We had an obvious identity problem that clearly impacted our sales performance, so getting support from the executive suite for a branding initiative should have been a slam-dunk. In theory, everyone agreed we had a brand problem. But branding initiatives are costly. They are long-term commitments; they're marathons, not sprints.
When presented the initial budget proposal, the Finance team went into sticker-shock. "You sure you put the comma in the right place?" was their first salvo.
When I joined Kronos several years ago, everyone on the executive team knew that the company had a brand problem. Damned by its overwhelming success in the time and attendance market—which it had helped create almost 25 years earlier—those who knew Kronos knew it as "the time-clock company." And there were many others who didn't know Kronos at all. Adding to the confusion: if you asked 100 different Kronites, "Who is Kronos?" you would get 100 different answers.
But Kronos's offering had evolved significantly from its core transaction-processing application to a rich, fully integrated suite of human capital management solutions.
As overall growth in the time and attendance market flattened with approaching maturity, Kronos became increasingly dependent on building sales in other components of its suite to maintain its track record of consecutive quarters of growth and profitability—a record that reached 109 consecutive quarters of year-on-year revenue growth and 80 consecutive quarters of profitability before its acquisition by private equity firm Hellman and Freeman in June 2007.
Yet, as a consequence of its brand problem, Kronos's very satisfied time and attendance customers weren't considering Kronos when purchasing HRMS or payroll or labor scheduling or absence management or labor analytics.
In many cases, these purchases were being made by those elsewhere in the organization, not by the decision-maker involved in the original time and attendance selection. The relevant buyer didn't know we offered those solutions, and in many cases didn't know that we even existed.
In the mid-market sector, more than half of all companies were unaware that Kronos's core time and attendance product delivered performance and value for smaller businesses as well as for the enterprise. Consequently, there were a lot of deals that we weren't getting called in to. And if you don't play, you can't win. It's that simple!
To support the proposed branding initiative, we presented data from Interbrand and other sources, documenting the asset value of a strong brand. The Microsoft brand, for example, we explained, would be a $65 billion asset if allowed on the balance sheet, the McDonald's brand a $27 billion asset. Unwavering, Finance remained steadfast in the belief that branding was a soft initiative with no direct tie to revenue.
Back to the drawing board, we sought to translate the benefits of the branding initiative into terms that were meaningful to the Finance executives, and within that context to show a compelling return on the investment we proposed to make.
Looking at other product categories outside the company, we developed independent estimates of product line revenue, sales productivity (sales expense per revenue $), and product line margin (%) for the top three suppliers in each category. The absolute estimates were then converted to rank orders.
Returning to the board room and ready to speak "finance," we were prepared to make our case. First question to the Finance team: "Think about buying a new inkjet printer: what is the first product that comes to mind?" The immediate and unanimous response: Hewlett-Packard. Next question, "Who else would you consider?" Long pause.
Third question: "Think about buying a new network router..." Everyone named Cisco. "Who else would you consider?" Silence. "Think about buying a laptop computer..." Dell was the immediate and unanimous response. Interestingly, IBM was most mentioned when asked "who else," even though IBM had been out of the laptop business for years at that time.
In every case, the brand leader was correctly and unanimously identified; the runners up were seldom, if ever, named. The rank order data presented next documented that in every case the supplier ranked first in product line revenue was also ranked highest in sales productivity and product line margin.
More interesting, for laptop computers, not only did Dell rank first in revenue, first in sales productivity, and first in product line margin, but for more than 50% of Dell customers the Dell Web site was the first and only place visited before making a purchase. Why did more than 50% of Dell customers go directly to Dell and nowhere else? Why didn't they compare prices or specifications? Because brand matters.
We had Finance's attention. Why did we need to invest in the Kronos brand? How would a stronger brand affect how much we sell and how hard we would have to work and spend for every dollar of product and services sold? Looking at our performance for a single business sector, independent research showed that we were considered in approximately 40% of all deals and that our win rate in those deals was approximately 35%. What would fortify the brand return?
