Business-to-Business Marketing Strategies in the Knowledge Processing Industry

Sindhu G*

KPO Experts India has indicated that Knowledge Process Outsourcing (KPO) is a step ahead of Business Process Outsourcing (BPO), referring to it as a process chain consisting of high-value-added activities. The fulfillment of business objectives in a KPO engagement model depends to a large extent on domain knowledge, analytical and execution skills, and experience and business expertise. Traditionally, the strongest talking point for marketing the KPO concept was the price advantage that India offered. Cost-benefit used to be the primary value proposition in almost every KPO marketing strategy in earlier times, and was considered to be the major advantage, based on which India was likely to constitute the $17 bn global KPO market, as forecast by the National Association of Software and Services Companies (NASSCOM). However, the cost advantage is seen to be waning in recent times. Labor costs are increasing due to rising salaries and real estate rates are formidable, despite the recession. Hence, KPO firms have moved away from projecting the cost advantage as their primary value proposition to prospects, even as a whole new range of benefits from outsourcing have emerged, such as access to high-quality manpower on demand, subject matter expertise, scalable infrastructure, objective perspective in analytical services and streamlined processes. This paper explores some of the ways in which KPOs in India are presently marketing their services, whether and how their marketing techniques have changed in view of recession-induced challenges, and how KPOs are differentiating themselves vis--vis competition.

KPO Marketing Strategies: Overview

Perhaps the maximum opportunity for marketing that recession has brought is to the outsourcing segment. Call centers and plain Business Process Outsourcing (BPO) services have given way to the new high-value offering called Knowledge Process Outsourcing (KPO), which seems relatively unaffected by the recession, but not quite. Because of the higher margins associated with KPO services, a large number of BPOs, typically IT offshoots, have rolled out their KPO operations, augmenting competition in the industry. While outsourcing still holds profound strategic significance for companies that regularly outsource, major outsourcers that have suffered a financial impact have placed immense price pressure on Indian KPOs. While typical KPO marketing strategies, even before the recession, have always highlighted the cost-benefits of outsourcing knowledge processes, competition and pricing pressure during the recession have steered the focus of KPOs from traditional process innovation towards adopting and implementing novel marketing strategies. With major captive BPOs pulling out of the market due to burdening overheads, innovative approaches
* Senior Manager Presales, Scope e-Knowledge Center Pvt. Ltd., Chennai 600035, Tamil Nadu, India. E-mail: sindhu@scopeknowledge.com 2012 IUP All Rights Reserved. . Business-to-Business Marketing Strategies in the Knowledge Processing Industry 37

to marketing have become necessary in an attempt to survive, transform into third-party vendors, or embrace KPO service segments. Discussed below are some of the marketing challenges that Indian KPO companies had to face and also a discussion on some of the strategies companies adopted to retain/acquire customers and develop business.

