Your company is an aggressive acquirer of good little companies (and you then asset strip them).

  2. Your sales people ignore us between contracts and then are too aggressive in renewal re-negotiations.

  3. We don’t trust your most senior managers.

  4. Welikeyourproducts.

  5. We like that you aspire to offer the same solutions across every available platform (but we are concerned that this is only aspirational).

  6. We like that you aspire to integrate all of your solutions (but we are concerned that this is also only aspirational).

This feedback was almost perfectly consistent across all of our customers, from those that used a huge amount of our technology to those who only used a small amount.

It also became clear that nearly the entire market had very little idea of the full range of business solutions we offered - often to the extent that they were not even aware that newer releases of software products that they were already using could solve problems they had (and that they could have the newer version for free).

During the time we evaluated the market it also became clear that just opening the discussion with the customer would elicit a consistent positive response, which would allow us to show them these easy answers to their problems. Once this was done they were almost instantly interested in considering us as a potential vendor in solving new problems.

What we also found through our research was that this was anything but a dying market. The number of customer organizations was stable and there were a small number of the smallest customers leaving the platform each year, but the size of the average installation was massive and growing. In fact the amount of processing being performed on the mainframe as a percentage of all business processed was, if anything, growing. We surmised that there was massive market potential tied to these existing customers.

In other words, what we found was that a little marketing investment expertly focused could dramatically increase customer satisfaction and create new demand. It also became clear that this was an industry-wide issue, and as such solving this would quickly become a point of differentiation.

We felt like there was an audience (both internal and external), that could be re-energized.

Now that my small team and I had a clear understanding of the market conditions and target audience and their views on us vs. the rest of the market, we needed a plan to first reverse the negative trend and second, grow our presence in this market (and the market itself if possible).

This was a market with a relatively small number of customers, and there was very little likelihood that many new businesses would become new 1st-time mainframe customers. In addition we could see a real issue with customer retention looming (see “3 bad things” above), and we needed a plan to maximize retention of current customers and grow our presence in these and all mainframe accounts.

From speaking to our customers (who were also our prospects) in our research we gained a clear view of the 6 things they thought about us and how the overall market was performing for them (and we realized that we previously didn’t have as a good of an understanding of our customers as we thought we did).

We now knew what the business issues were that customers wanted us (or someone else), to solve for them. We had a clear idea of who our customers were, and we knew how they wanted to be “partnered with” by a vendor and how they like to consume information. We also knew we would be outspent by the market leader (IBM) by as much as 10-to-1.

 

Social media video we created that allowed us to confirm our research resonated with the market

Click on Image to watch video

Armed with all this information we then came up with a very simple (but not obvious) strategy; we decided to first “help our customers get the most value possible out of the products they already owned.”

We would re-build our relationship with the market based on giving value to the customers directly. We were not going to focus on selling them anything new, but instead on helping them feel great about the products they already owned.

Our research told us this was exactly what customers wanted, so we decided to do it. And we felt strongly that happy customers would likely want to consider us to be the solver of new business issues they wanted to solve [“Growth by focusing on NOT selling” would be one way to characterize it]. It was a very simple idea, that spoke directly to the brand issues we faced, and targeted the business issues we needed to solve. In marketing terms we felt we had found the way to turn our biggest weakness into our biggest strength - take the people that hate us and get them to actually become advocates for us. But it would take re-writing the book on how to market to mainframe customers.

 

MF20book  The Zero Dollar Budget

 

As the overall market was not considered an area of growth, it didn’t have the traditional attributes a business needs to see before making a significant investment from a marketing or sales point of view. We needed to find ways to deliver on our plan without spending at traditional levels or in typical ways for a growth objective. We were a small, focused passionate team with little to no budget.

