Tags: bring your own device, byod, crm, sales management
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This is # 9 in a serialized book called Enterprise Sales for the Digital Age, delivered here as 11 blog posts. You can get value from each in isolation, but if you really need to understand enterprise sales, reading the whole series is worthwhile. You can buy an improved version, neatly printed and bound, for $6 from Amazon.
Note: a version of this post has already been published on ReadWrite.
This applies to outside sales, particularly the rain-makers who get the early customers for startups.
Bring Your Own Device (BYOD) is now a well understood management issue. What mobile device a salesman uses is not that tough an issue to manage now that HTML5 has matured to a level where it is perfectly acceptable for most business apps. Its the app that matters, not the device.
However management is only just starting to wrestle with a world of “bring your own everything” including:
1. Bring your own social networks.You want to hire sales guys who “bring their own rolodex.” and technically speaking, the social networks such as Facebook, LinkedIn, and Twitter, are their rolodexes. This is not the same as just having a lot of Friends or Followers or Connections. What matters is the depth and quality of those relationships. Sales is all about “what have you done for me, or somebody like me that I can relate to, recently?” It is much better to have 10 who say “you have done something for me recently” than 100 who say “I vaguely recall interacting with that guy”. The key point here is that these are personal relationships, where the relationship data is stored in the cloud service and belongs to the individual, not corporate data in a CRM system that is used by the hired salesman while they are on the corporate pay roll. There is a change in the individual relationship to their employer that is going on here. Data is power and that data power is shifting to the individual. We can cheer the empowerement of the individual while also recognizing that this creates a management challenge which is quite legitimate.
2. Bring your own contact manager. LinkedIn has a special role in business social networking because it is the self-updating rolodex of business, managing content on people independent of their company affiliation. The individual owns and controls the data, not the employer.
3. Bring your own sales methodology. In ye olden days, the company told sales people what sales methodology to use. It was part of “the way we do things around here”. Onboarding included training in the company standard sales methodology. There are lots of these sales methodology and most of them are good. Famous ones are Miller Heiman, SPIN and Target Account Selling (TAS). However, will your startup be defined by your sales methodology? Or will you reject a sales star who made the key sales for a competitor because she prefers SPIN to your company standard? No, I did not think so.
4. Bring your own sales productivity tools and apps. This brings us back to mobile. It does not matter too much to the company whether a sales guy uses iPhone, Android, Windows or even Blackberry. However, what apps they use on that device has a bigger impact on management, because it relates to control over data and integration. The good sales guys will come in with their apps on phones and tablets hooked up to the networks and services they use in the cloud. They are onboard and productive on day one.
5. Bring your own content. The thought-leadership sales guys who are rain-makers for startups could be described as “bloggers who sell” or, if you prefer, “sales guys who blog”. They will of course use the content created by the company, but when prospects can self-educate online before meeting anybody from the company, there has to be a reason why the prospect wants to meet that sales person (as opposed to meeting the CEO or CTO or CMO who is doing the company blogging). This is another management headache or tremendous opportunity depending on how you deal with it.
The mission you are giving these sales guys is tough – break into a new market for a relatively unknown startup and do it fast and do it big. You cannot also say “oh, and by the way, you also have to use all the systems, processes and tools we give you whether you like them or not”. Imagine telling a sales guy who has used one methodology and tool set successfully for years that she must switch to your company standard. Do you want her to do that – or generate sales quickly, put you on the map in a new market and make $ millions for your company?
This does change the balance of power between sales guys and their employer and creates a management headache. Luckily there are new solutions appearing to crack this problem.
New ventures focussed on this challenge include Nimble, RelateIQ, ClearSlide, Yesware, Tylr Mobile, Social Pandas and Selligy. These “sales productivity” ventures focus on making sales people more productive as opposed to traditional CRM which made their managers more productive. They focus on two types of solution:
- Integration at the mobile device level. Outside sales people should be – outside. Any system that is not mobile first, that does not allow sales people to do most of their work when they are out of the office, is a productivity drain. A sales person who is in the office too much is not a good sign. Mobile is the obvious answer. Mobile is also key to the integration of all those single feature cloud apps. Thanks to APIs, it is relatively easy to integrate these at the mobile app level. This is where the types of services that sales people use every day to get their job done – LinkedIn, email, presentations, CRM, maps, online meeting systems etc – can be integrated and presented in a single user experience.2. Digital exhaust to replace sales data entry. If the sales guys are in the office filling in reports for management, that is a management and systems failure. You want them meeting customers and prospects, that is when they are adding value. The great sales guys can write really short reports such as “beat quota by x% this month/quarter”. The long reports are all about reasons why the sales guy did not hit the numbers. Yet management does need data. The mobile apps do enable quick simple reporting while in between meetings (in the elevator, on a train, getting coffee). More strategically interesting is the trend towards auto aggregation of what may become known as “sales big data”. Like all big data, this is aggregated automatically from “digital exhaust”, in this case from what the sales guys are doing all day on their mobile devices. This answers questions like:1. Who did you meet?
