Technology Case Solutions
Cisco Systems: Managing the Go-to-Market Evolution
1) How have Cisco’s channels evolved in the last 10-15 years? Why have they evolved that way? Ans#
In the last five years, there has been a marked shift in Cisco’s channel strategy. Rather than being purely focused on the volume of business that a channel does with the vendor, it is now paying great attention to the value of the business that the channel does. The focus is therefore no longer pure ly on point product sales but on bringing together multiple technologies and focusing on solutions aimed at solving customers’ business problems.
This value-based strategy is equally beneficial to the customers who then receive more technology and business value from partners, with the partners themselves able to achieve a higher level of profitability.
the organisation only had one sales business model which negotiated deals with customers with the assistance of partners who fulfilled these deals. However, this single business model restricted access to the lower segments of the pyramid. It also signalled a need to establish a sales relationship with all customers. 2) What does the future look like?
Ans#
The challenge was how to communicate thoroughly and effectively to the market when Cisco had developed over 4,800 products. It is clearly not easy for a channel, a customer or even the sales force itself to access all the latest information on, for example, the organisation’s activities and future prospects. Cisco is increasingly moving away from point product launches and sales, towards a greater focus on solutions. Cisco recently started a marketing advisory board in the UK. This brings together a number of their key partners on a quarterly basis to discuss future marketing strategies which everyone involved found this to be a helpful forum for exchanging ideas and it has also helped Cisco to forge stronger links with their partners. Cisco has developed a set of productivity tools designed to enable their partners to increase productivity when selling solutions based on security, unified communications and wireless solutions.
These productivity tools provide partners with faster quotes and complete solutions, saving them valuable time to focus on other sales activities. Cisco’s aim is to move channel marketing on to a new generation, offering marketing as a service to the channel. It aims to help partners make the best use of this selfservice model, so partners can focus on the follow-through and execution of their own campaigns. It is important to develop a suite of tools to assist the partner sales force to close deals on leads that have been generated.
3) What grade would you give Cisco for managing that evolution? Good or a bad? Why? Ans#
This approach, half marketing-led, half partner-enabling, has boosted Cisco’s lead generation, from about 50 leads a quarter to more than 1,200 leads per quarter a year later, with a tenfold increase in the SMB sector.
I would say an excellent strategy to capture market opportunities, Cisco and its partners must continue to evolve, invest, lead and grow together. 4) Against the background of your answer to questions #1 and #2, how should Cisco distribute VoIP products? Through voice VARs? Data VARs? Or both? Ans#
Cisco should distribute VoIP Products to existing data VARs. Convince data VARs to market this technology as a bundled product with their existing router sales. Giving this new and rapidly growing technology to existing customers will show them that CISCO are interested in their long term success and their current relationship. Also, existing VARs are the most familiar with their current products and company (discount systems, payment systems, etc.). On the other hand several discussions happened with senior management in respect to Voice VARs, which is a poor route to take this new technology to market. These companies have little incentive to sell these products due to the fact that it would cannibalize their current sales, and produces lower profit margins. 5) What are your reactions to the “Pyramid” model advanced in Figure C of the case? What is the core concept of the model? Is there an alternative evolutionary model that Cisco should adopt? Ans#
Cisco’s revenue share was largely concentrated on the large business sector and then shrank as it approached mid-sized enterprise businesses and small and medium businesses. Only few years ago, the organisation only had one sales business model which negotiated deals with customers with the assistance of partners who fulfilled these deals. However, this single business model restricted access to the lower segments of the pyramid. It also signalled a need to establish a sales relationship with all customers. The company realised the full potential of this wide commercial market segment and the growth opportunities it could foster. It is important not to underestimate the value of marketing in that context as it gives as much accountability and ROI as sales do. As well as adapting the sales model, it was necessary to give more structure to the marketing communications
