“OK Google. Where did I park my car?”

Google Now "Where did I Park my Car?" CardThere appears to be a bit of controversy with some commentators learning exactly what “Favorite Locations” are, as stored by every iPhone handset. What happens is that the number of visits to common locations are recorded, from which, based on time spans and days of week, Apple can deduce your “normal” working location and the address at which you sleep most nights. This is currently stored only in your iPhone handset and apparently not yet used; it is designed to enable services to advise you of traffic conditions to and from work, to be used at some point in the future.

The gut reaction is “Whey! They can see exactly where i’m going all the time!”. Well, yes, your handset can; GPS co-ordinates are usually good for an approx location to a meter or two, you have a compass in there that indicates which way you’re facing, and various accelerometers that can work out the devices orientation in 3 dimensions. The only downside is that the full mix tends to be heavy on battery power, and hence currently used by applications on the phone fairly sparingly.

Some privacy concerns then started to arise. However, I thought it was fairly common knowledge that mobile phone operators (certainly in the USA) could deduce the locations of spectators as being inside a sports stadium, and tell the stadium owners the basic demographics of people present, and the locations from which they travelled to the event. This sort of capability will extend to low power bluetooth beacons which can be positioned in retail outlets, which armed with a compatible application (and your permission to share your data), will give them analysis gold. Full coverage, 365 days a year, to a level that doesn’t need Paco Underhill class analysis (Paco is the author of seminal book “Why We Buy: The Science of Shopping“, itself based on years of analysis of customer behaviour in and around retail establishments).

I think i’m fairly cool with it all. Google Android handsets can already sense internally whether you are walking, cycling, on a bus or driving in a car. The whole premise of Google Now is to do searches or to provide service to you before you have to explicitly ask for it. I got quite used to my Nexus phone routinely volunteering commute traffic conditions before I got in my car, or to warn me to leave earlier to hit an appointment in time given current driving (or bus service) conditions on the route I usually took. I was also very impressed when I walked past a bus stop in Reading and Google Now flashed up the eta and destination of the next bus, and a summary of the timetable for buses leaving from that stop.

Google have just released another card on Google Now that automatically notes where you parked your car, and navigates you back to it if you feel the need for it to do so later on.

All of this is done with your explicit permission, and one of the nice things on Android is that if the software vendors data policies change in any way, it will not allow through the update to enable that functionality without explicitly asking you for permission first. Hence why I knocked LinkedIn off my Nexus 5 when they said an update would enable them to collect my phone call data of who I was calling and receiving calls from. I thought that was unnecessary for the service I receive (and pay for) from them.

The location services i’m sharing with a small number of vendors are already returning great benefit to me. If that continues, and service providers are only intrusive enough to help deliver a useful service to me, then i’m happy to share that data. If you don’t want to play, that’s also your call. What’s not to like?

What do IT Vendors/Distributors/Resellers want?

What do you want? Poster

Off the top of my head, what are the expectations of the various folks along the flow of vendor to end user of a typical IT Product or Service? I’m sure i’ve probably missed some nuances, and if so, what is missing?

Vendors

  • Provide Product and/or Services for Resale
  • Accountable for Demand Creation
  • Minimise costs at scale by compensating channels for:
    • Customer Sales Coverage and Regular Engagement of each
    • Deal Pipeline, and associated activity to increase:
      • Number of Customers
      • Range of Vendor Products/Services Sold
      • Customer Purchase Frequency
      • Product/Service Mix in line with Vendor objectives
    • Investment in skills in Vendor Products/Services
    • Associated Technical/Industry Skills useful to close vendor sales
    • Activity to ensure continued Customer Success and Service Renewals
    • Engagement in Multivendor components to round out offering
  • Establish clear objectives for Direct/Channel engagements
    • Direct Sales have place in Demand Creation, esp emerging technologies
    • Direct Sales working with Channel Partner Resources heavily encouraged
    • Direct Sales Fulfilment a no-no unless clear guidelines upfront, well understood by all
    • Avoid unnecessary channel conflict; actively discourage sharing results of reseller end user engagement history unless presence/relationship/history of third party reseller with end user decision makers (not just purchasing!) is compelling and equitable

Distributors

  • Map vendor single contracts/support terms to thousands of downstream resellers
  • Ensure the spirit and letter of Vendor trading/marketing terms are delivered downstream
  • Break Bulk (physical logistics, purchase, storage, delivery, rotation, returns)
  • Offer Credit to resellers (mindful that typically <25% of trading debt in insurable)
  • Centralised Configuration, Quotation and associated Tech Support used by resellers
  • Interface into Vendor Deal Registration Process, assist vendor forecasting
  • Assistance to vendor in provision of Accreditation Training

Resellers

  • Have Fun, Deliver Good Value to Customers, Make Predictable Profit, Survive
  • Financial Return for time invested in Customer Relationships, Staff knowledge, Skills Accreditations, own Services and institutional/process knowledge
  • Trading terms in place with vendor(s) represented and/or distributor(s) of same
  • Manage own Deal Pipeline, and associated activity to increase one or more of:
    • Number of Customers
    • Range of Vendor Products/Services Sold
    • Customer Purchase Frequency
    • Product/Service Mix in line with Vendor objectives
    • Margins
  • Assistance as needed from Vendor and/or Distributor staff
  • No financial surprises

So, what have I missed?

