Q and A with Paul O’Connor, Marketing Director, Sun Microsystems

When Paul O’Connor stepped into the role of Marketing Director of Sun Microsystems three and a half years ago, he saved a lot of trees. Under his reign, Sun Australia and New Zealand has transformed from a print-based marketer to a purely online marketer. These days, Sun enjoys phenomenal response rates of up to 30 per cent for its email campaigns and has been continually growing its server market share in ANZ according to IDC.

We speak to Paul about the transformation and what it has meant for Sun.

Can we first talk about how and why Sun got started in online marketing?

When I started in this role, Sun had a fairly traditional marketing mix – direct mail, hard copy publications, telemarketing and events. At that stage, we didn’t have much in the way of online marketing.

We were faced with a static marketing budget, plus the challenges of marketing an organisation that was growing and acquiring new products. It quickly became clear we needed to change the way we were doing things, and that online was the answer.

Online’s ability to perform closed loop marketing and measure responses to campaigns instantly is favourable to direct mail. With DM, it would take us a long time to find out whether our communications were being read; and with our quarterly hard-copy publication, which we printed 35,000 copies of, huge piles would be ‘returned to sender’. That’s incredibly wasteful.

So we did a communications audit, looking at what our customers received from us, whether it was effective, and where the gaps were. We spoke with customers, our sales team and our partner base; and did a review of publicly available materials from our competitors.

The first thing we realised was that our database was in poor shape. We decided to use Salesforce.com as our record for customer and prospect data, and invested valuable time in building it up. We can now do some pretty neat stuff with Salesforce.com, developing a list of criteria for each campaign to give us the powerful ability to reach the right audience at the right time by segmenting against job titles, location, interests and so on.

Segmentation and targeting are two of the keys to successful email marketing. How do you use these techniques?

Our first major foray into online marketing was ‘Edge‘. This is an email newsletter sent to 30,000 contacts, which lets us communicate with customers regularly and really focuses on being an information dissemination platform – not a hard sell. From the beginning, we were interested in measuring campaign effectiveness, improving response rates and really honing our targeting techniques.

With Edge, we now perform detailed testing, and customise it for different segments. So we will send a different email to a technologist vs. the CIO; or to one industry over another. It’s important to realise that these segments are never fixed – they keep evolving because you need to say different things to different people at different times.

We are able to achieve unique click-thru rate of up to 45 per cent of open emails and up to 12% of all emails sent. That’s pretty exceptional, and it’s down to targeting the right people at the right time.

Can you share your secrets for such success?

Targeting is most important. If you don’t do this, forget it.

Next, you have to look at the content and message delivery, ensuring that it is genuinely relevant and likely to spark a response. We test different subject lines, different calls to action… always looking for the optimum combination.

Finally, the power of repetition cannot be underestimated. We get great responses from our second and third emails. These reminder emails – as long as they aren’t too obtrusive – repeat the message for those customers who didn’t have time to open the first one.

Then there’s the database. You have clearly been very successful in integrating customer data in a common database so you’ve got a single view of the customer.

We’ve got an incredibly strong local view of customer interactions, which means we can keep on personalising emails.

It’s all about amalgamating the implicit, explicit and behavioural profiles of a customer. Salesforce stores the implicit data (‘I know you’re in this role, so you should be interested in this new product’) and the explicit data (‘you’ve opted to receive updates about this product’); and we use web analytics data to gain insights into customer behaviours.

Our goal – indeed, the next frontier for large organisations with existing systems – is to bring it all together so that you’ve got an incredibly efficient and accurate way of segmenting and targeting.

Apart from email marketing, what else are you doing online?

Other online marketing activities include aggregating the best of the best content on the corporate Sun site and creating a localised version; using Omniture for web analytics, and using the analysis to evolve the site’s design and structure; and of course search engine marketing and online advertising.

We don’t do any print advertising now, nor do we do any DM or hard copy newsletters. The only printing we do is when we need collateral to support an event.

It’s a big shift. What have been the major benefits?

The benefits of email marketing versus traditional DM are clear. Emails cost about 1c to send; with DM, a stamp is $1 even before print costs. Then there’s the production timeframes – emails are very efficient, you get them out quickly; whereas DM has a much longer production cycle.

One of the major benefits with Edge – and email marketing in general – is that the sales reps get updates at every point in the communication cycle. They know, in real time, who has opted out, who hasn’t responded to an invitation, and so on. It empowers them to take immediate action to restore or grow the customer relationship.

We’ve still got the same market and the same product, but we’ve now got a completely different marketing mix. We’re a B2B business – and in this game, if you don’t know all your contacts by name, you’ll never get anywhere. Our new approach gives us a very strong way of assessing our effectiveness in the market and getting to know our customers’ behaviours. It means we enjoy better yields from marketing investments over the long term.

And what about the benefits to the business? How have your online programs improved Sun’s sales?

Sun Australia and New Zealand has made incredible gains over the past five years, continually growing market share in these markets.

Marketing has been one of the critical contributors to this growth. And our cost effectiveness has also increased, as we improve the yield of our marketing spend.

Has your marketing budget changed to reflect the change in your marketing mix?

We’re spending the same as before, but getting more bang for our buck. It’s about being more pragmatic about your approach.

You save a lot in converting to online from print, but where you need to invest more for online marketing is your people. You need very good people to run these programs, and if you invest in this area you’ll enjoy success.

So would you say people are more important than the infrastructure or platform?

Yes. Online marketing requires a very different skill set compared to traditional marketing. You need to know about email marketing techniques – writing subject lines, the information architecture and design; you need to understand the numbers behind the campaigns – open rates, bounce rates, click-through rates; you need to know about multivariate testing.

If your organisational development is predicated on the strong development of your people, and maintaining strong diversity in your talent pool, then everything else falls into place.

You’ve selected Bienalto as your vendor for running online programs. What do they offer?

Most marketing organisations such as Sun’s rely on external vendors as trusted advisors, to gain valuable insight into industry best practice and also to understand what the market is doing.

In our case, we turned to Bienalto for strategic advice about the online space, to gain an external perspective. Bienalto had the willingness to challenge us and show us how to do things better. They will sit down with us and figure out how to solve problems collaboratively – for example, they recently sat down with us and improved our ability to target our campaigns better through response propensity scoring and profiling a customer’s purchase history.

Looking to the bigger picture, what are the most exciting and effective techniques or tools emerging in online marketing?

Right now, the main shift that I find most exciting is the impact of the social web. As a vendor, no matter what you’re selling, the customer knows you have vested interests in selling it to them. An endorsement from a friend or colleague – a social referral – is much more powerful.

The trick, though, is for the marketer to initiate a community or social space and then step out of it. At Sun, we’re very active in blogs; but we also try to support the user groups around our software and open source technologies. For example, we might help them set up a group, advising on what has worked in the past, and we’ll let them use our premises for face-to-face group meetings. It’s about generating goodwill – the equivalent of buying someone a beer and pizza. The hard sell doesn’t work in these spaces.

And what about the future? Where is it all heading?

The sheer volume of media out there won’t reduce any time soon, so we will see continued personalisation and relevance.

The role of social media will continue to grow, because it’s the consumer’s best way of filtering out messages and only listening to the people they know and trust. How a vendor leverages this opportunity is the real key to marketing in the future. Anyone can plagiarise or hijack a social space – but do that and the trust disappears. Instead, we have to find ways to make our presence felt in these spaces in a trusted and positive way.

Footnote: Since this Q&A interview, Paul O’Connor has accepted the role of Regional Leader – Emerging Markets for Sun Microsystems’ Volume Sales Team.