Archive for October, 2016

Why Are Reviews So Powerful In Social Media Customer Service?

Friday, October 28th, 2016

Since I wrote Customers Of The World Unite, You Have Nothing To Lose But The Call Center Hold Music, many more brands are now providing customer service via social media, with some of them like Bajaj Allianz GIC (@BajajAllianz), Hootsuite Helpers (@Hootsuite_Help) and Ministry of (Indian) Railways (@RailMinIndia) doing a great job at it.

I’ll conveniently attribute this welcome trend to the self-serving assumption that more and more brand managers have read my blog post The Business Case For Social Media Customer Service:)

reviews-fiBy social media customer service, I’ve so far implied interactions between consumers and brands via posts on Twitter, Facebook, Instagram, and other social networks.

In this post, I’ll cover another form of social media interaction: (online) Review. A review is an evaluation of a product / service posted by consumers typically after they experience the said product / service. For the purpose of this blog post, reviews can also mean consumers’ comments. Reviews and comments can appear on a brand’s website, blog and social media pages (e.g. BajajAllianz), an ecommerce company’s website (e.g. Amazon) or on specialized review portals (e.g. Yelp, MouthShut).

Like social media posts, reviews are out in the open. Since no brand would like to see their dirty linen washed in public (hopefully!), reviews invoke response. For example:

  • reviews02A business associate had a bad experience with a plumber sourced from a home-services aggregator. He left a caustic review on its portal. The next day, a rep from the company called to ask him what went wrong and inquired what they could offer him to get him to remove his review.
  • The CEO of a leading executive recruitment firm had posted an update on LinkedIn. Someone commented that the company’s paid job search service was useless. He’d apparently complained about it via email but had received no reply from the company. The honcho replied back within a few hours on LinkedIn.
  • I had a problem with the CD shipped by a leading e-learning provider. After trying in vain to reach the company via telephone and email, I left a detailed comment about my experience on the company’s Facebook Wall. A couple of people from the company called me the next day to inquire what prompted my scathing remarks and asked me what they could do to remedy the situation. You can find more on this incident at http://lnr.li/Ml7Js

Apart from these first hand experiences, I chanced upon a blog post titled How To Respond To Negative Reviews. When I noticed that it was written by an executive in a leading TELCO that’s not exactly known for its CX, I was left with no more doubts that brands have turned very sensitive to reviews and comments.

I’m also getting the feeling that reviews are more effective at eliciting service than social media posts. I can think of at least three reasons why this might be the case.

#1. Reviews Are Permanent

Social media posts are ephemeral and vanish within a few hours of being posted; whereas reviews are like an email inbox and stay visible permanently until the reviewer deletes them (some brands are known to delete reviews but that’s blog post for another day).

#2. Reviews Are Democratic

The visibility of social media posts is restricted to the reviewer’s social graph. To take Twitter – by far the most popular social network for customer service – as an example, a tweet typically reaches only the reviewer’s followers. Therefore, a rant by someone who has 10 Followers on Twitter doesn’t have the same visibility as that by another who has 1 Million Followers. In an ideal world, brands should take both tweets equally seriously. But, in the real world, don’t be surprised if most brands ignore the first tweet and only take the second one seriously. On the other hand, because reviews are published on a property owned by the brand / ecommerce company / review portal, their reach is not limited to the reviewer’s social graph. Everyone’s review is visible to every visitor of the website.

#3. Reviews Enjoy Larger Audience

Since the website on which reviews are published are well promoted, they have a much bigger audience than an individual’s friends / followers / connections. Therefore, a review – anyone’s review – is seen by many more people than a social media post. Therefore, every review is an equal and far bigger source of potential damage to a brand’s reputation.


It’s clear that, compared to social media posts, reviews are a bigger source of potential damage to a brand’s reputation. Not surprisingly, brands seem to be taking reviews more seriously than social media posts.

Rating follows Review.

Inconsistency is a serious challenge here.

Left to their own devices, one user might give a 5* rating if there’s nothing wrong with a product / service (i.e. if it “meets expectation”) whereas another user might only give a 3* rating for that level of performance and reserve a 5* rating only if everything goes well and more (i.e. only if it’s “outstanding”).

Since I belong to the second category, I’ve been giving 3-4* rating to most of my Uber rides. I recently heard on the grapevine that Uber drivers want raters to be in the first category!