I do remember, in my relative youth, that as a vendor we used to work out what our own staffing needs were based on the amount of B2B revenue we wanted to achieve in each of catalogue/web sales, direct sales, VARs and through IT Distribution. If you plug in the revenue needs at the top, it gives the number of sales staff needed, then the number of support resources for every n folks at the layer before – and then the total advertising/promotion needed in each channel. It looked exactly like this:

1991 Channel Mix Ready Reckoner

Looking back at this and comparing to today, the whole IT Industry has gotten radically more efficient as time has gone by. That said, I good ready reckoner is to map in the structure/numbers of whoever you feel are the industry leader(s) in your market today, do an analogue of the channel mix they use, and see how that pans out. It will give you a basis from which to assess the sizes and productivity of your own resources – as a vendor at least!

Simple words often work better than neat adverts

Love at First Website Advert

An example advert from the time I led the Marketing Services Team at Demon Internet. It was a dumb sounding advert, but it pulled response like crazy. Some of the responses we received back in the mail (asking for trial CDs) contained nice poems, so it appeared to strike a healthy connection.

When we first entertained bids for a new agency, we had super looking, consistent, nicely branded advert samples from one company, and these tongue in cheek worded ones from another. Cliff Stanford (owner of Demon Internet) liked the worded ones, while I thought he was nuts – but he agreed to do some tests to see who was correct. He was absolutely right; the worded ads pulled much more effectively. Lesson learnt!

The Valentines Day Advert was done in a rush a week before, and Les Hewitt (media buyer extraordinaire) got it in most target newspapers near the back. Once in, he phoned them hourly to twist their arm relentlessly, getting it shifted page by page towards the front. The advert made it to the dating page on Valentines Day in the Times I believe, where we got fantastic response levels.

We ran quite a few variations of the theme in over 40 different publications:

Thick as two short planks advert

piece at cake advert

We also tried cross-track and a 40-sheet poster treatment of the piece@cake advert, but had a bit of a mishap on the approach to Wembley Stadium the evening when the Spice Girls were giving a concert. Hence thousands of young fans, being driven in by their parents to see the concert were greeted with:

Piece @ Cake Advert, dropped E

We had them paste the ‘e’ panel back on the next day.

Average cost to land a £10/month paying customer was £30, around 1/6 that of competitive ISPs at the time (this was 1998-9). We tested everything, and knew what the landed cost of a customer was for every ad we placed. Even knew which ones gave us high response and then heavy churn 3 months later (waves hello to the Sun and Mirror). The most effective medium one of my folks tried gave us acquisition costs of £4 per landed customer, but many odd ball complaints. But that’s another story, and described near the end of an older post here.

Class work, well executed and full of personality. In my humble opinion, of course.

 

Avoiding the strangling of your best future prospects

Escape Velocity Book Cover

I’m a big fan of the work of Geoffrey Moore, whose seminal work “Crossing the Chasm” i’ve cited before (in fact, the one page version is the #1 download from this blog). However, one of his other books is excellent if you’re faced with a very common issue in High Technology companies; having successful, large product line(s) thats suck all the life out of new, emerging businesses in the same enterprise. The book is “Escape Velocity”:

Unlike Crossing the Chasm, i’ve not yet summarised it on one sheet of A4, but have outlined the major steps on 14 slides. It sort of works like this:

The main revenue/profit engines in most organisations occur between the early and late majority consumers of the product or services; that can last a long time, denoted by the Elastic Middle:

Product Lifecycle

That said, there are normally products that sales will focus on to drive the current years Revenue and Profit targets; these routinely consume a majority of the resources available. Given a fair crack of the whip, there are normally emergent products that while not material in size today, are showing good signs of growth, and which may generate significant revenue and profits in the 1 to 3 year future. There are also likely to be some longer term punts which have yet to show promise, but which may do so in a 3 to 6 year timeframe:

3 Horizons

The chief way to categorise products/services against the relevant Product Horizon is to graph a scatter plot of revenue or profit for each line on one axis, against growth on the other (10% growth is a typical divider between the High and Low growth Quadrants):

3 Horizons to Category Power

Any products or services on Horizon 0 needs to be shielded from core resources and to be optimised to be cash generative while it lasts. The other product/service horizons are segregated and typically have a different go-to-market team (with appropriate Key Performance Indicators) assigned to each:

Focus Areas

The development pattern for Horizon 2 products are typical of the transition from “Chasm” into the “Tornado” stage on the normal Chasm lifecycle diagram. It’s a relentless learning experience, ruthlessly designing out custom services to form a standard offering for the market segments you target:

Free Resources to Context

As you execute through the various sales teams and move between financial years, there’s a lot of introspection to ensure that the focus on likely winners continues is appropriately ruthless:

Action

The sales teams driving Horizon 2 offerings should be seeking to aim high in customer organisations and drive strategies to establish a beachhead, then dominate, specific focus segments. In doing so, be mindful that a small supporting community tends to cross reference each other. Good salespeople get to know the people networks that do so, and work diligently to connect across them with their colleagues.