To start with we decided to engage our pre- sales, sales and service organizations and worked with them to develop a program of customer technical reviews. We positioned this interaction as a free audit to help the customer understand how they could get more value out of the products they already owned. We called the program the “Mainframe Value Program” (MVP), and created a simple campaign targeted at select accounts. The process was simple, we would choose accounts based on the mix of products they already had in place and by their geographic location. This meant we could choose customers where we thought we could offer most value without having to send our experts to the furthest reaches of the world. We would then directly market the program to those customers (via email, phone and in-person), advising them on the program’s value proposition that we would give them specific ideas on how to help them get more from the products they already own. Customers were, as you would expect, initially skeptical. Here was a vendor who they had little respect for offering to come and expend time and effort at no charge to help them make their business better. But once we had alleviated their concerns we were able to perform our work and the customers were delighted, often exceeding their highest expectations. Each MVP concluded with a professionally written, detailed report presented as high up in their IT organization as possible. The result was lots of very happy customers who now saw us as a valued partner, and one which they were willing to consider for more solutions. In fact virtually every MVP engagement lead to considerable new business and a reference. So we now had a great source of endorsements to grow this program and our other marketing actions. Interestingly, we also saw that the customer “sponsor” of our MVP drill was frequently given management recognition after they received the MVP report filled with no charge tips and details for efficiencies and cost savings. They often became “brand evangelists” for us.

We realized that while this program was running exactly as planned we would soon be hitting the limits of our scale. Happy MVP customers wanted to work with us on new projects, so our MVP team would be needed to do more and more paid work. We could see ourselves becoming victims of our own success so we needed to find a way to deliver on our strategy in a more scalable way in the next phase.

coasters2

 

One answer was to write a book outlining the most effective lessons we had learned from the completed MVPs. We called this book “Releasing Latent Value” (RLV) and outlined several hundred business issues a customer may be facing and the best ways to solve them using the products they already own. This was a 250-page perfect-bound book and it looked exactly like a book from the book store. We self-published it, using our MVPs and other work we had already done as the content, and our own team as the editors. The print layout costs were under $1000. We then printed it and paid for the costs out of various budgets across sales, events and marketing. The result was we had a fantastic new asset for sales to hand deliver to customers that was all about value for the customer with no strings attached. This approach was non-threatening and not “aggressive” in any way as there was no reason for a customer to feel pressured into buying something because the book contained content about products they already owned. It was a great reason though for sales people to meet face-to-face with their customers in a 100% positive interaction. We now had a great asset to use to build out our customer profiles, enhance our sales rep and company’s reputation with customers and at the same time give the customers hundreds of reasons to keep our software, upgrade to the latest release, and consider doing even more with it.

There was another unexpected consequence with the RLV book. Customers who were at the final stages of making a major purchase (or license renewal review) of enterprise software often wish to have their procurement teams perform a detailed review of the vendor’s full range of offering. This is to ensure that they are making the right product purchase decisions and haven’t missed any valuable additions that they may want later that could have been excluded from the negotiations. These audits can be very detailed and take months. We found that the information contained in the RLV book actually helped alleviate many of the procurement team’s concerns, and allowed these audits to be shortened significantly. Sales people and procurement people really like it when you can make their lives easier and customers like being able to show their bosses the value they get from their purchases.

All the research and work we had done so far had taken us about nine months, cost virtually nothing, and the results were already starting to show a dramatic improvement in our reputation. Customers clearly told us that we were becoming better to do business with and were seeing more value from the products they already owned. We were now being considered for new business in more and more accounts, our retention rate was rising, and new sales were up. Things were looking good.

We now had the opportunity to build upon the momentum we were generating, and our company’s leaders were taking notice. In fact, our company decided to form a new business unit (BU) to focus on the mainframe (whereas mainframe solutions had been part of a dozen separate BUs). This move was a reflection of the growing recognition of the potential of the mainframe that we had uncovered from a marketing perspective. With this new BU structure we were able to bring to the forefront a number of our customers’ concerns that were difficult for us to deal with in the past. One of these issues was in the area of integration. Customers had clearly told us they liked that we recognized integration as a key need, but didn’t think we had truly invested in making the situation better for them. Now that we were one BU this was something we could address.

Our new general manager was able to see and hear the results of our research and program thus far and instructed the development organization to look at ways of improving the product user experience along the lines of the customer feedback we had received. As you would expect in a large organization that had grown up over decades and included the experiences of many talented people from a multitude of acquired companies, everyone had a point of view. Based on our research the BU was now working with a clear vision of the customer need and this became the focus that allowed us to drive customer experience innovation. This was an audacious project that required every product team to work the same way. The first step was to develop a consistent way of installing mainframe software.

