• April 2, 2019
  • February 26, 2019

    Salesforce will be celebrating its 20th birthday on March 8. Where did those decades go? “Time flies like an arrow,” said Groucho, “fruit flies like a banana.”

    There it is.

    Last week a respectable chunk of the analyst community that follows the company converged in San Francisco inside its cavernous new headquarters to hear about its plans for the year ahead. I’ll get to some of the non-NDA ideas floating around the sessions momentarily but first, some impressions of the first (or last?) 20 years.

    In many ways, Salesforce has executed a typical and nearly flawless grass roots maneuver of the kind explained by gurus like Geoffrey Moore and Clay Christenson. They entered the market late, after Siebel was already a billion-dollar company but their entry was not of an also ran. From the beginning Salesforce positioned itself as fundamentally different because it was what would become known as a Software as a Service, or SaaS, company.

    Competing with an established player can be hard. Initially, the Salesforce app comprised just four tabs while Siebel had so many that Marc Benioff said they were so numerous they were useless. That’s nothing you’d hear from Salesforce today with its numerous clouds. Salesforce was selling something that every company wanted at that point and it had little to do with the merits of its CRM–quick delivery and low costs.

    You see, Salesforce arrived at the start of the century just as the smoke was clearing from the traumatic change of financial systems to accommodate four-digit date formats. Conventional CRM in those days was largely a custom programming market and implementation cost metrics often stipulated that the total cost of ownership in CRM would be 3-4 times the software costs. They weren’t wrong and there was a kind of fatalism, at least among large companies, that that was the way things would be.

    But you can’t grow a market or a category like that. If prices had not come down, CRM would have become a not very good major corporation play thing. Prices had to come down and functionality had to expand in order to get CRM into the hands of medium size companies and even those smaller. SaaS, with its very low cost of ownership fit the need precisely.

    Salesforce changed that equation and in so doing gave itself and multiple other dot-com companies running room. Still it was amazing to me even then that the CEO’s of most of the other CRM competitors offering SaaS services failed to understand the importance of what they had. Most simply regarded SaaS as another delivery mechanism rather than the revolutionary commoditization of IT that the industry badly needed.

    IT in the earliest decade of the century was ripe for commoditization. It was traditional and highly manual. There were no smartphones or social media then and analytics was a failed idea from the 1990s in need of greater CPU horsepower and data storage before it could take on its natural role. Much of this comes together in one observation. If you wanted to brief me, or any analyst, about your company, products, and strategies in the hope that I’d write about you, it was necessary to fly to Boston to do that in person. There were no products like WebEx yet. It was a long time ago if you’re basing your analysis on such things.

    So, into that milieu Salesforce launched in 2000 after a year of software development led by co-founder Parker Harris but what’s interesting is that the company hasn’t changed that much in the intervening decades. Instead the industry has continued to play catch-up over numerous product cycles that have included basic SaaS, social media, mobility, platforms, customer journeys, analytics, and machine learning.

    Corporate social responsibility

    Always lurking in the background has been the company’s famous 1:1:1 approach to corporate social responsibility. It still donates one percent of its people’s time, its equity and product to charity and most interestingly more than 2000 companies have taken the hint and developed similar programs. They aren’t all small companies either. Google instituted such a program before its IPO and on the day it went public automatically spun up a large charity.

    Lately Salesforce has described the four pillars of its business as trust, customer success, innovation, and equality which neatly ties together its attitudes about customers, employees, the community, and its responsibility to deliver innovative products, which brings us full circle to last week.

    Commoditization of IT hasn’t ended. Salesforce might have taken advantage of a nascent trend at its inception, but the need was already pronounced. Understanding that trend in relation to the IT industry is important in part because it seems like cloud computing is now the thing that’s commoditizing.

