Before the program's introduction, technical services represented untapped potential for the hardware company, and Cisco wanted to find a way to sell services to customers with which it did not communicate directly. All business is fulfilled by its partners.
The difficulty was compounded by a lack of familiarity with the complexities required to sell the intangible aspects of the services on the part of both Cisco field salespeople and Cisco channel partners.
"It's a sold product, it's not a bought product," said Lauren Robinette, senior manager of marketing at Cisco. "We wanted to help channel partners improve service sales performance by attaching services at the point of sale, renewing service contracts and getting multiyear service agreements."
Involving channel partners
With only one-third of its partners selling its technical services, Cisco launched the program in October 2005, with four distinct campaign periods centered on specific selling goals.
Cisco's partners include corporations such as AT&T, IBM Corp. and Verizon Communications that sell directly to the market as well as mom-and-pop shops, most of which are resellers that in turn purchase Cisco products from distributors such as Comstor, D&H Distributing Co., Ingram Micro and Tech Data Worldwide.
"We have 11,000 resellers," Robinette said. "They have outlets, so multiply that by about 10,000. When you look at that range, our ability to penetrate it requires us to reach as many partners as possible."
After deciding to focus its marketing and sales efforts on the small and midsize business market, Cisco determined that its slice of this lucrative and growing market comprised about 10 million potential prospects. That meant channel partners would be the primary sales contact.
The first campaign period?"Making the First Service Sale"?occurred between Oct. 18 and Dec. 15; the second?"Selling Service for Uncovered Equipment"?went from Dec. 15 to Feb. 15; the third?"Selling Service Contract Renewals"?extended from Feb. 15 to April 15; and the fourth?"Selling Multiyear Service Agreements?occurred between April 15 and July 15.
Each campaign consisted of three e-mail communications tailored to target partners, as well as training tools that included services guides, quick reference tools for salespeople and self-paced learning modules.
The e-mail promotions were designed to enlist partners in education and training programs to help them market and sell services. Cisco offered prizes to participants who successfully completed the training process and passed the required tests.
"It's a cheap, dirty trick," Robinette said. "This is a way to give the partner sales rep the incentive to understand better how to [sell services]."
Prizes included XM radio receivers and iPods. "We want to encourage the sales reps to go through the education process while also getting to the owner/managers so that they understand the revenue they are leaving on the table," she said.
Robinette said Cisco chose to target partners that were selling the most hardware.
"The asset is in the database," she said. Using database marketing, it identified partners with more than $100,000 in product sales. It came up with a target audience of 83,000 contacts. She said each time an e-mail went out, the ARM Program Web site received 40,000 hits, and the opt-out rate for the e-mails was exceedingly low (less than 0.02%).
"There are very few partners that don't want to hear from us," Robinette said.
In addition to prize incentives, the program gave channel partners the opportunity to become eligible for joint marketing funds for demand-generation campaigns. Active participation in the ongoing educational series was required for eligibility.
Cisco built a scorecard to measure the success of the program using metrics that included revenue, sales reps trained and partner locations registered. It managed to train more than 3,000 sales staff members in 600 partner companies in more than 1,100 outlets. Those participants grew service sales by $200 million in one year.
Robinette said the revenue forecast when Cisco began the program was $20 million, so the results were a pleasant surprise. "It was 100 times the forecast."
In addition to the impressive incremental revenue figures, each campaign period generated increased interest, which Cisco said indicates that channel partners see the value in the training and joint marketing opportunities.
Based on its success, Robinette said, "this will be a long-term program." The program will evolve over time to provide more and more meaningful curriculum training that "digs deeper."
The program also won an Information Technology Service Marketing Association Marketing Excellence Award in October in the increasing sales effectiveness category.