2. Where (in the cloud or F2F?)
3. For how long?
4. How engaged was the customer?The first three questions answer the most basic management concern whch is “are the sales guys doing their job, are they working hard?”. Much better to get this reported automatically rather than asking the sales guys to spend time doing this, knowing that they are incentivized to not tell you the truth. The current system of CRM reporting is doubly broken – it wastes valuable time and delivers suspect data.
However the really valuable data comes if you can answer the last question. This could help companies to do consistently what really great sales people do, which is to qualify prospects with great care and discipline. We all know that is what we should do, but very, very few sales people do it at all well. We think that sales is all about hard work, persistence, determination and all those other good Protestant work ethics. So we drive relentlessly on, calling that prospect for the umpteenth time.
The best sales guys wait until they can see that the customer’s need is real and urgent. They “wait until you hear the screams.”
One way of checking for pain and urgency is how much effort the prospect puts into the relationship. You need to see some equality of effort. If you call five times before the prospect returns your call that is not equality. If you send reams of information and give multiple presentations but the prospect won’t fill in a requirements questionnaire, then that is not equality of effort. With every call you want the prospect to DO something. If this does not happen then the screams are not loud enough and you should move onto your next opportunity.
Sales big data could start to answer questions like this at the customer level, by aggregating data such as:
How many hours has this customer spent talking to us?
Do they open mails from us and how quickly?
Are they clicking through our slides during webinars or is their attention engaged elsewhere?
How many emails did they send us?
It is still really early days in the market for sales productivity tools, but the need is there, so it is likely to happen quickly. In the era of “bring your own everything” our sales management systems and tools need to evolve. We need tools that primarily focus on making the front-line sales folks more productive while incidentally also allowing better management oversight.
Is Facebook Worth $100 Billion? Not If Competitive Advantage Period Is Halving With Each Generation Of Technology May 2, 2011Posted by bernardlunn in capital markets, IPO, social networks.
Many pundits call this “The Facebook Era”, meaning that Facebook has the same level of dominance as Google, Microsoft and IBM in their glory days. Plenty of investors seem to be backing this view with some serious $$$. The current valuation of Facebook on the private markets is around $70 billion.
That $70 billion valuation is a mighty big pair of shoes they have to fill. By the time they do an IPO they will need to show a valuation more like $100bn, to give current investors and the IPO investors a return.
We don’t have reliable earnings numbers for Facebook. That will only come when they go public and file reports with the SEC. So we can only go on revenue numbers that get bandied about. Parsing through all the reports in various blog posts, the revenue growth looks tremendous:
2010: $2bn ($1.86bn from ads, balance from other lines)
That is a growth rate well over 100% which is staggering at that scale. That is $1.3bn in new revenue in one year. They talked about $1.2bn in the first 9 months of 2010. If they did $2bn in the full 12 months, it means that they did $800m in Q4, which would be an annualized run rate of $3.2bn. In other words, they would be on track to double again to $4 billion in 2011.
There is almost no reliable data on profit margins for Facebook. So we cannot do any PE or PEG comparables. But let’s assume that Facebook’s margins are similar to other large ad-monetized web technology ventures such as Google (that subject alone could be multiple blog posts, let’s just take it as an assumption for now).
If we assume that, we can do some PSR (Price to Sales Ratio) against comparables like Google, Yahoo, Demand Media and eBay. These are all publicly traded web tech companies that monetize primarily via advertising. I left out AOL, their price is very low for good reasons. Demand Media is the highest at 7.78, Google is 6.3. Let’s take Google as the benchmark. They are the current kings of the web.
Let’s say Facebook does an IPO in early 2012, showing $4 billion in revenue in 2011. To get to $100 billion, Facebook would need a multiple that was 4x Google’s. Here is the math – Google PSR is 6, 4x that is 24 and 24 * $4bn is $96bn. Google’s growth rate is around 27% (that is growth in last year, lots of debate whether that will accelerate or slow, let’s just take it as their growth rate for now). Facebook’s growth rate is around 4x that at 100%.
There is some blog chatter indicating EBITDA in 2011 of $2bn. Yes, EBITDA is not the same as net profit. Nor is blog chatter the same as audited financials. But for now, lets take that EBITDA number as audited net profit. That makes Facebook at $100 billion on a forward PE of 50. If their growth is really over 100%, that makes PEG = 0.50 which indicates a bargain.
So, with a couple of assumptions, the uncrowned King Of Social Media may be able to wear a $100 billion crown at IPO time.
One assumption relates to the fact that Facebook is still private and so we have no idea if these numbers are even close to accurate. There are no audited accounts that ordinary folk can take a look at. But lets for the moment make the assumption that those numbers are accurate.
The other assumption is more complex. Built into these Facebook projections is the assumption that Facebook can keep growing at these rates for a long time. That relates to what classic management theory calls Competitive Advantage Period (CAP) and what Warren Buffet calls “competitive moat”. To put it in simple terms, “how long can the company charge high rates for something before lots of competitors storm into the market and bring prices crashing down”? So, the big question is:
Has Moore’s Law Shortened The Competitive Advantage Period?