Everyone conceded that an investment in branding could increase consideration rate by at least 5%. The impact of a mere 5% increase in consideration rate for this sector, we showed, would yield a 13% increase in net sales, well over $10 million annually. If win rate could be improved by 5% as well, the aggregate increase in net sales would be more than $25 million annually, approximately a 29% increase without increasing headcount or other expenses in the Sales function. This would represent a 29% improvement in sales productivity for the sector, a 4.9% improvement in total company sales, and a 9% or 12 cent improvement in earnings per share. There were similar benefits, we added, to be had in other business sectors. The total marketing investment required: less than 10% of the incremental revenue projected for this sector alone. We closed the sale.
Phase one of the program was developing the brand strategy. The strategy had to be broad enough to cover not only customers and prospects but also other key constituencies, including business analysts, investors, media, current employees, and prospective employees. Each group was surveyed to ascertain current awareness and perception of the company, awareness and perception of others in the space, and the characteristics of the "ideal" provider. This enabled us to define both our destination and our starting point.
If you don't know where you're going you will end up somewhere else. If you know where you want to go but not where you're coming from, expect dead-ends, blind alleys, and a path that may ultimately get you nowhere.
We learned the market wanted and needed a real expert on developing and managing the workforce, a thought leader who could bring clarity to the marketplace and establish best practices, a trusted partner to help navigate the complexities of managing the workforce, a visionary who could clarify where the market was going next, and finally, a supplier who could deliver solid products that worked and solved real business problems.
With the origin and destination clearly understood, we went back to our target audiences to confirm that they would allow us to get where we wanted to go from where we were. To build effective programs, we needed to identify obstacles and understand whether any were potentially insurmountable.
Phase two of the program was making every Kronos employee a brand ambassador. Every "Kronite" needed to understand the brand strategy, needed to believe the brand strategy, and needed to be passionate about reinforcing the brand in their words and actions. We needed to engage everyone's heart and mind. Without employee support and reinforcement, an external campaign would never succeed.
Phase two started with a big bang, an all-employee event at headquarters that was simulcast to field based employees in over 70 locations. A successful phase two, however, depended on commitments from management to engage employees on a continuous basis and to enlist new employees as part of on-boarding.
Phase three was repositioning the brand with our external audiences. To accomplish this we needed to deliver on our brand promise: We needed to be the expert the market was looking for, not just say we were that expert. Advertising and promotion where very much a part of phase three, but their role was to reinforce the brand, not to create it.
Public relations was an important tool in establishing ourselves as the expert. We conducted and shared primary research on workforce-related issues. We put our thought leaders, our human capital management experts, and industry experts front and center as speakers and in the media, addressing timely topics and critical business issues.
To deliver on the brand promise, we also needed to be experts in our every interaction with customers and prospects. We needed to enable our Sales, Pre-Sales, and Professional Services organizations to speak with customers and prospects about their issues and concerns, not our products and services. Our customer facing team needed to understand our customers' businesses and be able to speak in terms of solutions that could address their critical business needs. Then they needed to be able to map our capabilities to those solutions.
A key element in re-establishing the brand was the "Expert Enablement Program," which provided training, resources, and tools to our customer-facing employees. It enabled them to demonstrate that as a company we understood our customers' businesses and challenges, and as a company we could enable them to successfully tackle those challenges. Expert Enablement also became an important component of reinforcing the brand strategy with every Kronite.
We started by recognizing that branding initiatives are marathons, not sprints. After a year, we felt this marathon was off to a strong start. Sales and consideration rate grew in the business sector we focused on during our discussion with Finance. Opportunities in the pipeline grew for the specific components of the product suite we focused on. Sales productivity improved. We began to become the go-to-guy for media and analysts for issues pertaining to the workforce.
And while the follow-on assessment of brand awareness and perception has not been completed, I'd venture that far fewer customers and prospects think of Kronos as the "time clock company." And if you ask any Kronite today, "Who is Kronos?" the answer you'll undoubtedly receive is this:
Kronos, we are experts who empower organizations to effectively manage their workforce. With more than 25 years of experience, we are solely focused on delivering an integrated suite of software and services that enables organizations to reduce costs, increase productivity, improve employee satisfaction, and ultimately enhance the level of service they provide.
Stuart Itkin joins Roy Young at the MarketingProfs Business-to-Business Forum 2007 in Chicago, October 1-2 during his keynote presentation, Marketing the Marketing Department.