The ‘lone wolf’ mindset to selling is New Zealand’s biggest shortfall, according to a survey by latest Market Measures survey conducted by marketing advisory firms Concentrate and Swaytech.
What is the ‘lone wolf’ mind? This mindset applies those who “rely on a talented sales person or sales team to do everything from finding prospects through to securing a sale, which restricts their ability to efficiently grow a company of scale,” says Owen Scott, managing director of Concentrate.
The alternative, he says, and more efficient approach is the ‘pack’ approach, where a suite of indirect tactics are used to find, nurture and qualify sales leads for the sales team to convert to customers.
The bottomline is this: Big tech companies are few and far between in New Zealand. On average, New Zealand tech firms turnover growth rate of 38% continues to do well. “But we remain a nation with a few large tech stars like Orion Health or Tait Communications, and thousands of very clever, but small exporters.”
Thirty percent of the firms in the survey were over 10 years old, but over 70% of them record annual turnover under $5 million.
Why we have so many small companies
“Benchmarks we have sourced from the world’s most successful technology industry, the USA, show indirect tactics (e.g. direct marketing, advertising, email marketing, social media) deliver 80% of their sales leads, compared to 23% for the average Kiwi technology company in this study,” says Scott.
“It is a stunning contrast and at the root of why we have such a long tail of very small companies, and not enough hitting that magical $100 million annual revenue figure.”
“Faster and more sustainable growth comes from focussing on a market, undertaking indirect activities to warm that market and qualify and generate sales leads for a sales force then to convert,” he says.
Bob Pinchin, director of Swaytech, says the exciting aspect of the study is that much of this indirect activity can be driven remotely over the internet.
“In almost any business, part of the buying process is conducted online, giving our tech companies the opportunity to reach them cost effectively,” says Pinchin.
Remedy - the internet?
The study found firms need to better embrace the internet as a channel to support their sales, produce the right kind of marketing content for online channels, and use social media much more aggressively.
Here’s what technology companies can do to lift performance.
1. Value digital marketing more: have a broader realisation that much of the buying process in virtually any market is occurring online (50% thought this situation hadn’t changed in the last 12 months, contrary to industry data).
2. Reduce the marketing ‘fluff’: produce the right kind of tools to generate and nurture sales leads. Generate useful content, not marketing 'brochureware' (less than 30% produce ‘thought leadership’ type content, as opposed to 75% of US firms).
3. Get more social: our US counterparts are embracing social media aggressively and applying it differently. We are a long way off the pace (98% of USA tech companies use social media, compared to 68% of local firms).
More about the survey
Participants: 305 New Zealand technology companies completed the 2014 survey.
Age: 53% were established firms, 33% characterised themselves as early growth and 14% as start-ups, with the majority either software, IT services or electronics companies.
Main focus: 77% are focused on exporting, mostly to Australia, US, UK.
Size: Average annual turnover growth was 38%. They spend spend an average of 27% of turnover on sales and marketing. Early growth companies (31%) spent more than mature tech companies (23%).
The annual Market Measures survey, operating since 2009, draws data from over 300 New Zealand-based technology companies on their approach to marketing and selling their products. Technology marketing consultancy Concentrate organises the survey along with technology marketing specialists Swaytech. Deloitte and AJ Park are the principal sponsors of the 2014 Market Measures survey.