Trusted Advisor

The positioning of your Horizon 2 offers tend to vary depending on price and benefit; this in turn looks about like the findings from another seminal work, “The Discipline of Market Leaders”. That book suggested that really successful companies put their relentless effort into only one of three possible core competences; to be the Product Innovator, to be Customer Intimate or to be Operationally Excellent:

Benefit Sensitivity

Once you have the positioning, the Horizon 2 sales team relentlessly focus on the key people or organisations that make up their target market segment(s):

Drive to Share of Segment

The number of organisations they engage differ markedly between Enterprise (Complex) and Consumer (Volume) markets:

Target Customers

So the engagement checklist needs to address all these areas:

Target Market Initiatives

The sales team need to be able to articulate “What makes their offer different”:

Differentials

Then pick their targets:

Growing Horizon 2

Above all, be conscious who your competitors are and where you’re positioned against them:

From Whom

That’s largely it. Just a process to keep assessing the source of future revenue and profits, and ensuring you segment your sales teams to drive both this years business, and separately working on the green shoots that will provide your future. And avoiding what often happens, which is that the existing high revenue or high profit lines demand so much resources that they suffocate your future.

You can probably name a few companies that have done exactly that. Yours doesn’t need to be the next one now!

The Jelly Effect and the importance of focus on AFTERS

Jelly Effect by Andy BoundsI have a few books in my bookcase that I keep for a specific reason. Normally that they are succinct enough to say the obvious things that most people miss. One of these is The Jelly Effect: How to Make Your Communication Stick by Andy Bounds.

His insight is that most people want problem solvers, not technicians. They typically don’t care two hoots about the history of your company, or all the detailed features of your products or services. What they do typically care about is what will have changed for them AFTER your assignment or project with them has been completed. Focussing on that is normally sufficient to be succinct, to the point and framed around delivering the goals that customer feels are important to them. All that without throwing large volumes of superfluous information at your prospect on that journey. Summarised:

“Customers don’t care what you do. They only care what they’re left with AFTER you’ve done it”.

The end results of taking the deeper advice in the book include:

  • One bank, who won business from 18 pitches out of 18 after having implemented AFTERs
  • Another bank increased weekly sales by 47% based on focus on AFTERs
  • A PR and Marketing Company that have won every single sales pitch they have made after having previously won far less sales than their available skills deserved
  • The author suggests it’s worked for every single company he has worked with, from multinational blue-chips, to small local businesses, to charities looking to win National accounts, to family run businesses.

He describes the process outlined in the book in a short 5 minute video here.

I was once asked to write out the 10 reasons why customers should buy Software from my then Company – Computacenter, widely considered to be the largest IT reseller in Europe. Using the principles of “The Jelly Effect”, I duly wrote them out for use by our Marketing Team (they could choose which one of the 11 reasons to drop):

