Archive for December, 2014

Product Or Service? Taking The Positioning Dilemma By The Horns

Friday, December 26th, 2014

componentsThere’s this widely-held view that marketers want to buy analytics as a service because that’s where they see tangible Return on Marketing Investment. However, many technology vendors want to sell analytics as a product.

This results in a dilemma of whether to position analytics as a product or service.

While Palantir from USA and Mu Sigma from India are two companies who have succeeded by packaging their analytics offerings to resonate with a service-oriented positioning, many other technology companies have opted to take the product positioning in the analytics space. This may be because product companies enjoy the following real / perceived advantages:

  1. Product development is intellectually more satisfying
  2. Product results in IP
  3. Top talent prefers working on products
  4. By coding someone else’s requirements, service offers little scope for creativity or innovation
  5. The service business model is perched precariously close to a risky outcome-based model
  6. Product companies enjoy a higher valuation-to-revenue multiple than services companies
  7. Most investors fund only product companies.

At this stage, it’s clear that many of the underlying factors of this dilemma extend beyond analytics and cover a fairly wide swath of other technologies, especially ones in the high-ROI sales and marketing space.

Before exploring ways to address this dilemma, let me clarify that I’m using the term “service” to refer to a managed service delivered using a technology platform. In this context, it’s not the same as the second “S” in SaaS: The term “service” in “Software As A Service” emphasizes the typical business model of SaaS of being sold as monthly subscriptions à la cable, Internet and other “services”.

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CBSA – Best of Both Worlds!

Coming back to the dilemma, Systems Integrators can bridge the gap between what a vendor offers (product) and what the customer wants (service). But very few product companies are able to reach the critical mass required to attract SIs.

Therefore, the product-or-service dilemma can’t be cast away so easily.

One way to break out of it is by adopting the Component Based Solutions Assembly approach. Mooted by Gartner in the early 2000s, CBSA helps vendors to enjoy the advantages of a product company with its component development core and still deliver highly tangible ROI solutions via massive customization.

While CBSA is more complicated to devise and execute than a pure-product or pure-service approach, it has proven very effective in breaking out of the product versus service dilemma. To translate CBSA into faster deal flows requires sophisticated marketing and selling skills. With our experience of taking many CBSA solutions to market successfully, we can be of help there.

How To Lie With Big Data

Saturday, December 20th, 2014

51FVlKJT9JLDarrell Huff’s classic How To Lie With Statistics is as relevant today as it was when it was published 60 years ago. Probably even more relevant now because, as more data has been generated in the last three years than in the entire history of mankind, there’s so much more raw material for lying now than ever before.

Whether it’s statistics or big data, the goal of lying is still the same: Draw a favorable conclusion by ignoring unfavorable alternatives.

Let’s take a few examples of fooling around with data to see how the lying techniques have evolved.

Faux Data

“I polled my 1000+ LinkedIn Connections to ask them whether they preferred fingerprint or password to access their Mobile Banking app. 80% of respondents voted in favor of Fingerprint.”

It’s intuitively clear that people will prefer the convenience of a fingerprint over the pain of entering a long password on the virtual keyboard of a smartphone. That said, we crave data before agreeing or disagreeing with anything. This statement slakes our thirst for numbers, so we readily give it the thumbs up.

There’s only problem: The aforementioned statement implies that 800 people voted for fingerprint.  That’s totally wrong, as you can see by looking up the actual figures here.

This technique works by using verbal sleight-of-hand. In this example, the wordplay is on the word “respondents”.

istockphoto_thinkstock_silence_1Strategic Silence

“Sixty-two percent of consumers expect live chat to be available on mobile devices, and 82% would use it.”

I read this in the following tweet by @rshevlin. 

 

I agree with @rshevlin: “Nonsense. 62% of ppl don’t know what live chat is”.

If you probe deeper, you might find the truth unraveling as follows: “62% of shoppers who know about live chat want it on mobile devices”. Considering that not more than 20% of consumers are likely to know about live chat, the above finding would translate to:

“12% of shoppers want live chat with brands on mobile devices”.

(12% being 20% of 62%).

This won’t help someone trying to sell mobile live chat. Hence the “strategic silence” on details.

Exploiting Calculitis

“A growing digital advertising market has also seen increased adoption among B2B marketers.”

Blogger Poornima Mohandas waxes eloquently about the popularity of PPC ads in B2B in her post “How to Create PPC Ads That Close Sales”.

Unfortunately, according to data, only 15% of B2B marketers agree with her conclusion. Which is disastrous for the author’s obvious attempt to plug her white paper about PPC in her blog post.

So what happens?

We see the premise broken into two parts:

  1. Percentage of B2B marketers who use PPC: 48%
  2. Percentage of them who find PPC very effective: 32%.

Now, for somebody to like PPC, they need to have used it and found it effective. That figure works out to 48% of 32% i.e. 15.36%. In other words, a vast majority of over 84% of B2B marketers don’t like PPC ads.

But many readers afflicted by “calculitis” – the fear of using a calculator – might see the two percentages in isolation and say to themselves, “Wow, PPC is widely used” or “Hmm, PPC seems quite effective”.

And you don’t expect an author pitching a white paper on PPC to rush to correct that impression, do you?

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I could go on and on with many more examples but they’d all prove the same thing: The techniques for lying with data are still crude.

While data has grown by leaps and bounds in the last 60 years, the tricks to lie with it haven’t kept pace.

I leave it to you to decide whether that’s a good or bad thing.

Does CX Really Drive Sales?

