A new product is predicted to give a lift to USA stock markets and even add up to a half a percent to that country’s gross domestic product (GDP). What is this earth-shattering breakthrough?
It is, of course, the iPhone 5 launched by Apple Inc last week. Yes, the fifth version of an existing product, which is a bit lighter and has a bigger screen and a few other whizzy new features, but is really just an evolution of the wildly successful phone.
What the hoopla shows is that it is not just the technology at play, it is something bigger – Apple’s ability to sell the ‘idea’ of the product and its’ desirability.
Strengthening that capability is the aim of the latest Market Measures survey, a benchmarking study of sales and marketing by Kiwi hi-tech companies.
275 New Zealand technology companies completed the 2012 survey, authored by technology marketing companies Concentrate and Swaytech, and sponsored by NZTE and PWC.
The sample reflected the demographics of our high-tech sector, with a small number of large companies (5% had over 250 employees) and a long tail of smaller companies (70% had 20 or fewer); with Auckland, Canterbury and Wellington supplying the largest number of respondents.
The majority (69%) continue to be focused on exporting their products, mostly to other businesses (88%). Exporting is focused on traditional markets like Australia, US and UK, with some non-traditional markets such as Hong Kong, China and Singapore starting to emerge.
Firms continued to invest in sales and marketing, on average spending 28% of turnover. Consistent with international benchmarks, start-ups and early growth companies (32%), spent significantly more than mature tech companies (21%).
Respondents’ sales and marketing objectives covered a broad range of issues, from entering new markets to improving their online marketing capabilities to getting appropriately skilled sales and marketing staff in place.
The most common themes were grouped around fundamental sales and marketing goals: increasing awareness of their brand in their target markets; generating more leads to feed into their sales process; and, the bottom line - achieving more sales.
Given these concerns companies in the survey were still achieving stunning growth rates. Respondents achieved an average 53% growth in annual turnover, impressive against the backdrop of a weakening global economy and our high exchange rate.
Examining what sales and marketing attributes correlated with high growth amongst survey respondents showed some interesting insights into how Kiwi high-tech can further improve its performance.
The highest performing companies in the survey shared some common characteristics – they tended to be very market focused, confident in developing market entry strategies, clear on what makes a good channel partner. Successful companies are also those embracing a move to online, inbound marketing and using non-traditional approaches to producing marketing content.
So how can you emulate these high growth companies?
1. Improve your market understanding: high-growth companies have a very strong understanding of their target markets, an ‘outside-in’ perspective critical to achieving strong growth. The average company is too internally focused and doesn’t build a strong enough understanding of their target markets.
2. Get better at developing market entry strategies: top technology companies are confident in their ability to develop effective plans for entering new markets. There is no hit and hope; they have a clear view of the best way to attack a new market, a confidence tightly linked to our first growth insight i.e. the more information you have about your target market the more obvious the strategy becomes.
3. Focus on the right attributes when selecting channel partners: high-growth companies focus on the partner attributes that really matter. In previous Market Measures surveys it has been shown that using channel partners is correlated with high-growth for Kiwi hi-tech companies, but the average firm was going it alone.
The insight from this year’s survey was that ‘partner market knowledge’ and the ‘size of customer base’ were the attributes of a good partner that high-growth companies found most relevant. High-growth companies were less concerned with credit/financial stability and the strength of a partner’s reputation/brand.
4. Adjust the focus of your promotional approach: 91% of companies felt it was important that potential customers were able to conduct at least part of their buying process online (i.e. finding information about their products and evaluating them), and 53% felt this situation has become more common in the past 12 months.
In this online world the highest growth companies were taking a different approach. Instead of using traditional marketing content like flyers or brochures for their promotional activities, they focussed on producing knowledge-based output like ebooks or whitepapers.
Emulating the Apple juggernaut from New Zealand is not a simple exercise, particularly as their annual revenue is about 90% of our entire GDP. Applying some smarter approaches to our sales and marketing is a good place to start, and the Market Measures gives some insights into what those are.