10 Reasons to buy Software from Computacenter

  1. Reducing your Costs. We compensate our folks on good advice, not sales or profits. We would rather show you ways to lower or eliminate your software spend, rather than stuffing you to the gills with products or services that you don’t need. Putting a commission hungry software salesperson rarely delivers cost savings in a tough economic environment; we think being synonymous with “help” is a better long term business strategy.
  2. Improving Service Levels. Your Internal Account Manager or Sales Support contact is the central hub through which we bring all our software skills to bear to help you. We expect to be able to answer any question, on any software or licensing related query, within four working hours.
  3. Access to Skills. Computacenter staff have top flight accreditation levels with almost all of the key infrastructure and PC software vendors, and a track record of doing the right thing, first time, to deliver it’s customers business objectives cost effectively and without surprises. Whether it’s the latest Microsoft technologies, virtualising your data centre, securing your network/data or weighing up the possible deployment of Open Source software, we have impartial experts available to assist.
  4. Freeing up your time. Computacenter has trading agreements in place with over 1,150 different software vendors and their local distribution channels, almost all signed up to advantageous commercial terms we make available to you. We can find most software quickly and buy it for you immediately on very cost effective commercial terms, and with minimal administration. Chances are we’re buying the same thing for many of your industry peers already.
  5. Reducing Invoice Volumes and associated costs. We’re happy to consolidate your spend so you receive just one invoice to process per month from us across all your hardware, software and services purchases from Computacenter. We often hear of cost-to-handle of £50 per invoice, as well as the time you staff take to process each one. Let us help you save money, and reduce your costs at the same time.
  6. Renewals without surprises. We can give you full visibility of your software renewals, enabling more effective budgeting, timely end user notifications, simpler co-termed plus consolidated contracts, and lower support costs. Scheduled reporting makes late penalty fees and interrupted support a thing of the past. Reduced management burden, and more time to focus on your key management challenges.
  7. Self Service without maverick buying. We work with IT and Purchasing Managers to make only their approved software products, at their most cost effective licensing levels, available using our CC Connect online purchasing service. This can often halve the spend that users would otherwise spend themselves on retail boxed versions.
  8. Purchase Power. Computacenter customers together account for the largest spend of any reseller on almost all of the major Software vendors we trade with. In the final analysis, you get the best prices and access to the best vendor, distributor and Computacenter skills to help achieve your business objectives.
  9. Spend Reporting. Knowing what license assets you have is the first step to ensuring you’re not inadvertently duplicating purchases; we’ve been known to deliver 23%+ savings on new software spend by giving IT Managers the ability to “farm” their existing license assets when staff leave or systems evolve in different parts of their organisation. Reporting on your historical purchase volumes via Computacenter is available without charge.
  10. Managed Procurement. We’re fairly adept at, and often manage, relationships for new and renewal purchases across 80-120 different software vendors on behalf of IT and Purchasing staff. If you’d like to delegate that to us, we’re be delighted to assist.
  11. Services. If you’ve not got time to work out what you’ve purchased down the years, and wish to consolidate this into a single “bank statement” of what your current and upgrade entitlements are, we can do this for you for a nominal cost (we use our own internal tools to do this fast and accurately for the major PC software vendors, independent of the mix of routes you used to procure your software assets). When times are tough, many vendors think “time to audit our software users”; your knowledge is your power, and even if you find there is some degree of non-compliance, we work to minimise the financial exposure and protect your reputation. We’ve been known to strip 75% off a vendors proposed multi million pound compliance bill using our licensing experts and some thorough research.

So can we help you?

I think that summarised things pretty well (my boss thought so too). Not least as the company were surrounded at the time by competitors that had a tendency to put software sales foxes straight into customer chicken coups. We always deliberately separated what media outlets consider a divide between advertising and editorial, or between church and state; we physically kept consultants measured on customer satisfaction and not on sales revenue. Computacenter are still pretty unique in that regard.

They still do that to this day, a long time after my involvement there as the Director of Merchandising and Operations of the Software Business Unit finished.

I don’t think the Andy Bounds has overhyped his own book at all. Its lessons still work impeccably to this day.

 

Focus on End Users: a flash of the bleeding obvious

Lightbulb

I’ve been re-reading Terry Leahy’s “Management in 10 Words”; Sir Terry was the CEO of Tesco until recently. I think the piece in the book introduction relating to sitting in front of some Government officials was quite funny – if it weren’t a blinding dose of the obvious that most IT organisations miss:

He was asked “What was it that turned Tesco from being a struggling supermarket, number three retail chain in the UK, into the third largest retailer in the World?”. He said: “It’s quite simple. We focussed on delivering for customers. We set ourselves some simple aims, and some basic values to live by. And we then created a process to achieve them, making sure that everyone knew what they were responsible for”.

Silence. Polite coughing. Someone poured out some water. More silence. “Was that it?” an official finally asked. And the answer to that was ‘yes’.

The book is a good read and one we can all learn from. Not least as many vendors in the IT and associated services industry and going in exactly the opposite direction compared to what he did.

I was listening to a discussion contrasting the different business models of Google, Facebook, Microsoft and Apple a few days back. The piece I hadn’t rationalised before is that of this list, only Apple have a sole focus on the end user of their products. Google and Facebook’s current revenue streams are in monetising purchase intents to advertisers, while trying to not dissuade end users from feeding them the attention and activity/interest/location signals to feed their business engines. Microsoft’s business volumes are heavily skewed towards selling software to Enterprise IT departments, and not the end users of their products.

One side effect of this is an insatiable need focus on competition rather than on the user of your products or services. In times of old, it became something of a relentless joke that no marketing plan would be complete without the customary “IBM”, “HP” or “Sun” attack campaign in play. And they all did it to each other. You could ask where the users needs made it into these efforts, but of the many I saw, I don’t remember a single one of those featured doing so at all. Every IT vendor was playing “follow the leader” (and ignoring the cliffs they may drive over while doing so), where all focus should have been on your customers instead.

