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|Jump Starting the Quest for New Customers|
Sometimes it takes an outsiders viewpoint to help you see your
own prosperity and your potential.
The HP 3000 division gained
a fresh viewpoint late this summer when Roy
CSY as its latest marketing manager,
arriving with more than a
decade of marketing and product management
experience inside HPs
handheld computer operations. The
background in HPs handheld
business looks like it will offer some
pertinent HP 3000 lessons
to Breslawski, who started with HP in 1984
as an electrical engineer
working on the groundbreaking HP 110
Portable. After Japanese
firms drove down portable pricing with more
favorable labor structures,
more than a few US-based companies exited
the business. HP was
one of them.
Breslawski hung on in PR and
merchandising, and eventually came
back to the calculator division as a
first-level manager in product
marketing. He had a tough assignment: get
HP back into the portable
computer game after being benched for
years. The end result was
the Omnibook, a solution that stole market
share from better-heeled
and more established portable vendors. More
was responsible for moving Microsofts
Windows CE onto the 320
palmtops, with a resulting spike in sales.
He spent the last three
years in Singapore, transferring the
calculator and palmtop business
to the Pacific Rim, working as a product
marketing manager, development
manager and technical manager. The
organization had to be built
to division strength in five months, and
Breslawski was starting
with two marketing people, a support
engineer and a secretary.
He waded in to do whatever jobs needed to
Breslawski faces similar marketing
challenges in CSY, a division
whose managers were virtually out of the
market for new customers
during the last several years. CSY had
suffered in HPs shadows
before the companys Unix fanatics
fled in the face of the NT
juggernaut. Fortunately, the
customers willingness to keep their
minds open about operating environments
yielded two surprising
years of success for CSY, success that
attention when the divisions
marketing manager post came open
this summer. The divisions first
marketing manager hand-picked
by GM Harry Sterling, Breslawski said when
he arrived at CSY in
August that he was moving to another
durable post both CSY and
HPs calculator businesses turned 25
years old this year. Theyre
both mature businesses, highly successful
with a huge, loyal customer
base, he explained when we first met
him at HP World. The parallels
are just amazing. Since then
Breslawski has reminded HPs sales
force that the 3000 product line was one of
HPs most successful
in fiscal 1997, something thats
earned CSY resources to reach
for new customers. We asked him how he
plans to push the HP 3000
into new businesses.
Do you see evangelism for the 3000
platform as part of your positions
Yes, and personally I think its part of every single persons position in CSY. If somebody doesnt believe strong enough that theyre out evangelizing it, then they probably dont belong in the division. From what Ive seen, thats pretty much the makeup of the people in CSY. Ive never seen an organization where almost every single R&D engineer is out talking to customers every year.
How do you define evangelism?
That kind of growth in awareness of the 3000 is obviously important to CSY this year. Many in the 3000 community were thrilled to see the influx of national 3000 ads in the national computer trade press in October. What gave you the elbow room to make such a big splash in print?
We hear youre pushing for a major increase in the number of new HP 3000 customers over the coming year. How much increase do you want to see, and what will need to happen for HP and its partners to accomplish it?
Theres no limit to what Id like to see; however there are some things we would like to do. As far as what were going to get in new customers, I dont know exactly what will happen. What Id love to see is somewhere around 30 percent of our sales in fiscal 1998 come from new business.
Can we get to that number? Im not sure. To be perfectly honest, I dont have a good measure for where were at today. Thats a hard thing to track. There are a lot of people around the world selling HP 3000s every day of the year. We dont always know when that sale goes to a customer whos never owned an HP business computer before. Were working right now to put better systems in place to more accurately track that. When we can clearly identify every new customer we have, we can take a more active role in making them feel part of the 3000 community.
Some of what needs to happen is already
going on. The most important
thing is a process were going through
in the division today.
Were clearly segmenting the total
available business computing
market, identifying the areas where the
3000 has a clear advantage
in the market and where we have good
solutions, and then putting
our marketing programs together around
those focused areas. As
we move through 1998 well move from a
promotion of the 3000 as
a high-reliability technology to a solution
to very specific business
problems. Its the most important
thing we have to do today. Identify
where those opportunities are and show
people how were going
to benefit their business.
We think theres a large opportunity in the market where NT is not quite ready today to solve the mission critical problems. And there are lots of environments where Unix may not be the right answer. Unix is a little larger and more sophisticated system than people really need to apply to the problem. A 3000 is a great fit in between those two.
What have you identified as targets where NT is not the best solution?