Brands can overcome this challenge by stating their rating guidelines upfront. Like I’ve done on my book review website myBookAlert.

reviews01

Guidelines Can Drive Consistency of Ratings

While raters can deviate from them, published guidelines, by their very existence, will encourage more people to use them, thus helping drive greater consistency of ratings. (I’m even prepared to revisit my driver ratings if Uber spells out its rating guidelines!).

How brands respond to reviews and ratings is a big topic that deserves a separate blog post. Spoiler Alert: I urge brand and social media managers to check out Capterra’s blog post on how to create positive outcomes from negative reviews. While the article is targeted at software companies, most of its guidance can equally well be used by other industries.

Should Your Sales Dodge The Price Question Or Answer It Upfront?

Friday, October 21st, 2016

dap01

In a typical sales cycle for a technology solution, a vendor demonstrates its product and lists its features and benefits before getting into discussions about price. And a typical technology solution buyer goes along with this sequence of activities.

However, there are some prospects who want to know the price upfront.

If you want to dodge the price question until you reach its due stage in your standard sales cycle, check out this blog post for tips on how to steer the conversation to value.

However, the more important question is, should you?

To answer this question, it’s important to understand why some prospects raise the price question right in the beginning. In my experience, this happens when a prospect quickly wants to:

  1. Check whether they can afford your price (“affordability”)
  2. Assess how well your price compares with their budget (“expendability”)

dap-fiIn case you’re wondering what’s the difference affordability and expendability, as private individuals in a B2C setting, we tend to buy only one big-ticket item at a time and there’s hardly any difference between these two terms. However, a company buys multiple big-ticket items simultaneously. Therefore, in a B2B setting, affordability means how much money a company is able to spare for the given item regardless of other items whereas expendability is a measure of how much money it wishes to spend for the given item mindful of other items.

By steering the conversation with such prospects to value, it’s quite possible that the prospect might be impressed with your value proposition and induced to increase their budget. However, until the budget has actually risen to the level required to fund the purchase of your product, your sales is unlikely to accept the lead since it’s not yet BANT-qualifed (It’s another story that sales might hasten its own demise by sticking to dated concepts like BANT). Besides, no amount of value selling will help the prospect generate the money they don’t have to buy your product.

Therefore, you’re unlikely to convert such prospects. You may be better off quoting your ballpark price and moving on to the next prospect in your target lead list. Ducking the price question is not a great idea with this segment of the market.

dap03I experienced this from the buyer’s side when I helped a customer purchase a market intelligence software recently.

The inside sales rep of a leading vendor in this category kept chasing me for an appointment to demo his product. Everytime I asked him about the price of his software, he steered the conversation to value. Nevertheless, I eventually acceeded to his request for demo since I happened to know the company’s CTO and had a soft corner for it.

After the demo got over, I repeated my oft-asked question about price. This time the rep gave me a straight answer. It was in $$$$$. There was no way my customer could spare that kind of cash, no matter how much value the product delivered. Ergo, there was no chance of this sale happening.

Had the rep indicated a price range for his product in the beginning of our interactions instead of ducking my price question repeatedly, we could’ve saved each other a lot of time.


Therefore, in B2B technology solution sales, it’s better to get the price question out of the way as early as possible if your prospect raises it ahead of everything else.

Let me hasten to clarify that this advice is applicable ONLY for prospects who raise the topic of price upfront. For all others, price discussions should take place at their customary later stage in the typical sales cycle.

Reliance JioFi Second Impressions

Friday, October 14th, 2016

In Reliance JioFi First Impressions, I’d shared my initial experiences with the Reliance JioFi Portable 4G Pocket WiFi Router.

One month later, here are my “second” impressions:

UPDATE DATED 16-SEP-2016:

It’s confirmed that voice on JioFi happens via data packets. However, I understand it’s called Voice Over LTE (VoLTE) and not VoIP as I’d previously labeled it. I still don’t have any reply to my tweet asking @reliancejio how many MB of data would be consumed by a 5 minute voice call. Wonder if the company’s tone-deaf Twitter account has something to do with the recent departures of its Chief Marketing Officer and Chief Digital Marketing Officer.

