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Good Customer Experience Trumps Good Customer Service. Bad CUX Trumps All. A Tale of Chukka Boots and Photoshop.

Posted by Bob Warfield on January 22, 2014

ChukkaBootsGood Customer Experience trumps Good Customer Service, even if you are Zappo’s.  My wife quit buying shoes from Zappo’s after they sent her the wrong pair of shoes for the third time and she had to return them.  They didn’t do it all on the same transaction, it happened over a fairly long period of time.  And yes, the Zappo’s Customer Service people were wonderful as always.  But it didn’t matter–the underlying Customer Experience was giving her the wrong shoes and she only allowed that to happen so many times before she gave up on them.

I had a similar experience with Zappo’s, but I didn’t even get as far as Customer Service.  I have bought shoes from them once–a nice pair of Clark’s Chukka Boots.   Great!

Some time later, I went looking for some tennis shoes.  I have a penchant for bright red shoes of the most exotic design possible that I wear when I go to hear live music.  I went straight to Zappo’s, found a pair of shoes I wanted, and tried to purchase.  I expected to be able to use my Amazon account, given they’re owned by Amazon and all, and it looked like I could do that, but I actually couldn’t quite make it work.  I don’t have an account on Zappo’s, because in a time of data breaches like Target’s, I open as few accounts as I can.  So I moved on.  It came time for me to buy another pair of shoes and I went  back to Zappo’s again, thinking that companies as savvy as Amazon and Zappo’s would surely have fixed the problem.  I found the shoes I wanted and tried once more to buy them.  No joy.  I could find no way to buy on my Amazon account and did not want to spend the time opening a Zappo’s account.

Not only did Zappo’s lose the sale of 2 pairs of shoes, but I just won’t go back there again.  It isn’t clear to me Amazon cares much, because in the end, I did buy those 2 pair from Amazon.  But if there was a good alternative I was familiar with, I would’ve skipped Amazon too, just for annoying me.

Now, how hard would it be for Zappo’s not to send my wife the wrong pair of shoes 3 times?  She doesn’t buy shoes all that often, so it was surprising it happened to her so many times.  And how hard would it be for Amazon to make it easy for me to buy shoes from Zappo’s with my existing Amazon account?  Come on, this can’t be rocket science for a company like Amazon.  If Google can figure out to put a birthday logo on their search page on my birthday because it picked up my birthdate somewhere in their far flung empire, Amazon can let me buy Zappo’s shoes with an Amazon account, right?

Fast forward to this morning.  I was doing something and fired up Adobe Photoshop CS3 (yes, I have had it for a long time!).  It immediately announced I had 2 days left to activate or it would die.  Great, I did remember it asking a few days ago.  I had tried and it kept telling me it had an Internet connection problem.  I knew it wasn’t at my end, nothing else was complaining, so I figured I try again–they surely had fixed their problem by now.

No joy.

I was forced to use their phone activation.  With some trepidation I dialed the toll-free number and waited.  I really hate phone support.  It just isn’t ever a happy thing.  Ever.

Eventually, it had me key in a 24 digit serial number followed by a 32 digit activation code using my phone’s keypad.  Wow, that was a joy–not!  But, Photoshop at least did pop up a box that had the phone number to call plus these two lengthy codes to make it easier.  Unfortunately, the phone robot announced my activation code did not have enough digits.

WTF?!??  This was exactly the same code that Photoshop was telling me was the one to use.  How could it be wrong?

I tried twice, to no avail, at which point it told me to hold for a support representative.  Good, I was ready to let some human being know what I thought about all this after having used the software for several years.  Unfortunately, after a 5 minute wait, the Adobe side announced that they were no longer handling activation problems by telephone and gave me a URL I would have to visit with my browser to fix it.  Of course my blood pressure went up to the next DefCon level.

I went to the page suggested and couldn’t find even a hint of clue about what to do.  It was kind of a haphazard FAQ that only listed a few things, none of which could possibly be at issue.  When I got to the bottom, there was a Chat button with a message that cheerfully informed me I could get on right away with an agent if I would simply click.  So I did.

Of course as soon as the chat window opened, it informed me there were other customers ahead of me in line.  WTF?

Okay, deep cleansing breaths.  After no less than 10 messages informing me I was still waiting (no duh, I know I am waiting), Kumar finally popped up.

Kumar is mostly robot.  He is no doubt based on the old ELIZA simulated psychiatrist program which would always turn your question back around without really ever answering much.  It’s a primitive AI technique that’s been around forever.  Try it if you like, it’s kind of creepy in the same way that Kumar was.  I had to provide a description of my problem up front, and Kumar would ask me questions that were phrased along the lines of what I’d already told it, but that didn’t really add much color to the situation:

“Hi Bob.  You’re here because you can’t activate your Photoshop?”

“Yeah Kumar, that’s what I said in the original description.”

This is where Kumar gets clever.  Every time I respond, I get back a message saying, “Okay Bob, I’ll be back in 2-3 minutes after I check into that and take the necessary actions.”  Literally every single response I made, it would do that.  This is because Kumar, or whatever the real human being is named, is sitting in a giant call center somewhere dealing with probably 100 customers simultaneously.  He doesn’t want to get back to any one of us too quickly lest we monopolize too much of his time and annoy the other customers.  So, he uses all this clever software mostly to stall us customers so he can handle more of us.  Sweet!

He asks me to type in my 24-digit serial number (DOH!), but fortunately, I can just copy and paste it (Hah, outsmarted you bozos!).  Then he goes away for extra long–longer than the 2-3 minutes promised.  When he gets back, he wants to know my email for my Adobe customer account.  Oh boy.  Each piece of information will be asked for at 5 to 10 minute intervals–this is going to be painful and I have an appointment in 10 minutes.  I call the appointment to say I am coming, but I will be late.  It’s taken me 45 minutes with Kumar to get this far.

And then, a bit of magic happens.  Kumar comes back and says it’s all fixed, please try again.  I do, and low and behold, the Internet activation works.  A modicum of happiness ensues and I recall the nuclear bombers my DefCon blood pressure rise had summoned.  Then I started thinking about what had happened. Basically, the only reason online activation, had failed, the only reason I had worried whether I would fail to activate and thereby lose a valuable tool, the only reason I had to spend 45 minutes trying to tell Kumar the two pieces of information needed to fix the problem, the only reason I was getting really ticked off at Adobe, was because they wanted to associate my serial number (Kumar didn’t even ask me for the activation code) with my email.

Remember when I said I didn’t create an account with Zappo’s?  Well I also didn’t bother registering Photoshop.  It used to pop up a box about every 2 weeks asking me to fill out an elaborate form, and I would just tell it to go away.  Eventually it offered me the chance to tell it to never ask again, and I did so, thinking what a relief.  Nowhere did they tell me that eventually some power that be would decide they were going to force me to reactivate software that had already been activated and then put me through a painful experience of apparently having that activation fail, just because they wanted me to register.  A registration they no doubt needed so they can send me better marketing spam.

Can we see by now how to apply the maxim that Good Customer Experience trumps Good Customer Service?  Adobe didn’t really give good customer service, BTW, it was terrible.  I don’t blame Kumar for it.  I blame a Draconian wall and a moat filled with alligators designed to keep costs down on a cost center (Customer Service) that was built by a left and a right hand not knowing each other in a large bureaucratic organization and a marketing organization that only cares about filling its lead hungry maw.  It’s about par for the course with large organizations but it also happens to small organizations that pride themselves on treating customers well.  Tragically, it is so unnecessary and counter-productive too.

Let’s take Adobe’s case.  One could argue they never should’ve resorted to all this to connect my email to a serial number.  Let the man not register.  Or, they could’ve just told me I had to register to activate.  Hell, they could’ve just asked for my email as part of the re-activation and I’d have been happy.  Or they could’ve asked me to login to my Adobe account, also acceptable.  There are endless up front Customer Experience things they could have done to eliminate the need for me to deal with Customer Service at all.  Ironically, it would’ve been cheaper to do that.  45 minutes of Kumar and all those automated voice response systems had to cost something.

I run a one-man SaaS company (actually there are a couple part timers, but I’m making a point).  I do all the Customer Service myself.  Whenever and wherever I can, I try to change the User Experience to eliminate classes of Customer Service I see over and over again.  I have to just to survive.  Best of all, it makes the Customers happier and less frustrated.  The next time you’re gearing up a new release of your software, e-commerce front end, or whatever, ask what you can do to reduce the need for Customer Service.  Find out what the common sources of it are.  Get rid of a few of them every time you ship another release.  It’ll be a Good Thing for all concerned, I promise.

Posted in amazon, customer service, Marketing, service, strategy, user interface | Leave a Comment »

Everything You Need to Know About Email Marketing in One Tiny Little Post

Posted by Bob Warfield on December 13, 2013

seths.headTake the time to go read Seth Godin’s post about the 8 things you really need to know about email.  It’s short, totally to the point, and exactly the way my bootstrap business CNCCookbook tries to pursue email.  It has worked great for us and I get tons of love letters back as a result.

If you have all of Seth’s bases covered, you will too.  As I mentioned recently, we use Mailchimp (sounds like he does too) to automate as much of the email process as possible.  Interestingly, I have not heard a word from them about my post on their becoming less user friendly over time.  That’s got to be a first.  OTOH, as Seth points out, they’re just a tool and not really the important part of the equation.

 

Posted in bootstrapping, business, Marketing | Leave a Comment »

Does Your SaaS Company Have to Have a Sales Force?

Posted by Bob Warfield on October 7, 2013

used_cars_SalesmanAny time absolutes are being bandied about, I have to do the fact check.  Sorry, it’s just an automatic reflex.  We live in a world that is largely gray and seldom black and white.  This was never more true than in the world of startups.  Entrepreneurs need to see both sides of every coin before they cast their lot in any particular direction.  BTW, I get Jason’s posts directly via email thanks to Google+ (bloggers, take notice), so I seem to disagree with him fairly often.  It’s really more that his posts get to the top of my queue more often than others–I love a great deal of what he writes.