The first object lesson I had was with the original IBM PC. One of the biggest assets IBM had was the late Philip “Don” Estridge, who went into the job running IBM’s first foray into selling PCs having had personal experience of running an Apple ][ personal computer at home. The rest of the industry was an outgrowth of a hobbyist movement trying to sell to businesses, and business owners craved “sorting their business problems” simply and without unnecessary surprises. Their use of Charlie Chaplin ads in their early years was a masterstroke. As an example, spot the competitive knockoff in this:

There isn’t one! It’s a focus on the needs of any overworked small business owner, where the precious asset is time and business survival. Trading blows trying to sell one computer over another completely missing.

I still see this everywhere. I’m a subscriber to “Seeking Alpha“, which has a collection of both buy-side and sell-side analysts commentating on the shares of companies i’ve chosen to watch. More often than not, it’s a bit like sitting in an umpires chair during a tennis match; lots of noise, lots of to-and-fro, discussions on each move and never far away from comparing companies against each other.

One of the most prescient things i’ve heard a technology CEO say was from Steve Jobs, when he told an audience in 1997 that “We have to get away from the notion that for Apple to win, Microsoft have to lose”. Certainly, from the time the first iPhone shipped onwards, Apple have had a relentless focus on the end user of their products.

Enterprise IT is still driven largely by vendor inspired fads and with little reference to end user results (one silly data point I carry in my head is waiting to hear someone at a Big Data conference mention a compelling business impact of one of their Hadoop deployments that isn’t related to log file or Twitter sentiment analyses. I’ve seen the same software vendor platform folks float into Big Data conferences for around 3 years now, and have not heard one yet).

One of the best courses I ever went on was given to us by Citrix, specifically on selling to CxO/board level in large organisations. A lot of it is being able to relate small snippets of things you discover around the industry (or in other industries) that may help influence their business success. One example that I unashamedly stole from Martin Clarkson was that of a new Tesco store in South Korea that he once showed to me:

I passed this onto to the team in my last company that sold to big retailers. At least four board level teams in large UK retailers got to see that video and to agonise if they could replicate Tesco’s work in their own local operations. And I dare say the salespeople bringing it to their attention gained a good reputation for delivering interesting ideas that may help their client organisations future. That’s a great position to be in.

With that, i’ve come full circle from and back to Tesco. Consultative Selling is a good thing to do, and that folks like IBM are complete masters at it; if you’re ever in an IBM facility, be sure to steal one of their current “Institute for Business Value” booklets (or visit their associated group on LinkedIn). Normally brim full of surveys and ideas to stimulate the thought processes of the most senior users running businesses.

We’d do a better job in the IT industry if we could replicate that focus on our end users from top to bottom – and not to spend time elbowing competitors instead. In the meantime, I suspect those rare places that do focus on end users will continue to reap a disproportionate share of the future business out there.

A modern take on peoples valiant attempts to get attention

Facebook Newsfeed Algorithm Equation

A really well written story in Techcrunch today, which relates the ever increasing difficulty of getting a message you publish in front of people you know. Well worth a read if you have a spare 5 minutes: http://techcrunch.com/2014/04/03/the-filtered-feed-problem/

The main surprise for me is that if you “Like” a particular vendors Facebook page, the best historical chance (from Feb 2012) of seeing one individual post from them was around 1 in 6 – 16%. With an increase in potential traffic to go into your personal news feed, it is (in March 2014) now down to 1 in 15 – 6.51%. So, businesses are facing the same challenges to that of the Advertising industry in general, even on these new platforms.

Despite the sheer amount of signal data available to them, even folks like Facebook (and I guess the same is true of Google, Twitter, LinkedIn, Pinterest, etc) have a big challenge to separate what we value seeing, and what we skip by. Even why we look at these social media sites can be interpreted in many different ways from the get go. One of my ex-work colleagues, at a s Senior Management program at Harvard, had a professor saying that males were on Facebook for the eye candy, and females to one-plus their looks and social life among their social circle (and had a habit of publishing less flattering pictures of other women in the same!).

The challenge of these sites is one of the few true need for “big data” analyses that isn’t just IT industry hype to sell more kit. Their own future depends on getting a rich vein of signals from users they act as a content platform for, while feeding paid content into the stream that advertisers are willing to subvert in their favo(u)r  – which is a centuries old pursuit and nothing remarkable, nor new.

Over the past few weeks, i’ve increased the number of times per week I go out for a walk with my wife. This week, Google Now on my Nexus 5 flashed this up:

Google Now Walking Stats Screenshot

 

So, it knows i’m walking, and how far! I guess this isn’t unusual. I know that the complete stock of photographs people upload also contain location data (deduced from GPS or the SSID of Wireless routers close by), date/time and readily admit the make and model of the device that it was taken on. And if you have a professional DSLR camera, often with the serial number of the camera and lens on board (hence some organisations offering to trace stolen cameras by looking at the EXIF data in uploaded photographs).

Individually identifiable data like that is not inserted by any of the popular mobile phones (to the best of my knowledge), and besides, most social media sites strip the EXIF data out of pictures they display publicly anyway. You’d need a warrant to request a search of that sort of data from the social media company, case by case. That said, Facebook and their ilk do have access to the data, and also a fair guess at your social circle given who gets tagged in your pictures!