Most people are used to installing software on PCs, let me just say that is not the experience on mainframes. Mainframe software installation is a very technical experience that can take from hours to several days to complete for a single product (think about doing your own automobile brake pad installation and you’re in the ballpark). So we embarked on developing and promoting a new installation tool which we called Mainframe Software Manager (or MSM) (yes, techies do love acronyms). The first iteration of MSM worked with a few products and dealt with just a few of the steps involved in the process, but it was an innovation for mainframe. This was new, it was newsworthy, and while an installation process isn’t going to make us additional revenue directly, once one exists and you have it and no one else does, you have a positive differentiator and major retention, and we marketers love those.

We now had something new to market and had earned a meager budget (still far below even 1% of revenue). We launched a new marketing campaign to our customers and the overall mainframe market where we outlined how we were going to make it easier for people to work on the mainframe. Our program included a set of bold innovation promises and updates on how we were keeping these promises. We called this new campaign “Mainframe 2.0” and supported it with the tagline, “Changing the way the mainframe is managed, forever.”

We needed to find a way of reaching all of our customer targets, across multiple technical and business functions around the world. MVP and RLV had been a good start but now we had MSM and Mainframe 2.0 and we needed to deliver the message more effectively.

 

Social Media Video we created to share the idea of Mainframe 2.0

Click on Image to watch video

 

Based on our target audience research we decided to consider use of virtual trade show (VTS) technology. Customers told us they really liked traditional IT trade shows but found it difficult to get approval to attend. A VTS contains all the elements of a physical trade show but takes place purely online. We looked at several leading VTS vendors and spent the time to deeply understand the technology. We invested the time to learn how to build these events and attended a multitude of VTS events in various industries to see how they performed.

We found that most VTS’s are designed to be delivered over a period of several hours or a few days and we started to see what it takes to make these events work well. The simple truth is that virtual events are no less work for us than physical events, but when run well the benefits and costs were far superior. Accessing customers over a large geographic area (worldwide in fact), and being able to capture and mine a large amount of data about these people and their areas of interest, adds tremendous value. The cost of implementation (outside of the people’s time “costs”) was much lower and could easily be offset through a small cut in the traditional trade show/event budget.

  

 

mf20logo May Mainframe Madness (MMM)

 

We decided to offer a month long virtual trade show learning event, open 24 hours a day (to address all worldwide time zones), with new live presentations delivered each work day of the month. This was a massive undertaking, but it allowed every one of our product evangelists and experts in product management, product marketing, pre-sales and development to get involved and, in the end, to touch customers. We marketed this aspect heavily inside our company. We also decided to deliver this event in May, which made sense for several reasons. It was the time of year when many products were updated, but it was also the second month of our financial year so it aligned with Q1 sales pipeline generation needs and budget cycles.

This was an audacious plan from the outset as we were in effect going to deliver the largest virtual trade show that had ever been run and we were going to do it with a small team and a shoestring budget. We included over twenty virtual booths covering all the areas of our mainframe business, and had a number of key partners pay for booth space (covering a significant part of the event cost). We delivered 150 live “keynote” presentations throughout the month in a virtual auditorium and several hundred pre-recorded presentations and solution demos in the show floor booths. We offered a networking lounge where people could start unscheduled chats and participate in contests and we offered hundreds of internally created technical and thought leadership papers for download.

MMM

A huge amount of work went into the event and we spent much time marketing the event online, via email, banner advertising, and via articles in publications. We also had our sales people personally invite their customers and we included influential industry bloggers in the event (who of course encouraged their readers to attend). MMM was an amazing success, with approximately 5000 people attending. We added a large number of new contacts to our CRM database and refreshed the data for many others. Attendees, on average, spent over 4.5 hours at the event and everything everyone did while in the VTS was captured for our use. We compared who attended and what they spent time doing to the products of ours they already owned. We also learned who was looking at information related to products they didn’t already own. This new data lead us to having a much more accurate database of customers to use for future communications and we identified many hundreds of new opportunities for sales.

Our internal teams loved having the opportunity to work directly with their customers and customers loved the “access” to the experts. The customers were able to learn a huge amount about their current products and about many to consider for the future – all from the comfort of their chosen chair and at a price they couldn’t resist (free). Compared to a physical trade show we found costs to be exponentially lower, and the results to be exponentially higher. When we added it up, it was the lowest cost per qualified lead we had ever seen (or heard of), anywhere in B2B marketing (and it came from a “retention and loyalty” event).