Fellow Enterprise Irregular Jason Lempkin just penned a post, “Curse of the Middlers:  Why Happiness Officers Can’t Stand in for True Sales Professionals.”  It’s a decent article if you start out a priori thinking you must have a Sales Force, but it never really delves into the question of whether you need a Sales Force.  That’s a pretty darned important question that goes to what your basic business model is going to be.  There’s a little bit of hand waving about the possibility of companies like Atlassian or 37Signals which have not needed sales forces.  Jason basically says:

Well maybe you can.  More power to you.  As long as there is enough momentum in your business to hit your revenue goals without a true sales team, then by definition you don’t need one.

I don’t think this is right.  It isn’t a question of whether there is enough momentum and it certainly isn’t the case that adding sales can always increase momentum.  Sales is not something you can necessarily add to any business and expect it to make a difference.  It is integral to what the business model is in the first place.

Let’s drop back a few paces and you’ll see what I mean.  I was with a startup one time who had the luxury of having Geoffrey Moore (Mr Chasm Crosser) come in to advise us about the business.  If ever there was a guy who understands the arcane alchemy of how to combine products, markets, marketing, and business models in successful combinations, it’s Geoffrey.  His view of the whole Sales thing is that it is a question of ASP’s.  Below a certain ASP, a Sales Force won’t work.  The numbers we talked about were along these lines:

0 – $15,000:  Forget the Sales Force.  Focus on reducing the friction to purchase.  This is where the Atlassians and the 37Signals thrive.  These are pure Marketing plays, and there are zillions of successful businesses that work this way.  One could argue most successful businesses do.

$15,000 – $100,000:  No Man’s Land.  It’s too much money to expect the buy to put on their credit card, yet it is too little to field a Sales Force profitably.  You can argue Telesales works here, and it can towards the upper end.  This is also traditionally good territory for Dealer networks, which is yet another business model.

Over $100,000:  Prime Sales Force Territory.  When I worked for Oracle, Sales used to tell us product people that if they couldn’t charge at least $100K, they wouldn’t even look at the product, even as an add-on to something else.

Looked at in those terms, it becomes fairly straightforward to understand whether you need a Salesforce or not.  Let’s consider some potentially extenuating circumstances, and also consider as an entrepreneur whether you want to try to steer towards one of these or some other (realizing you probaby wouldn’t ever want to steer towards, “No Man’s Land”).

I Just Started My SaaS Company and No Way Am I Getting $100K.  None of Them Do.

Yep, it’s true.  Welcome to the world of needing reference accounts.  You don’t start with $100K sales day 1.  Not even year 1.  If you have an offering capable of commanding such sales,  You won’t be ready to take them down until you’ve gotten enough credibility through reference accounts to satisfy they buyers you’re worth betting on.  The last Big Sale + Sales Driven company I worked for was Callidus.  I was with the company from $12 million in revenue through IPO.  You could see tangible results each time a bigger customer was signed up.  Nobody ever liked being your biggest customer unless there were no alternatives or it was such a screaming deal they couldn’t lose.  But, as soon as you could point to someone bigger, suddenly you had almost infinitely more credibility.  Steadily climbing that ladder of bigger and bigger sales is important to a Sales Driven company.  Until you get there, you won’t be very capital efficient, which is a big problem when Bootstrapping Enterprise SaaS that has a Sales Force.

What if I Tilt Slightly Up-Market?

Jason has another good post, “Why Tilting Just a Smidge from Self-Service Can Grow Your Revenue 30x.”  I like the post a lot and think about its ramifications for my own company, but I’m skeptical of a lot of the numbers in there.  For example, Jason says single seat SaaS churns at a rate of 2.5% to 4%.  Annualized, that comes out to 24-36%.  He goes on to say that 5 seat deals churn at 1-1.5% a month and that over time the churn will be negative because some customers will add seats faster than other customers churn.  My problems with this are four-fold.

First, Jason shows the single seat numbers with churn factored in and concludes you keep the customers for 8 mos and that therefore they are only worth $240.  He gets there by arguing the customers are only around for 8 mos on average.  But there’s a better way to do the math since one of the great charms of small ASP businesses is they have a lot more customers.  They don’t have just one or a handful like a Big Ticket company.  If we model it that way, I get an ASP for the year of $290 to $324 per seat.

Second, Jason shows no churn on the 5-seat deal after having said there’ll be 1.5% per month.  Let’s be fair and factor in the 1.5%–that means a seat is worth $331.74.  That’s starting to be a lot closer to the $324 a seat a good single seat sale company can achieve.

Third, Jason conflates the number of seats sold with the likelihood the deal will close.  He’s up front about saying that he thinks Sales will make a deal more likely to close no matter what in the Happiness Officer post.  As he says, “More deals will both open, and close, when you have a trained sales professional working with your prospects.”  But this is a problem of how you measure it.  If you count the deals closed as the percentage of Sales Leads closed, he is right.  A good sales force will do very well on that metric.  But, Sales Leads is the wrong metric for this comparison because they have already self-selected buying interest.  they were qualified six ways to Sunday else the VP of Sales excoriated the VP of Marketing for sending him crappy leads.  We should drop back and count all visits to the company’s web page and then take the percentage of those closed to get a real Apples-to-Apples comparison.  Looked at another way, there’s always far fewer but bigger transactions with a Sales Force.  For purposes of this example, it simply means it isn’t quite right to throw down 5 seats against 1 seat and call that Apples-to-Apples.  If we had to throw down # of seats, it should be adjusted by the relative close rates.  But we don’t know what they are, so I’ve got to stick to comparing single seat numbers.

Fourth, Jason says churn will be negative over time for Sales Driven SaaS.  You should be so lucky.  If that were common, why do so many SaaS IPO candidates get looked at so carefully for churn?  Why do we see so many articles about SaaS unprofitability that call out churn?  Why do so many get called on the carpet over it?  At the same time, he takes it as an article of faith that the churn rates for single seat sales must be much higher.  Why?  Where’s the data?  Let’s talk about great brands selling to individuals that have very little churn.  I’ll just start right at the top and mention Apple.  Don’t like Apple?  Well how about Google?  Dropbox?  37Signals?  Atlassian?  SmugMug?

We shouldn’t confuse nice to have impulse purchases, which can happen to Sales Driven SaaS too, with powerful brands, products with lock-in, products with network effects, and products that are just too good to be without.

Here’s what I will readily agree to:

Tilting slightly up-market may increase your multiple-seat sales revenue by 30X.

Here, I’ll use language similar to Jason’s about this case:

Well maybe you can.  More power to you.  As long as there are enough multiple-seat opportunities for your business, you might benefit from a true sales team.

It’s really a function of whether whatever team features your software offers make it interesting enough to the team that they’ll bite.  If they do, it’s great news.  Just make sure they’re closing big enough deals (back to that Geoffrey Moore business) and that they’re not deals you could’ve closed anyway without them.  For my own business, I already offer volume purchase discounts on 3, 5, and 10 seats and they sell well.  I will be adding some Team features to see how much that accelerates, but until I get some really BIG deals, I just don’t need a Sales Guy to close a few multi-seat deals.

Note that at some point, you will automatically be able to add a Sales Force.  You’ll be dealing with enough large companies that they will insist on the kind of care and feeding a Sales Force can give them, and it’ll be worth it to oblige.  Just don’t think that has to happen too early.  It certainly didn’t happen very early for Amazon Web Services or for Google.

But Won’t Sales Always Increase the Dollars I Can Sell For?

This is another one I have to differ with.  Jason spells it out pretty clearly when he says, “Sales professionals know how to maximize the revenue per lead.”  Hang on, do you really think an individual sales guy knows how to maximize revenue per lead better than say the people at Walmart who maximize revenue per shopper?  What about the people at Amazon who do the same thing?  Substitute the people that design promotions for any E-Commerce site.  Why would we assume every Sales Rep can automatically do a better job?

OTOH, having come out of the Sales Compensation business with Callidus, I will tell you that one of the most effective ways to improve the bottom line is to change the sales comp plans to give them less flexibility in what they negotiate.  Gaining alignment between an individual sales person and overall revenue and profitability is extremely difficult.

The way to look at this is to consider who in the organization will be responsible for maximizing revenue per lead (or profit if that is more important as it sometimes is).  If nobody is responsible for maximizing sales per lead, then Jason has a point.  The Sales Guy has an advantage: he can look the customer in the eye, and if he is good, he will see how much money is in their pocket and take most of it out.  The Marketing Guy has an advantage:  he has lots more transactions than a Sales Driven company, he can measure the results of experiments much more accurately with analytics, and over time he can hone a promotion strategy that maximizes revenue per shopper.  The only way to tell who actually does better would be to compile metrics of the profitability and revenues of sales-driven vs revenue-driven companies.

Once you start thinking of the Sales Guy as the one who offers promotions by negotiating price, you’ll be a lot wiser to the issues where their agenda (make quota, go to club, buy a new car, yada, yada) may not be that well aligned with the overall company’s agenda.  For example, I find there is a certain frequency with which I can offer my marketing-driven promotions.  If I have them too often, all I am doing is lowering my average selling price.  If I have them too infrequently, I am lower my close rates as some people will only buy if they get a deal.  Can you really coordinate your salespeople to such a cycle?  Some you can, some you can’t, but you will have to work at it hard in either case.

One aside is that there is a natural tension between Marketing and Sales.  It is very hard to get an extremely high quality Marketer to join a Sales-Driven company (hard to get very high quality product people too, hence Enterprise software is often not the paragon of software virtue).  They don’t want to be under the thumb of that Sales Guy.  They don’t want to be constantly blamed when numbers are missed.  But eventually, if the CEO is good enough, he will create a situation where the company can attract and retain both and he’ll see to it that they work and play well together.  Interestingly, I have seen this work best when you have a CEO that was a Sales Guy who isn’t on his first CEO gig.

