By APNWLNS payday loans
August 30, 2011
It pays to be second
In the wide and weird world of business plans (and having sat on VC panels during start-up pitch parties, I have seen some mightily weird business plans) being a fast follower is the sanest approach. A fast follower lets another company prove that a market exists, then lets the follower rapidly become a competitor by mimicking the core features in their competitor’s ground breaking product while adding those that they missed. Risk is lower, development costs are lower, and if well timed you join the party at the moment early majority buyers raise their sluggish heads and open their tightly clasped wallets.
I maintain that Microsoft made its fortune by being a fast follower. MS-DOS was a practical clone of CP/M which had proven that the personal business computer concept was viable. Microsoft also mimicked Macs when creating Windows and Apple mimicked Xerox’s pioneering of GUIs. Imitation is the most sincere form of profit.
Which brings us oddly to e-books and the revolving lead/follow relationship between Amazon’s Kindle and Barnes and Noble’s Nook. Though e-books had existed before Kindles, the market remained undefined because digital tomes were read on PCs, which was a very un-book-like experience. Amazon innovated and eliminated all the painful aspects of finding, acquiring and reading an e-book (and in the process they cut out every middleman in the book publishing business). They were the innovators.
Barnes and Noble became a fast follower (so did Apple — Sony and a few others were failed contenders). The Nook in its early incarnation was a Kindle that used a different digital e-book format (which didn’t matter to readers at all).Â But Barnes and Noble knew that following fast was not enough — they needed to take the basic Kindle concept and expand upon it to create a broader reader experience. Thus they developed the Color Nook, which is in fact an Android slab in chains. It delivered book, multi-media magazines and applications, fulfilling broader buyer desires without violating the core mission of making machines the replacement for dead trees. This made Barnes and Noble a fabulous fast follower.
Which is now Amazon’s role as they prepare to release their first slab, which I’ll call the AmaSlab since the proper product name has yet to be revealed. We know it is Android based (like the Nook), has an e-ink screen like the Kindle, and know very little else. But we do know that before rumors of the AmaSlab came forth, Amazon had already created one of the largest Android app stores available, and we can safely bet that shopping for all Amazon products will be very easy on the AmaSlab. So Amazon was the innovator, found real competition from their major fast follower, and is now a fast follower themselves.
The marketing lesson is that new markets are minefields. Knowing that a market exists is iffy in the absence of serious market research. Knowing the exact set of features and the buyer’s expected outcomes is a crap shoot. Letting someone else take the risk of exploring the market, even if they are a mammoth competitor (ala Amazon) is worth while. But it also means that being a fast follower will attract new fast followers who want to do to you what you did to the original innovator. A great strategy is to be a fast follower, then to keep innovating upon the core concept until you achieve market dominance and have exhausted all possible paths to expansion.
Then follow again.
August 23, 2011
I would not want to be an HP employee this week. Well, actually I have not wanted to be one since Bill and Dave went to the big database in the sky.
Last week, in rapid fire, HP said they will likely get out of the PC/laptop business (either through an Agilent-like spinoff or outright sale), killed their newborn webOS phone and slab business, and bought a relatively obscure software company for a huge premium. Their stock dropped about 30% and HP aficionados are still staring, jaws agape, in disbelief.
Change is the only thing of permanence, and that applies doubly in the high tech business. Tech companies are the most agile known, and many have completely reinvented themselves when faced with undeniable market shifts. Others change because better opportunities exist. HP’s newest CEO, Leo the Lively, knows that software companies make significant margins (Oracle has an overall margin of 30%) on peddling well organized electrons. Leo wants HP to change in that direction. Reportedly, HP’s PC business has profit margins of 7%, though their volume through retail channels makes them the #1 vendor. Though HP’s PC volume and revenues were impressive, sales of consumer PCs and laptops have been plunging (around 23%) and the profit HP earns from PCs and laptops would soon enough be unworthy of staying in that business. So like IBM before them, they seek to exit the soon-to-be unprofitable.
They’ll continue gigging consumers for overpriced ink cartridges, which appears to be a damned (and) good business.
Oddly, they are also scrapping their webOS product line, dumping Touchpads and “Palm” phones. Though they never received respect or respectable reviews, the main catalyst for declining consumer PC sales are slabs and smart phones. HP is wisely shuttering the declining PC business, but have simultaneously aborted their newborn in the one consumer market that has growth potential. Combined, it makes Leo look like a consumer luddite, lacking desire to peddle products to the proletariat.
Which likely makes Steve Jobs smile. He knows how to market to mobs.
Change for change sake is a rarified form of idiocy. I don’t accuse Leo of blindly altering HP’s fabric, but the timing and lack of commitment to product lines makes Apotheker look like a banana republic dictator, changing rules, laws and strategy at personal whim as opposed to long range product planning and revision. Given that HP’s Touchpad was introduced a mere 53 days ago, it was never given a complete chance in the market — no version 1.1, no second generation, nada. It is bizarre for a first entry into a relatively untapped market to be a sacrificial lamb on the altar of ambition.
Today’s market strategy lesson is a two-fer. First, any strategy should not be implemented in ways that cause people inside and outside of your company to lose faith. Stockholders bailed and HP employees, on a private discussion forum, are confused and a bit ashamed. It is better to build your new strategy and have it well-anchored before you jettison the old one. Secondly, it is bad policy to display executive knee-biting as part of the transformation process. For HP execs to bravely proclaim that killing off a seven week old product line based on a $1.2B investment (the Palm acquisition) was wise is unwise. To do so while paying an 80% premium for a software company that is not destined to become a center post of a software strategy simply begs for Leo to don a clown nose.
