Why End-to-End HR-Solution Concepts Won’t Work

In the new marketing book entitled Trout on Strategy, marketing guru Jack Trout discusses how most companies turn their highly focused brand into an unfocussed brand that represents two, three, or more types of products or ideas. As a result, the brand loses focus and its meaning. In the consumer marketplace, this is called line extension, and it rarely works. Says Mr. Trout, “the more variations you attach to the brand, the more the [buyers] mind loses focus. Gradually a brand like Chevrolet comes to mean nothing at all.”

Mr. Trout gives some great examples of how in the consumer marketplace the specialist or well-focused competitor almost always wins. While most of Mr. Trout’s examples relate to the consumer marketplace, they do have relevance in the business-to-business marketplace – and, in the HR space – so please read on.

A popular term (and strategy) in the human capital marketplace these days is end-to-end solutions:

Hire us and we’ll help you with recruiting, tracking resumes, paying the employee, administering their benefits, tracking their development, training them and when you downsize, we’ll even help you with outplacement.

End-to-end is too often the B2B version of line extension. And, it rarely works. This doesn’t mean companies shouldn’t develop new products and go after share-of-customer strategies. If you sell insurance, there is nothing wrong with offering multiple lines, but we would recommend not going into applicant tracking systems.

Increasing numbers of vendors are being coerced into an end-to-end strategy and the reason is usually economic in nature – pressure to rapidly grow revenues (from existing clients), leverage an asset base, gaining cost efficiencies, etc. End-to-end solutions are complex, confusing, and to educate the buyers, vendors end up spending hoards of money on marketing, conferences, advertising, white papers, etc. And as any good marketer knows, trying to change buyer attitudes is expensive, time-consuming, and rarely ends up working. Meanwhile, a more specialized niche competitor who isn’t burdened with these costly expenditures can focus all of their marketing on one product (or, service) with a compelling and easy to understand message.

Most consumers demand compatibility amongst their TV, VCR, DVD player, and stereo system. But it doesn’t mean they buy them all from the same manufacturer, or that they are an all-inclusive unit. Remember the combo TV’s and VCRs? They never caught on. It’s hard to be an expert and successful in multiple product categories let alone convince and educate the buyer.

Time will tell if corporate America catches on to the end-to-end HR-solution concept. However, our guess is that most vendors will fail if they adopt this strategy. There can only be a few winners. A better strategy may be to take your focused and specialized message (and the money you save) and penetrate new markets and/or sales channels (see previous HR Marketer blog from May 5, 2004, entitled Penetrating the Various Human Capital Sales Channels) such as small business, public sector, education, associations, etc.