The big question for Facebook, which is clearly “minting money” today, is how many more years can they continue to do this? The stock boosters talk as if it is forever, that is clearly not true. But is that window 20 years? Or is it 10 years? Or is it 5 years? Or is it less than 5 years? This is fundamental to how you value the company.
A little bit of tech history helps get some perspective:
- Wave # 1: IBM, mainframes. This lasted about 25 years from 1965 to 1990. I am counting from when the “minting money” phase started not from when the technology was invented or launched into the market.
- Wave # 2: Microsoft, PCs. This lasted about 12 years from 1988 to 2000.
- Wave # 3: Google, Web. This lasted about 6 years from 2004 to 2010. Now we are into current days so this is a lot more controversial. But we can see that the stock market no longer views Google as a growth company (their PEG demonstrates this), they have changed CEO and the new CEO is saying that social is the next wave they have to master (and we all know who the master of social is).
IBM, Microsoft and Google still generate huge amounts of cash. The question is the acceleration in those cash flows. That started to slow when they reached the end of their Competitive Advantage Period (CAP). If the above history is even close to accurate:
We are seeing a halving of competitive advantage window with each successive wave of technology.
Is that some weird, ugly cousin to the virtual Moore’s Law?
We do not see this shortening of CAP in markets that are not impacted by technology. For example, Coca Cola still has great moat and that is why Buffet still owns a lot of Coke shares. The same forces that enable incredibly rapid growth – think of the time it took Facebook and Groupon to get to over $1 billion in revenues – may shorten the CAP. In other words, what Moore’s Law giveth it also takes away.
This matters if you want to invest in Facebook at a $100 billion valuation. If you can believe they will grow at current rates (around 100% a year) for 5 years and then slow to say 50% for another 5 years, that $100 billion valuation is quite sensible. But if they only have 1 year at 100% and 2 years at 50%, the numbers simply don’t add up.
If Social is the current wave, what is the next wave? Mobile is the obvious contender.
Mobile is fundamentally different. The app experience is not simply the browser experience on a small screen (like TV was more than Radio style talking heads and online news is more than a newspaper converted to HTML). From a business point of view, the App Store is the first significant addition to the monetization arsenal since Cost Per Click. The mobile phone is the one device we “cannot leave home without”, it is with us whatever we are doing. Location awareness may be the game-changing innovation that will disrupt the long-heralded local commerce market.
More importantly the growth of mobile dwarfs anything that went before. There are over 2 BILLION people with mobile phones. This is where the other big part of my theme comes in – “global”. Most of those 2 billion folks with mobile phones are outside developed markets like America, Japan and Europe. That is a good news and bad news story. The good news is that 2 billion people is one heck of a big market and it is quite likely that we will see at least another billion users soon (there are over 6 billion people in the world). The bad news is that most of them have tiny amounts of discretionary income compared to users in developed markets.
If the next wave is mobile, then the question is will Facebook dominate mobile?
Facebook clearly understand the challenge. But that is not enough. IBM understood that PC was the next wave, Microsoft understood that Web was the next wave and Google understands that Social is today’s wave. History shows that the leader in one wave never becomes the leader in another wave. So, if mobile is the next wave, then Facebook probably will not dominate that wave.
Of course, it is possible that Mobile is not another wave, it is not fundamentally different, that it is simply another way to be Social. Facebook clearly have that view. But again history is a guide. IBM saw PCs as just devices to connect to a mainframe, Microsoft saw the Web as just another feature within Windows and Google saw Social as just more stuff for a search engine to index; they were all wrong.
What do you think? Is Mobile another wave or just a feature of the Social wave? If it is another wave, will Facebook dominate that as well?
Why I Don’t Like Facebook May 22, 2010Posted by bernardlunn in social networks.
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The media frenzy about Facebook privacy has reached a ridiculous stage. It started with a backlash against Facebook. Then just this week we see tech blog A-listers start the backlash against the backlash. I have even seen a backlash against the backlash against the backlash (which means “Facebook messed up”).
I have never been a Facebook fan. My writing has been consistent for years on this score. So now that it is a headline story, I needed to think more deeply why I don’t like Facebook. There are three things that bug me at at visceral level.
1. Facebook represents a really old-fashioned and cynical Madison Avenue view that you can never underestimate the stupidity of consumers. This is such a wrong view and so totally counter to the Internet which empowers everybody in deep and meaningful ways. What upsets me about the Silicon Valley consensus is that this view seems to go deep. That is so far from the what has made Silicon Valley so great. The view seems to be that “we are smart enough to figure out Facebook privacy settings but the masses don’t care, this will blow over, the 500 million plus users will be oblivious”. That is just yech! It is Brave New World come to life. Except that it won’t come to life. People are NOT sheep. Pre-Internet, people might not have had access to the data to be informed. All the elites need to understand this: the toothpaste is out of the tube. Or, as the Who sang “won’t get fooled again“.