One last point here–the role of Sales is to make the market they’re in less efficient in hopes of increasing profitability.  That’s the real reason why you can’t get much real information without filling out a lead form.  This approach works, unless someone is disrupting you by making the market radically more efficient.  That brings me to my next point:

Important Counter-Example:  Lack of Sales Force as Disruption

The history of the modern computing landscape is one of increasing efficiency disrupting sales forces that wanted the markets to be inefficient.  That’s how mass markets emerge in new fields–they kick down the doors, offer unprecedented lower price points, and tell people things they never knew before.  Think IBM or DEC scratch-golfing Sales Guys having to go against the neighborhood computer store.  That was a painful disruption that neither survived when it came to the PC market (or indeed, their whole market for DEC).  They had to retreat up market.  Think the neighborhood computer store, which essentially was just smaller time sales people, competing with online sellers like Dell.  One more turn of the wheel and those guys were in trouble.

Once a market encounters meaningful disruption of this kind, it is extremely hard to put the genie back in the bottle.  After all, how do you argue that more information and lower prices are bad to customers?  The only defense is to retreat up-market.  The disruption involved in trying to change a Sales-Driven company into a Marketing-Driven company is at least as bad if not worse than going from On-Premises to SaaS.  I’m not sure I know of any successful examples where someone pulled it off.

Entrepreneurs, take note: if you can figure out how to take a crusty sales-driven market and turn it into something coin operated (insert credit card here, pay low fee, get product now), you can go disrupt a market.

So I Shouldn’t Ever Need a Sales Force?

Not so fast!

There is the matter of what your ASP’s will be–at a certain point ($100K for sure, maybe less), you will have to use a Sales Force.  To a certain extent this will be governed by the nature of your product.  Can it add enough value to relatively few people?  Will Enterprises require an all-or-nothing decision?  Such factors will dictate.

But suppose you have a blank sheet of paper.  You want to start a brand new SaaS company.  What should you aim for?

The choice here, for me at least, is easy–I’ll take the low ASP marketing-driven ideas every time.  We live in a time when you have to bootstrap on your own dime as far as possible before you can get any outside capital.  Cash flow is king.  Insights into where to double down and where to fold are king.  The web is there as a relatively frictionless resource to get the word out about your offering.  I don’t want to wait for sales cycles.  I don’t want to wait to close large enough sales to have built credibility.  I want the insights that come from analytics on large numbers of transactions today.  I want my customers lifecycle from prospect to happy subscriber to be one integrated UX on the web.

That will maximize my chances of growing a company to cash flow positive.  That will maximize my early growth potential.  Down the road, I will be able to look at whether I want to raise capital and whether I want to try to fire up a sales force to sell Team Editions.  Meanwhile, I’ve got a web company to focus on.

Posted in business, Marketing, strategy | 7 Comments »

Will Context Eat the Software Industry?

Posted by Bob Warfield on September 23, 2013

ManBehindCurtainI read with interest fellow Enterprise Irregular Michael Krigsman’s recent post, “Context Will Eat the Software Industry.”  Kudos for the excellent link baiting paraphrase of Marc Andreesen’s “Software is Eating the World.”  Andreesen is right, but I’m not so sure about Michael’s hypothesis.

He is centered in some thinking about Content Marketing and why some Content Marketing, specifically Enterprise Content Marketing, is not so hot:

The best content speaks directly to the reader, listener, or viewer. However, creating great content requires a nuanced understanding of the audience, which precisely explains why most enterprise content sucks. Content without empathy misses the target and quickly falls into the trap of jargon and sameness.

To see the effect of bland content marketing, try a test. Examine marketing materials for directly competing products from the major enterprise software vendors and try to discern significant differences in messaging and positioning. You’ll likely discover that the major vendors tend to look similar; remove the product name and see how the competitors all sound similar. I tried a variant of this test and the results demonstrated how bland enterprise marketing become as it regresses to the least common denominator.

From this he sees Content that is increasingly targeted to specific readers (e.g. targeted to Context) as the answer.  Let’s talk about that.

First, in the spirit of Full Disclosure, I want to point out that I make my living as a Content Marketer.  I don’t do it as a service for others, but it is nearly exclusively how my bootstrap company, CNCCookbook, sells its wares.  As a result, I have spent a lot of time thinking about it and trying to get better at it.  I’ve been extremely happy with the results so far.

Now, what about Context?

Context is critical to the extent that there must be content available that speaks to the reader well enough to move them to some action.  If you can do so, you’re Content Marketing.  That action may range from buying a product to promoting a brand (i.e. telling others about it) to (especially in an Enterprise setting) being predisposed to favor or at least not block a brand.  I list those in roughly the order of importance.  While it’s great to have lots of people who’ve heard of you and think positively of you, if they never bother to tell anyone else and nobody buys your products, you’re not going to make it very far.

At this stage, I should point out that Enterprise selling is special.  I have been there, done that, and gotten the T-shirt, frequent flyer miles, and hotel breakfasts that comes of selling multi-million dollar Enterprise Software.  For that world, the costs are such that you don’t just get somebody to whip out a credit card after reading a pithy article on your blog.  Instead, you may get them to exhibit enough enthusiasm that you can regard them as a sales lead.  This will start the corporate CRM gears in motion and somebody from sales will contact them.  One could argue and probably win the argument that the whole point of Sales is to provide a finely honed and real-time sense of Context.  It is the Sales Team that puts feet on the ground inside the customer’s organization.  They get to know the players, the politics, and all the details of the buying decision being made.  That is the essential key context for such a transaction.

Does that mean Context is unimportant for Enterprise Content Marketing?  No, of course not, but it is an important nuance to be aware of and I will come back to it shortly.

The next thing I want to discuss is how Context can be implemented, because that seems to be the gist of how Context might eat the Software Industry.

Here Michael has some choice Bill Gates quotes:

Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting.

and:

A major reason paying for content doesn’t work very well yet is that it’s not practical to charge small amounts. The cost and hassle of electronic transactions makes it impractical to charge less than a fairly high subscription rate.

As Michael points out, micropayments are available from Paypal and many others these days, so that isn’t the problem.  The problem is that, as with making Ballmer CEO for so long, Bill Gates was wrong.  Content isn’t where the real money was made.  In fact, the real money was made by software supplying Context.  You will know what that means more familiarly if you think about names like Google and Facebook.  If you think about Content being where the real money would be made, you’d be thinking of Yahoo, and we all know how that turned out.

Context via Self Selection

This brings up an important first principle of Context, which I will call the Principle of Self Selection:

Context is implicitly applied when people search for content or go to a place where their preferred content is particularly rich.

One corollary of the Principle of Self Selection is that when a Content Marketing team is micro-managed too much to, “Stay on message,” they wind up not creating content that can self-select a broad enough range of Contexts.  I suppose we should not be surprised as the essence of Enterprise Software and the biggest weakness of both the Software and the Companies is that it is overly focused on Centralized Command and Control.  This is perhaps the foremost reason why Social continuously hits brick walls in the Enterprise–something so egalitarian is toxic to hardcore Command and Control.  It encourages too much fraternization with the enlisted and noncoms.  Command and Control is also tragically short on the empathy that Michael points to as being so important.  The higher ups rarely think of themselves as being in the Customer’s Shoes.  The ones that do have typically been the ones I have enjoyed working with the most, but they’re not always the most successful.  I’m not sure anyone ever accused Larry Ellison of having too much empathy.

It has been my observation that most organizations with awesome Sales teams have lousy Marketing.  One wins out over the other, and scratch golfing sales guys are bread to be genetically superior to marketers in the face to face arena.  The marketers simply lose at politics, and it is even worse for the quant jocks that are essential to great Content Marketing.  This is a problem, because when you’re Content Marketing, you cannot simply parrot the party line–you must create real value.  This means your Content Team needs to have some motivated stars who are empowered to do something great.

There is also a subtle mindset difference with Content Marketing.  Let’s call it the Principle of Jiu jitsu:

When Content Marketing, you must give away something of great value to build trust.  In doing so, you cannot overtly sell anything.

It is called the Principle of Jiu jitsu because like the ancient martial art, it gives where the opponent is strong and pushes hard where the opponent is weak.  The opponent is strong at resisting sales pitches.  We are trained to consider whether the spam will be worth it if we give over our email to get a white paper, for example.  In Content Marketing, we give them such fabulous content without the Sales Pitch or demand for email that they give us their email gladly to make sure they don’t miss any future free content.  This is tough for a lot of Sales people to grasp.  They’re used to the idea of using their Jedi mind tricks to machine the prospect into submission, “Sign here, these ARE the droids you’re looking for.”  In fairness, most of them are smart about giving their personal charisma for free to get to deliver the sales pitch, and that is sort of close to what’s being done by Content Marketing, but yet different.  BTW, it’s even tough for most Marketing people to grasp.  They will tell you to do things like remove all the navigation from your landing pages so that once the prospect winds up there, they have no choice but to fill out the lead form.  Sadly, this increases short term lead gen at the cost of long term trust.  Think carefully about your business and your sales cycle.  Is it really as short as you thought, or did it go through multiple iterations, coming on and off the forecast over the course of even a couple of years as the prospect came up to speed?

To capitalize on self-selection we serve up a smorgasbord of content, make sure it is SEO-optimized for search engines, use analytics to identify what’s working, and then double down further with more similar content.  Quite apart from killing software, that approach is only enabled by a bunch of analytics software, not to mention the software at Google that delivers them to your doorstep.  Seeing your content through the SEO lens as well as the reader’s lens is a subtle art that has to be learned over time.

Context via Machination

Of course self-selection is not the only way to establish Context.  There is what I will call, “Context by Machination”, where software establishes Context in real time based on what it is sensing.  Two examples would be Responsive Web Design and Marketing Automation.

Responsive Web Design is simply designing a web site so that it changes based on the device being used to access it.  This is done so mobile viewers have a better experience.  It’s blunt Context, but Context nonetheless.