    Closing the frontier

    My observation today is that not only Salesforce but most of the industry is built out. That’s far from saying there’s nothing left to do though. It’s more like closing the American frontier in 1890–there’s no more frontier but there’s still plenty to be done internally. In Salesforce’s case, as well as much of IT, we’ve entered an era of efficiency and effectiveness meaning that we’ve now produced various automations and our focus now is optimizing them.

    Fair enough. But this also means that the importance of product announcements and making release dates begins to recede into the background. What takes prominence are the services needed to help customers to be successful and we’ve seen Marc Benioff harping on this aspect repeatedly. So rather than big news items, we’ll be on the lookout for more individual customer accomplishments.

    For example, for several years already, Salesforce has been edging toward the position of change agent and corporate culture transformation maven and you see it in the discussion of digital disruption. No one buys digital disruption, there are no products labeled as such just as there are no cans of whoop-ass (a technical term) on store shelves that you can pour on an IT problem.

    If you go back to the company’s four pillars–trust, customer success, innovation, and equality–you realize that only one is about technology. The others are about how you encourage people to take the leaps necessary to achieve digital prowess, to have the courage to become data driven and to make better business decisions. It’s culture change.

    That’s what I think last week was about and I think one data point neatly encapsulates this. They told us that this fiscal year 55 percent of the sales team will be focused on industries like insurance, financial services, health care and more, and that number is trending. Working that angle, you can expect more things like My Trailhead, a learning system that can deliver knowledge about anything to a user that’s relevant to a business process.

    My two bits

    Despite its great success, Salesforce is not the CRM industry; it has revenues of $10 billion in an market that generates $80-ish billion in revenues. But, in Salesforce’s history, you can discern all of the industry’s major inflection points. Looking at CRM today you can conclude that it’s mature and that major systems are already in place. But there’s still ample room for growth and in a mature market you typically see vendors working to make their products easier to use through more service offerings such as in industry versions.

    In line with this, CRM will continue enabling users to be more effective. This enablement will become increasingly fine grained as the vendors reach into industries with detailed solutions for specific business problems.

    I think the next big milestone for CRM will be inter-vendor–inter-process communication, something beyond integration. It will take the whole industry to solve that challenge just as it took the whole industry to come up with SQL and the relational database. Based on what I saw last week, Salesforce is already working on it.

    Published: 5 months ago


    This is a guest post by friend Vinnie Mirchandani. Vinnie has been a fixture in the independent analyst community for many years now after starting his analyst career with Gartner. Vin comes from the ERP side of enterprise software and his many years of experience have enriched how we see both front and back offices. I can’t say I agree with everything he offers up, but Vinnie has a great way of making you think and that’s an important part of any analyst’s job. Follow his at Deal Architect.

    Take it away Vinnie!

     

    It’s heady times for SaaS – cloud application software. Salesforce is entering its third decade with tremendous momentum. It only had $1 billion in annual revenues by end of its first decade and it is expected to have $16 billion by the end of the second. Talk about a rocket ship! Workday, ServiceNow and many other SaaS vendors are doing similarly well.

    However, in writing my recent book, SAP Nation 3.0, I researched the enterprise apps market over the last two decades and I saw several red flags around cloud applications.

    Way too many “white spaces”

    After two decades of cloud applications (NetSuite and Salesforce were born in late 1990s) if you look at a grid of applications by industry, by geography there is only 20% or soin the cloud. Most cloud apps are concentrated in HCM, CRM, accounting areas, not operational areas or industry functionality. Even there, if you look for support for Brazil or China or the Czech Republic your choices drop off very quickly. These industry and regional white spaces won’t last forever. We are seeing startups target them, in industries like financial services, big banks are developing solutions to sell to others. The opportunities are limitless, but SaaS vendor investments have been grudging.