2. If you preach living in public, you need to live in public. The stories about Mark Zuckerberg and ConnectU as well as old text messages indicating a lack of respect for users are “yellow press journalism”. But the Valley elite who say “that is not fair” miss the point. The old standard that many people grew up with was, “before taking this action, would you be happy to have this story on the front page of the Times?”. That is a higher standard than a legal standard. Many people may say “that is unreasonable, I am a private person”. OK, but if you say “live in public, so I can make money from that” you need to live by that standard.
3. Their mission is so far-reaching that their leaders need to work to a different standard. Think about the generational missions:
a) Microsoft: a PC in every home/office
b) Google: organizing the world’s information
c) Facebook: owning your personal communication.
That needs leadership that everybody can trust in the deepest sense. It is unclear who can provide that leadership. But Facebook has clearly not lived up to that standard.
LinkedIn and Facebook Prediction Market November 19, 2007Posted by bernardlunn in social networks.
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I posted Read Write Web about recent LinkedIn momentum from my personal experience and then responded to the Facebook fans with a Poll where people can predict who will win this game.
Seeing the results will be interesting. I have made a note in my Blackberry calendar to check what has happened.
The data from these kind of prediction polls could be valuable if done on a big enough scale. People will tend to contribute as everybody has a secret Nostradumus just itching to show how they can foretell the future. In a market where the prediction of enough people actually impacts the prediction that could be interesting.
Mahalo is Web 2.5 – its official October 4, 2007Posted by bernardlunn in India, social networks, start-ups, Web 3.0 Semantic.
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Jason Calacanis tried spinning Mahalo as Web 3.0 and got flamed all around the Blogosphere. Being a savvy promoter and ex publisher I am sure he is tickled pink at the free attention he got for his start-up.
I have to admit I rather liked his definition of Web 3.0:
“Web 3.0 is defined as the creation of high-quality content and services produced by gifted individuals using Web 2.0 technology as an enabling platform.”
Leaving aside the entirely correct view that all this versioning is just silly (it is silly, but methinks it is here to stay, the concept of continous evolution is too messy to grasp, we need defined phase transition points), Calacanis is just a bit wrong. What he described is Web 2.5. I think he is onto something big with Mahalo and it is a potentially great model, particularly with a few million more knowledge workers coming on stream from “the countries formerly known as emerging markets”. Mahalo is an interim step and brilliantly timed.
The reason is that the real Web 3.0 when we combine the Web 2.0 user generated social web with STRUCTURE (like we had in all those boring 30-year old databases) is a technically very, very tough thing to pull off. There are some big attempts such as Freebase and Radar Networks but these are very early stage.
So the interim, using humans rather than relying solely on algorithms, will be a great business model. It might not be Mahalo that pulls it off. But the basic idea is bang on target IMHO.
What amazes me is that the Mahalo concept was not invented in India.
B2B Media strategy for the people formerly known as audience September 20, 2007Posted by bernardlunn in B2B Media, Online Advertising, social networks.
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Let’s call this the Prince strategy (“artist formerly known as Prince”, sorry!) We have called them readers, subscribers, eyeballs, circulation, audience, listeners, friends and community. Coming up with another term would almost certainly get it wrong and needlessly cause people to change their business cards yet again (Circulation Manager to Audience Manager to Community Manager?) So Prince it is. At least it sounds respectful ☺
Paul Conley has a good comment on yesterday’s NYT articles on the future of media and the implications for B2B Media. The message, B2B Media is missing the boat. This is not a minor issue for B2B Media CEOs. It looks like we may be heading for another recession and it is not clear that the boats are in good shape for a storm that may be a lot fiercer than the last one.
I have to make two warnings about this post. First it is rather long. Sorry, as Oscar Wilde said, I did not have time to write a shorter letter. Second it is not a feel-good post, more like a wake-up call, so please read it when you are feeling robust! However please do persevere as I will propose a strategic direction, not just ask a bunch of awkward questions.
Advertising gets cut in a recession because, as Sam Wanamaker famously said, “50% of my advertising is wasted I just don’t know which 50%”. So the marketing manager defending her ad budget (in a grueling meeting to discuss “what do we cut to hit the CEO’s 10% cut mandate”) has a hard time coming up with the numbers to justify holding the line for your titles. That’s when your ad sales executive gets the dreaded call.
In the past, traditional advertising has always bounced back after the recession. It’s probably going to be different in this cycle, because there is an alternative that is measurable. Advertising will always bounce back, but some types may not. A cyclical trend (from growth to recession) amplifies a secular trend (to measurable advertising). Whether it is behavioral targeting or search engine targeting based on a the “database of intentions” or any of the other myriad schemes dreamed up by Web 2.0 techies flush with VC cash, it is all about measurable, accountable ROI.
That marketing manager can now say “OK we will cut total ad spending by 10%, cut traditional media by 80% and allocate what’s left to the measurable alternatives we have been piloting and see if that moves the revenue needle”. She at least keeps her job.
