January 16, 2013
We are at it again and why not? It’s the start of another year and people are doing predictable things like having kickoffs of all sorts of things. I just launched a new website and several new initiatives in research and thought leadership so I am no exception. I am drinking the Kool-Aide, eating my own dog food. Many companies I speak with on a regular basis are briefing me on new product launches and engaging in a sacred rite of a new year the sales kick off. Both these things make me think a lot.
The messaging I hear in briefings is all about sales productivity whether it comes from a sales professional or from a software vendor. Sales productivity is definitely a hot button issue. And why not? More productivity means getting more done per unit of investment whether you’re talking about time or the money invested in making more money and often the two are the same.
But the thing that puzzles me is that for as long as I can remember, and I am not a young sales guy any more, the drill has been the same. We start the year looking for ways to enhance sales productivity in the hope of getting that incremental deal or deals that will turn an average performer into a superstar.
I won’t be foolish enough to ask why after all this time are we still chasing this goal. The answer is simple, we chase the goal because it’s a human endeavor and the goal remains elusive. Situations change, people change and positions change but one thing remains the same in sales. On January 1 every year, your boss asks a perennial question, What have you done for me lately?
However the purpose of this piece is to prod some new thinking. Too often in my experience anything that promises to enhance sales productivity, increase shots on goal or reduce sales rep involvement in record keeping becomes a shiny new object that many must have. There is value here, but I sometimes wonder if these things are solutions chasing problems. This is especially in my mind because we naturally assume that a technological fix that reduces time commitments to anything other than being in front of customers is a good thing.
To that I say, maybe. Maybe that can be a sustainable answer but it also forces the question on preparation, of collecting the necessary information and marshaling the necessary support resources that enable a sales person to make a case.
You know from reading this space that I firmly believe that the market today is unlike any that we’ve seen in a long time, if ever. It’s a zero-sum market where many niches are saturated and success involves taking something away from a competitor and sometimes the competitor is yourself. This kind of market resembles retail where most niches are also filled and securing a place for your product or brand may mean displacing another on the store shelf.
In business to business selling and even in business to consumer sales, we can take a page from retail and its dependency on statistics for assortment planning, store planning, inventory management and the like. That’s where social media plus analytics come in. The two together can deliver the kind of information that retailers have sought for years but people in more formal sales management have avoided because, frankly, there wasn’t much need. Prior to the zero-sum era we are in, there were wide open markets, green fields where whole categories had never penetrated, but that’s not today.
Ok, so that’s where I’m coming from. Now let’s add a bit of information from some research I recently did with that ninja analyst Esteban Kolsky. We wanted to understand how social media is being adopted in the enterprise and smaller companies. We also wanted to gain some perspective on deployment behavior.
Guess what? Marketing led the three major CRM divisions in adoption and in plans to adopt in the near future. Service and support were well represented and we were surprised at how many nooks and crannies in the service realm were taking steps toward social. I am sure you can see where this is going. Sales was last in adoption and last in alacrity or interest in adopting social technologies.
I can understand sale’s reluctance. When you work on commission you don’t make enough to not care about closing deals and that’s the point. It makes people in sales rather conservative when it comes to taking on new approaches; for them “if it isn’t broke, don’t fix it,” is practically a religion.
Right now the old approaches aren’t working particularly well and the sales profession needs some new thinking. If this is you, before you grab that shiny object that promises great results without any change in your behavior or a requirement to try something new, think different. It’s time to get social deeper into sales and this is the time of year to do it.
Welcome back to the discussion.
At the top of my list is the idea of resiliency, which I consider a more practical form of sustainability for business. We are now encountering a wave of sustainability-oriented ideas in the popular culture. Forty miles per gallon is the new thirty, someone said and I have seen or heard the word sustainable used tentatively more than once in advertising. But I wonder if sustainable is really what we should be shooting for.
In too many cases, sustainable simply slows down our use of a resource to “sustainable” levels but in practice it is a moving target because it has to be tied to things like demand. What is sustainable at one level may not be at a higher level. And human nature being what it is, we tend to set a marker and promptly forget about it until something breaks revealing that our sustainable idea is not so any longer.