    Over million on-premise customers are not budging

    Around the world, there are over a million on-prem ERP, CRM etc., application customers – running software from SAP, Oracle, Infor, Unit4, Microsoft and others. They are stubbornly not moving to modern cloud, in-memory solutions – either those of the incumbent vendors or those from SaaS specialists. These on-premise systems are increasingly a recruiting liability for customers. Many are heavily customized and are security and compliance risks. Yet, these customers are shrugging at those risks.  There are all kinds of opportunities to target and migrate them. In the book, I call it “titling the bell curve” to turn these Bystanders into Risk-Takers and Modernizers.

    Platforms are not generating vibrant ecosystems

    These days, every vendor appears to be releasing their own version of PaaS. They do fine in helping customers develop minor customizations. However, vendor stores with partner apps using that PaaS are surprisingly empty. Even after a decade, the platforms around enterprise software have shown limited success, especially when you compare them to the vibrancy of consumer tech platforms like the Apple iOS store or Fulfillment by Amazon, which were started around the same time. There are now 20 million Apple developers creating apps and in another big milestone, Apple has since paid out over US$100 billion in revenue to those developers. As much as 90% of certain product categories, such as patio furniture, sold on Amazon come from third parties.

    Enterprise PaaS needs to show similar success – and publicly disclose similar metrics, not just brag about the number of partners they have recruited. After a decade of Force.com, we should expect to see many more startups like Veeva Systems and Vlocity. Veeva went public within 6 years of its formation, and Vlocity is doing well in several verticals. However, they are more of the exception than the rule. Other SaaS vendors can show even less success.

    Public cloud economics are losing their edge

    SaaS was a huge step forward for software economics. You used to buy software from one vendor. You would get hosting from a data center vendor. You would get application management from an offshore firm.  You’d do upgrades with the help of systems integrators. Salesforce and other SaaS vendors packaged all that into one buy and delivered SLAs across those previously disparate contracts. But the economics have not evolved enough. When you give a vendor a three or five-year contract, you are entitled to see continuous improvement.  It’s called Six Sigma benchmarking. In the auto, aerospace and other industries, they’re constantly expecting 2%, 5% improvements a year from their suppliers. In outsourcing, we have seen CMM Level 5 performances. That is something SaaS vendors will increasingly be expected to deliver.

    An example of that thinking comes from Zoho One, a bundle of their applications priced at $30 a month an employee, or $75 a month on per-user basis. It was launched in 2017 with 35 applications; it now has over 40. More apps will soon join the bundle. A dollar a day per employee is a compelling value proposition, when the functionality keeps growing exponentially.

    The SaaS model is increasingly looking like the on-premise model as large systems integrators burden customer costs with their implementation and on-going budgets. In its first decade, the Salesforce ecosystem had many of the smaller “born in the cloud” SIs like Appirio and Model Metrics. It still has a few like Slalom, but the bigger SIs have muscled in. Nothing wrong with that, if Salesforce can make them bring plenty of automation, remote delivery and other innovations. In my book, observers point out that the ecosystem around SAP cloud solutions like SuccessFactors is like the ‘Wild West”. That’s not an encouraging trend.

    Many customers were really pleased with their first-wave SaaS projects. But we are entering a new phase. The opportunity to convert plenty of on-prem customers remains. However, SaaS functionality has to grow across industries and global regions. SaaS economics need to be sharpened, and PaaS stores need to become more vibrant.

    Who will step up? It should be an exciting next few years.

     

    Vinnie Mirchandani (@dealarchitect) is an advisor to tech buyers, analyst on enterprise tech trends and author on technology innovation trends. SAP Nation 3.0 is his 7th book. He blogs at Deal Architectand New Florence. New Renaissance.

    Published: 5 months ago


    A Green New Deal has a lot of moving parts that have to work together. The solution looks more like solving a Rubik’s Cube than playing whack-a-mole. Are we up for this?

    I follow economic cycles. I don’t know how it started but I’ve always been fascinated by the ebbs and flows in economies. Big economies, small ones – it doesn’t matter. There’s the relatively short business cycle of course, that is often the subject of news coverage whenever the news reports on employment, interest rates, oil supply, and aggregate demand and supply but the business cycle is just one example and there are many.