Marketing Automation is a bit more subtle.  It means a lot of things, but in this case, let’s stick to Marketing Automation as observing what actions a prospect takes and serving up content based on those actions.  Ultimately, the content served up can even be the first call from telesales wanting to see if the budding relationship should be expanded to a full blown sales cycle.  A lot can be gained from this notion of Context.

To give an idea, let me tell a personal anecdote from my college days.  I’m a car nut and would haunt the local exotic car dealerships.  There’s no way I could’ve afforded such a machine as a college student, but I was not deterred.  Inevitably, a salesman would approach and try to determine if I was a serious prospect or or a tire kicking joyrider (that’s me!).  I would be taciturn, and would steadfastly refuse to ask any performance-related question.  Never ever ask how fast the car would go, for example.  Instead I wanted to know such things as, “How reliable are these cars?  What does it cost to repair one?  What’s the insurance premium likely to be?  Can they be driven in the rain?”  The salesman always took these sorts of sober questions as coming from someone who was trying to imagine what it would be like to live with one of these fiery beasts on a daily basis–a real buyer in other words who was over the romance of it.

So it is with what the Marketing Automation people call, “Lead scoring.”  So you read a white paper.  That’s good.  But did you look at the system requirements, for example?  Did you try the pricing calculator out with an interesting number of seats?  Did you look at the salesy content, or just the free value content?

Based on the lead scoring, the system can decide which emails to send to you.

This can be especially potent if you have a completely closed loop software company.  What I mean by that, is a software company where every single contact happens via the Internet:

-  They read your content on the Internet to get interested.

-  The software runs in the Cloud.

-  Customer Service is handled over the Internet.

In a world like that, the lines between Marketing, Product, and Service should rightfully become blurred.  You are always Marketing because SaaS renewals are so darned lucrative.  If they’re in the Product, why have them bail all the way out and go to a separate web site to get Customer Service?  Wouldn’t it be better if the Service people can directly see what’s happening in the Product as it unfolds with a problem?

It creates an extremely powerful combination to combine all three and view them essentially as one User Experience (UX) that has to be optimized for the entire cradle to grave lifecycle.  That’s Context via Machination at its finest.  I haven’t seen any companies that really optimize that end to end experience.  You get the Marketing Automation companies like Marketo and Eloqua at one end, and there are starting to be Product companies at the other like Totango.  It’s an interesting opportunity.  I haven’t even seen many companies that operate in that realm of Contextual Integration, but probably the biggest and best would be Amazon.  Funny how we’re still trying to get to what the CRM world originally called the “360 Degree view of the Customer.”

So, quite apart from Context Eating the Software Industry, that Man behind the Context Curtain’s name is “Software.”  If you don’t have keen Software chops in your Marketing, Product, and Customer Service worlds, you are missing several tricks.

Postscript

Heidi Cohen makes the problems with Enterprise Content Marketing even more obvious with her 3 Surefire Ways to Kill Content Marketing:

1.  Contains Too Much Marketing Hype and Buzzwords

2.  Lacks Truly Independent, Unbiased Information

3.  Is Too General To Be Effective

Yup.  You see all three constantly in Enterprise White Papers, blogs, and other content marketing.

Posted in business, Marketing | Leave a Comment »

It’s In Google’s Best Interest to Kill Marketing Channels They Don’t Own

Posted by Bob Warfield on July 24, 2013

The folks at MailChimp recently did an article that analyzed open rates for emails and how they were affected by Google’s new Gmail tabbed user interface.  There’s not a huge amount of data yet, but there are 3 consecutive weeks of reduced open rates in the wake of the new tabbed interface.  Here’s the graph from the MailChimp article:

Gmail tab open rates

There’s no question that open rates are down in the wake of the tabbed UI for Gmail…

This is not particularly surprising.  Personally, I don’t find the tabbed interface useful at all–it just means I have to look in more places to finish reading through my inbox.  If I do run short of time, it is the promotions tab that suffers.  The MailChimp folks say that it is very hard to write email that doesn’t get stuffed into the promotions tab too.  What a pity Google didn’t put Google Reader on a tab instead of Promotions and Social.  It wouldn’t been a lot more useful, but that’s beating a dead horse.

Marketers are going to be disappointed by this development because email remains one of the most powerful weapons in there arsenal.  Unfortunately, here is a newsflash:

It’s in Google’s best interest to kill or damage any marketing channels they don’t own.

They don’t really help in any way with email marketing, so anything they can do to reduce its efficacy means you’re that much more likely to shift dollars to areas they do own.  They get nothing when your successful SEO leads to lots of results through good organic search results so they’re only to happy to limit the information you can get about how people found your site and thereby make your SEO that much less effective.  In fact, they’ve basically declared all out war on SEO’s.  They are the enemy because they reduce your need to spend ad dollars with Google.

Expect more of this as time goes on.  Big companies can’t resist using their clout to do this kind of Evil.  In the original PC days, the Evil was perpetrated by controlling shelf space.  If you owned all the shelf space, nobody would ever see the Little Guy’s innovative new products.  In today’s world, they want your eyeballs focused entirely on parts of the Internet that contain their ads.  As their growth and profitability slow down, they’re only going to play these kinds of games more often to try to prop things up.

Posted in business, Marketing, strategy | Leave a Comment »

What If You Fired Your 8 Million Most Influential Users?

Posted by Bob Warfield on June 19, 2013

trumpfiresyouWhat if you were running a big web business and you fired your 8 million most influential users?

Would that be a smart thing to do?  Would your shareholders be happy?  Would your board be happy?  What possible reason could you have to do such a thing?  What perceived advantage would offset the cost of annoying your 8 million most influential users?

Lest you think this is some imaginary scenario, firing 8 million influential users is exactly what Google is doing as it shelves Google Reader in less than a month.  Google is firing the likes of Om Malik, for example, and Seth Godin who says RSS is still the most efficient way of reading blogs.  Google says they’re doing it for lack of traffic, but as I’ve written before, that’s a bogus argument.

Let’s start with how I get to 8 million.  That number is from an email I just got from Feed.ly, who are introducing a Cloud version and say that since the Google announcement they’ve gone from 4 million to 12 million users.  Even better is that these are not just looky-loos–Feed.ly says that 68% are accessing the service on a weekly basis so they’re real users.  That’s 8 million right there, but the truth is the numbers are probably much higher for a number of reasons:

-  There are bound to be quite a few that will wait to the bitter end to migrate off Google Reader.

-  There are a lot of other services besides Feed.ly that have gotten their share of defectors.  Feed.ly happens to be my current favorite alternative, but I have no doubt the others are successful growing from the Google debacle too.

-  There are potentially even larger players in the offing, with Digg about to offer up its alternative and there is even a rumor Facebook may make it possible to bring your feeds into Facebook for reading (smart move on their part if so).

With Google Reader shutting down July 1 (just 10 days) and some of these big new players getting here only slightly before the shutdown, it should be no surprise that there’ll be a lot of last minute jockeying before the post-Google Reader market has stabilized.  One thing seems certain–with this many people moving around and this many companies putting forward products, RSS is far from the dead duck Google and some others have claimed it to be.   That’s great news for bloggers, many of whom depend on RSS driven traffic to keep growing their readership through compound interest.

Okay, we’ve established there are millions of people Google is firing, but are they “their most influential users?”  That all depends on how you define “influential”, but I look at it this way:

-  They’re people that consume a lot of content and are savvy users of the web else they wouldn’t bother with the complexity of an RSS Reader.  In other words, these are the web’s power users.

-  They are Bloggers, Journalists, and Influencers.  These people need a power tool like RSS to be able to consume the Firehose of Information they need to be on top of their games.

I don’t know why you wouldn’t call such people the most influential users Google has available to it.  If you have any doubt, go to virtually any post about the Google Reader debacle and read the comments (I should add that the Google Reader audience are hugely more likely to participate via comments and other means).  I just picked a few examples to show:

-  Wired’s Christina Bonnington writes that Google Reader was axed because people no longer consume the news that way.  It’s too old-fashioned.  Instead they want the “push” delivery that services like Google+ can offer.   The comments are virtual explosion decrying that notion and you don’t have to get far before someone says they don’t want to read the news Google thinks they should read, they want to read the news they want to read.  It’s also funny to read in this article an others the guess that Reader had “several million users” when we now now it was much greater than that.  Google simply let people believe the service wasn’t popular because it served their purposes.

-  Andrew Chen says he is dropping RSS and his readers need to sign up to his email list.  His article purports to show the death of RSS in a single graph, which is of the number of people searching for RSS.  It’s telling that the very first comment is from Seth Godin who tells him in no uncertain terms he has a bad idea there (“The patient is dying, and you’re busy telling his loved ones to put their feet on the respirator hose.”).  Godin goes on to explain in detail why Chen is wrong and commented on Chen’s other post about RSS too.  Nearly all the many commenters disagree with his analysis and tell him they’ll miss him and won’t sign onto the emails.  I left him a comment myself on the fallacy of using Google searches for RSS to decide the issue.  As far as I know, he is sticking to his guns though.  If you’re a blogger, you’d be silly cutting off your nose to spite your face like this.  I also think it’s interesting that as I write this, Andrew hasn’t gotten a single comment on any of his subsequent posts.  I don’t know if that means his audience doesn’t find them interesting or if they moved on with his RSS feed antics.

- Moz.com’s Reader-A-Week post in search of alternatives has great commentary on the alternatives and a great comment thread that shows the reactions of ordinary users.  If nothing else, it shows how many alternatives are available and how many readers are interested.

Most of these kinds of articles get more comments and engagement than the average for the blogs hosting them, which is just another indication that these are influential, or at least highly engaged users.

So why would Google fire 8 million of its most influential users?

Many have expressed opinions and many are wrong.

Forget the articles that say it happened because RSS was dying.  RSS is a power user niche offering that is alive and well as the millions of users and dozen odd companies scrambling to take over for Google show.  Google wanted people to believe that usage had dwindled to a few million but in fact it’s much larger than that and likely larger than usage for Google+.