This is not about print versus online. All those statistics about the tipping point where B2B online revenues exceed print revenue are beside the point. Online CPM advertising is no more measurable than print display advertising. Attempts to measure CPM effectiveness through clicks are extremely counterproductive. The click-through cost will look incredibly weak compared to SEM and you will end up rather defensively saying “no, actually, it is all about brand impact and you cannot measure that”.
Nor is the answer a knee-jerk response that we can “deliver more leads”. That will help short term and may need to be done, but at best it will be playing catch-up with Google; you cannot beat them on lead volume. There has to be a strategy that leverages the genuine sources of competitive advantage within B2B Media and that “moves to where the puck is headed” (as the ice hockey loving CEO of Sun liked to say). Or as my cricket-loving friends in India and England like to say, “get off the back foot”.
A forward-looking strategy has to face up to an ugly word – “deportalization” – and the harsh reality that it represents. This word signals the decline of destination sites, caused by the ability of search engines to find whatever you want reasonably easily. As a quick reality check, look at your own online habits. This affects first generation online sites as well as traditional media. Why go to multiple job sites such as Monster and HotJobs when a vertical search engine like Indeed or Simply Hired can do the job for you?
So your online site, the hopes and dreams of the company and recipient of all the forward-looking investment dollars, may not be the source of competitive advantage that you need.
The sources of competitive advantage for B2B Media are simply not what they have been in the past:
- Content? Not any more. We are awash in content and software is getting better every day at automatically searching it, aggregating it and displaying it in meaningful ways.
- Brand? People don’t search for information by brand.
- Bundled deals? The online only guys don’t have print and events so we can put together a compelling package deal? If this does not hit the measurable ROI objective, bundling is simply cross-subsidization that leads to internal conflicts and lower returns on the components of the package.
- Advertiser relationships? Unless you can show measurable ROI, the relationships will fade.
I believe that B2B Media has one critical, fundamental source of sustainable competitive advantage and it is summed up in word – trust. The old joke about the Internet – nobody knows you are dog – is still true. Authenticity, rigor and ethics matter when somebody needs to make a quick judgment call on “can I trust this source to help me make an important decision?” This is not about translating the print brand online. This trust is earned every day, on every page.
Trust leads to attention, which is the new coin of the realm. The attention economy is a simple take on the never-to-be-repealed law of supply and demand. When the supply of content explodes and demand remains constant, attention is what matters. Note that attention is not simply eyeballs. Trust is the difference. In the B2B world the ideal of trust is 30 minutes of a CIO with a $100 million discretionary budget reading an article/white paper/blog with rapt attention as if his company depended on it.
Unfortunately the critical, strategic need to protect this trust bangs right up against the urgent, equally critical need to show a measurable ROI now and boost revenues now by delivering more leads.
This short-term imperative leads B2B Media firms abuse their audience by:
- bunching telemarketing calls around audit cycles so everybody is pestered at the same time,
- giving the email list to anybody who wants it internally,
- renting the list with email and phone numbers to anybody who will send a check,
- contacting people multiple times by email, phone and post without even being able to answer the question how many times we have contacted that person,
- contacting them again in different ways for print, online and events,
- contacting them again on behalf of a webinar, survey or whatever else we have just sold to the “people formerly known as advertisers”.
This is a long way from the world that publishers grew up in and that has fundamentally been the same for about 100 years before the Internet. In that world, I read a magazine and nobody has the faintest idea what I am thinking about, unless I write and post a letter to the Editor and only rather eccentric people did that. As readers we liked that. As advertisers we had learned to live with it. As publishers we felt no conflict of interest and knew that as long as we created interesting content the business was fine.
Strangely enough for a self-confessed technophile who is pushing to the future, I believe that B2B Media needs to return to this old-fashioned anonymity. The reason is trust. If we lose that we have nothing. So I agree with the editorial purists represented by Paul Conley.
We are about to witness the loud noise and mess that happens when an irresistible force meets an immovable object.
The irresistible force is personalization. This is the key to online research productivity. Personalization technology cuts through the clutter and saves time. The firm that delivers personalized content sits at the top of attention economy food chain; all other content is “drive-by commodity”.
The immovable force is privacy. The privacy backlash is building. Today it is only techies who are aware of the issue and where it is headed, but when mainstream users get spooked by a few more high profile or highly personal cases, we will see consumer backlash and then, with politicians on the bandwagon, more regulation.
The fact is, as niche content producers, B2B Media cannot win the personalization game on the current rules. Behavioral advertising networks (in future all advertising networks will work this way) have access to Prince’s behavior across hundreds of high volume sites and Google sees every search that Prince does. You cannot compete with that.
You can compete based on trust. Personalization is based on data provided by Prince. There are different types of data and they have different values (skip this if you already know it):
- Volunteered data. This is the most valuable, because it is freely given in exchange for something of value. A controlled circulation magazine works this way; the qualification form is a form of “contract” between reader and publisher, mediated by BPA. Unfortunately the value of a print magazine is declining (the same content is available online without registration) so it is increasingly hard to get people to fill in those horribly long qualification forms that seem like they are from another era (they are). Also publishers are breaking the relationship of trust (although not the letter of the contract) by too much contact. However there maybe ways to get Prince to volunteer data based on a different contract – more on that later.