    We’re mostly familiar with relatively short-term cycles. For instance, when oil prices are relatively high, they spur drilling which brings additional supply to market which brings prices down often to the point that further drilling is discouraged. But as supply tightens again prices rise and another drilling cycle kicks in. These cycles can play out over the course of a year or two.

    My primary interest in economic cycles has a much longer time horizon – 50 to 60 years, in particular. These long waves are called K-waves after the economist who first brought them to our attention about 100 years ago, Nicolai Kondratiev. He was an interesting person. An academic economist who studied capitalism and tried to explain it to Russian Communists. He was an advisor to Lenin but when Stalin came to power, Kondratiev was shunted aside because his views didn’t fit with Stalin’s orthodoxy. Eventually, Stalin had Kondratiev killed by firing squad.

    Kondratiev’s ideas came to America and were popularized by the American economist, Joseph Schumpeter who, among other things, is remembered for his concept of creative destruction. Schumpeter believed that each new innovation created value but at the same time it destroyed some of the value that the previous economic trend had brought. So, for example, the automobile brought tremendous value to the economy but at the cost of diminishing the horse and rail economies over time.

    You can see this throughout history as once promising jobs and industries become commoditized. While companies might do well in a commoditizing environment, often jobs get exported and people are left to find new ways to make money. Frequently, that means in a new industry.

    K-waves are interesting because they typically last longer than an average working lifetime. Figure the average working life in an industrialized society is about 40 years. That means you could work your entire lifetime within one K-wave. Some times would be better than others and they have less to do with who is in political office than what stage of the cycle you find yourself in. Innovations are continuously commoditized in the name of lower costs which results in jobs moving to lower wage areas and economic hardships are often what’s left behind.

    In the 20thcentury textile and shoe manufacturing left New England for lower cost labor states in the South. But a generation later those same jobs left the US for places like Japan, China and then on to Bangladesh and Vietnam.

    Not just any innovation can serve as the economic driver of a K-wave. We tend to over-use the term disruptive innovation to make the point. A disruptive innovation creates industries and jobs in such quantity that it becomes the driver of the economy for a little while at least. Disruptive innovations have the capacity to initiate K-waves.

    The silicon chip initiated the K-wave that’s finishing right now. Patented in 1959 the chip eventually led to the development of a computer on a chip which launched the modern IT era and all that goes with it like software, the Internet, mobile computing, and more.

    Disruptive innovations take on the order of 25 to 30 years to diffuse throughout the economy and during that time they create huge numbers of jobs. Then, in the following period commoditization takes place and Schumpeter’s creative destruction takes hold. Consider the IT industry again.

    Fifty years ago, computers sat in airconditioned rooms and consumed huge amounts of energy. They were attended to by small armies, or at least platoons, of highly skilled workers managing and maintaining them. But the story of the last 20 or so years is one of commoditization. We carry the equivalent of a big computer room in our pockets today and we maintain it all by ourselves. Not only that but we have access literally to all of the world’s knowledge on those tiny devices and the cost of these devices is too small for most people to remember. Those tiny devices have commoditized much of IT even as they’ve created wealth and made us all more productive.

    Here’s the point of all this. We’re at the end of the K-wave that dealt with information and telecommunications. Those industries won’t die but they’re no longer sufficient to drive the economy thanks to commoditization and inevitable price erosion.

    But right on time, there’s a new K-wave forming and just waiting to come to the forefront. What’s coming will help us get out of the ecological and climate bind we’re in.

    The new K-wave, which I call The Age of Sustainability includes renewable energy including solar, wind, geothermal and space based solar collection. But it also includes ways to capture carbon from the environment and store it safely for millions of years. Finally, the new K-wave also includes using some of that renewable energy to supplement what I call ecosystem services, perhaps a new term for you.

