Established b-to-b companies facing massive technological change, a slowing economy and increased competition are eager to revamp themselves.
At Annapolis Junction, Md.-based facility maintenance company First Service Networks Inc. —known for the past 35 years as Sure Air Ltd.—the changes began about 18 months ago.
In First Service Network’s case, it wanted to grow its business beyond serving multisite retail clients, including Eddie Bauer Inc., Williams Sonoma Inc. and The Picture People Inc., into financial services, food distribution and government sales. It also wanted to expand its business from heating, ventilation and air-conditioning maintenance into new services such as electrical, plumbing, refrigeration and signage repair, and adapt its products and services for existing and new customers.
"We knew all along if we were going to go out and introduce a new model to new marketplaces, we needed help with the total marketing function," said Jim deGraffenreid, president-CEO of First Service Networks.
First Service had been using a small graphics company for print marketing, but it wanted a full-service agency to help it develop its brand and communicate the repositioning message. After a review, it selected Carton Donofrio Partners Inc., Baltimore, previously Richardson, Myers & Donofrio.
Carton Donofrio has a unique position in the marketing communications business. The company provides a worldwide network of about 2,000 cultural anthropologists who conduct research for clients on the behavioral experiences of employees, customers or partners interacting with a brand.
"We realized our network of cultural anthropologists could transform the way we were able to design marketing communications and every other part of the brand experience by bringing the customer into the design process," said Chuck Donofrio, president-CEO of Carton Donofrio.
First Service said Carton Donofrio’s ability to conduct ethnographic research helped cinch the deal, since a deep understanding of customer needs was central to First Service’s technology and marketing redesign.
"One of the reasons we chose Carton is they didn’t listen to our preconceived notions of what was in the minds and emotions of our customers and prospects," deGraffenreid said. "They went out and found out for themselves."
Carton Donofrio deployed a team of eight field researchers and two anthropologists to interview and observe First Service’s facility manager clients and service contractors, spending four to 12 hours with each interviewee.
The researchers wanted to learn about job functions, decision-making, information needs and, perhaps most important, frustrations in the day-to-day working environment.
"We learned a lot about our contractors and our customers," deGraffenreid said. "From our customers, what surprised me was how out of control they felt in their jobs. … They have a desire to outsource site maintenance, but they also have a fear of losing control. What gives them control is information."
On the contractor side, the researchers learned that service providers, who deal with problems all day long, use a variety of technologies to track service calls and coordinate schedules: cell phones, wireless PDAs, the Internet and physical maps.
First Service knew that if it wanted to better serve its existing customers and break into new markets, it would have to solve these critical information needs. Whereas deGraffenreid said his company had an "inkling" of this need, the anthropological research confirmed it.
So First Service spent $8 million developing a proprietary technology system called Fusion, launched in September, that uses the Internet and wireless technology to provide real-time reporting of the status of maintenance calls, aggregated billing, and strategic analysis of developing patterns and trends.
"The information gives our customers the control they were looking for, and [as for] the terror they had about losing control, our system now addresses it," deGraffenreid said.
Mapping to marketing messages
Carton Donofrio also developed a b-to-b ad campaign around the concept of staying in control. The campaign launched last September in trade publications targeting retailers, food service providers, financial institutions and convenience stores.
The company is planning an online campaign for the fall to build awareness, although it declined to disclose details.
In the months after the campaign began, First Service signed up new clients including General Electric Co., Xerox Corp. and H&R Block.
"Our revenues are ramping up rapidly, and we expect them to ramp up even more," deGraffenreid said, pointing to a doubling of the company’s run rate over the past year.
Other marketers are pursuing strategies to revamp their business models around technology and better serving client needs.
In February, ADC Telecommunications, Minneapolis, began a marketing and sales restructuring, prompted by the weak economy.
The restructuring was part of a downsizing at the broadband telecommunications equipment vendor, which laid off 4,000 employees last year and announced plans earlier this year to lay off an additional 3,000, leaving a work force of 18,000. It also eliminated several business lines, including broadcast transmission and broadband wireless, and narrowed what had been between five to 10 businesses at any given time to four: DSL, IP cable, software and optics.
ADC also restructured its marketing and sales organizations to focus on accounts by customer type and customer region, instead of by product line. For example, sales teams are now set up to target high-end customers, start-ups, and partners and integrators, rather than more broadly by business line.
Previously, sales representatives for specific products, such as DSL, would call on a wide range of accounts. Some clients had five or six different ADC reps calling on them. Now, sales teams dedicated to accounts represent all of ADC’s services, which allows them to focus more directly on clients’ needs, said an ADC spokesman.
"I would say 10% of [b-to-b] companies are dramatically restructuring the way they do business," said Jean-Gabriel Henry, senior analyst at Jupiter Media Metrix Inc.
"The other 90% are saying, ‘How do I get information to my sales force more quickly, give them the ability to build on-the-fly presentations and use the Internet to allow marketing to see what sales divisions are doing?’"
Companies that are dramatically changing their business models have something in common. "Most of the time it’s driven by fear of being left behind by your competition," Henry said.