- Observed behavior data. This is what behavioral targeting networks do. They observe your online behavior – through cookies – and infer interest that they sell to advertisers. It is very powerful stuff and kind of spooky when done right. I watched the Tacoda founder present by asking a quiz to see what would be the best predictors of propensity to rent a car from Alamo and it was weird things like the person had visited sites about funerals (a relative has died and I need to visit the family and that involves renting a car); as I recall, other predictors included renting a romantic movie and visiting NFL sites. The point is that a) this is an imprecise and evolving science b) it can be very, very wrong in hilarious ways and c) it can be bang on target in such a way that it spooks the user.
- Derived data. This has been a staple of consumer marketing for decades. This simply derives Lifestyle/Lifestage assumptions from known data such as zip code, age and occupation. This does not infringe privacy. Nor does it enable personalization. It simply allows basic segmentation such as Baby Boomers want content about travel, health and investments.
The key to getting more volunteered data is a new contract with Prince that will encourage him/her to volunteer more data. A contract, whether verbal, legal, online or just implicit, is something representing trust. B2B Media needs a new contact that goes beyond the controlled circulation print model. Online there is no contract at all. We just serve up content and then serve up banner ads to whoever turns up. This “no contract” model was based on the desperate desire to get online visitors and the fear that asking for anything would turn them away. Online the move is to make it even easier with initiatives such as Open ID and Data Portability.
However that online “no contract” model does not enable a new contact with “the people formerly known as advertisers, list renters, webinar sponsors, exhibitors and so on”. To avoid confusion with the other Prince, I will simply call them Marketers. That new contract needs to put B2B Media back in the central position in their budgets and plans that was enjoyed in the halcyon days before the Internet.
That is not easy but it is possible.The lives of publishers have become more complex. The lives of marketers have become even more so. I have spent more years as a marketer than a publisher, so I remember when the choice of marketing tools was much less, but also when the “noise” that one had to compete with to get one’s message across was way, way less. Marketing in an ADD (Attention Deficit Disorder) world is hard.
Publishers can help, by rigorously enforcing their contract with Prince and then delivering Prince to the marketer in a way that is win/win for Prince and marketer.Lets get back to those precious leads that every marketer wants. Targeted lead generation enabled a B2B Media firm focused on technology to raise $100 million in the midst of the technology nuclear winter in 2002 and to “exit” with a successful IPO in 2007.
So all we need to do is crank up white paper registration and business reply cards and other lead gen techniques?
Not really, because these “pulled” leads are random for the marketer. We don’t know how many we can get at what time intervals and what the lead quality will be. So the sales team doesn’t bank on them to make their numbers. So leads trickle in and fall on the floor; 80% of leads are wasted, with no follows up. For a lead to get followed-up, it must be the right lead (relevant interest, right decision-maker, in the right market segment), with the right information about the lead and it needs to get to the right sales person in the right division and region and all of that has to happen today so the sales guy can call while the lead is still hot.
Now look at what happens to the leads that do actually get followed-up. The sales guy makes a call or sends a mail or does both at different times. In the best case, Prince really is a lead; he has a budget and an immediate need for a product sold by that sales guy. In that best case, it takes multiple rounds of tag to set up an online demo, presentation or telephone call. In the worst case, the lead is not really a lead (another vendor, early stage curiosity or just plain mistake).
The cost to follow up on bad quality leads is high; it is better to have no leads than bad leads. Most sales guys complain that marketers deliver bad quality leads. If publishers can deliver good quality leads they will win the undying love of marketers and sales people – and that’s worth big money.
There are three keys to delivering that lead quality on a consistent basis:
1. Allow the marketer to define lead quality – what companies and job titles they want and what product categories and how they want to make contact. From this define an economic value for a lead that meets the criteria. This economic value can be way, way higher than we think as publishers. A highly relevant lead for a $1m sale is worth how much?
2. Allow Prince to do all the research he needs on your sitewith total privacy. (using your content and content from other sites aggregated through your tools). Do the hard work to make their research easier. Go beyond Search to (Re)Search. Research is what Prince is really doing online. Don’t sell enhanced listings and any other type of paid listings type that distorts the value of the information. Allow Prince do all this totally anonymously and to determine when and how he wants to make contact with a vendor and how he wants to make contact and what sort of person that he wants to speak to at the vendor (e.g CTO not sales guy, which the vendor will do if Prince is a CIO with a big budget). Let Prince state a specific need; that has real value to the marketer. Never, ever give out any data about Prince without their express and specific agreement to do so for that vendor and that situation. Build that trust. This has been called “Vendor Relationship Management” and it was – sort of – what the analyst firms like Gartner used to do, except that they got paid by both parties and lost their credibility. The Internet puts power into the hands of the user/buyer/Prince. Work for the one with the power and get their trust. This does work for the marketer as they get a genuinely interested lead and don’t waste time on unqualified prospects.