Forget the articles like Bonnington’s Wired piece or How-to-Geek’s piece that claimed the model is old and dying and that there are better alternatives.  The truth is that there aren’t any better alternatives for efficiently consuming large amounts of news, at least not yet.  There are, however, alternatives for people who want to do something other than efficiently consume a firehose of information.  That’s okay, we like choices.  It’s when companies and marketers insist things have to be black and white in order to further their agendas that we should be annoyed.

Here’s the real reason, and it is a simple, typical-big-company sort of thing:

Google Reader is being shuttered because Google thinks that will help a more strategic product (Google+) to be more successful.  They want to force us to chose and rely on inertia and their brand to shift people to Google+.  They’ve convinced themselves that Google+ is so much better strategically, that they don’t care if they lose a lot of people along the way.  They don’t value those people and generating any kind of growth for G+ through reduction in expense elsewhere is a good thing according to the way Big Co’s keep score and run their internal politics.

Writer’s like Victoria McNally call it out like it is, but the majority seem to have bought Google’s story that RSS simply died out too fast.  Keep that in mind the next time some pundit is predicting the demise of a thing.  It may only have entered what Gartner calls the “Trough of Disillusionment”, which is only a trough compared to the ridiculous peak of any hype cycle.

What will this mean going forward?

Watching my own usage patterns, it will mean I spend less time in the Google Empire.  That’ll be a bit of a disappointment for them, because they’re looking to grab more mindshare through this move, but I think they’re going to be rudely surprised.  I used to alternate between shutting down all news and interruption driven sources to get real work done and going through my sources of news and interruption:

- GMail for email

- Google Reader for RSS and specifically for news and information most relevant to my work and interests

- Facebook for casual news and information about friends

- Google News for general news about what’s going on in the world

You can see that Google had me pretty solid except for their arch-nemesis Facebook.  This is where introducing an RSS Reader that integrates in a sensible way with Facebook would be awesome.  I am only too happy to flip between tabs on a single app to access these sources.  If we think about what’s stick or not, Google doesn’t own much that is sticky because they don’t own the sources of the content.  Facebook actually owns the sources of their postings.  So, if they were to add email, RSS, and general news, it would be a pretty compelling news portal.  They could lock up a lot of eyeballs for long periods of time.  The cost to add such capabilities should be fairly low.

Yahoo is another organization that ought to be on top of this stuff, though it isn’t at all clear they can think clearly enough and respond quickly enough to get there.  Newcomers and smaller players like Feed.ly and Digg have an opportunity to land and expand in their ability to give people access to more and more news sources.

If any of these players can actually get together a coherent strategy and deliver, shutting down Google Reader could turn out to be Google’s biggest strategic error to date.  Especially because all those millions of influencers they fired will be telling others who believe in them exactly what the best alternatives to Google are.

Posted in business, Marketing, strategy | 8 Comments »

Converting Content-Audience Fit to Product Traction

Posted by Bob Warfield on December 18, 2012

tractor-pullJason Lempkin has a new post out about gaining traction after your product ships.  He says it’s hard, much harder than building the 1.0 product which was already hard, and he makes some concrete suggestions on how to go about gaining traction:

-  Finish hiring your core team.  Presumably you’ve left the sales and marketing until post-1.0?

-  Get attention for your app:  “Whatever you can possible do.  Go to every conference.  Speak at any possible event you can, no matter how small.  Win every award. Try to get every blog to write about you.  Reach out to anyone and everyone in your space.  Be respectful, but totally, utterly, shameless here.  Do whatever you can possibly think of here.”

-  Hit the pavement and get early customers and partners

-  Lavish attention on every single customer and lead

-  Plan your next release carefully–it may be your last

Wow, put that way, the job seems really tough!

After reading the account, I do have memories of startups that had to solve the traction problem through brute force and shoe leather.  They were painful and very scary.

The thing is, success is about being prepared (with a healthy dose of luck, though chance does favor the prepared mind).  As I tell my kids, “It doesn’t matter how smart you are, if the other guy already did the homework and knows the answer while you’re still trying to figure it out, he looks smarter.”

So it is with achieving product traction.  This is why I wrote my earlier post about achieving what I call “Content-Audience Fit” to tell Founders it has to be their first priority, even ahead of building a product.  Possibly even ahead of knowing what product you will build.  I say this for two reasons.  First, if you don’t know your audience, you can’t build a great product anyway.  While you might think you know your audience, how can you be sure until you have Content-Audience Fit?

If you have Content-Audience Fit, the following things are true:

1.  There is a reasonably large audience that is steadily growing and is consuming your content.  They care about what you have to say in the market you’re interested in.  They are subscribing to your mailing list, following you on Twitter, liking you on Facebook, or whatever other Social Medium works for your market.  Consequently you know what Social means to your market.

2.  You are part of the Conversation taking place on the web for your chosen market.  You are posting in their online communities.  You’re on the blogs of the key influencers (you do know who they all are, don’t you?) commenting.

3.  You are so familiar with the commercial players in the market that you’ve helped the Market Audience understand some of them better.  You’re commenting on their blogs too.  That establishes you as an agnostic authority in the market.

4.  Because of your participation in all the right conversations, and because of the quality of the content you’re producing, Key Influencers will recognize your name.  You are beginning to get folks asking you unsolicited questions as a recognized Expert.

There is a not-so-subtle difference between this Content-Audience fit and “Get attention for your app”.  It’s because you’re getting attention for your content.  You’re establishing yourself as an expert, not a guy shilling your products and company.  Because your content is very high quality and it’s being given away freely, you’re invoking the principle of reciprocity, which is a powerful force when marketing and selling.  You’re laying the groundwork to present your selling proposition from a position of strength, after your prospects have already decided you’re the expert.

Imagine being able to validate your product vision, and eventually early versions of the product with that kind of Audience insight.  It’s invaluable.  It should be a requirement.  Yet so many companies build the product first and consult the Audience afterward.

Second, you need a strategy to make this business of gaining Product Traction easier.  I love the definition that strategy is what you do to make winning easier.  If you ever needed a strategy, it is when you launch your 1.0 product!

So how do we convert Content-Audience Fit to Product Traction?

Back up.  Let’s get the timing right first.  You don’t want to start trying to achieve Content-Audience fit after you’ve built Product 1.0.  That’s way too late.  Here’s a mini-case study:

I took Helpstream, a Social CRM startup, from being invisible to having a successful blog that had achieved Content-Audience fit in about six months.  At the end of the six months, the key influencers knew who we were and were starting to write about us.  For example, Paul Greenberg, the “Godfather of CRM”, wrote a short passage that perfectly signals good Content-Audience fit:

A few weeks ago, I had a discussion with fellow Enterprise Irregular Bob Warfield, who is the EVP of Products for a company called Helpstream. I have to admit, when I saw Bob’s rather cogent commentaries on the Enterprise Irregulars site, I became curious as to what he did and what the Helpstream company dealio was. I asked him and we set up a demo and a conversation between me, Bob, and Anthony Nemelka, the President and CEO of Helpstream and a long time industry veteran.

That second sentence telegraphs where we’re going and why Content-Audience fit is so critical to a product launch.  Because of my “cogent commentaries”, Paul asked us for a demo.  Imagine Content that is so good, the key influencers are coming to you, rather than you going to them hat in hand trying to get a meeting.  I would budget a minimum of 6 months and perhaps as long as 12 months to achieve your Content-Audience fit.  Sounds like you need to get started at the same time you start the Product, right?

This is an insight that is missing from many startups.  In fact, many want to do a stealth launch and keep everything secretive.  Feel free to keep your product aspirations a secret, but you’re nuts if you’re not belting out super high quality content for your audience from Day 1.  That means as you sit around the table with your fellow Founders, and you ask the question, “Who is spearheading our drive for Content-Audience Fit and who is writing all that content?”, there had better be a good answer.  That marketing guy you partnered with who has never actually done a blog, he has just simply hired people who did blogs?  We might be past the evolution in how marketing is done for that to be a good idea.  First question I ask any marketing candidate at any level is, “Show me your blog?”  If the response is, “Huh?”, the interview is not going to go well.  It’s no different than asking any question about marketing deliverables.  Would you hire someone who had never had any contact with advertising of any kind?  Content marketing is so critical to small companies, how can it be an afterthought?

As an aside, I recently came across a bootstrap business called, The Wirecutter.  The Founder achieved Content-Audience fit before they ever started this little company by writing for Gizmodo, Wired, GadgetLab, and MaximumPC.  How about grabbing one of the big name bloggers in your space as a co-Founder?  How about at least as an advisor to help you get to Content-Audience Fit?  Have them brutally critique your content until you get it right.

BTW, people like Paul Greenberg have extremely high standards.  There is a reason they get nicknames like the “Godfather of CRM”.  They are trusted and they didn’t get there by being dummies or shills.  If your content doesn’t have something really meaningful to say, you’ll get nowhere with this strategy.  But if you get the meeting because your PR firm pounded hard enough on doors, and then in the meeting you still have nothing to say, you’re going nowhere anyway.  So:

It is critically important to do the work of achieving Content Audience Fit!

That’s it.  Full Stop.  End of Sermon.  Don’t.Mess.It.Up!!!

Okay, now imagine you’ve got that fit, as defined by the 1,2,3,4 list above.  Let’s use it to produce traction.  This is done in the following ways:

The Audience that’s ready to Jump Now is ready.  Invite them in.

There are always those influencers who get an edge by working harder to learn than the others.  Always those prospects who are ready to buy now and want the new new thing.  If you have achieved Content-Audience Fit, all you need do is announce the availability of a product and any of these people in your audience will be likely to check in.  Start with  your Beta Test.  You can keep it as controlled as you like, but put the announcement out through your content channel and be sure to communicate at least your value proposition well enough so people will want to jump in.  If you don’t have a big enough audience yet that having 5% of them answer your invitation, you don’t have Content-Audience Fit.