    We’re teetering on the brink of not having enough fresh water to support Earth’s groaning population and using our smarts to generate more is becoming a top priority. Look around. California isn’t the only place confronting dry and drought-like conditions. Iraq, Iran, Yemen, Syria and many other countries don’t have enough water for agriculture and their people are leaving those countries and disrupting their neighbors. Just ask Jordan about Syrian refugees. Did you know that Cape Town ran out of water for a while last year?

    Also, burning fossil fuels is poisoning the planet but, at the same time, fossil fuels are running out. The BP 2014 annual report stated that the Earth had, at the time, about a 54-year supply of oil left (about 1.687 trillion barrels) and we haven’t discovered any new oil since 2003.

    You might say what about fracking but that’s a technique for extracting hard to reach deposits and it isn’t an exploration method. Put it this way. We’ve been pumping oil out of the ground since 1859 at ever increasing volumes each year. Earth isn’t made of oil and sooner or later logic tells us this huge but limited resource has to run out.

    The new K-wave

    We’re at an inflection point. Going back to K-waves, the Age of Sustainability is just starting, and it will create jobs not only in renewable energy but also in ecosystem services, transportation, infrastructure, agriculture, and more. This new age has the potential of being the greatest job creating and money-making opportunity in history.

    The Green New Deal will be part of it and it is an interesting proposition. There’s no doubt that the infrastructure parts will be job creators and investment opportunities. So will be creating a renewable energy sector that replaces fossil fuels with electricity. But there’s also a need to remove about 1 trillion tons of CO2from the environment. That can be done with photosynthesis and we’ll need to invest in that; I discuss this in a book that I am not advertising here.

    What hasn’t come up yet, and what is causing a lot of resistance, is how to wind down the fossil fuel industries. Promoting coal use as we’re doing is a retrograde step, so is removing emissions restrictions and getting out of the Paris Climate Accords. But the fossil fuel industry is very powerful and it has trillions of dollars invested in things like mines, oil fields, pipelines, tankers, refineries and more. It won’t go quietly and that’s okay.

    We’ll still need fossil fuels for making advanced materials like rubber for cars, but we’ll need to burn far less. So because we’ll still need the fossil fuel industry, we need to put our heads together and come up with a plan that reduces the industry’s impact while keeping parts of it running strong. It’s the only way we can have a smooth transition. Unfortunately, we aren’t discussing that plan though it’s the 800 pound gorilla in the room and the thing all else depends on.

    So when you hear about or participate in discussions about a green future, keep an eye on how it impacts things like energy production, natural resources and carbon affiliated industries. The Green New Deal will look much more like solving a Rubik’s Cube than playing whack-a-mole. It will be hard but not impossible.

     

     

     

     

    Published: 6 months ago


    What’s the state of the selling profession today? In brief, it fluctuates significantly based on economic circumstances and a company’s position in a category lifecycle. At the start of a category lifecycle, when vendors really need people who can educate and explain what a disruptive innovation actually does, salespeople are in demand and life is very good indeed. But in a down economy, most selling suffers; in a recovery selling can be fun.

    Of course, life is even more difficult when the economy is down and the last disruption has run its course. In my selling career I found that it’s vital to understand where you are in all of this down to a company’s trend line in its market because a sales person can do a lot but the macro trends really own you.

    I am always interested in the annual CSO Insights sales performance study that comes out this time of year. Last week’s release of its 2018-2019 report was full of interesting nuggets that make me wonder where we are in various cycles. Deep in the report it says that about a third of most companies’ revenues come from new sales and early on it notes that “Average revenue attainment has reached 93.9 percent, the third straight year of growth,” which is good. But it also shows that only about a third of revenue is coming from the sales team and, significantly,15 out of 16 seller skills have declined over the last five years.

    That means companies are bringing in more money but that sales people are less responsible for it and not as good at basic blocking and tackling as they were not so long ago. How do you explain this?