3. Arrange the first meeting. That simple last step cuts out all that wasted lead problem and the lead follow-up telephone/email tag cycle. That pushes the lead way deeper into the marketing funnel and thus significantly raises the value. Arrange the right contact at the vendor based on the level of seniority and position of Prince. The first meeting will be online. It can be a publisher-mediated webinar where Prince could still elect to be anonymous (we can determine the value of that Prince but we don’t identify the name), or it can be a one on one webinar for that Prince only or a marketer mediated webinar that has multiple prospects attending that could enable some interesting dialogue between the prospects.
Those three steps are not easy. They are particularly tough for a traditional media firm with all kinds of legacy interests and relationships to protect. This reminds me of the old joke about the driver who stops in the country to ask a farmer for directions to Dublin and the farmer replies “Bejesus if you be wanting to get to Dublin I would not want to start from here“. This would be easier for a start-up. Which may indicate that this should be given to a skunk works team. If not you have to get everybody – print, online, events, editorial, sales, IT, finance – all pulling in the same direction while at the same time hitting all those immediate targets. It does not often happen that way.There is a lot of database building, cleaning and restructuring to do and that cuts across current organizational boundaries. There is lots of process reengineering to be done. There is lots of technology to be licensed, developed or partnered. However this is all easy if the organization is really aligned to meet this strategic goal.
How is the Internet impacting face to face Events? August 9, 2007Posted by bernardlunn in B2B Media, social networks.
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According to the numbers from ABM, face to face events are booming, overtaking print as the single largest source of revenue for B2B Media. The ability to connect online, using email, webcasts and social networking seems to drive more need for face time rather than less. This makes sense. In the Attention Economy, face to face attention is where the real scarcity value lies.
The Events business is often described as “trade shows and conferences”. It is possible that these two parts – trade shows and conferences – are impacted differently and one maybe more healthy than the other. Conferences, seminars and other events where the attendee pays to receive high quality content from expert speakers and the opportunity to mingle with their peers are one proposition that is doing very well. The fact that much of the same content is available online does not detract from the networking value of being there.
These conferences are often linked with trade shows. I wonder how the trade shows part of the business is doing. I have noticed the following as both an Attendee and and Exhibitor. As an Attendee:
1. I can very easily get the same or even better data online. With Blogs I can read what the CEO of the vendor is thinking, rather than getting a rehearsed sales spiel.
2. It is quite simple to set up an online demo, teleconference and even video conference when I want more information.
3. The networking advantage comes from the Conference, not the trade show.
As an Exhibitor, I have noticed that the trade show is often slotted in for the lunch and coffee breaks and that the Attendee traffic is getting weaker. This maybe a reflection of what I am seeing as an Attendee.
What can be done to make the trade show part of Events more relevant in the age of Internet and social networking? I can see a few interesting possibilities:
1. Scheduled meetings with senior people and/or specialists from the vendor. This works well for both Attendee and Exhibitor. It does require a more sophisticated registration process that is linked to a more segmented audience database.
2. Using social networking techniques to find who else is attending that I would like to meet at the Event and a mechanism to make connections at the event itself. This can use a mix of wireless technology as well as coordination by the Event organizer.
Online “Social Networking” for grown-ups? August 1, 2007Posted by bernardlunn in B2B Media, Online Advertising, social networks.
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Unless you have been meditating in a cave in the Himalayas, the hype about Facebook has probably come to your attention. A 23 year old turning down a $1 billion offer has a certain ring to it.
What about those of us who are paying for the kids who are using MySpace or Facebook? Is it possible for traditional B2B Media firms to make money from creating community sites?
I have heard the complaint that “it is easy enough to build the sandbox and people do come and play, but how do I make money from their play?” This is a tough question. In a real operational business, any project has to meet stringent hurdles for Return On Capital. There is not the luxury that some start ups have of just building traffic and then later figuring out how to make money. However the investment required is not great and, if there is money to be made, it is almost certain that some start-up will be looking at doing it in your market; so ignoring the question is not a serious option.
I see two big positives and two big issues (that may be negatives or maybe resolvable). First the two positives:
- Positive # 1. The cost of entry is low. Setting up a site is inexpensive and traffic does build virally if you build good features.
- Positive # 2. Users who contribute, share, comment, communicate are more loyal (aka “sticky” or “engaged”) than people who only read.
The two big issues:
- Issue # 1. These are not environments for grown-ups doing business. Do you want your readers hanging out in a place that looks like this? (Actually this is my brother in law and he is a really good wholesome guy, but you get the point). This is pretty easy to fix, it is really just a style/design issue.
- Issue # 2. CPM rates and click-throughs are low. This is OK if you have 30 million users (Facebook) but not if you have a controlled circulation audience around 50,000. You need every one of your community to count. They are important, influential people and not college kids with budgets for books and beer, so the potential is there but the $ per person must be way higher.
