CAMBRIDGE, MA — April 8, 2002 — A recent survey by The Gantry Group, LLC and Collaborative Insight, Inc. indicates that Massachusetts technology companies and the service providers that cater to them are systematically employing disciplined business strategies to survive the recession. Nearly 60% of respondents indicated that selling products/services based on ROI is the most important step they’re taking to combat the effects of the economic downturn on their business. A majority of companies are looking to revaluate their customers’ needs, and plan to adjust their marketing strategy to focus on narrower vertical and geographic market segments with a clearer value proposition. Many are also seeking new channels and/or business partners to reduce the cost of sales and provide alternative sources of funding.
Both technology and service providers are taking a “back-to-basics” approach, with renewed emphasis on cash flow management (74%), revenue growth (76%), and profitability (65%). Although 35% of respondents stated the effect of the downturn on their business was dramatic, over 75% expect full economic recovery by year’s end. Few companies saw widespread adoption of new technologies, as experienced with the recent Internet revolution, as playing a major role in this economic turn-around.
Dale Troppito, Managing Partner of Gantry Group, notes that the emphasis on ROI is a phenomenon born of necessity – buyers must justify their budgetary outlays. “Sales cycles have lengthened and many companies reported increased difficulty closing deals, so they need to respond with quantifiable benefits, in the hope that proof of ROI will loosen the purse strings. Prospects have adopted a “Prove it!” posture when justifying any purchasing transaction. Prospects wish to know when they will recoup their investment, expressed in terms of specific economic metrics that reflect the performance of their businesses today.”
The renewed “Back to Basics” orientation also revealed itself in the top business activities being used by technology and service providers to sustain their businesses through the economic downturn. Over 61% of technology providers reported that formulating crisp market segmentation, gaining deeper competitive intelligence, ensuring clear differentiation and maximizing the customer’s lifetime value were on their “short list” of activities.
The results of the survey also suggest that companies are taking a more realistic view of their market position, and are struggling to support growth strategies against current fiscal pressures. Notable findings include:
Over 63% of technology providers consider the Internet a key component of their strategic plan to sustain growth, but over 52% have lowered their investment in online initiatives, while 42% report their Internet spending is unchanged. This may indicate that ramp-up expenditures related to building an online presence are leveling off.
Given $1M to invest in any business function, technology providers listed, in order of importance, product development, marketing, and sales force expansion.
58% of service providers are using market research as a means of validating their target markets, and 56% are using direct marketing campaigns to get their message out. During the past year, 62% of technology providers have conducted market research, of which 80% tested market needs, 58% conducted studies to tune product/services design, and 52% benchmarked competitive awareness.
According to service providers, Web investment is being re-appropriated from brochure-ware presence to creating customer and partner communities online.
Both technology and service providers ranked building brand awareness and name recognition as the most critical contributor to their success in the future, and only 50% indicated a reduction in their marketing spending for the coming year, despite the budgetary pressures resulting from economic downturn.
41% of service providers reported that their high-tech clients have earmarked CRM as a key area for future infrastructure investment.
“Despite the fact that 85% of technology and service provider respondents reported that the downturn has had a negative impact on their business, a majority of them see marketing as a key component to surviving the slump,” said Pamela Hamilton, President and CEO of Collaborative Insight. “The strategies they hope to implement are smarter, focused on customer need and not technology details. When companies understand why their customers buy, they’re on the right track to increasing revenue.”
Survey respondents were primarily from privately held small and mid-sized Massachusetts companies, with 82% identifying themselves as Director level or above. Of the respondents’ companies, 57% were identified as software-related, and 61% reported being at break-even or better for FY2001.
The survey was conducted by the Gantry Group of Concord, MA, a strategic advisory and custom market intelligence firm, and Collaborative Insight of Cambridge, a provider of strategic marketing services and products that drive leads, revenue, and growth. The State of the Massachusetts High Tech Economy Survey Report will be sent to all respondents in April, and will be available at the Gantry Group and Collaborative Insight web sites after April 15th.
About The Gantry Group, LLC
The Gantry Group is a strategic advisory and custom market intelligence firm that uses primary market research to help companies cost-effectively accelerate the successful market adoption of their products and services – online and offline. Through Gantry Group’s market analysis, marketing testing, and ROI/TCO benchmarking service suites, we have helped over 160 client companies drive sales, acquire new customers, increase brand equity, and increase customer lifetime value by better understanding and meeting customers’ needs.
Gantry Group creates customized market research studies using qualitative and quantitative techniques, including online and traditional surveys, focus groups, and one-on-one interviews. The executive team of seasoned business executives combines deep operations experience with proven strategic planning, research methodology and market intelligence to grapple with the most challenging business goals and problems. Gantry Group works with CEOs and senior marketing and sales executives in technology, financial services, health care and retail sectors. The company can be reached at 978-371-7557 or www.gantrygroup.com.
About Collaborative Insight, Inc.
Collaborative Insight is a provider of services and products that help companies make a quantifiable impact on their quarter-to-quarter revenue goals. Using a broad range of proprietary methodologies and customized tools, Collaborative Insight applies the science and art of marketing to generate leads, revenue and growth. The executive team has more than 100 years of combined experience, with over 150 companies, at solving tough business problems quickly and effectively. Collaborative Insight works with CEOs and senior sales and marketing executives in the technology, manufacturing, services, retail, and consumer sectors. The company can be reached at 617-621-1800 or www.collaborative.com.
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