    Sales process but also…

    CSO Insights has a classic answer that I think stands up but that also needs to be challenged in the current environment. For many years they’ve divided the sales world into four categories of sales process: random, informal, formal, and dynamic. Roughly drawn, random sales processes live in about 25 percent of the universe of over 900 companies surveyed. This year the number of random process companies is down to 20.8 percent. Nicely done!

    At the other end, the dynamic process supporters also represent about a quarter, this year it’s up to 28.9 percent. Good also. Finally, the broad middle, consisting of informal and formal process users makes up half or 50.3 percent this year. The differences are important because the research shows that companies with dynamic processes who are able to adjust to customers’ changing expectations and truly provide consultative selling services, are the locomotives where getting a deal is concerned compared to the others with the random process guys in the caboose.

    My analysis of the report this year suggests that we in tech and the selling profession might be on the downhill side of some trends. First, I don’t think you just lose skills in 15 out of 16 capabilities without cause. Sales people can be lazy, finding the easiest way to a deal is the name of the game and that’s a benefit not a bug; plus, they aren’t stupid. For such a profound thing to happen suggests to me a significant turnover in the sales population. Newer, less experienced people are filling the ranks and it’s obvious.

    Also, the fact that revenues are up while this is happening tells me that sales people are less necessary today than they were five years ago. It could be that AI and machine learning are enabling more organizations to do more with less, but I suspect what’s really happening is that customers are just getting smarter and more experienced with the products on offer throughout a broad swath of the economy so selling is being replaced by purchasing.

    This happens all the time as products and categories commoditize. Vendors simplify products and the purchase process to the point that they can eliminate expensive sales talent or at least replace it with lower cost versions. I’ve seen this before and it’s almost a generational thing as people who “grew up” with a category or trend take their winnings and figure out something else to do.

    The last time I saw this was in the 1990s. In that decade mainframe and mini-computer business was eroding but there was little to replace it yet. Client-server and large PC networks weren’t exactly ready for prime time. The “year of the network” was falsely proclaimed so often that the year turned into a decade. It took that long to shift the industry.

    Meanwhile, with expectations that most of the software and gear in the datacenter was about to become obsolete, demand dried up for almost everything save ERP systems that could support 4-digit dates. All this resulted in a difficult time for selling that was only relieved when the ERP thing had been handled and CRM became the next big idea in the enterprise. That was over 20 years ago.

    My two bits

    I think we’re entering another down phase for selling. So far it seems that vendors are weathering the commoditization of their products well and the numbers in the report bear this out. But questions abound. What will take over as the engine of progress if so many tech products are commoditizing? Will selling become the first white collar profession to be automated away or will some new disruption require so many people who can educate and explain things?

    At the moment the answers are somewhat obscure though my bet is on new technologies that support sustainability and initiate dozens of new categories of products that help. Those will be big ticket sales and they’ll require smart people who can explain and educate as well as close deals. The big questions are whether all this will take another decade and if we have that much time.

    Published: 6 months ago


    Disruptive innovations are only disruptive for as long as it takes competition to develop and thus create a market. Worse, for the disruptor, the niche it created can also spawn other niches. Social networking provides a vivid example.

    First, there were networking sites that could help you find a job or a sales lead, then there were social sites whose purpose was simply, well, networking. Sites like Facebook and Twitter had no trouble achieving explosive growth, in large part because they were free. But lately the user/consumer has come to realize that free ain’t exactly free. The strings attached cause users to give up privacy and submit to psychological manipulation most often without their consent—a high price to pay for somewhat glorified email.

    Social media’s problems have been well documented so there’s no reason to review them here. But hidden in the headlines are some nervous technology companies that jumped on the bandwagon early to make their wares all social, all the time. Exhibit A in all this is CRM. There’s no CRM company that doesn’t leverage social media to support customer centric business processes. From sales to service and marketing, CRM’s benefits include a lot of value from providing significantly lower cost business processes.