The MMM virtual trade show won marketing industry awards for innovation and changed the way we thought about marketing going forward. When we started the idea of “May Mainframe Madness,” many people (including some of our own team) thought we were mad. By the time we finished MMM, everyone was excited, committed and started planning for next year. It became a rallying point for our entire BU.

Social media video we embedded in the virtual trade show

Click on Image to watch video

 

So we were now two years into our plan and have had huge gains in each year with a minimal budget. We increased the market’s awareness of us as a significant force in this space and we are now high on the customers’ preference scale (and we have seen our business grow based on these factors). While our tiny marketing spend had increased a bit, the additional spend was based on very solid, reusable content and activities and little was spent on traditional business-to-consumer (B2C) type activities. One minor exception to this was in the area of advertising. Often not a good use of budget for B2B companies, in this case we saw it as the most efficient way to achieve our specific awareness and preference objectives. In the mainframe market there are 3 vertically focused publications that target this space; these are:

We had decided that a key way of gaining greater market awareness and preference would be to have a significant presence in each of these publications. We worked directly with the editorial teams of each to get prime placement for advertorials and articles (i.e.: thought leadership, how to approach solving business and technical problems, etc.), from us in each edition. This helped build our credibility with the mainframe audience. We also would send copies of each magazine to our sales people around the world to take to their customers to enable more face-to-face, non- hard-sell interactions for them. We didn’t present traditional awareness type ads but instead spent a lot of time building content rich advertorials for each edition with calls-to-action that were relevant to the timing of the publications. This allowed us to get value from the publications beyond the standard reach and frequency measures. We were also able to get cover stories of our general manager and several centerfold stories involving other members of our teams. These help position them as experts, stroke the egos a bit, and give them bragging rights; the value of this can never be quantified, but it always helps.

Our program was expanded to include more things based on customer feedback and insight, including hybrid VTS-physical events, social media-friendly video content, select branded giveaways (to be displayed in customer and prospect cubicles) and customer loyalty activities with themes we knew our customers liked (blues and classic rock music, anything to do with bacon, celebration of main-framers’ accomplishments over the years, unique hobbies, etc.). 

Everything learned from each customer interaction since we began the effort was used to better communicate with them and customize new messages, content, and tactics.

 

protionalhandoutBig Iron

 

Perhaps the greatest response we received was to a documentary film (which we made on a shoestring with a media partner), “Big Iron: The Mainframe Story.” It is a celebration of the rich history of computing and the mainframe and also points to the new innovations and bright future of the platform and its users. Tens of thousands of people have watched it and perhaps more importantly, main-framers now have something to proudly show their friends and relatives when they ask, “What exactly is it that you do?” And while it doesn’t promote anyone’s products for purchase (including ours), it is presented by our company and many of our experts and thought leaders appear in the film (yet another opportunity to get our senior folks their time in the sun).

Big Iron Mainframe Documentary

Click on Image to watch video

 

 

We actually premiered the film in the “Main- framers Only” Lounge at our company’s physical trade show and followed it up with a customer party that celebrated the rich histories of both mainframe and blues/rock music; the “Our Roots Run Deep” party took over the House of Blues that evening and “The Stray Cat: Lee Rocker” had so much fun that he and his band played an extra set for the 900 mainframers in attendance.

Needless to say attendees talked about the event for months, hung up the souvenir posters at work, and mainframer attendance numbers for future physical corporate events went up even when overall attendance numbers for IT events in general were down.

 

Epilogue

Here’s what we wrote five years after the birth of the idea for this program:

It’s now been five years since the challenge was issued. Customers no longer hate us and the customer satisfaction rating has actually risen to the point where it was removed as a financial incentive for the corporation (which would have been inconceivable to predict 3 years ago).

Customer retention rates are now at record highs for us [think 90+ for a %], and we are actually viewed as a “growth engine” for the company. Imagine that, old stagnant products in a declining industry driving growth for a company – truly amazing. And the much better- funded market leader’s senior management actually admitted to our CEO that we “outmarketed them on the mainframe.”

The icing on the cake came recently as the most revered analyst group in the world (who essentially had declared us and our sector dead), just awarded us their highest possible rating for our mainframe program. This was the only area of our company’s business that received this rating. Truly high praise for a small passionate team with a small budget, a simple plan, and a lot of hard B2B marketing miles logged along the way. 

 

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