Friday, December 12th, 2014

ola-app-windows-newIn this day and age of Amazons and Flipkarts, it shouldn’t take much for a business to get the importance of customer experience.

Nevertheless, when we recommend certain features to improve the UX / CX of our customers’ products or platforms, we often receive pushback ranging from “when a customer takes a little more trouble to contact us, we’re assured that they’re serious about us” through to “if a customer really has a need, they’ll take the trouble to place the order on us”, and various arguments in between.

This tells me that there’s still a lot of confusion about the exact role played by CX in the buyer’s journey. So much so that some people still use poor CX to qualify leads and others, to underwrite their ration-officer like mentality.

So I thought I’ll illustrate the stages of the sales funnel where CX makes an especially sharp contribution and take the example of Olacabs to explain how better CX has resulted in more sales, at least from me.

Founded by a fellow alum from IIT Bombay, Olacabs is among the new breed of taxi aggregators that also includes UBER, Meru Cabs, Easy Cabs and so on.

mattress-purchase-cycleOlacabs recently launched a mobile app for Android, iOS and Windows. With just two clicks, the app lets customers book rides immediately or a day in advance. By eliminating the pain of dealing with a call center and removing the need to sit in front of a PC to book a cab, the mobile app takes Ola’s CX to the next level. This has driven more sales in two ways:

  • Every time I need a cab, I order Ola. While its competitor UBER has a mobile app – what the heck, UBER is a mobile app! – its lack of support for advance booking takes it out of my reckoning under most circumstances. MeruCabs, another Ola competitor, has only recently launched a mobile app for its GenieCabs subsidiary that operates in my city (Pune, INDIA)
  • Whenever I need to go to a new place for the first time, I no longer use my own car because of hassles related to parking and finding the way around unfamiliar places. I simply book an Ola instead.

To put this in marketing speak, better CX has resulted in more sales by

  1. Ensuring that the customer selects the brand (Ola) every time they use the product category (cab). This is the primary objective of a brand’s loyalty / customer engagement program
  2. Transforming the customer’s need (travel) directly to a brand choice (Ola) without passing through the interim stage of product category (cab). This is the wet dream of any marketer.

Therefore, CX plays a major role in the need-to-brand and product-to-brand stages.

As for stimulating greater need just because the brand makes it easier to fulfill, maybe that’s what Olacabs is aiming for by keeping its app “addictively simple“. However, it would take the company a few more things to crack this Holy Grail of CX:

  • Ensure that the cabbie can reach my pickup location without having to call me to ask for directions (while I’m busy in a meeting)
  • Issue paper receipts (its e-receipts are cumbersome for accounting in the context of my business use)
  • Display the running meter during the ride (the company claims that the app supports this feature but not a single cabbie I’ve asked has been able to show it)
  • Accept payment by credit card (Sorry prepaid mobile wallets don’t work for me!)

If Olacabs found a way to fulfill these wishes, who knows, I might turn into a travel freak just because it’s easy to order a cab from Ola!

PS: I’ve been using an online stock trading portal for over a decade. Maybe it’s only me but, lately, the need to be tethered to a computer to place orders has started feeling quite painful and evokes memories of standing in long queues to book train tickets in the good old days. As a result, my activity level on this portal has come down drastically in recent times. My Relationship Manager called me a couple of weeks ago offering a discount on brokerage if I went back to my previous trading volumes. I told him no amount of discount would help but promised to double my previous volumes if only he gave me a mobile app that let me trade on the go. Like any typical RM, he promised to pass on my feedback to his “management”. Let’s see what happens.

Retail Is Barking Up The Wrong Tree Against Ecommerce

Friday, December 5th, 2014

quote-sales-are-contingent-upon-the-attitude-of-the-salesman-not-the-attitude-of-the-prospect-w-clement-stone-179351Although I’ve had my first taste of ecommerce as far back as 1998, over the years I’ve preferred to shop at brick-and-mortar stores because the offline channel provides “instant gratification”, shields me from the intrinsic delivery risk of the marketplace model and saves me the friction of using credit cards online. Accordingly, when I had to buy a few things recently, I headed over to the high street and a couple of malls.

Here’s what I found:

  1. Two stores had shut down (CROMA @ Pulse Mall, Venus @ Magnum Mall)
  2. Two stores didn’t have what I wanted (Microsoft Mouse, Belkin Power Trail)
  3. The salesman at one store (The Mobile Store) couldn’t understand why I was asking him if I could install apps from Google Play Store on a certain Android smartphone (Nokia X).

Since I didn’t have the time and energy to continue my search at some other brick-and-mortar store, I bought all these items online.

As you’d have inferred by now, my decision to defect to ecommerce was driven by the following factors:

  • Spiraling cost of overheads – rather than low margin on merchandise – threatening the viability of many retail businesses (More in Retail Winners & Losers Amidst Skyrocketing Real Estate Costs)
  • Stock outs  (Not the first time it has happened: Stores Have Themselves To Blame For ‘Showrooming’)
  • Ignorant store attendants who don’t know that a mobile device could run on Android OS but still not be able to access Play Store (Nokia X and B&N Nook Color are just two examples of “closed ecosystem” Android devices that only run apps published on their own app stores).

If you notice, price isn’t one of them.

I’m not price-insensitive but price didn’t enter the picture in any of my aforementioned purchases.

Jumping to conclusions on the basis of a datapoint of one is dangerous but brick-and-mortar retailers are completely mistaken if they think people shop online only for lower prices. Even at their current price levels, they can retain their loyal customers by setting their house in order on inventory management, shopping experience and other internal areas.