KPO Marketing Challenges in Light of the Recession

Every crisis is an opportunity is a statement that has become extremely pronounced in the aftermath of the Great Recession. The recent recession has presented an opportunity to Business-to-Business (B2B) marketers to do more with the existing customers. The foremost concern for outsourcers in light of the recession is the cost saving that they can derive from outsourcing knowledge processes and the quality of outsourced services, which are perceived to suffer, due to unreliable infrastructure and resources. Although cost advantages have been demonstrated well to prospects by KPO marketers, in recent times, they have had to demonstrate service quality and delivery processes through proof-ofconcept presentations to convince the existing and potential customers of the consistent quality promise used so frequently in their pitches. Coming back to cost benefits, KPO marketers are increasingly under pressure to promote the intellectual arbitrage offered by their services vis--vis the labor arbitrage that was presented as a major advantage to outsourcers during the early days of KPO. Intellectual arbitrage shows clients how they can derive better performance and service quality levels for the same cost as they are getting more skilled resources and expertise than they would in the source country. The need for leveraging intellectual arbitrage in the KPO industry has led to a new marketing method known as consultative selling. As opposed to product-related B2B marketing in the KPO segment, there is a greater need for alignment of the vendors strategy with that of the client so that benefits from outsourcing stretch beyond basic cost-effectiveness and enhance value for clients to help them achieve sustainable growth during tough economic conditions. Only such an alignment would assure the longevity of the vendor company and imparts flexibility and strength in negotiating relationships with customers, besides improving the scope for referral businesses. How can a firm selling KPO services have a different approach? One approach that has become popular is consultative selling. This method demonstrates an alignment of client needs, long-term relationship building and value enhancement for both parties. Typically, KPO firms marketing process involves identifying prospects in different verticals and mapping their services with its offerings. This mapping exercise reveals what service segments and knowledge processes of the client are the most amenable to being outsourced. Thereafter, the vendor communicates the value proposition for each likely outsourced activity. This process has assumed greater importance in the post-recession period in that the marketing strategy now needs to include a value proposition that directly addresses the recession-driven pain points of the client company. Another important selling method that has evolved by virtue of client requirements and service alignment being rather straightforward is knowledge-based marketing. This concept has taken many different forms, one of them being thought leadership. This type
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of marketing involves feeding the client fraternity with information, concepts and themes that can bring about a positive impact on their business, thereby triggering their curiosity and inspiring them to explore KPO service offerings that can bring them those benefits. Different forms of marketing collaterals have been created for this purpose, namely, white papers, landing pages, research reports, webinars or online seminars, and informative flyers or brochures. Regardless of the vertical to which services are being marketed, identifying the issues facing existing customers as well as designing marketing strategies that enhance value from them has become paramount. The recession has emphasized beyond doubt that the present day is the time for nurturing and strengthening existing relationships, getting back in touch with former customers and exploring opportunities for increasing or reviving sales. Several B2B marketing strategies have evolved and are being practiced to this end, depending on the status of the existing relationship, for sustaining and growing customer engagements. Some of them are cross-selling and up-selling, cutting down advertising, focusing on customer service, adopting low-cost marketing strategies such as online demos, and enhancing web presence. All these strategies are implemented with a keen eye on maximizing returns on marketing investments. Several cost-effective methods to guide prospects to the companys products have emerged, such as using Google AdWords, conducting online campaigns and creating dedicated product landing pages. Following are some of the key marketing techniques that have been found to be the most effective at this stage of evolution of the Indian KPO industry.

Cross-Selling/Up-Selling
While cross-selling involves selling services that are allied to the services that a customer is presently using, up-selling involves selling additional services. In KPO, both these techniques have been successful and allow marketers capture a greater share of the customers value chain. For example, a marketer of database content services can bundle the Search Engine Optimization (SEO) or taxonomy-indexing aspects of content along with content provision in an attempt to cross sell. Alternatively, content provision for one domain can be up-sold with services for other domains to the same client. Cross-selling becomes a successful strategy once the client company gains confidence over the quality and timeliness of outsourced deliverables, and benefits start accruing from the engagement. Insight-based cross-selling and up-selling have become popular in KPO segments such as insurance, publishing support and strategic marketing services.