UPDATE DATED 20-SEP-2016:

It’s now over a week since I activated JioFi. Speeds in the interim period have ranged from 5.75 to 12Mbps. These were all at my home (Kalyaninagar, Pune). Today, I tried JioFi in my office which is located in a building on Nagar Road, Pune, which hosts many cell towers. I got 30Mbps!

jio-speedtest-results-20sep2016-fi

This is absolutely the highest Internet speed I’ve ever witnessed. (But that’s only me – Hathway apparently delivers 50 Mbps in some parts of Mumbai).

That said, while JioFi has posted consistently better results on speed tests compared to my other connections, it is not perceptibly fast for browsing. In other words, I don’t find any significant drop in page loading times with JioFi. I understand that browsing speed is determined by ping time (lower the better). JioFi’s best ping time so far has been 50ms, which is much higher than figures like 9ms I’ve observed on other connections in the past.

UPDATE DATED 21-SEP-2016:

People tell me the real benefit of higher speed is to cut down file download times. Today, I had a first hand experience of that: I downloaded the MyJio app from Play Store. The 16MB app downloaded in just 6 seconds. That’s really quick! For the numerically-inclined, the speed works out to 21Mbps (16*8/6).

UPDATE DATED 24-SEP-2016:

I was at my parents’ home today. Their landline broadband connection (from another ISP) delivered 2.46 Mbps. Although that’s 1/15th of JioFi’s top speed, I found browsing to be much faster on it. It had a ping time of 30ms, which is much lower than anything I’ve seen on JioFi. This confirms what I’d heard before, namely that browsing speed is determined more by ping time rather than upload / download speed.

UPDATE DATED 6-OCT-2016:

I heard from a few people in my circle that Reliance has stopped selling new connections. However, there seems to be a gray market for its SIM cards on the high street.

UPDATE DATED 10-OCT-2016:

During the past two weeks, JioFi’s 4G connection has been out for more than 50% of the time. I’d earlier thought I could “jiofy” on Reliance Jio alone. But, with this kind of outage, I’ll “marofy” if I canceled my other Internet connections (This is a lame one even in the native Hindi, so I won’t dare translate it!).

That won’t stop me from being greedy, though:)

SAAS – What’s In It For Vendors?

Friday, October 7th, 2016

sbv-fiSAAS promises zero upfront cost, freedom from maintenance and relief from headaches of updates, and so on.

These are all benefits for its customers.

What’s in it for software companies offering SAAS solutions?

Shorter sales cycle is the most obvious benefit. Because they don’t need to incur huge licensing costs while signing up for a SAAS solution, SAAS lowers the entry barrier for buyers. This often translates to shorter sales cycles for SAAS vendors (provided they’re able to achieve the SAAS multiplier effect).

But, while the onprem sales cycle can be longer, the vendor gets a big “pot of gold at the end of the rainbow” by collecting license fees for the entire lifetime of the software soon after booking the order. On the other hand, all that a SAAS vendor gets upon booking the order is the first month’s subscription fees. As illustrated below, there’s a big difference between the two numbers.

ONPREMISE SAAS
License Fee $2000 per user (onetime) N.A
Subscription Fee N.A $75/user/month*
Deal Size 1000 users 1000 users
Month 1 Revenue $2,000,000 (1000*2000) $75,000 (1000*75)

*: This is ~1/27th of license fee. This figure is based on anecdotal evidence of SAAS subscription fee being 1/20 to 1/30th of onprem license fee.

2 million dollars versus seventy five thousand dollars. That’s the difference in order booking. That’s a big hit to short term revenues. Which is a big problem for sales leaders measured on quarterly numbers.

Why then are software vendors – IBM and Oracle to name a couple – pushing SAAS so heavily?

I have no inside track into these companies but, from my experience of building and marketing SAAS products during the past 2-3 years, I can hazard an educated guess as to the benefits of SAAS for software companies.

#1. No Piracy

It’s no secret that piracy is still a thing – even in enterprise software.

SAAS can only be used by people registered directly with the product owner. This effectively eliminates piracy of SAAS.

#2. Zero Revenue Leakage

sbv02In the onprem world, the vendor signs a license agreement for, say, 1000 users. Most software products don’t block usage beyond the contracted number of users. In other words, there’s nothing in the product to stop the customer from adding the 1001th user and beyond. In fact, it’s customary for users of onprem software to keep adding users through the year. Since the software is administered by the customer, the vendor may not even know about excess users – users exceeding contracted number of users – at the point of their addition to the system. On prem vendors typically regularize their license agreements every year by asking their customers to declare the exact number of users at the end of the year. I personally experienced this practice when I was responsible for the rollout of PeopleSoft at one of my former employers. We declared the actual count. However, not all people / companies may be as transparent. When excess users are not declared, the onprem vendor loses license fees for them. While Microsoft conducts audits – and even raids – on customer premises to expose and bill excess usage of its products, such practices are not very common in the industry.