Theres a wide range of things were investigating today. We dont have any final answers. Were looking a great deal at small and midsize discrete manufacturing operations, managed healthcare solutions, a fair number of things in the finance community, mail order businesses, travel reservations. An awful lot of that runs on a 3000 today, and were trying to identify why those customers had an advantage with the 3000, and then apply it to rest of the world.
Those solutions obviously serve many users. On the other end of the scale is the prospect for growing the 3000 base as a PC LAN application alternative. What do you think of a four-user, lower-cost HP 3000?
Thats something I dont have a complete understanding of at this point. I do have some people researching that to understand what the opportunity is and how the 3000 can fit. We dont just want to go head to head with the message that if youre a small company, you can do a 3000 instead of a PC LAN. One thing Ive learned over the years in marketing is when you go head to head with a 900-pound gorilla and punch him on the nose, youre going to lose. If you can find out a way to run around his feet and nip him on the ankles, thats how you win. Even if theres a small, four-user license system opportunity there, we need to find out what the opportunities are to nip them on the ankles: what specific applications or types of businesses will that win in and focus our resources there.
Tell me about the biggest marketing challenge youve faced before arriving in CSY. What can a marketing failure teach you?
My biggest lesson came early in my marketing career, and it was probably my biggest failure. I was involved in a new start-up within HP that was going after a new market segment that HP did not participate in. It failed miserably, and it did not fail because of product technology, it did not fail because of time to market, it did not fail because of pricing issues. It failed very simply because the HP sales force at the time was not appropriate for that market. Very simply, we did not have a channel of distribution for the product. My key lesson out of all that is marketing is all a market basket. You have to address every element, every piece of that market basket to win. You cannot let any single element fall by the wayside.
What was the product?
I cant say. This was an HP market failure, and they dont go public with that. There have been flip sides, too. In my recent history I was involved in the handheld business in Singapore. We went to market and moved from a very small set of competitors that were pioneering the handheld PC market for a number of years to suddenly a bigger universe that had some very large consumer electronics companies in it. In some cases our competitors were outspending us by enormous factors, 6 to 1 in dollars spent.
How did you leverage back against that?
Its one of the things Im driving at with the HP 3000. We focused very carefully on specifically how people could apply handheld technology to increase productivity in a company. We designed around very specific needs to meet that. We sold a benefit based on specific business problems people had, and our competitors were throwing very large dollars at telling people isnt this slick, we built a small computer. That was meaningless to the guy who needed to buy 3,000 of them. Showing him we solved a problem that people who are mobile want to have their information to have the same format as it does on their PC. That made a big difference, and it had nothing to do with advanced technology.
Do you do that in some cases by finding a pilot customer who has been successful, and then publicizing that?
In this case we had an advantage, in that HP had been in the handheld market for 5 years already when Windows CE came along. We had a lot of users to learn from, and our new competitors did not. Its that good old evangelism. We had some very dedicated people who put a lot of time and effort into helping HP get this handheld business going. We spent a lot of time buying plane tickets and getting out and talking to people, building enthusiasm for it.
How do you make that work when the majority of your product is being sold indirect, like the HP 3000? Are those the people who have to be getting on the planes?
They do part of it. That handheld business was as indirect as you get. The calculator business that it was born out of was the first indirect distribution HP ever did as a company. One way to get your distribution partners enthusiastic is by getting end users to call them and ask to buy product. Thats a lot of what we do with the HP 3000 already. Thats one of the benefits of having an entire division thats comfortable with going out and talking to customers. Those customers call up our distribution partners.
Theres evidence they have been calling. We heard the HP 3000 product line was one of HPs most successful in the year that just ended. Is that true, and how do you measure success of a product thats been around for 25 years?
Absolutely its true. The way HP measures success is pretty straightforward; if you look at our corporate objectives, profit is at the top of the list. If we dont make profit, we cant do anything else we care about. We made money. One way you make money is by selling a lot more than you planned on, and thats what happened in 97. HP has a process of setting a quota every year for every product line, and thats the expectation from the management group both within the division and in the field sales force for how much we sold in a product line. The objective is to go out and beat that. In 97 we beat that by a large margin.
Did that earn you the dubious honor of having the expectations raised for the next year?
Where it sets the expectations for the next year is really immaterial. Whats most important is that it builds a very high level of enthusiasm and gets more effort out of everybody involved for the next year. Thats what were seeing happen right now.
Did it help raise the mindshare of HPs own sales force about the product?
Thats a tough one to answer. Im not sure the mindshare has changed as much as the mindshare has become more positive. We are certainly getting a lot of enthusiastic support out of the sales force right now. They are doing a lot of good things for us going into 98.