Knowledge-Based Marketing/Content Marketing

A key marketing tactic followed by KPOs in India is showcasing their intellectual capital to the prospective client community. This involves creating information assets that would serve the interests of the client community and disseminating them periodically, e.g., trend and research reports on the outsourcing industry, industry benchmarks, peer comparison reports on the prospect, white papers and fact sheets. While these reports based on comprehensive analysis could themselves become a KPO offering, they often urge the
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prospective client to follow the vendors information assets closely and get sensitized about the benefits of outsourcing in general, and about the vendors capabilities in particular. Content marketing is also a type of non-interruption marketing whereby prospects are delivered information that will make them more intelligent. Content is created with the purpose of engaging the present and future customer base by presenting them high-quality, relevant content. This method seeks to build a customer franchise by building readership. A typical example of content marketing is custom publishing or developing content of specific interest to the buyer community and making it available to them in a variety of formats. The other common forms include online newsletters, magazines, landing pages or microsites. As readership increases, subtle marketing messages, case studies and collaterals can be embedded into the content without disrupting the primary objective of this marketing mediumof educating the readership. The other more enriched and interactive media that accommodate content marketing include webcasts and webinars (online seminars on topics relevant and interesting to the prospective client community), podcasts, roadshows and online panel discussions. The objective of educating the prospect in an unbiased way is believed to promote confidence in the service providers capabilities, and build brand recognition as well as thought leadership. Besides thought leadership, this method can be used for lead generation by tracking the followers and subscribers of content marketing formats. There are interesting statistics supporting the use of content marketing and illustrating its potential in business. About 80% of business decision makers have expressed their preference to receive custom content from companies rather than company advertisements, and 60% of them have acknowledged that such content from companies helps them make informed decisions. Content marketing is thereby a powerful tool, very widely used in the KPO sector, which makes prospective customers actually look forward to receiving content from prospective clients. Amongst several formats of content marketing available, the most widely used in the KPO sector are article posting, e-newsletters, case studies, white papers and webinars. Some established KPOs also post content on social media to extend reach and to understand the voice of the customer.

Consultative Selling
The essence of consultative selling in any business is to answer the clients question as to why the company needs the vendor. This is particularly significant in the case of KPO marketing, partly because of the apprehensions surrounding the trade and partly due to the lack of awareness of outsourcers about the ways in which the engagement can help them or what they are striving to accomplish through a KPO engagement. Frontline salespeople who sell outsourced services to prospects need to be able to convincingly showcase their understanding of the prospects business, their industry of operations, challenges and risks in the industry, prospects value chain, processes and where the marketers outsourced solutions can make a difference, mostly in terms of efficiencies gained or revenue augmented. Rather than hinging on price benefits, consultative selling urges prospects to view price as an investment and understand the benefits of the marketers service offerings from a perspective of long-term returns. A KPO marketer
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through consultative selling is able to differentiate the services marketed by using intellectual capital towards deriving mutual benefits. Clearly, the advantages are not restricted to cost/ price. The approach to consultative selling in the KPO industry involves being able to make intelligent conversation with the prospect from an information providing perspective, about industry trends, key drivers and deterrents of the prospects growth, events, and success/ failure stories of peers by means of thoroughly researched outputs by internal marketing or presales teams. The findings are typically passed on to the frontline or client facing sales teams, who then identify similarities and dissimilarities in the clients process in light of industry output and conceptualize offerings that could meet the clients objectives. The trends and industry events are used to advise the prospect on probable scenarios that can arise in his business by virtue of the present industry trends. In tandem with the prospect/ client, marketers conduct comprehensive enterprise due diligence in an attempt to jointly discover the factors causing pain to prospects and the value that can be created mutually. A variety of tools such as questionnaires, scoring formats, roadmapping tools, business cases, and value chain analysis are used for consultative selling in the KPO industry. In the process, a thorough understanding of the prospects competition is also gained so as to position the prospect vis--vis its peers and tailor the KPOs offerings around the prospects strategic growth imperatives. A number of factors make consultative selling successful in the KPO sector today. The main factor necessitating consultative selling is the lack of awareness of clients about what processes are amenable to being outsourced. This is where the marketers intellectual capabilities in understanding client processes and mapping it with high-ROI services come into play. Several clients who are averse to the concept of outsourcing are that way because their previous experiences were not fruitful. Therefore, the marketer is required to provide validation that the engagement is likely to bring benefits to the prospective client. This will involve presenting the trends in global outsourcing as well as showcasing the benefits from outsourcing through stories on successful past KPO engagements. The process involves a series of discussions with the senior management of the prospect to understand its current requirement, goals and strategies, and key areas that hold potential for outsourcing. The marketer also needs to develop a strong business case for outsourcing, as in other forms of marketing, but using the inputs from enterprise due diligence. Enterprise due diligence brings to light several aspects that determine the success of an engagement: the key resource requirements of the client company, how the service provider needs to replicate the staffing function of the client, the knowledge processes that can be de-coupled from client facilities, technology and data readiness of the service provider/client, readiness of the client business unit to outsource, people and intellectual property-related issues, and regulatory and legal issues foreseen with respect to a probable KPO engagement. At each stage of the enterprise due diligence process, all these aspects need to be understood by the marketer in order to assess the outsourceability of the clients processes and develop business cases for each process as well as its upstream and downstream tasks. Using this data, an outsourcing roadmap is presented to the client, which illustrates the priorities of the task to be outsourced, mapped across parameters such as benefits derivable and difficulty of implementation.
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This marketing strategy has been successfully implemented by companies such as TCS and certain other IT offshoots as part of their cross-selling/up-selling initiatives. This strategy has said to have been quite successful as many client companies are averse to hiring expensive outsourcing consultants, and also because a KPO engaging in enterprise value chain analysis is more likely to tailor its offerings closely with client requirements than a vendor recommended by a third-party consultant. Besides, the price of consulting, when offered by the KPO service provider, is amortized over the life of the KPO engagement, thereby taking off a major cost burden from client companies.