Google makes tons of money because they create a “database of intentions“. When you search for something you reveal your interest. This is not true in social networks. You don’t even have context to help target the advertising. This is like selling advertising on email systems. You are too consumed with writing or reading email to look at ads and if the provider serves ads that are based on what you are writing your privacy is invaded.
There is a possible direction for this that does make sense for B2B Media which tackles both big issues. First, lets drop the term “Social Networking”. Your readers (to use a terribly old-fashioned term) are not interested in dating (at least they don’t equate your brands with dating). They use your sites for “research”. Which is rather more than Search. (Re)Search is what we do after Search.
The best Research data comes from your community. If you build a “Research Network” (as opposed to a “Social Network”) that enables this to happen you will deliver value to your community and you may be able to create a “database of intentions” that can be monetized.
There is an excellent book called Wikinomics, How Mass Collaboration Changes Everything that I am currently half way through. I recommend it to anybody who thinks this is a passing fad for teenagers. There are complex issues to think through related to editorial control and the authentication of posters. In niche B2B markets, the totally open model of Wikipedia is unlikely to be ideal. A more balanced approach, between total editorial control and total open model will need to evolve.
Page Flakes replacing MyYahoo – what else? July 24, 2007Posted by bernardlunn in Blogging, Online Advertising, social networks, start-ups.
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MyYahoo has been my start page since 2000 and it has been great, but I wanted to try out the alternatives. I opted for PageFlakes as I saw management came from Yahoo so I thought it might be an intuitive switch. In 30 minutes I had my new start pages on PageFlakes. So it certainly meets the ease of adoption criteria. Here are the obvious benefits:
- Gmail in my start-page. As I started to use Gmail it started to become my home page, which was not what I wanted. Will I be locking myself out of Google widget ecosystem? I think that Widgets will be neutral to start-pages/social networks so I can get the best in whatever start page I choose.
- Personalized WorldClock, another simple time-saver, no need to open another window/tab.
- Changing layout is easier than in MyYahoo. Not a big deal as I don’t do that often.
In summary, ease of adoption = good, impact = nice to have but minor. Would I have switched if I was not interested in researching new technology? Probably not. I wonder if they get switchers or new users? This matters because it seems that in America at least the new users are not getting start pages they are going to social networks.
I notice that PageFlakes is from Germany and NetVibes (their main competitor) is from France. Do young Europeans use start pages more than social networks? If so will PageFlakes add social/colloboration features that are compelling? What I have seen so far was not that useful to me at least.
I think that WordPress i.e. my Blog is a more natural collaboration tool than my start page. I use my start-page to consume. So I consume RSS feeds from people who I want to keep track of on my start page and I create RSS deliverable content on my Blog for people who want to see what I am doing/thinking. There is no reason why producing and consuming need to be in one tool.
The Facebook bear case July 23, 2007Posted by bernardlunn in Deal-making, social networks.
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The amount of energy spent on whether Facebook is the next big thing is extraordinary. If Facebook was public I can understand traders spending time to figure out whether to buy, sell, hold or short. So lets pretend that it is public and has that $6bn market cap that people are throwing around and that would justify turning down the $1.6bn offer from Yahoo. Would you buy, sell, hold or short? My answer – I would not buy (I also would not short as crazy valuations can stay crazy for a long time and outlast the shorts). Here is why:
- The monetization/click through problem. There maybe a hidden monetization strategy, like Adwords for Google, but if this is reliant on CPM rates holding up….This is like expecting click-through from e-mail, when the writer/reader is focussed on communicating. There is no “database of intentions” similar to Search.
- The possible reverse network effect. As Facebook grows, the cool/exclusive factor recedes and the spamming grows and that leads to more exits. This won’t show up initially as there is no reason to close down your Facebook account, you just ignore it. It will show up – already is showing up – in low click-throughs.
- The Silicon Valley/Techcrunch 5,000 Web 2.0 crowd is fickle and will move onto the next big thing. The technology industry in the end always favors open standards, which would indicate OpenID and other standards that enable people to cross easily between multiple networks.
Would I love some founder stock? Of course.
Would I buy if IPO was today at over $2bn? No.
Would I/do I use Facebook? Yes, because I am interested in social networking as a business/technology and it does not cost me a dime.
Have I found Facebook useful yet? No. When i first joined it offered a network by zip code and that was totally useless. When Read Write Web set up a group I joined but that was an experiement and I go to RWW when I am interested in RWW community, not to Facebook.
Would I build an “app” for Facebook? I am looking around to see what might make sense to meet some specific objectives. I would experiment with very little investment, which is what it looks like others are doing.
Would I desert LinkedIn or spend time to move my network over in hopes of increasing it? No. LinkedIn is only marginally useful and I would not expect Facebook to be worth the effort.
What would change my mind:
- A monetization strategy beyond CPM that does not involve spamming people.
- An app vendor making serious money (note, making money not just getting a gazillion people to look at the widget a few times)