Whats changing inside HP to ease marketing the 3000 to HP itself?
I dont know that theres anything really changing inside of HP.
Is there something changing inside of CSY, then?
CSY has been very successful for a number of years now. I joined a highly successful organization; thats was a very attractive aspect of coming to this position. There is some shift within CSY, a more aggressive stance toward the future and a stronger belief there are new customers out there waiting for us to get em rather than were only here to serve the installed base customers. It was never totally that, but certainly our focus has been on the installed base.
Doing the right thing for the people who
already own a 3000 has
been eating up virtually everybodys
time for a few years now.
Now theres a belief that one of the
right things we can do for
a current owner is to go get a new customer
into the 3000 community.
Were putting some effort into that.
The other is that were getting
incredible support from our upper level
managers. The people that
we report to are very strong supporters of
the HP 3000 and have
been a big help to us. One of the ways we
make our customers successful
is by getting new customers.
It had an impact on every product line in HP. Its been very beneficial. The whole purpose of the reorganization was so that sales reps would go to a customer and represent Hewlett-Packard as a company, and sell the best solution to that customer for their problem. This is exactly what were trying to do from our product lines already. Thats the key here. Sales reps in the past were responsible to a product only, and their job was to go in and sell that product to everybody they called on.
So have the opportunities opened up because you now have more people you can influence within the sales force?
I believe so. The other part of it is that were doing a lot to build up our reseller channel. At the end of the day when you have several tens of thousands of active customers around the world, you cant call on all of those customers with HP people. As much as the customer would like it, its impossible. As a company wed be broke if we had that many sales reps out there. Were very active now in strengthening our reseller channels, structuring things differently, developing new training for resellers. Were coming up with different levels of resellers and in the process of designing programs that will benefit the top resellers the ones that are the most knowledgeable, most capable of marketing and selling versus just taking orders and delivering a box.
Right now the HP 3000 division has just one level of reseller?
In fact we do. Our distributors do offer different levels of discounts depending on the level of business a reseller is doing.
How will the new levels of resellers have an impact on the mission of expanding the customer base?
Were not going to focus just on business size. Whats very important to us is who is able to bring the technical expertise to the table thats required to make a sale, and who is able to deliver the marketing and sales resources necessary versus just being able to take an order when somebody else has done the work. If were going to bring new customers in, we have to have competent people out there finding the new customers.
So what you find is that being on the menu of a very large distributor, for example like a Gates/Arrow, doesnt bring you many new sales?
Right, and in a worse situation, people just go around shopping for the lowest possible price which means that you get no new customers. You only get repeat business from people who already know what theyre buying. Thats not a market growth scenario at all.
So shopping strictly on price is a situation that doesnt earn you new customers as quickly as shopping on benefits or shopping on solving business problems?
I believe so. If we were a PC group, that might be different. Price would be much more important, because people have a much higher understanding of the benefits of a PC. Furthermore, most of the value is simply the application that runs on the PC. In a market with the HP 3000, the hardware is a pretty large contributing factor. Certainly the operating system is an even bigger factor. Thats the differentiator between us and any other choice that could be made.
So that means you have to focus on selling the differentiating factors of your operating system?
Yes. People need to understand why MPE is a benefit, what does it do for the customer. How does it solve their problem and give them a lower total investment over a number of years versus the up-front purchase.
The accepted wisdom in the market is that NT has made some room for different, non Unix operating systems. Do you agree?
Maybe theres a little of that going on. Certainly there are some people who have tried NT installations and they didnt work out, and they went back to something else. The flip side is that there are people who have tried NT installations, and theyve worked out just fine. For whatever reason, people are much more open to taking a look at alternatives than they were a year or two ago. Back then it was the peak of this mad rush of there has to be one way to do things. More people are accepting there may never be one way to do things.
Whats the most significant change in the 3000 market over the past six months?
In a six-month period I dont think theres significant change. What may happen in six months is significant awareness. Changes in the market take a lot longer than we ever perceive they will take.
What kinds of motivations and incentives do you want to offer to the channel partners who were once very active in the 3000 community but have fallen away?
I dont know we want to do anything different for them than for anybody else. Whats most important to me is not necessarily what they might have done five or 10 years ago, but what they can do going forward. Thats what were going to structure our programs around. Were going to build off of the strengths people can bring to party, rather than trying to resurrect something that might have worked in the past. The environment always changes, and what was a formula for success in the past is probably not a formula for success in the future.
