This paper evaluates SAP's Internet marketing strategy as part of the company's broader global integrated marketing approach. It examines how SAP uses go-to-market architectures to coordinate multi-channel campaigns across regions, how the company segments its target markets—including large enterprise verticals and small-to-medium-sized businesses—and how it executes customer acquisition, retention, and service strategies. The paper also explores the technical infrastructure underpinning these efforts, including SAP's Services-Oriented Architecture and Enterprise Content Management framework, and reviews the metrics used to evaluate Internet marketing performance. A SWOT analysis and discussion of social and regulatory issues, particularly the Sarbanes-Oxley Act, round out the assessment.
SAP's ability to execute on and compete using an Internet-based market strategy is a central part of the company's global approach to defining integrated marketing strategies, establishing go-to-market architectures that support core messaging, and identifying key target markets. SAP is distinctive in its approach to building entire architectures that support a multi-market, multi-channel planning and measurement framework for Internet campaigns.
This paper reviews SAP's use of go-to-market architectures to support its Internet marketing strategies, taking into account customer target segments, customer acquisition strategies, and customer retention strategies. It also addresses customer service strategies, the integration of Internet-based strategies with overall marketing strategies, the technical architecture SAP employs, and the company's approach to content management. Finally, the paper discusses the use of dashboards for measuring Internet strategy performance, an overview of the social and regulatory issues SAP faces in its global operations, and a concluding analysis of the company's integrated marketing campaign.
SAP's core business applications generated $30 billion in worldwide revenue in 2004. By 2010, an additional $40 billion in Total Addressable Market (TAM) was anticipated through the organic growth of SAP NetWeaver, mid-market expansion, industry vertical marketing, and Small and Medium Business (SMB) programs. Figure 1 illustrates the growth projection of TAM as defined by SAP's senior management at the Annual Shareholder's Meeting.
Figure 1: Global Available Market Sizing (SAP, AMR Research)
Source: SAP Annual Shareholder's Conference, 2006.
At the center of SAP's global growth is its coverage of key vertical markets. SAP's vertical market penetration, shown in Figure 2, maps the total count of companies in the Global 500 against SAP's customer penetration by vertical.
Figure 2: SAP Penetration by Vertical Market
Source: SAP Annual Shareholder's Conference, 2006.
SAP's approach to defining vertical markets constitutes a segmentation criterion the company has consistently applied with success to its product strategies. Figure 3 illustrates how SAP's vertical market segmentation directly drives its product differentiation strategies.
Figure 3: SAP's Vertical Market Segmentation Directly Drives Their Product Strategies
Source: Friedman, Billings, Ramsey (13).
Recognizing the recent growth of technology spending among SMB customers — a 41% increase between 2001 and 2004 — SAP sought to segment small- and medium-sized businesses according to their software needs in order to better serve this customer group. SAP now divides SMB customers into two segments: "sophisticated," for the most technologically equipped, and "advanced," for those with less technological sophistication.
Based on this segmentation initiative, SAP launched a program called "Smart Business Solutions," which addresses the distinct SMB segments according to their degree of technological sophistication. SAP identified a need for product individualization and industry-specific functionality among the sophisticated customer segment, and developed a product offering based on its flagship mySAP.com suite. The mySAP.com SMB product assists small- and medium-sized manufacturers seeking to extend and maximize their supply chains. For the advanced customer segment, SAP recommends its BusinessOne product — a less complex offering that assists with core operations such as accounting, customer and vendor management, purchasing, selling, reporting, and analysis. BusinessOne also offers analytical tools that can track events online and generate customizable reports.
In 2002 — one year after introducing its two-tiered SMB segmentation strategy — SAP reported strong global support for the initiative, citing increases in new customers obtained, geographic markets reached, and distribution partners utilized. Today, this growth continues with the development and refinement of SAP's approach to hosted and on-premise application solutions in the SMB arena.
SAP's approach to customer acquisition centers first on mining its existing customer base for follow-on sales, in addition to extensive reliance on all forms of digital and electronic media. At the core of SAP's customer acquisition strategy is a heavy emphasis on its world-class base of referenceable customers. The following are the key lessons learned from SAP in creating customer references as the basis of its acquisition strategy:
Approach references through multiple channels. SAP relies on approaching customers through multiple channels, including mailings, web announcements, and sales representatives who are incentivized for bringing on references. Once accepted as a reference, participants receive a welcome call and a "fun box" filled with branded goodies such as bobblehead figures and a retro-style radio.
Maintain privacy of references. SAP maintains the exclusivity and privacy of its reference community. To become a member, a potential reference must apply and be accepted by moderators, with the option to remain anonymous. Only customers and potential clients may access the community; extraneous SAP staff and sales representatives may not participate.
Ensure full disclosure of the reference program. Once a customer agrees to participate, an SAP representative contacts the reference to explain the exact role and obligations of serving as a reference. Together they examine availability and determine how the reference would like to interact with potential clients — via email, telephone, or at trade shows.
Cultivate relationships with references. SAP's program is designed around one core purpose: cultivating relationships with customer references, thereby narrowing and maximizing the efforts of the group.
Provide a rewards system. SAP maintains a compelling rewards system based on a point accrual model. Because many corporations have strict rules about employees receiving gifts from vendors, SAP carefully selects its reference incentives — including hats, T-shirts, free SAP technology training, free tickets to SAP conferences, and significant charitable donations. References who accrue a high number of points receive guest speaker invitations at lectures and conferences, positioning them as experts among their peers.
Make the Internet site enjoyable. SAP deliberately made its Customer Reference Internet site engaging and fun, resulting in a major increase in traffic and a high rate of adoption among companies wishing to become references.
"Global surveys, CRM integration, and 360-degree customer view"
"Campaign architectures, SOA, and content management systems"
"Key performance metrics for Internet marketing campaigns"
"Sarbanes-Oxley compliance and global regulatory challenges"
"SAP's strengths, weaknesses, opportunities, and threats"
SAP's dominance in the enterprise software arena is understandable given the many internal systems designed to streamline and expedite all customer-facing strategies. The Internet strategy SAP employs is specifically designed to be part of a broader, globally integrated marketing strategy coordinated across the company's many regions and divisions. Using a go-to-market architecture, SAP has created a solid platform for ensuring a high level of coordination across all strategies.
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