Give the Early Adopters an Amazing Deal and Make Them Heroes

You don’t need revenue yet, you need credibility.  You put out the call to action, and the right people have self-selected by coming forward.  They like you or else they wouldn’t have come forward.  They’re active in the online world or else they’d have no idea you existed.  They’re raising their hands to tell you they care.  Make it easy for them to feel like that was the best decision they ever made.  Focus your spotlight of attention entirely on them.  Save your bandwidth so you can give them completely unreasonable amounts of it.  Make them heroes and they will make you a star.

You need to charge them a little bit or it isn’t a real transaction.  Give them the best deal you will ever offer in your corporate history and make sure they know that in the nicest possible way.  Give them attention and services that will never be available to others in even a year’s time.  Plug every member of your team into the success of these early customers.

When that fire has caught, you can ask them for a favor.  You can ask them to help you get the word out.  At the very least, you need them to be a willing and able reference.  Next step up, you need them to be a case study.  Grand Prize:  you need them to be a source of referrals.  Try to discreetly make sure when you sign them up that they’ll be able to do some of this, at least serve as references.  You can’t ask for that favor up front, but you can find out if they’ve ever been involved with early software, done references, yada, yada.

Earn the Right to Raise Your Price and Sell Bigger Deals

The company I mentioned earlier, Helpstream, had nearly every marketing automation company as customers for our Customer Service Social CRM product.  I remember calling each of these CEO’s, who were all entrepreneurs like myself, and asking them what Helpstream could and should do going forward.  Phil Fernandez, CEO of Marketo, shocked me by telling me, “Bob, I don’t know if I should be saying this, but you should raise your prices.”  Even more shocking was that Phil wasn’t the only one to tell me that.  So we did, after carefully making sure to grandfather existing customers with appropriate agreements so that they were taken care of.  There was virtually no pushback whatsoever, and it helped the business tremendously.

What had happened is we had earned the right to raise our prices by delivering on our promises and raising our credibility.

The ability to price higher comes most from credibility.  Sure, you might have the world’s greatest product, but nobody knows that if you don’t have the credibility.  Can you see where having good Content-Audience Fit is the first step on the credibility journey?  Beyond that first step, it is your conduit for telling your customer’s stories and continuing to build that credibility.

The next step is being able to tell your Early Adopter’s stories.  In terms of closing business, there is nothing like being able to have a prospect talk to a customer that gushes about your product.  At Callidus Software we used to invite prospects to our User Conferences precisely to maximize the exposure to that kind of sentiment.

Startups are enaged in earning the right to raise prices and to sell bigger deals throughout their history.  Successfully getting your first 5-10 reference accounts is just the first rung on that ladder.  Each company you sell to would like to know that they’re not the largest deal you’ve ever sold.  Raising the size of your largest deal earns you the right to sell even larger deals.  Accumulating this asset of referencibility is your primary deal closing accelerant until you’re large enough to point to being the market leader or perhaps to being a public company.  Gordon Moore’s Chasm Crossing can largely be seen as the process of establishing the credibility needed before those who are not Early Adopters will buy.

All along your journey, your Content continues to establish your company’s expertise in its chosen field.  You never walk away from that–you just keep building on it.  If your references are your Sales Accelerant, your successful Content is your lead generation accelerant.  Establish your web properties as the go-to spots to learn about what your customers care about.  All the best marketing startups like Hubspot, SEOMoz, Marketo, and Eloqua are working this way.  Maybe that’s a clue for the non-marketing startups that this is how marketing is done these days?

Lead With Content for Competitive Skirmishes and Insights

Competitors are great for startups.  If you’re the only one in a market, you have to undertake to grow that market all by yourself.  With competition, the cost is shared and the market can grow much more quickly.  In addition, picking a fight is a sure way to add passion to your content and help drive more traffic.  You can’t agree with everybody, but you need to agree with the position your key audience want you to stake out.

Take advantage of that with your Content strategy.  See which conversations your competition are dominating and wade into those conversations with your own viewpoint.  That viewpoint has to carry substance, but when it does, if you win the audience’s hearts and minds who are watching the conversation, they will come your way.  You can’t win them all, but this is where you start stacking up the different value propositions.  This is where you carve up the market into micro-niches that are looking at things each a little differently.  Here’s where you find out which micro-niches matter, and which ones are dead ends best left to the competition.

Passive sonar gained by just passively consuming the content from your space is great, but so much more can be learned through active pinging of the landscape.  See how they respond to your messaging, analysis, and insights.

Conclusion

There’s a lot of work required to achieve traction.  But, if you subscribe to my Content-Audience Fit idea, you’ll begin that work Day 1 at your company.  When you’re ready to enter Beta Test, you’ll have a lot more going for you than your sales guy’s contact lists and willingness to burn through shoe leather.  You’ll have an audience that wants to come to you, embrace your product, and help you spread the word.  FWIW, Helpstream wasn’t my first or last experience with Content-Marketing Fit.  My bootstrap company, CNCCookbook, thrives on the notion today.

Posted in bootstrapping, business, Marketing, saas, strategy, venture | 2 Comments »

The Very First Thing a Founding Team Needs to Do: Achieve Content-Audience Fit

Posted by Bob Warfield on December 10, 2012

Audience3DA lot of entrepreneurs,  when faced with the question, “What’s the most important thing to do first?”, would answer, “Build a product.”

Big mistake.

The most important thing to do first is to find an audience.  It may be that building a product is an integral part of growing your audience, but you’re not ready to build a product or grow your audience until you’ve found the right audience to start with.

How will you know you’ve found your audience?

There are some important signs.  For example, you can participate in their communities and be well received.  An even better test is you can get their communities to consume your content.  Before you’re going to have much hope of achieving Product-Market Fit, you’d better achieve Content-Audience Fit.  When you have that fit, when traffic to your web site is growing steadily and you’re starting to get some big spikes in traffic from particularly compelling content, you’re close.  When you can measure growth in the audience’s commitment to your content, for example, when your mailing list for your blog is growing and people are clicking through the weekly digest to get to the actual articles, you have achieved some degree of Content-Audience Fit.

Content-Audience Fit is a surprisingly high hurdle.  It is higher than getting a bunch of random people to sign up to try a free software product, for example.  The reason is that there is less value being offered by the content.  People actually have to be willing to spend some of their attention on your content simply because it is that good.  They do it because you’ve demonstrated you understand what they want and that you have something worthwhile to offer.  There are tons of people that will play with some free piece of software for a short time, and you’re probably not even set up to measure how hard they played with it yet.

With Content, all you need is a blog to deliver the Content from and Google Analytics to measure its impact.  Maybe augment that with a MailChimp account so you can actually start to aggregate some followers to your Tribe and use the Analytics there to tell how committed they are.  Anyone who is willing to undertake the hard work needed to consume your Content and decide they like it well enough to want to keep consuming it is a valuable member of your Tribe.  The more you can grow the Tribe, the more voices there will be to help you get your message out, to tell you what problems they need to have solved, and to guide you in the next phase of your journey:  achieving Product-Market Fit.

To be a successful Bootstrapper, you’re almost certainly going to have to be a Content Marketer anyway.  Advertising is typically going to be too expensive before you get some capital and a following.  So do yourself a favor.  Forget the product for a little while.  Focus on achieving Content-Audience Fit.  When your past striking flint and blowing on the tinder, you’ll have a little fire glowing.  It’s a big accomplishment.  So far it’s just kindling, but soon you’ll be ready to throw a real log or two onto that fire.  That’s when you build your product, as soon as the Content Kindling has caught and you can see some actual flames.  The timing will be perfect, because your costs will go up and your available attention for producing product and content will go down as soon as you ship your product.

You can’t afford to be just starting to look for Content-Audience Fit after the product is ready to ship.  That’s too late.  And it’s a terrible time to discover your market has no passion for what you’re trying to do.  That bit of news was tragically knowable with a lot less effort if you had only started out finding an Audience.

Extra Credit Note to Investors:

If you find a team that knows how to create a product, we both know that’s not enough.  You’ve raised the bar on that some time ago.  But if you find a team that has achieved Content-Audience Fit, they’ve demonstrated a critical marketing skill.  At the very least, you know that this team can present compelling content that draws a significant audience.  Combine that Audience Insight and ability to compell the Audience with a decent Product and that’s the essence of a startup that will grow.  I am surprised every time I walk into a startup and ask who in Marketing is a hard core blogger and hear back that basically nobody is and they’ve outsourced that task to technical writers of one kind or another.  Those startups are proceeding on a wing and a prayer that they actually understand their Audience.

Posted in bootstrapping, business, Marketing, strategy, venture | 8 Comments »

Steve Ballmer and Marissa Mayer Face the Same Problems at Microsoft and Yahoo

Posted by Bob Warfield on July 17, 2012

marissa-mayerI know this will come as a shock to many Microsofties who will hate seeing their company compared to Yahoo, but I firmly believe that Steve Ballmer and Marissa Mayer face exactly the same problems at their respective companies.  The only differences are matters of scale and position on the lifecycle to extinction.  Both are CEO’s of once great and now fading empires.  Both organizations have gone a long time without showing much sign of recovery.  In Microsoft’s case, the stock has been flat since Bill Gates handed over the reigns.  The world has started referring to Steve Ballmer’s tenure as Microsoft’s Lost Decade.

I came to this conclusion just as I was about to write about the new Office Microsoft is showing around and what I think the most important work for Ballmer to accomplish in the next 12 months would be.  As the thoughts for the article were percolating, a fresh round of articles about Marissa Mayer taking the Yahoo CEO post began circulating and I thought, “Well, I’d better write about what she needs to do too.”  That’s when I realized they’re both facing the same problems and need essentially to do the same things to fix their respective companies.  Because we’re talking about two large entities that are each worthy of a post of their own, and trying to bring the threads together, this will be something of a magnum opus post.  Appologies in advance for being verbose.

