With cash and capital constrained, focus on solving customers issues and speed to market are more crucial than ever for Kiwi technology companies, says Owen Gibson, Partner Private Client Services, at PricewaterhouseCoopers in Wellington.
His comments echo a key theme that emerged from results of last year’s inaugural Market Measures survey. Conducted by Concentrate and PwC, Market Measures set out to gain a better understanding of the sales and marketing activities of Kiwi technology companies and to compare results with international benchmarks. It also identified which sales and marketing approaches correspond closely to growth.
The survey showed that despite Kiwi technology companies having such a high number of technically innovative concepts, they lack targeted marketing strategies and struggle to grow their ideas and businesses behind them to a large scale.
However, the country has no shortage of technology innovations. The government’s hi-growth project lists over 8,000 technology-related businesses the country.
So what can we do better and how do we compare to our US counterparts?
Results of Market Measures found that New Zealand technology companies are not as customer-focused as they could be. “A lot of effort is focused on building and developing products, before even linking it back to a customer need,” says Owen.
He explains that although some Kiwi technology companies are customer focused and march ahead in the market, the majority focus a lot of time and money into perfecting their product or service before taking it to market.
“The marketing focus is often missing in the early stages of product development. Companies that spend a lot of effort getting their idea 100% right before they commercialise are often behind the eight ball, particularly in terms of cash flow and trying to keep up with their competitors.”
In this current period of economic uncertainty, Owen says a change is needed to focus more marketing efforts on the customer.
“Current economic conditions have meant that cash and capital are a lot tighter, therefore speed to market is becoming increasingly important for technology innovators. There is less room for error – particularly for early stage technology developers.”
“When companies are raising capital or sourcing funds, they don’t give enough consideration to the marketing activities that are needed to get their product to market, and the costs associated with this. Marketing budgets often get squeezed near the end as companies haven’t planned enough.”
He believes some Kiwi technology companies still have a ‘we will build it; they will come’ mentality without dedicating enough effort to learn more about their target customers or leaving enough money in the budget to cover marketing expenses when the product or service is ready for sale.
“They’ll get their product ready to sell, then at the end of the cash burn, decide to go and market it but are left with very little in the budget.”
Although it leads these companies to be slightly more innovative in ways they market their product, they become more reliant on low-cost marketing activities which means they are not competing head on with international counterparts as well as they could.
“They just don’t have the footprint perhaps that their competitors have. Allowing marketing to be a part of the business strategy in a more formal sense would be useful for Kiwi technology companies”, says Owen.
He is looking forward to this year’s Market Measures survey and the effect latest economic conditions have had on the sales and marketing of Kiwi technology products.
“After gaining a thorough understanding of the marketing activities of New Zealand technology companies from the 2008 Market Measures survey, we are now keen to see an increased focus on the results, with slightly more in depth and targeted questions.”
“We certainly encourage New Zealand-owned providers of technology products and services to participate in the survey. It will allow them to compare their sales and marketing activities with their US counterparts and helps to identify sales and marketing strategies most likely to support future growth.”