External and internal pressures have pushed organisations to find ways to transform their businesses into being more agile, cost-effective and consumer-centric. Thousands of companies have adopted the lean approach by shifting their marketing online, where measurability reigns and cost per lead acquisition is as much as 62% less than traditional methods.
This story shows how SAP successfully transformed their business by adopting a lean strategy with the client at the centre.
SAP: The Story of a Transformation
In other words: how SAP changed their company from what was seen as a highly traditional, stodgy, closed company to an open, innovative, accessible organisation. This article is based (and pulls text from) a case study entitled Run Marketing as a Business by Matthew Quint of Columbia Business School. You can download the full reports here – Part I and Part II.
As the Year 2010 Approached…
SAP – the world’s largest Enterprise Resource Planning (ERP) systems provider – was in a mess. The company’s net income fell 2% in 2008 and another 4% in 2009, and had to lay off 3,000 employees – a first for a German company of excellent repute since its founding in 1972. The reasons for the decline in the fortunes of SAP were to be found in the financial crisis of 2008 and onwards, but also in the arrival of disruptive new business models.
Disruption as a Trigger for Change
In a down-in-the-dumps economy, Software-as-a-Service (SaaS) quickly gained attention as a viable alternative to the ERP solutions on offer from SAP. While ERP requires significant upfront investment, SaaS operates by remotely hosting software, and its associated client data, on cloud computing server centers. SaaS is typically more affordable and flexible as it spreads costs via a subscription fee business model.
As a result, vendors such as Salesforce started to steal more and more market share in small-medium-business segments, which were high-priority targets for SAP.
What Happened to the SAP Customer?
Because of their high upfront cost, ERP purchase decisions were traditionally made by Fortune 500 Chief Information Officers together with approval from their CEOs and CFOs. Until now, SAP had to develop really strong relationships with one or two key influencers at these large global companies. This was beginning to shift. A crucial change came with lower price points (SaaS) for which SAP now developped products and services. Rather than dictating IT services from the top, clients gave purchasing authority to individual departments.
These new decision makers were technically aware, critical, curious, outspoken – and more often than not direct users of the products they were looking to buy.
A New Marketing Approach
In the light of the conditions described, SAP’s marketing people were given the mission of developing a more customer-centric approach. With a business goal of reaching 1 billion people with SAP software by 2015, the approach needed to evolve to not only reach customers but also its customer’s customers. The aim was to shake up SAP’s historic use of detailed, often technical communications about the company’s products and services and shift instead to messages about how SAP helps businesses gain insights and solve problems.
After much brainstorming, these 5 key transformation pillars were retained:
1. Humanize the brand
Build trust relationships amongst customers and stakeholders.
2. Develop ‘pull’ marketing
Allow people to interact with SAP when, where and how they choose.
3. Simplify marketing
Improve the sharing of information and resources across the company and foster bottom-up decision making.
4. Tighten the links to business
Shift from a marketing model that measures activities to a model that measures outcomes.
5. Invest in employees
An important internal effort to develop an “all in” mentality. In concrete terms, this implied linking a significant portion of year-end bonuses to the collective (not individual) success of 10 pre-defined Key Performance Indicators (KPIs). The 10 KPIs and a Score Card end 2012 are available in Part II of the case study.
And Now to Your Business…
In a globalised world with increased competition coupled with challenges on price points, one or all of the above five key transformation pillars are likely to be relevant to your business. Whether your organisation is big or small, you want to be outcome-focused, and you want to help sales sell AND your audience buy.
Start Your Own Transformation Right Now and See What Happens
Here is a five-step implementation road map:
1. Customer. Make sure you have an intimate understanding of your customer. Do this by using the Customer Persona technique.
2. Product or Service. Make sure your product or service and your customer segment are aligned. You may want to gather your team and reserve a few hours to review your current business model. Business Model Canvas is a great visual tool that can stimulate a discussion.
3. Desired Business Goal. Define a simple and concrete business outcome. For example, you wish to start a conversation with ten new potential clients (outside of your current network) over the next two months.
4. Online Customer Acquisition. There are many ways to acquire customers online. TheVersio2 blog gives you a myriad of ideas. But right now, let’s focus on a desired business goal and a landing page. Get outside help to optimise three key elements:
- The Headline. It reflects what your customer persona is looking for. Make sure your offer is in direct relation to the keywords your customer persona will have typed into Google when searching for your product or service. You want to provoke an “Incredible! How did they know that I have exactly this problem right now?”
- The Benefits. Make sure you clearly state benefits to your archetype persona. Don’t talk about all the wonderful features your product has – features are boring! Each benefit statement must trigger a “That’s exactly what I need!” exclamation from your Customer Persona.
- The Sign-up form. Craft a strong call-to-action (CTA) and provide a sign-up form that is well positioned and easy to complete. For example, you may want to invite your customer persona to an event, or let him download an insighful research paper at no charge and with no strings attached.
5. Experiment, Measure, Learn – Rinse and Repeat. No rules book exists that has all the ingredients for success. Your organisation and your customers are unique. You need to make repeated, easily measurable experiments that develop your very own insider knowledge about what works (and doesn’t) for you online.
Watch this 30 minute video to discover how SAP gets 27% more incremental sales leads with the Experiment – Measure – Learn approach:
Find Your Place in the Sun
Grasp control of your destiny and keep careful track of the test results you gather throughout your experiments. And then, when you know better what works and what doesn’t, go full steam ahead (time and money) to expand and scale, using your very own ingredients for success. You’ll no doubt do so with a confident smile, because you’ll have successfully transformed or enhanced a smaller or bigger slice of your business – you’ll make me happy!