But the big issue with sustainability is that it often does not engage a new paradigm. It simply extends an older and frequently decrepit one. Resilience puts us on a new track with an unlimited future and that’s where I prefer to be.
All this has a practical business and CRM side. I was first impressed with the idea of resiliency while perusing “The Post Carbon Reader” a compilation of essays by writers with serious cred on topics like energy, land and water use and much more. What got my attention, and what inspires this essay, was a report issued by the City of Portland, OR, dealing with how to make that city more resilient to the long term effects of Peak Oil.
Now, I won’t go into what Portland did in any great detail but the very existence of the report made me ask what for me is the obvious question: Do our businesses have resiliency strategies and plans? Bet not. But can anyone afford not to have a plan? If a regional or city government can develop a resiliency plan ought we not do the same for our businesses?
I will probably add to my list of ideas for making businesses resilient over time but for starters, here are three things any, or at least most, businesses can do to help ensure profits in unsure economic times. Of course, they are all mediated by first class front office technologies. How could it be otherwise?
Engage in the Subscription Economy
We’ll see some form of economic bounce this year because there is an election looming, that’s my hunch backed up by much historic data. The bounce might make credit easier to access but the demand for credit — to grow the economy and its availability — may not be well matched. In lieu of licenses and product sales, we need to think again about subscriptions. There is some evidence that customers are doing just that.
I think Oracle’s missed revenues in its last reporting period suggest that we’ve hit a turning point in the conventional licensed software business. I believe the demand for subscriptions is accelerating, so let’s give the market what it is asking for.
I have often said that the two great sticking points for moving more aggressively to subscriptions include changes to corporate business models and to the billing systems companies use. The business model change is a big and ugly issue because it alters revenue recognition and can upset valuations, which investors abhor for good reasons.
But there is no time like a recession, or whatever euphemisms you use to describe this era, for making a fundamental change like this because the economy is roughly synchronized in a trough. Much of your competition is in the same predicament and everyone understands this and that makes this year a great time for the herd to move as one to subscriptions.
As for the billing system, well there’s plenty of evidence that there are companies like Zuora, Aria and many others that can help you through the billing system and billing model change.
There’s no time like now for this kind of action and subscriptions will make your business more resilient, no question.
Deploy UCS
UCS or unified communications systems make a lot of sense for anyone thinking about a resilience strategy. Good UCSs combine calendars, email, text, voice (VoIP) and video in a variety of ways that are dirt-cheap and that enable vendors to efficiently communicate with customers. The UCS is also part of a must-have system of internal communications for many companies. A UCS does its work over the Internet, which is far less expensive than going through the phone company. It’s not a complete strategy because you still need an employee social network but it is a necessary step on your way to becoming a more resilient company.
Ramp Up Your Cloud, Social and Mobile Strategies
Part of cloud and mobile is implied in the above, but not completely. Cloud and mobile are inextricably tied up with social. Subscriptions are best driven by cloud technologies and they enable more flexibility and economy in deploying mobility strategies, not to mention the viral impact on and by social. A good cloud, mobile and social strategy will open up your possibilities for deploying expensive and precious resources, like people, that face customers.
While we’re on the subject a cloud-social-mobile (closobile?) investment opens up other possibilities for involving customers in self-help communities with attendant savings.
Much of this isn’t new but it bears repeating because these ideas happen to work, they have not been universally adopted yet and importantly, because this is the season for implementing plans and resolutions.
Happy New Year!
Forrester Research has been heating up the marketplace lately with a string of interesting reports and forecasts that impact CRM and the front office generally. One that I saw, “Capitalizing on Live Video Chat” by Diane Clarkson, August 23, 2011 talks about the bright future of using video rather than text (obviously) chat in sales, service and support.
I like the video chat idea and I can see many important applications for it, especially in a world that Thomas Friedman over at the New York Times thinks of as “Hot, Flat and Crowded.”
Another report out just last week “Social Enterprise Apps Redefine Collaboration,” speculates that the social software market will be worth $6.4 billion in 2016 up from a mere $600 million last year. I read about the report in a PCWorld article by Juan Carlos Perez of IDG News.