Do you have examples of what youre going to do in the way of motivations and incentives?
Were going to focus building the marketing capability of the resellers. One of the key ways we do that is through the marketing promotions and programs developed within the division and implemented through the HP sales force and the resellers. Today, promotions and programs are not developed just in the division. Everything we do in the marketing process is developed in partnership with resellers. We have a Distributor Marketing Council and Distributor Operations Council that meet to get a clear understanding of whats important to our resellers. This just started within the last two months. This is a new way to do business and make the resellers part of the 3000 team rather than just somebody to move boxes.
Since it just started in the last two months, Ill bet you had something to do with getting this started, since it covers your time in CSY.
I certainly did a little prodding in that effort.
What do you do to get the marketing efforts of the resellers ramped up?
The key thing is getting consistent marketing messages. When you develop a program in isolation, everybody runs with their own interpretation of what that means. Some people use it, some dont. By doing things in partnership, you get all of those factors out of the way up front. Its very similar to when youre designing a hardware product and designing quality in from the beginning.
So are you applying the same kinds of processes to marketing that CSY has pioneered with its software and hardware products?
Its exactly the same. Every link of the value chain we should have the exact same close relationship with our end customers.
Tell me how the chief marketing post in CSY relates to the HP sales force. The salespeople dont work for you, right?
Yes and no. At the end of the day, they report to different people, but the reality is they make their money by selling products for divisions. They have a quota to achieve, and make money by achieving that quota. Quota is assigned to a product line, so indirectly, yes, they work for us. If they dont go out and sell what theyve been asked to sell for our product line, then they dont make as much money.
How does CSY ensure it gets the necessary marketing mind-share from the sales force?
We market to the sales force in the same way we market to customers, resellers and distributors. Were bringing a set of our dedicated US sales resources out to San Francisco for a day and a half to have them meet the functional management team, and have Harry [Sterling] talk about what were doing and what the strategic direction is. A lot of recognition and thank you's are going to the people who have contributed to the business in the past. We want to make sure everybody is completely aligned and has the exact same message in talking to the customer in the same way.
By dedicated sales team, do you mean salespeople dedicated to selling HP 3000s?
Some of them are, and some are salespeople and managers from various districts who are going to be the lead in their area for representing the 3000 within their team. We have to make sure there are champions everywhere, in every aspect of the organization.
Which dormant business sector in the 3000 would you like to help make more active over the coming year?
One of our focuses next year is in manufacturing. Its been one of the long term strengths of the 3000, and its certainly something that has a lot of life in it for the 3000. We have an exceptional partner there in eXegeSys, whos been investing in the [MM II] product, and I think theres a lot of things we can do together.
It would be interesting to watch MM II begin to sell some new 3000s, wouldnt it?
More than interesting Im counting on it.
What kind of a role can small applications suppliers, the kind that might become 918DX owners, play in the 3000s renaissance?
Everybody is critical. One of the things we need to do here is to get very focused on our market segmentation. Rather than look at broad categories, we need to get down to specifics. When you do that, very often what you uncover are the small problems our customers have that large applications dont take care of. Thats where the small software suppliers become a large strength. They have the ability to react quickly, or in some cases have very specialized applications to address those kinds of problems that the larger software suppliers dont address. I dont think its possible without all ranges of software suppliers.
Give me your thoughts on a small, focused conference for these kinds of channel partners with MPE solutions. Could it help build on the 918DX momentum? Could CSY help support such a meeting?
Thats one idea on a list of a lot of things we have to look at today. We have more ideas than we could ever implement. What we have to do is figure out where we could get our best return. I honestly couldnt say one way or another if that could be effective for us or not at this point.
Whats your first-year goal as marketing manager for the 3000?
Every marketing manager has a number one goal: to exceed quota. If I say anything other than that, then Harry is not going to be too pleased. Beyond that, whats very important to me is that we bring new customers into the HP 3000 community, and we can clearly identify who those new customers are for everybody. Thats what will build the enthusiasm and continue the commitment to the platform going forward.
Whats the most important aspect of the 3000 customer base that will make achieving that goal possible?
Our customer loyalty. I believe the HP 3000 customers are the most loyal computing customers out there. A lot of people tell me its similar to the Macintosh customers. Ive got to say I think it probably is, with the big difference being that our business hasnt been collapsing for the last year and a half. We have incredible customers, and thats whats most important we do with the future is that level of loyalty. It gives us so much ability to do other things going forward. They trust us, and we trust our customers to tell us the right things. Theres an awful lot of power in that.
HP Commercial Systems Division