Differentiating KPO Offerings

In as much as aligning services to customer requirements, KPO companies need to package and showcase their offerings to clients in a manner that clearly demonstrates how KPO offerings directly address the pain points of client companies. The main things to be showcased to the client community are domain expertise, processes and scale; the value addition provided vis--vis that of competition; the profile, credibility and expertise of the top management; the aggregation of knowledge and research around service offerings; case studies and collaterals of work done in the past; and clients challenge areas, wants and needs. Some low-cost KPO showcasing strategies that have become popular in the post-recession era include delivering customized presentations to clients across verticals; designing and delivering webinars that address major client industry pain points, KPO services that address them, and corresponding benefits; delivering complimentary pilot or trial projects; initiating thought leadership through white papers and portals for knowledge sharing; and exploring prospective client operations to design engagement models that offer high returns on investments. These strategies provide a platform of effectively showcasing a vendors offerings as well as offer a risk-free opportunity for potential clients to understand and evaluate vendors. In the aftermath of the recession, it has become important to pitch to prospective clients from a domain expertisecost-effectiveness standpoint. This is particularly true in light of client companies groping with credit and cash issues with their suppliers. Designing overlapping and merged services portfolios and engagement models are the need of the hour as client companies are facing pressures from their governments to stall headcount reduction.