Something in Perez’s fine article caught my eye and made me think:
“Simultaneously, demand for unified communications and collaboration (UC&C) products that offer IM, audio calls, online meetings and video conferencing, will start to drop overall in 2014 because, unlike enterprise social software, they don’t help employees discover peers outside of their work groups with expertise they need to tap, according to Forrester’s report “Social Enterprise Apps Redefine Collaboration,” published this week.
I used to be in awe of anyone who could make such bold predictions about market growth until I tried it myself. There is a methodology to this sort of madness, which you need to adopt or you will go crazy since nobody has a crystal ball. The method boils down to assuming the future will be like the past. A famous and colorful Boston DJ of the 1970s and 80s (I know that dates me doesn’t it?) Charles Laquidara, used to summarize it at the end of his show as, “If the creek don’t rise, if the good lord’s willing, if there ain’t a melt down and if no one pushes the little red button.”
In other words you have to assume straight-line continuity from today through the period you are forecasting. Good luck with that. Our recent experience with “Black Swans” is enough to tell us that straight-line projections are feeble at best. I’m not saying the people at Forrester aren’t hard working or sincere in their research. It’s just that this kind of prognosticating can go to Hades in a handcart without much of a push. Still, for most things it’s the best that we have.
But back to that quote. My reading of the tea leaves says that UC&C will not shrink at all and will most likely grow after possibly being repositioned, here’s why. It appears that the analysis may not take into account the escalating price of gasoline and other transportation fuels. Fuel prices drive the economy these days because there is no slack left in the system. In prior decades when supply got tight prices might have gone up a little but then producers, seeing opportunity for increased profits, began pumping more oil and exploring for even more but that’s over.
Today when economic activity drives energy demands up, higher prices are the result and no one talks about opening the spigot further because production is at one hundred percent and demand is out stripping it. That’s why, even in this economy gas is over three bucks per gallon and partially why American Airlines filed for bankruptcy last week. For a very good analysis of this situation read Chris Steiner’s book “$20 per Gallon.” http://amzn.to/vipoQP
So my view of the future is a bit different. I think it is entirely possible that the social software market will overshoot the $6.4 billion projection (by an integer factor of 3 to 5) and that UC&C isn’t going anywhere but north. The two technologies do different things and there is a market for both. While social software is becoming invaluable in sales, marketing and service, UC&C will, I think, grow into a niche that is still expanding.
According to Steiner’s book, as fuel prices continue to escalate we will find our travel options reduced meaning fewer connecting and short distance flights and that will drive demand for online meetings and video conferencing as well as online conferences. We’ll drive more but at, say, $12 bucks the SUV/land ark will be a quaint part of history and we’ll drive only when necessary replacing face to face meetings with virtual meetings. Add to that the much lower costs for telecommunications services that UC&C can provide and I think we’ll see increased demand for these systems.
You might think that the cost of transportation could simply be built into a company’s pricing models and that those costs would simply be reflected in higher prices. But that approach will simply drive an inflation spiral and make everyone’s products unaffordable. Transportation is going to eat into margins and the only way to fight the inevitable is to reduce demand for energy in your business processes.
To summarize, energy prices and energy availability are the Black Swan in our future. Straight-line projections are often helpful for sorting out the future within a paradigm but we are entering a new paradigm. In this case projections that do not take into account the cost of energy will only provide a false sense of security. Worse, they can cause us to sleep when we ought to be planning and implementing solutions for a very different future.
There’s a huge difference between the enterprise world and the social media community. While there are many signs of life on the social side, the rank and file global one thousand seem for the most part to be clueless. That’s not an indictment, just a statement of fact and maybe opportunity.
At the Enterprise 2.0 conference in Boston last week I got an eyeful of the reality. It’s still very early in this market’s evolution. The vendors are all lined up including the small innovators and the big companies looking to cash in by being fast followers. But what’s missing is the numbers of interested companies ready to be saved by the new solutions, a.k.a. customers. I haven’t witnessed the beginnings of a land rush for social technologies in the big companies that will ensure its success.