Excess usage is not possible in SAAS since every user needs to be registered on the cloud, which is owned and administered by the vendor (not customer). Therefore, SAAS virtually eliminates revenue leakage.

#3. Tighter Control of Receivables

When an onprem customer delays payment, the toughest action a vendor can take is to threaten to stop support. This is not very effective because the customer can still continue to use the software. Besides, I wonder if onprem companies are culturally attuned to actually follow through with their threats. I say this based on a data point of one: At one of my past employers, a field operations manager wrote a letter to a customer threatening to stop service due to nonpayment of AMC and then signed off the letter with the customary “Thanking you and assuring you of our best service at all times” line!

With cloud software, the vendor can literally turn off the tap if the customer delays payment à la electricity, gas and telecom companies. I know many companies – including some small ones – that actually do that.

#4. Higher CLV

While SAAS is sold for a zero or very low upfront cost, you can see from the following illustration that the total fees collected by a SAAS company over the lifetime of the software far exceeds revenues from onprem software.

ONPREMISE SAAS
Life of Software 5 years 5 years
Annual Maintenance Charges 15% of License Fees N.A
Lifetime AMC Revenues $1,500,000 (0.15*2000000*5)
N.A
Customer Lifetime Value $3,500,000 (2000000 + 1500000)
$4,500,000 (1000*75*12*5)

As against onprem revenues of $3.5M, SAAS revenues are $4.5M, which is 28% higher.

According to common wisdom, SAAS helps vendors by giving them recurring revenues. But, IMO, what actually counts is the relatively high MRR (Monthly Recurring Revenue) and, hence CLV, of SAAS – you’d agree that there isn’t much point in earning an MRR of US$ 10 / user / month and taking 17 years for SAAS revenues to match onprem license fees of US$ 2000 / user collected at the start of Year 1.

#5. Data

In the onprem world, all customer data stays on the customer’s infrastructure. Whereas in the SAAS model, they reside on the SAAS provider’s infrastructure. This means the SAAS vendor has access to data of multiple organizations that it can mine to gather insights. According to Fortune, both Salesforce and Oracle have announced plans to do so. Nature of insights include:

  • Is there a major client that you haven’t heard from in awhile or who has been name-dropping your competitor in email or on social media? It’s time to reach out.
  • If you have hundreds or thousands of sales prospects on a list, how do you tell the potential winners from the duds?
  • Detect if a competitor is mentioned on an email thread.

Assuming these insights have commercial value, data offers a potentially new revenue stream for SAAS vendors.

We have a little experience with this ourselves: For a Customer Engagement Management platform developer, we spec’ced an Uplift Manager module that has the capability to mine response, conversion rates and other performance metrics of targeted offer campaigns run by different companies to various target audiences. Using the insights gathered therefrom, the module can guide ways to boost the performance of subsequent campaigns.

Of course, this may need the buy-in of customers. Going by our experience with the aforementioned Uplift Manager, customers see tremendous value from this functionality and are open to onboarding on to this module.

*****

sbv01With so many benefits, is it any surprise that software companies are promoting SAAS so aggressively?

On a side note, IT services companies don’t seem to be too enamored with SAAS.

And for a good reason: According to the CEO of a midsized IT services company I met recently, implementation of an onprem ERP product requires 5-6 consultants for 1-2 years, which translates to billable efforts of 5-12 person years; whereas a SAAS ERP project hardly needs 3-4 consultants for 4-6 months (i.e. billable efforts of only 1-2 person years). As a result, SAAS causes a dramatic drop in an IT services company’s billing.

As of now, SAAS has not had a significant impact on IT services revenues. That’s perhaps because “for many leading software developers, SaaS still remains something of an afterthought … only 8 percent of the revenues of the top 100 software companies come from SaaS models”, according to a McKinsey article published last year.

But that’s so 2015. Judging by their recent high decibel announcements around cloud computing, SAAS is no longer an afterthought for leading software companies. If and when SAAS goes mainstream, it can be a disruptive force for the IT services industry.