Let’s set the stage with a little review of what’s being written.  I’ll start with Mayer and then go on to Ballmer.  In both cases, the usual suspects did the usual Echo Chamber number on the news.  We got an initial round of, “Golly, we’re surprised at how cool this news is after we’d written off <insert either Microsoft or Yahoo here>”  This was followed almost immediately by the round of grumblers and link baiters who write about how Mayer is the wrong thing for Yahoo being a product person instead of a media person and Office is too little too late.  Both are bullshit-tunnel-vision-link-baited and shallow article types (other than that guys, you did great analyzing these events).  Hey, let’s face it, journalists and what passes for journalists these days write about the news, they don’t make it, and they often don’t even understand it.  They don’t care.  They’re running the modern equivalent of Pavlov’s dogs where if you stick the right stuff in a headline with the right edgy attitude you get traffic, rinse and repeat until it becomes mechanical.  Yada, yada.

So, for Marissa Mayer we got:

Analysts react to Marissa Mayer in the WSJ:

“What we are a bit worried about is that by selecting Ms. Mayer, Yahoo is
explicitly pursuing an aggressive and bold growth strategy, whereas we believe a
value strategy might be more appropriate,”

Uh huh.  Analysts used to mean something to the stock market but they never really got tech with a very few exceptions–Rick Sherlund, Mary Meeker, and Chuck Philipps.  Absent an Oracle-style rollup Godfather for failed Internet media companies, Yahoo has little choice but to bet on a bold growth strategy.  There’s a reason most analysts aren’t running companies.

Ever popular Mathew Ingram on GigaOm tells us Marissa may not be a good fit:

In his post is a lot of gobbledigook from various folks that boils down to Mayer not being a media maven while Yahoo is a media company.  Shouldn’t it really have a media CEO?  I’m gonna call bullshit on that one too.  Where are these media companies?  The idea that media companies would rule died quite a while ago.  We have seen News Corp fail, AOL fail, the Music Industry fail, and Yahoo fail.  We are watching Books fail at the hands of technologists as we speak.  How much more fail do we need from the media world thinking they know how to run this stuff.  OTOH, despite some recent stumbles, we have seen Reed Hastings take what looks to me like a media company called Netflix and totally kick ass.  Reed’s prior post was founding and running Pure Atria software, which produced extremely nerdy technical tools for software developers.  Steve Jobs is another example who captained a launch of Apple into the music business.  Here is an important newsflash to those who think hardcore software product people can’t hack media or marketing:

In an online digital world, media and marketing are products.  The whole freaking User Experience is a product that spans all of these things.

If you don’t understand that, you are going to wake up like a lot of other once great companies and wonder how the software wunderkind ate your lunch.  This is why Marc Andreesen keeps proclaiming that software is eating the world.  Companies that don’t have people like Marissa Mayer can’t play that game.  Media Guys, Sales Guys, and Marketing Guys are never going to play that game.

‘Nuf said on that theme for the moment other than to add for Steve Ballmer, your biggest problem may be precisely that you don’t have what Marissa Mayer brings to the table as a product person.  You’re a snack cake salesman when you needed to be a fighter pilot.

Kara Swisher has 10 Totally Fluff Questions for Marissa Mayer

Oh boy.  Talk about linkbait.  Lists are always link bait and this one is no different.  It covers such critical advice as making sure not to be too geeky and not to think it’s cool to wear a lot purple.  Yes Kara, I imagine you were saying of Marissa, “What. A. Geek.”  And guess what, she runs things.  Jealous?

The less snarky questions focused on:

-  How do you cut enough people to carve out space to work in?

-  Which products do you cut?

-  How will you manage the board and partners?

Kara, you need to go have a conversation with Mark Hurd.  That’s his kind of discussion.  It did not do wonders for HP.  It propped him up nicely, but it has left the world’s largest computer company wondering WTF to do next.  The reason is simple.  These are short term answers.  You can’t cut technology companies to greatness.  You have to actually build something.  Product people are long term people.  They build things.  They understand that you don’t slash and burn out one side of your mouth and then succeed in hiring tons of awesome new talent.  Rather, you come up with a strategy that the talent can actually respect and you build a culture that the talent can thrive in.  Geez, what’s next?  Shall we ask Marissa if she plans to implement Microsoft-style stack ranking during her first 30 days?

The funniest was ReadWriteWeb telling us Yahoo needs a visionary not another product person and then letting Forrester Analyst Shar VanBoskirk define what a visionary is thusly:

“What I think Yahoo needs is a visionary – an aggressive executive who can make some pretty solid decisions about the business Yahoo needs to be in,” VanBoskirk said. “I’m not sure Yahoo needs another product person.”

Sounds like a visionary is a damn bean counter to me.  Let me get very very crystal clear:  a real product person will make solid decisions about the business Yahoo needs to be in.  Seems like Forrester and Gartner Analysts are the only ones whose crystal balls are more cloudy than Wall Street Analysts.

I won’t bore too much with the happy posts about Mayer because they typically boiled down to, “Yahoo is so screwed up we had no idea they could attract someone as talented as Marissa Mayer.”  Cool beans.

I think Fred Wilson had the best happy post I read:

Fred Wilson proclaimed that Yahoo is no longer dead to him.

Funny quote, but a little heavy on the Mario Puzo, no?  While your avatar-caricature looks a bit like a dark haired Marlon Brando, I’m not sure I fancy you the Godfather.  But, I know you have the sense of humor to take this in the sense it was meant.  And yes, I agree with you Fred, Yahoo is making some decent decisions here.

For Ballmer and the new Office release, it was much the same, although the kudos were a little more forthcoming with substance.  Let’s be real, Windows 8 and Office 2013 are the best work Microsoft has done in a long long time.  They deserve some kudos.  And, like the Mayer articles, we got first some good stuff followed by the snarky stuff.

Here are some of the articles that caught my eye:

Ballmer talks about why the Lost Decade is a myth:

Okay Steve, dream on.  It’s no myth.  What had been an awesome shareholder value machine has stalled on your watch almost to the day Gates stepped out.  Yet, Ballmer at least talks like he understands what needs to be done in this passage:

It’s not been a lost decade for me! I mean, look, ultimately progress is measured sort of through the eyes of our users.  More than our investors or our P&L or anything else, it’s through the eyes of our users.  We have 1.3 billion people using PCs today.  There was a time in the ’90s when we were sure there would never be 100 million PCs sold a year. Now there will be 375 million sold this year alone.  So, is it a lost decade?

The stock market has always had its own meter.  Sometimes it’s ahead of itself, sometimes it’s behind itself. A broken watch is right twice a day.  Ultimately all Microsoft can do is focus in on doing exciting products…

Okay, Steve, we agree.  Microsoft needs to deliver exciting products.  Now here is the part you REALLY need to understand:  it has failed to do so under your tenure.  There have been few exciting products from Microsoft for a LONG time.  The Lost Decade is not only a failure to deliver shareholder value, it is a failure to deliver exciting products.  When you have delivered them, they’ve been accidents and not in your core businesses.  Time to change that or get someone who can.  Incidentally, this is absolutely true for Yahoo as well.  They quit being exciting when they quit delivering exciting news.  On the Internet, everything is a product.  If your “product” is not exciting, you lose.

The high level summary of why Ballmer and Mayer face the same problems at Microsoft and Yahoo boils down to both failing to deliver exciting product often enough to matter in recent years.  Microsoft has had slightly better network effects to slow their decline (helps when you control an OS!), but the eventual outcome will be the same as it has been for Yahoo.

GigaOm wonders if Microsoft can recover its superpowers

Great continuation on the failure to deliver exciting products theme.  Consider these quotes:

To put it in the simplest terms, Apple makes products that people are crazy about and will stand in line all night to buy. When was the last time you saw a Microsoft product that inspired that kind of devotion?

Microsoft’s tried-and-true model of chipping away at a product category over the years until it got it right (usually around release 3)  isn’t applicable in the web era of continuous updates.

Of course, there is always someone around who will opine that the lack of quality product is simply a lack of focus.  For this article, Harvey Lubin says:

They have started to compete on too many fronts, against too many competitors.They want to beat Apple at computer hardware, and mobile services. They want to beat Google at Web search.They want to beat IBM at servers. They want to beat Sony & Nintendo at gaming. By trying to do everything, they end up doing none of them very well.

If it were truly a lack of focus, there would be some exciting products and a bunch of also rans.  That’s not really the case.  What we have is a lack of culture or talent that is capable of producing the exciting products.

Ars Technica gave us the Mac Fanboy perspective which is “Why did you bother, you can never be as great as Apple.

Well of course they did pretty much eat the Mac’s lunch for many years, so it actually is worth bothering and for the first time in years Microsoft shows signs they actually might still be able to bother.  Chill dude.

On a more positive note, Larry Dignan notes that Microsoft has a Killer Product Cycle Underway

He’s right, this is a killer product cycle for Microsoft.  Their problem has been that killer cycles happen too seldom.

What’s Next for Microsoft and Yahoo?

As I’ve argued, Microsoft and Yahoo are in the same place.  We may argue about the matter of degree, but both are once-great empires that have disappointed customers and shareholders for a long time.  They are each reaching inflection points where it will be increasingly hard to recover if they don’t take prompt action.  But what should that action be?

First, let’s take a moment to recognize each company gets one more get out of jail free card.  Microsoft gets it because the Windows/Office release cycle is the best they’ve had in years.  Yahoo gets it because nobody expected the likes of Marissa Mayer would take their CEO job.  In other words, we have a temporary willing suspension of disbelief.  The key will be to act in a way that extends that into lasting momentum.  To do that both companies need to produce exciting products at a rate that establishes and builds momentum.  That’s what vibrant tech growth companies do, and it is what has been lacking from these two for way too long.

Marissa Mayer and Steve Ballmer face the same problem:

How do they reignite a steady stream of exciting product launches to rebuild their company’s momentum?