Traditional media will instead trot out statistics on OTS (aka “Opportunities to see” an advert) and be able to supply some basic demographics – gleaned from subscriptions and competition entries – to work out the typical demographics of their audience you can pay to address. Getting “likely purchase intent” signals is much, much more difficult.

Love At First Website Demon Ad

When doing advertising for Demon Internet, we used to ask the person calling up for a trial CD some basic questions about where they’d seen the advert that led them to contact us. Knowing the media used, and it’s placement cost, we could in time measure the cost per customer acquired and work to keep that as low as possible. We routinely shared that data every week with our external media buyers, who used the data as part of their advertising space buying negotiation patter, and could relate back which positions and advert sizes in each publication pulled the best response.

The main gotcha is that if you ask, you may not get an accurate answer from the customer, or you can be undone by your own staff misattributing the call. We noticed this when we were planning to do a small trial some TV advertising, so had “TV” put on the response systems menu – as it happens, it appeared as the first option on the list. We were somewhat bemused after a week that TV was our best source of new customers – but before any of our ads had been aired. So, a little nudge to our phone staff to please be more accurate, while we changed every ad, for each different media title we used, to different 0800 numbers – and could hence take the response readings off the switch, cutting out the question and generally making the initial customer experience a bit more friction free.

With that, our cost per acquired customer stayed around the £20 each mark, and cost per long term retained customer kept at around £30 (we found, along the way, some publications had high response rates, but high churn rates to go with them).

Demon Trial Postmark

The best response rates of all were getting the Royal Mail franking machines to cancel stamps on half of all stamped letters in the UK for two two-week periods – which came out at £7 per acquired customer; a great result for Michelle Laufer, who followed up when she noticed letters arriving at home cancelled with “Have a Break, Have a Kit Kat”. Unfortunately, the Royal Mail stopped allowing ads to be done in this way, probably in the knowledge that seeing “Demon Internet” on letters resulted in a few complaints from people and places with a nervous disposition (one Mental Hospital as a case in point).

The main challenge for people carrying a Marketing job title these days is to be relentless on their testing, so they can measure – with whatever signals they can collect – what works, what doesn’t and what (from two alternative different treatments) pulls better. Unfortunately, many such departments are littered with people with no wherewithal beyond “please get this mailer out”. Poorest of Amateur behaviour, and wasting money unnecessarily for their shareholders.

As in most walks in life, those that try slightly harder get a much greater proportion of the resulting spoils for their organisation. And that is why seminal books like “Commonsense Direct and Digital Marketing“, and indeed folks like Google, Facebook et al, are anal about the thoroughness of testing everything they do.

Treating Employees right – or how to freak your Manager out!

Joker Playing Card

I’ve always been impressed with the output of Scott Adams and his Dilbert books. He did a sterling job in two of his books after reviewing the stupidity that happens in offices around the world, but then asked the intelligent questions. Like, if what it says in your Job Plan or your Personal Objectives is so bad, what would one that did things properly look like?

One of the gold nuggets in the appendix of one of his books was what he termed the “Out at 5” or “OA5” plan. At one fairly young company down my career, I employed two recently minted Marketing Graduates. In the absence of any template used by the company at that stage, I stole the theme completely – and the result is below.

When I moved to be a Director of the Software Business Unit at Computacenter, I asked my boss if she was okay with me using the same form of OA5 plan for all my employees there. She read one and sort of freaked out. I understood her concern after she explained her nervousness: that people would take advantage of the words literally, albeit my experience was that people followed the spirit of it instead – and worked hard regardless. So, in that instance, I filed it away and used the Corporate standard process in place instead.

I nevertheless executed using its sentiments – and ensured that if there was a vendor conference in the USA, it was my newly minted Product Managers that went on behalf of the team (they after all needed the context to explain how developments fitted in with future product roadmaps – better they know and impress people with their authoritative knowledge, rather than having to defer to me all the time). They always grew in stature very fast by being thrown in at the deep end (albeit with a safety rope to tug on if ever needed), and were a joy to see blossom into key employees of the future.

Pity I couldn’t put things in writing though. I found some of the same sentiments in the excellent ROWE (Results Orientated Work Environment) Books, though explicitly offering clock off time to go to the cinema mid afternoon, or to work remotely for an extended period of time, would have been a tougher management sell at the time. That said, I always found everyone enjoyed their work more with the below in place. This is a real plan, bar names and dates removed to protect the innocent!