Tenets for Reaching Out to Prospective Outsourcers

One of the largest KPO firms in India, WNS, outlines the four core tenets for marketing a KPO engagement to the senior managements of prospective clients. The first involves highlighting the revenue enhancement benefits of the engagement to the prospective customer. Several iterations and discussions with the senior management are required to accomplish this, with each demonstrating the efficiencies derivable in the client processes, in addition to cost optimization, which in turn, result in revenue augmentation. Consultative selling allows a KPO marketer to understand clients business, clients end users and usage behavior, the improvements required in the clients sales and marketing functions and fine tune the KPO offering to meet these requirements. For example, if a manufacturing industry
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prospect/customer is incurring heavy overheads in the purchase function, an analytics KPO can study the function and devise a solution that will study the customers spend and operations data and clearly indicates the areas that need optimization. As a thorough understanding of the clients process is already gained by this stage, the KPO is equipped to even provide strategic inputs to the client towards tracking and using this information as part of a knowledge management repository, thereby opening doors to cross-selling and upselling. Presenting a strong business case is the next important tenet of marketing KPO services. It is important for marketers to first help C-level executives of prospective clients to overcome the block about outsourcing. However strong the revenue enhancement opportunities are by virtue of the engagement, the concept of KPO still needs to be sold to the party, and the flexibility to execute the engagement as a virtual captive unit of the client company, if required, needs to be provided. Smaller tasks, at the lower end of the client value chain, are targeted at first to demonstrate the business case and KPO firms gradually build stronger cases for the other and more complex processes. Showing proof of concepts and pilot execution of low-end tasks boost the confidence of client companies and increase their appetite for outsourcing more complex KPO tasks. Yet another tenet of KPO marketing that leverages the consultative selling approach is enabling business unit to drive acceptance amongst outsourcers. Business units of client companies need to be given attractive and easy investment or engagement models to kick off the KPO-client relationship. It is important to focus on specific revenue-related pain points of the client company and offer solutions that empower the business units with data and tools to overcome the pain areas or improve the speed of decision making and expedite revenue improvements. Examples include studying the patent portfolio of a research-intensive prospect company vis--vis that of its competitors and presenting the results to the prospect highlights that timely inputs from patent portfolio research are likely to help the prospect be informed of its competitive positioning and make course corrections to stay ahead of competition. The last tenet of KPO marketing, as put forth by WNS, involves ensuring a holistic view of the KPO engagement. Without merely viewing KPO as the outsourcing of a specific knowledge process, outsourcing various tasks across the value chain in an integrated manner can bring clients enormous benefits from the engagement. Marketers are required to demonstrate that creating centers of excellence at the vendor facility for access by clients for a variety of knowledge processes will not only drive adoption but integrate several cross functional teams of the client to harness the vendors resources and expertise in a strategic relationship.

Value Creation, Sustenance and Growth

With a riot of KPO marketing techniques and many of them proven successful in the knowledge era, marketing productivity is of vital importance for sustaining and growing KPO businesses and adding value for clients. The misuse of marketing tools to falsely project
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customer needs is as destructive as failing to demonstrate the returns on KPO engagement, as promised during pitches. Providing the right information at the right time is also immensely significant to win the confidence and sustained trust of the client community. Eliminating irrelevant marketing messages and developing proof points to demonstrate scale and capability will go a long way in bolstering the marketing strength of todays Indian KPOs. In light of frugal marketing budgets in the post-recession era, KPOs are more under pressure to utilize the social media and the power of the Internet to develop information-driven client relationships and adopt consultative selling to a greater extent to win customers. %

Bibliography
1. Alok Verma (2010), WNS Research and Analytics Services Outsourcing: Resources, August. 2. B2B Content Marketing: 2010, Benchmarks, Budgets and Trends, Marketing Profs and Junta, Vol. 42, available at http://www.marketingprofs.com/charts/2011/6539/2012content-marketing-benchmarks-budgets-and-trends 3. B2B Sales and Marketing Knowledge Sharing, Social Media as a Sales Tool, November 2010, available at http://www.b2bknowledgesharing.com/#!/2010/11/social-media-assale-tool-section-5.html 4. James Heskett (2003), Is this a Golden Era for Marketing Productivity, Harvard Business School, Working Knowledge, available at http://hbswk.hbs.edu/item/3461.html 5. Lakshmi Kumar Reddy (n.d.), Challenges of the Emerging KPO Industry, IBM Daksh, TooStep, available at http://toostep.com/topic/evolution-asia-as-kpo-destination 6. Proven Online Cross Selling and Up-Selling Techniques, All Business, Dun & Bradstreet, available at http://www.allbusiness.com/sales/selling-techniques/3915-1.html 7. Stephanie Tilton (2010), B2B Technology Buyers Share their Content Preferences, Savvy B2B Marketing, September, available at http://www.savvyb2bmarketing.com/blog/ entry/1095271/b2b-technology-buyers-share-their-content-preferences

Company Sources
1. HP BPO 2. KPO Experts India 3. Scope e-Knowledge Center Central Marketing 4. TCS BPO Marketing Additional: Individual executive interactions and LinkedIn contact contributions.

Reference # 33J-2012-03-03-01

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