Change has to have a purpose and a plan. You may not be able to disclose the plan, but causing investors and employees to doubt you have one while hacking away parts of the current strategy is like a politician saying “Trust me, I’m with the government.” It lacks faith-building substance.
August 16, 2011
“Buy our features,” said the German software company representative. “You vill like our features.”
The way he said it sounded vaguely threatening.
More to the point is that nobody buys features, his or yours. Not in B2C markets and not in B2B ones either. Advertising features, and to a large degree benefits, misses the mark in marketing communications. The reason is that features and benefits do not describe what drives a buyer’s intent.
What motivates buyers, both logically and emotionally does.
Hunger provides motivation. So do natural sexual impulses (which often leads to children, which then launches a thousand new motivations, including the desire to find very dark and quiet places in which to hide). A person’s motivations force them into seeking ways to achieve something (their expected outcome) or make them instantly aware of a possible solution when it is thrust under their noses.
That last one only applies if the value proposition presented addresses their motivations.
It is the intersection of a buyer’s motivation and your differentiated offering that define your value propositions. You must itemize the motivations of your buyers, identify which features of your product satisfy those motivations, and what subset of those features are unique to your product (after all, if you solve the buyer’s problems in the same way as your competitors, then you are selling a commodity and the buy decision boils down to either brand preference or price).
Where nearly every marketing organization goes horribly wrong is in the first or the last point. Many never map the motivations (and expected outcomes) of their buyers, much less different buyer genotypes and different market segments. They fail to express these motivations in the language of their buyers. They don’t bother to know why someone wants to solve a problem, and lean on merely understanding the problem alone. Alternately or in combination, they toss whatever feature the marketing team thinks is hot, trendy or buzz worthy – even if thirty thousand competitors are promoting the same thing, and in the process are buried in a noisy tomb.
Blood drains from the faces of start-up CEOs that I coach on this aspect of value proposition identification. They often realize that they have no differentiation, that their differentiation makes no difference to buyers or, that they spent their second mortgage creating a product with the same value points that Google, Microsoft or Apple deliver. The same thing happens to marketing directors in large conglomerates who I council. There is nothing worse than not being appealing to the person you want to seduce (just ask the gold chain wearing, balding, potbellied, toothpick chewing disco relic haunting the single’s bar every night who always goes home alone).
The process for listing motivations and identifying differentiated intersections is not always difficult, but it is dangerous because many marketing tacticians take shortcuts. They assume that they understand their buyers well enough to understand their buyers’ motivations. Yet this is more often than not mere introspection, or worse, the skewed last recall of a lost sale. Their a priori process often fails to document emotional motivations of buyers and incorporate those into viable value proposition. Apple’s dancing iPod silhouettes said nothing about the gizmo’s frequency response and how many songs it could store, but it said volumes about how their target market felt (emotion) about music.
Do your motivation mapping homework, and if in doubt outsource it to someone disconnected from your market. When you find these magic intersections you will articulate the value that you provide and can develop your own dancing silhouettes.
August 2, 2011
My web hosting company is a pest (I don’t want to out them, but let’s just say their name rhymes with Juan and Juan).
In a few instances I consulted to a software company, which my web hosting service now resells. Thus, when my hosting company called one day to sell me on their “new and amazing” SaaS offering, I was amused.Â I politely told the telesales monkey about my history with the system, and suggested that I was not going to be a customer.
Then they called again … and again … and again. Eight times, and during each episode I asked with growing bluntness that they not disrupt my future days.
They called this morning.
Promotions, and the abjectly unpopular telesales routine, are essential to business. Making people aware of your products and value propositions are required as the first step in the marketing process. But like a neighbor who knocks on your door just to say howdy, what starts as a polite and perhaps quaint interaction eventually devolves into events that require calling the cops.
There is a line between being neighborly and being a stalker, and the same applies to sales.
Overly frequent or inappropriate promotions create dislike in the minds of prospects, or in the case of Juan and Juan, hatred and loathing in the minds of existing customers. Nobody likes a nag. Thus, your campaigns have to stop at some point lest they create resentment, which if prolonged creates reaction. Campaigns should target individuals very well, end after a set number of touches, and most certainly track the prospect accurately. The excuse Juan and Juan’s sales agents make is that I have multiple domain names, that I was getting calls about each, and there was no single account-wide flag to end those calls. The first part may be true; the last part is either an outright lie and the worst example of CRM management in the history of the industry.
Prospects and customers go through several phases of disenchantment. At first they accept new promotions. After the relationship changes from sales pitch to stalking, the prospect/customer quits buying new products because they do not want to deepen the relationship. If more inappropriate sales contacts ensue, they begin disengagement. If pushed further with unending contacts, customers retaliate, typically by telling everyone they know not to buy from the vendor (I for one have stopped three perfect strangers from buying Sony laptops due to a defective unit and a defective tech support team I once had the misfortune of encountering).
It is this last step that is deadly. Churn is inevitable in any industry. But mildly dissatisfied customers don’t make life missions of destroying your public reputation. Promotional campaigns that drive customers to the point of anger do. Thus, any campaign you run must be:
1) Well targeted — avoid aggravating non-buyers
2) Have consistent records — make sure sales attempts are tracked at the individual person, across all methods of contact (that’s what your CRM database is for)
3) Precise — don’t waste their time, which begins with getting your value proposition stated early
4) Finite — let it rest if you have not made a conversion after some small number of contacts (perhaps resuming after a significant time lapse)
In our wired world of social networks, you cannot unleash the wrath of angry customers. Start by not angering them. Just ask Juan and Juan, who if they keep up the harassment here will find new employment cleaning my pool.