    Social CRM

    But now the vehicle for all that goodness is in trouble and while no vendors that I’ve spoken to think they’ll be abandoning their links to social media, some are getting nervous. A recent story in the New York Times documents how consumers in Illinois filed a suit against Facebook for violating a state privacy law. The suit alleges that Facebook used facial recognition software on users’ photographs without permission. In response, the social media giant is trying to invalidate the action saying that no harm was done and harm beyond simple law breaking is needed to enable a consumer to sue. Seriously.

    Meanwhile, Facebook is in freefall. Grassroots movements encouraging people to quit Facebook, and other social networks, are gaining traction—enough that the company has doubled the waiting period for people to actually leave and have their accounts expunged from 2 to 4 weeks.

    A new niche

    Leaving the law suits aside, this ongoing drama is opening a new social media niche and there are vendors queuing up to enter. The new niche attempts to provide the goodness of social media including—the immediacy, bi-directional communication, low cost and broad distribution—without the vendor shenanigans. Actually, there may be two potential niches, call them Facebook lite or Facebook nice, and notifications.

    The first option would strip away Facebook’s propensity to mine other people’s data but from a commercial standpoint omitting data gathering and analysis would leave Facebook looking bloated and silly. The second option might be a Goldilocks solution because it admits users fairly easily and offers a communications regimen that’s not too much, not too little, but just right. That’s notifications but they aren’t for everyone.

    People using notifications dispense with the small talk—no baby pictures, cats or dogs or birthday reminders. With notifications people are always in the middle of a conversation not trying to hit the reset button because thousands of followers need reminding.

    Social scientists tell us that typical people can maintain between 150 and 200 or so relationships; it’s called the Dunbar number and more than that leads to confusion. Common social networking makes it possible to go way beyond Dunbar though the relationships maintained often look not much different than what you get with broadcast advertising.

    I think there’s a future for notifications and it’s possible that notification technologies will disrupt social networking. As with most disruptions the older technologies won’t necessarily go away but their market reach and importance would decline. Notifications in CRM would give you a just the facts ma’am vendor customer communications stream.

    Testing the idea

    Right now, I’m part of a beta test of a notification product in stealth mode. Compared to Facebook, you might say it’s bare-bones. There are no apps, no profile database for the unscrupulous to mine, just a list of my peeps, what I’ve called their attention to and what they’ve sent me (along with our comments). Sometimes I ignore the incoming flow for lack of time and it’s a good indication that I’ve reached my personal Dunbar number.

    If there were ads and offers in the stream, I’d ignore them too because I’m good at understanding my needs. With so little data emanating from the user you might logically ask how a vendor is supposed to train an algorithm. The simple answer is that you hire people, perhaps subscribers for a time to share their data. That would be more than enough to ethically capture use data and train algorithms.

    Not long ago, Esteban Kolsky and I ran a survey. As with most market research studies the hard part is getting people to take the survey. Ten years ago, it was relatively easy, you just bought a list and invited people and there were usually enough responses for statistical reliability. But lately no one wants to be bothered and market research has taken a hit.

    The good news, though, is that the situation has opened a niche. Database vendors compile lists of people with specific attributes and pay them to take surveys. We researchers pay a fee to the consolidators and we get our answers. Most importantly, the responses come from people with the exact attributes we specify.

    My two bits

    There will be people who say that social media can’t or won’t be effective with a payment model to which I say that’s not my experience. Social media has tapped into a rich vein of information and access shouldn’t rely on subterfuge. It generates huge profits and there’s no longer a reason (if there ever was one) for sneaking around the user database for insights.

    So those are some of the niches opening up in the shadow of social media. Notifications and a pay as you go model for research that’s above board and gives consumers what they need. I think CRM vendors are paying close attention and the current war room mentality companies like Facebook are exhibiting is not helpful and could lead to an unnecessary crisis in social and maybe CRM. We don’t need this.

     

     

    Published: 6 months ago