Peter Alexander, VP-global commercial marketing, Cisco Systems

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Targeting the small and midmarket segment has become big business for Cisco Systems, the networking and communications giant. Consider the numbers: Of the four audiences to which the company sells—service providers, enterprises, consumers and SMB—it is the SMB, or commercial business, that is the fastest-growing. Accounting for about 26% of the company's revenue, that business generates $7 billion globally and had a 22% growth rate over the past 12 months.

Peter Alexander, the driving force behind global commercial marketing, said his division's efforts start with finding the customer and generating awareness about Cisco's products and services. "Marketing is very much about accelerating demand," he said. "Customers would ultimately buy if marketing didn't exist, but it would probably take a lot longer."

Cisco's recent efforts in reaching this market have included its "You Inc." ad campaign, which, as part of the larger "Poweredby Cisco" effort, stresses the business benefits of the company's networking and communications products (see Best Ads, page 31). Aside from offline channels, Cisco relies increasingly on online marketing to get the word out, Alexander said, using banner ads, search engine and e-mail marketing, and Webinars.

Webinars, in particular, have had a high return on investment. "The market for technology in small business is such that many customers are looking to be educated first before they buy, so offering that education is very effective," Alexander said.

Beyond generating awareness, Cisco's commercial marketing efforts focus heavily on data segmentation. "We look at the commercial market and say, `What logical groups of buying behaviors are there in those markets? How can we use data to create a target list and thereby make that marketing more effective?' " Alexander said.

For instance, the company might send a direct mail campaign to as few as a couple hundred people. "By being so specific, sometimes we'll get response rates in the 30%-to-55% range," Alexander said.

Cisco also is pioneering a way to track the return on its marketing investment, a measure it calls "response company bookings." If a customer or prospect responds to a marketing campaign, Cisco tracks every subsequent transaction and links the sale back to that campaign. So if, for example, a customer attends a webinar or requests a white paper from Cisco's Web site and, four months later, buys a $20,000 phone system, Cisco credits the marketing program with $20,000 of response company bookings.

By this measure, the company's SMB marketing programs are proving quite successful: In the past year, the commercial business has found 94,000 new customers and has had $2 billion of response company bookings, Alexander said.

—Mary E. Morrison

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