OA5 Plan: (Employee Name)

You will sometimes find yourself surrounded by people who have different goals to you, who will unknowingly do things that undermine your projects, or that generally behave outside the best interests of (Company Name). Your task is to rise above this, and despite all obstacles, deliver:

  • 180,000 subscribers by the end of (date)
  • Complete the National Advertising for (4 month date span), including the test of a radio campaign
  • Complete the Corporate Brochure, Welcome Packs and other tasks that we mutually agree that you should execute
  • Full participation as a member of the Marketing Services Team
  • Help your Manager put together a spend plan for the new financial year starting (date)
  • Tests of everything you do. It’s a much safer world if we get to know what works, what doesn’t, and that we’ve learnt. Within the bounds of experimental exercises, we should strive for continuous improvement

Functions of your Manager

In support of the above goals, your Manager will assist in the following ways:

  1. Eliminating Assholes. If anyone or anything is standing in the way of you meeting your objectives, please seek assistance to get the obstacle cleared. It is his role to absorb uncertainty and to provide an environment where you can deliver your projects unhindered. We want you to enjoy your work and be proud of your achievements.
  2. Your manager will do his best to provide an environment where you are learning (and helping the company learn) every day. Requests for training are welcome. Sharing of ideas and distribution of your learnings to your Manager and your colleagues, ideally in small digestible chunks, is encouraged. And you are expected to make mistakes; that’s the way we all learn.
  3. Seek forgiveness, not permission. In the same way you can escalate issues to your Manager, there will be times when the data, or key staff, aren’t available for us to hit a key decision deadline. Time to market is key; having weighed up the pros and cons, make the decision that you believe is right for the company, our customers, and preferably both.
  4. Building your Personal Network. It’s often a case of who you know; contact with suppliers, customers and other departments in (Company) is actively encouraged. Please keep details of everyone you talk to, and don’t be afraid to seek advice from anyone with pertinent experience that you deem appropriate. The strength of your Personal Network – particularly outside the company – should build to be a significant personal asset.
  5. Timekeeping and Attendance. We wish to provide an environment where you can discharge your commitments between 9:00am and 5:30pm. If there are times when you prefer to work from home, or from another location, please let us know your whereabouts so we can find you if needed. Should you work extended hours (attending press announcements or any work related activity outside hours), you may take this time off in lieu; again, please let us know so we can correctly set expectations of anyone that asks for you.
  6. No Retribution. Your Manager is available to help in any way, at any time, day or night. However, if anything concerns you in any way, you are free to talk to (Manager’s Manager name), any other Director, or the Personnel Department directly.

Manager: Ian Waring
Office: (office direct dial phone number)
Mobile: (work mobile phone number)
Home: (Home phone number)
Email: (Work email address) or (Home email address)

Jean-Louis Gassee, Priorities, Targets and Aims

Bowling Ball and PinsEvery Sunday I get a “Monday Note” email from Jean-Louis Gassee, who earlier in his career had the esteemed position of Chief Technology Officer at Apple. Besides the common sense, some of it is laugh out loud funny. Like the time he was invited to a US Meeting of Senior Nokia employees in New York, asked to present on what he’d do to revitalise their fortunes, nominally based on his experience at Apple (see the unvarnished comment in the “ps:” at the end of this blog post). He listed two priorities; One was to fire the CEO (this was the one with a finance background, ahead of when Stephen Elop was appointed). The second was to co-opt Android. I can only imagine the look on the then CEO’s face when he read that out to all the Nokia employees in the audience.

Nokia have now done both, though not before Elop had thrown the company under the Microsoft Bus and where the first million orders for their low end Android phone is set to appear after Microsoft finally take control of the company.

More Priorities

Another instance is when he was still at Apple, and a fellow (new) executive was asked to present their priorities to the Board. Jean Louis describes it thus (the full article, relating to priorities for the incoming CEO at Microsoft, is here):

Once upon a distant time, the new CFO of a colorful personal computer company walks into his first executive staff meeting and proudly shares his thoughts:

“I’ve taken the past few weeks to study the business, and I’d now like to present my top thirty-five priorities…”

This isn’t a fairy tale, I was in the room. I didn’t speak Californian as fluently as I do now, so rather than encourage the fellow with mellifluous platitudes — ‘Interesting’ or, even better, ‘Fascinating, great vision!’ — I spoke my mind, possibly much too clearly:

“This is terrible, disorganized thinking. Claiming to have thirty-five priorities is, in fact, a damning admission: You have none, you don’t even know where to start. Give us your ONE priority and show us how everything else serves that goal…”

The CFO, a sharp, competent businessman, didn’t lose his cool and, after an awkward silence, stepped through his list. Afterwards, with calm poise, he graciously accepted my apologies for having been so abrupt…

Still, you can’t have a litany of priorities.

Growing a Software Business

That reminds me of the first time I was given a software business to run. At Digital, we had two Distributors selling systems to resellers. Newly transferred into that team after DEC had switched the lights out on its first foray into the world of Personal Computers, I was asked to come up with a few ideas on how to grow the amount of software sold via that channel. At the time, the previous year it had transacted around £770,000 worth of software, and was the smallest Software selling “Sales District” in Digital UK.

