Filling in the White Space

IBM Americas tightens the gap on server system sales

A $200,000 INVESTMENT in analytics helped produce almost $30 million in incremental server sales for IBM Americas.

It all started early last year when the firm identified spending levels on certain computer server systems and IBM’s share of those dollars. IBM referred to the gap between the two numbers as “IT white space.”

The objective was to find and profile the best prospects for each server series and then develop “tailored sales and marketing strategies,” said David W. Higgins, manager, market intelligence for IBM Americas.

First, IBM scanned all 13 million businesses in the United States, using Dun & Bradstreet data. Then, it turned to Harte-Hanks for help in finding specific details, “on the establishment level,” of server ownership and spending, said Higgins, speaking in July at the National Center for Database Marketing conference, and in an interview.

From this foundation, IBM identified 70,000 accounts, which it modeled by affinity to purchase various platforms. IBM built 12 models, using everything from geodemographics to customer transaction data and D&B information.

However, there were “three and a half months of technical development before we had a story to take out to the organization,” said Higgins. Actual selling began in April 2000.

The analysis also helped IBM determine the appropriate sales medium. IBM found that the greatest opportunity was in midrange Unix platforms. For that segment, IBM used inside sales — skilled relationship selling by telephone to qualified leads.

Selling of midrange non-Unix systems was farmed out to partners. PC and mainframe sales, the least important, were pursued via paper direct mail.

In the first nine months, IBM generated roughly $21 million in incremental sales, with another $9 million coming by the end of the first year. It also raised its opportunity rate — the rate at which leads were actually pursued — from the 1.3% to 1.7% range to almost 4%.

The conversion rate from “opportunity sales” rose by 35%.

The average order revenue went up by 28% to $120,000. And the sales time was reduced by 20%.

The future? IBM hopes to cross-sell these customers, given that “65% of our business run on multiplatforms,” Higgins said.