If they each accomplish nothing else in the next 12 to 18 months, there are two key things that they both must do to set the stage for that kind of momentum:

Microsoft and Yahoo Must Both Achieve Agility

Ballmer and Mayer must make their organizations demonstrably agile.  The days of 3 year product cycles for Microsoft are long since over.  Ballmer needs to put a stake in the ground that we will see updates for all the key products with betas out in 12 months and shipping in 18 months from now.  Mayer should do the same for Yahoo. Then they must deliver those results against that schedule, and they must sharpen the pencils still further until they can do 12 month product cycles.  Once having gotten that religion, they must never let more time than that pass without impactful releases of all their key offerings.  The world simply changes too quickly these days, and cycles any longer than that leave companies struggling to stay relevant as they miss one key trend after the next.  As any student of OODA Fighter Pilot tactics will tell you, once you get inside the other guy’s decision loop and make him respond to you, your victory is only a matter of time.

That doesn’t mean shipping mediocre products just to say you shipped something.  Microsoft, that doesn’t mean you’ll get your standard high dollar upgrade fees every 12 months either.  It means you will make it happen, “it” being shipment of a release that really moves the ball forward.  Every 12 months.  Without fail.

If you can establish that kind of momentum, that kind of agility, many benefits will accrue.  You will start to control the agenda as others respond to your initiatives instead of vice versa.  You will attract and retain good talent as they see the opportunity to do something that matters in the near term.  Momentum is key for tech companies.  If a shark stops swimming, it dies.

Microsoft and Yahoo Must Both Articulate and Demonstrate a Product Vision Worth Getting Excited About

Establishing agility is almost a mechanical process.  Yes, it will require enormous cultural upheavals and force of will.  But it is not like trying to schedule that Einsteinean flash of insight that is sometimes called for.  Unfortunately, the second of the two key things you must do is closer to requiring Einstein.  Establishing an agile cycle will help, and you probably have enough stuff on the drawing boards to get through the first cycle with flying colors.  But to go further, to have it all make sense and not just be a rambling features-gone-amuck kind of release cycle, you must have Vision.

This has historically been tragically missing from both companies.  At best, Microsoft has had a Vision to commoditize other people’s ideas, and lately it has fallen far short on that.  Yahoo’s Vision seems to have been to grab up one shiny plaything after the next and claim to be a great media company amassing playthings in a meaningful way.  Not much of a Vision (I use the capital “V” advisedly).

Marissa Mayer may be a Visionary capable of producing that capital “V” Vision, but Steve Ballmer most assuredly is not.  Steve, you’re going to have to get someone in there who is.  Possibly more than one someone’s.  You’re going to have to empower them and you’re going to have to stay the Hell out of their way.  Like Clint Eastwood told us, “A man has to know his limitations.”  This will be extremely hard for Microsoft, which has confused a Product Management Culture with having Vision.  Product Managers mostly only have lower case “v” vision because they listen to customers too much.  They let customers define how the problems will be solved instead of sticking to describing what problems they have.  Despite what MBA school teaches, checking off every request some customer made never results in Vision.  It’s better than nothing, but not much better.  Steve Jobs was never even interested in what problems customers have and went out of his way to make sure they had little input into how the problems he deigned to solve would be solved.  Marissa, if you are not a Visionary, and very very few CEO’s and other successful people (let alone Product Managers) are ever self aware enough to know when they are not Visionaries, you have the same problem as Steve.  You’re simply better equipped as a product person to understand how to help realize the Visions of others.  But if you aren’t the Visionary, you will need to get some in there quickly.

Visionaries are rare indeed, for they are the ones with crystal balls that actually work.  They see clearly how insanely great things could be, and what it will take to get there.  They are unfettered by considerations of how things are today and often whether things will even seem possible.  They ignore Wall Street, pundits, analysts, and customers alike.  Losing their Visionary or even more commonly failing to ever have a Vision that can withstand the test of time is the most common reason Tech companies die.  Visions can be accidental.  Accidental Visions turn out to be proxies for the real Vision.  Minicomputers are a great example.  They were closer to being commodities than Mainframes, but they fell well short of commoditizing computing power the way PC’s did.  By and large their luminaries never figured that out, or if they did, they were unable to do much about it.  Proxies are dangerous, because they work for a time.  Companies worship these false prophets for way too long when the proxies cease to track the real prize closely enough.

Large companies can only find real Visionaries by looking for people who have been right more than once, and never right because they rode somebody else’s wave.  Having found one of these rare unicorns, Visionaries are often completely at odds with the skillset needed to survive in large organizations.  They are not politically savvy (or don’t care).  They do not do well in meetings.  They do not crave gigantic staffs to manage.  They will not suck up at the expense of doing something they know is wrong, or even a little bit less right.  They are prickly and uncompromising.  Yet, you must not only find them, you must prop them up and make them successful despite all the antibodies the entrenched burocracies at Microsoft and Yahoo will generate to try to expel them.  It’s not going to be fun, but the alternative is a continuing slide into irrelevance at the hands of the Visionaries in other companies.  That’s even less fun and you’ve had a taste of what that’s all about.

Are you still hungry enough to do what it takes?  Do you want to win?

Good.  Because now you know what you need to do.  Let’s get on with it–time is short.

Posted in apple, business, Marketing, strategy | 2 Comments »

Twitter’s Biggest Problem: Brevity

Posted by Bob Warfield on July 2, 2012

Twitter CEO Dick CostoloThere are many rumblings these days about Twitter’s recent changes blocking LinkedIn from putting Tweet’s into their streams.  Lots of different reactions from various folks:

-  From Twitter’s perspective, they’re trying to deliver “a more consistent user experience.”  We can paraphrase that one as, “We can’t run ads if you don’t come to our site, so we have to block you.”  This is one of many direct examples where advertising creates a nasty conflict of interest between a large audience and the folks who really pay the bills.  It’s one reason why ad-driven business models are more likely to treat their audiences like cattle to be harvested and milked.

-  Owen Thomas points out over on Business Insider that Twitter’s own Facebook app does cross posting.  Well, that is a bit inconsistent, isn’t it?  Apparently Twitter believes it can live without LinkedIn, but not so much Facebook.  Looking at these three services, I think that’s an astute assessment, but time will tell whether they cut out Facebook too.

-  Mathew Ingram warns Twitter to be careful of what happened to MySpace and Digg, who both alienated developers with these sorts of changes.  Mathew agrees with me on the reason for Twitter’s move, “Twitter wants to control the network as tightly as possible so that it can monetize it more easily,” but he goes on to point out that there are downsides to the simple greedy strategy (as there always are).  He points out that the developer community is not happy with these quotes:

Twitter was trying to shut down third-party services so that they could “inflict a homogenized, boring, monoculture on their user base [that] they can monetize, which will make the experience progressively worse.”

Says turntable.fm developer Jonathan Kupferman in a tweet, “Twitter seems to be mercilessly killing all developer apps of any interest businessinsider.com/twitter-linked… Light the match, hello 

John Abell of Reuters points out, “Twitter’s value is its integration with other networks. Cutting them off is like being on the wrong side of history.”

Ingram concludes by pointing out that MySpace and Digg, “started to hemorrhage users because it focused more on monetization through ads and other elements than it did on maintaining a good experience for users.”

-  Dalton Caldwell laments Twitter having chosen the advertising route instead of becoming the Internet’s real-time API.  In the beginning, Twitter was great to many developers precisely because it had an early API that made a lot of sense for things these developers thought were very cool.  Not so much anymore.

-  Nick Bilton of the NY Times calls this latest Twitter move a, “Cacaphony of Confusion” for Twitter owned apps and sites.  He points (among other things) out that if what Twitter wants is a more consistent user experience, starting with Twitter’s own apps is not a good idea.

There were not many positive responses, save for the occassional, “We can make lemonade from this lemon” post, or the other stock-in-trade for Internet Hysteria which was Anil Dash’s missive about how the Web was over reacting by a lot.  He chides the developers for feeling hurt because Twitter is finally readily to appeal to the great unwashed instead of being their personal playground.  He claims this will all ultimately be healthy for the ecosystem because it cuts down on ‘bots Tweeting spam.  Except it doesn’t because I can still push articles from LinkedIn to Twitter, just not vice versa.  Hmmm.  So much for that kind of logic.

Twitter’s real problem here is ironic:  it’s own Brevity limits the options for what it can do.

Look, you only get 140 characters.  There’s nothing left if you try to divide that into something smaller.  If you have something like a blog post, you can link to the frickin’ blog post and there’s ample reason to go there.  With Twitter, why bother linking?  Just put the whole Tweet in the article and save people the trouble.  They can read 140 characters faster than they could click through, possibly have to sign in, get oriented, and read it in situ.

I’ve written along similar lines before when I said that Twitter’s biggest problem is the Tweets themselves are ads.  I’m not the only one.  I’ve heard many a person quip that Twitter is write only and never read, or that it’s just bots Tweeting headlines back and forth about one another.  So many have gamed the service to get more followers for their own ads, I mean Tweets, that it’s a joke.  Robert Scoble has gone round and round and seems to choose his latest Social Dingbat of the day based on which one is the easiest to game into another huge crush of followers in the shortest time.

Is the ecosystem really going to be improved by what Twitter is doing?  Can it fix this problem that Tweets are ads?  And what can you do with high quality non-ad/non-bot Tweets?

I don’t think they will fix the ecosystem.  As I said, they want to make it easy to add Tweets via API’s, they just don’t want you reading them in that way.  And to actually separate the wheat from the chaff is not something they’re directly incented to do.  They want to live on the advertising model.  And, to keep a consistent user experience, that’s only going to work if the ads look just like Tweets.

It’s a vicious cycle.  Don’t expect it to end any time soon–instead, expect it to get much worse.  They’re making a final monetization dive bombing run to get to a liquidity event.

Lastly, entrepreneurs and geeks, don’t bet the farm on Twitter.  They are not in business to help you.  Quite the opposite these days.  They’re in business to collect ad revenue.

Posted in business, Marketing, Web 2.0 | Leave a Comment »

 
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