I duly went and sat on the sales desk at the two Distributors – Rapid Recall (who were Intel’s first UK Components Distributor) and Hawke Systems (who started in the same area, but primarily with Motorola). I talked to sales people. I listened to their phone conversations. I talked to some of their customers. I talked to their product managers. After a few intense weeks of note taking, I produced a 35 page document on ways to increase the software business via the Distributors.

My then boss, Keith Smith, read it and just said “Go do it”. Shit. Where do I start? By a stroke of luck, I got as far as the end of the first three ideas – in two years – and the business was up to over £6 million/year, and now the largest Software Sales “District” in the company. From that base, I got given my next gig, which was to start the DECdirect Software Business; selling VAX Enterprise Software, armed only with a catalogue, 8 telesellers, 2 tech support, 25,000 potential customers and direct delivery from Software Manufacturing in Galway – which had an even bigger impact. It went 0 to over $100 Million in 18 months, at 89% gross margins.

Growing a Systems Business

A few years later, I got given a flatlining Distribution IT systems business to improve. That started off with a brainstorm on all the potential ways to grow the business, which ended up with 36 specific ideas on the board. What we then did was to list all 36 ideas down the left hand side of a table, and put 4 additional columns across the top:

  1. Ease of Implementation (1-5): on the scale, 5 was easy, 1 was hard
  2. Chances of Success (1-5): 5 for a Sure Thing, through to 1 if unlikely to prevail
  3. Revenue Potential if successful: we made an educated guess on likely business levels if all went well
  4. Total of (1) x (2) x (3)

We then went down the whole table, taking the teams view of scores for each of the 36 business ideas. Once done, filled in column (4), we picked 3 strategies with the highest total scores, and binned the rest. Those were our three priorities. That business went from £12 million per year to £52 million per year within 2 years, while our primary other Distributor competitor went from £10 million per year to… £10 million per year.

Likewise, much later on, applying the same disciplines to the VMware business I ran at Computacenter for 2 years (alongside looking after 1,071 other vendors as well in our team of 4), we got from 7% market share to 21% in two years, and won their prestigious “Global Solution Partner of the Year, 2012” award. The whole underlying strategy had 2 key aims, and 3 subsidiary development goals. Worked a treat:

VMware Global Solution Provider of the Year 2012 Trophy

The top 3-5 priorities are the only ones to focus on

Ever since, every business i’ve run has boiled down to 3-5 priorities, in order of impact – which is very much like organising a set of bowling pins and knowing, at all times, what you’re aiming at.

If you get down to brass tacks – and this is something I learnt from Microsoft when selling their wares – there are four key levers in any business. To improve profits, you sell:

  • More Product(s)
  • to More People
  • More Often
  • At More Margin (which is higher price and/or lowest cost)

Graphing the number of *different* products you sell per year, how many different customers you sell to per year, the average purchase frequency per customer per year and the overall margin percentages per year, all on separate graphs, will normally isolate pretty quickly where a business is succeeding, failing or (at the very least) which way it is trending. Towards future success, or alternatively, towards oblivion. Once you understand the dynamics you’re faced with, you can start addressing how you’re going to push things forward.

And i’m far from alone:

Equally applicable, I noticed on my weekly Quora Digest this morning that someone had asked how to prioritise feature requests submitted to a Product Manager. I thought the answer from Ian McAllister of Amazon was extremely good – see it in the flesh here – not least because if follows the same sort of process i’ve found has worked well down all the years in my sordid past.

 

DEC: company long gone, but Corporate Philosophy very much alive

DEC Corporate Philosophy

I worked for Digital Equipment for 17 years. Having done my A-Level project implementing a subset of the Joss language interpreter in PDP-8 PAL-III assembler at Grammar School, I left on a Friday and started at Digital the very next Monday. I ended up running their UK Software Products Group, the source of around one third of the UK subsidiaries profits.

This was the place where you were trusted “to do the right thing” and “to seek forgiveness, not permission”. We even had a Field Service Engineer in Welwyn told to get a part over from Galway Manufacturing to fix a fault in a customers downed DECsystem-10 as quickly as possible, “whatever it takes” said his manager. He chartered a plane, and when his boss found out, he just quoted the “seek forgiveness” line – which was an edict we had from Jean-Claude Peterschmitt, who ran the whole of Europe for the Company.

My Division also had a written policy that said we should always look after current customers before starting to chase new ones. Not to mention that the Salesfolks were not commissioned, so their honesty shone through and we got far more than our fair share of evangelistic senior customers.

Above all, we were taught to throw responsibility to our teams, and to help them grow. And to value honesty above all else, with no retribution if anything screwed up. If it did, it was probably my fault along the way anyway, so a good learning experience.

These traits last with me to this day. I’ve had many fantastic employees, and have pride in what virtually all of them have achieved – be they from my time at Digital, Metrologie, Demon Internet, BT, Trafficmaster, CCD or Computacenter.