Perhaps everyone is tired and cautious after witnessing in rapid succession the rollouts of enterprise ERP and CRM. They were both large-scale infrastructure plays that were as necessary to modern business as they were painful to implement. A few weeks back I posted an article comparing the growth in U.S. GDP and the rise of the information age. From a baseline of $1.6 trillion in 1975 the GDP has steadily risen to over $14 trillion today. Other regions of the world have seen similar expansions.
If it’s not institutional memory holding the market back — and holding back may be too strong a phrase — it could be that people in the enterprise just don’t understand in sufficient numbers yet the only thing that counts. Maybe too few people see a way for social technologies to help them make money. The halls of the Enterprise 2.0 conference were not exactly jammed with pioneers and pilgrims trying to get wise. But don’t get the wrong idea, the show was in a big place and it was well enough attended to call it a success. All I am saying is that the stampede has not yet started.
So what will it take for the avalanche to begin?
For a long time I’ve been harping on the challenges all companies face in demographic changes and most importantly transportation costs. As we discover that fuel price fluctuations will adversely affect business we might see greater adoption of social strategies in the biggest companies.
But that’s asking a lot, here’s why. Back in May, I was in Chicago for a speech and I noted the high cost of gasoline. It was approaching five dollars and at the time people were mad about high prices all over the country. Since then, prices have eased and in many places gas is a relative bargain at less than four dollars. A few years ago three dollars and change didn’t seem like a bargain but it shows what you can accommodate.
Now, this isn’t good news for a couple of reasons. First, fuel prices mirror economic activity. When prices are on the rise, it’s because demand is higher due to increased economic activity. The reverse is also true but it can take many months for the effects to be fully realized as an economic downturn. This latency is a big problem because it separates cause and effect in many people’s minds. As fuel prices fall we reap a temporary gain and think that things are returning to normal but we may fail to notice the country simultaneously slip back into recession. I am not forecasting this, but it’s on my mind.
The second reason for concern is that fuels are transitioning from a cheap commodity to a scarce and expensive one. Traditionally when this happens there’s a round of inflation and the market adjusts by bringing more supply to bear. As I’ve written before, that’s not happening. According to the IEA, global demand is about 90 million barrels per day (mbpd) and supply is 88 mbpd enough of a shortfall to cause the price tightness we see. Instability in some regions is no help either. Fuel is becoming more expensive in an absolute sense and that affects business from raw materials to travel. In a situation where supply is limited a round of inflation will simply breed another round of inflation and in short order, stagnation.
Alternatives include various transportation substitutes including smaller cars, less flying, bio-fuels, trains and electric cars. All of these require at least some modest change to infrastructure, which is expensive and will take many years. On the other hand, the Internet is an already built infrastructure and social media is well developed and understood and can fill in for at least some of the transportation demand by making us more attuned to customers and more responsive to them.
As the transportation issue unfolds it might prove to be the driver that enterprises need to begin thinking outside of their boxes. It’s going to take a lot because we’re not simply talking about adopting a new technology, we’re talking about changing out a hierarchical management structure that goes back to the industrial revolution for something that is distributed, inclusive and very twenty-first century. For some companies that will make implementing ERP and CRM look like child’s play.
I trade business cards like I traded baseball cards before the designated hitter and division play. So I get to see the broad diversity in how people arrange their information for public consumption.
There isn’t much under the sun that you can do differently with cards these days and for many companies — like mine — they are the only thing that actually gets committed to cellulose. So it takes a lot for me to comment on something as mundane as the business card but something occurred to me this week that got my attention.
At the Enterprise 2.0 conference in Boston, I noticed that some companies were omitting some of their usual business card information. One card in particular that I received had no phone number, just some social and email contact stuff. Someone informed me this was a new thing. After years of adding various social handles and extending printing to both sides of the card, a small minority of companies has begun removing vital information like phone numbers.
Perhaps this is simply a way for a social company to eat its own dog food or to encourage me to do likewise, but I don’t like it. It seems like a form of self-mutilation. Removing information, making yourself harder to do business with is no formula for success. In a world of less is more, this less is less.
I have no problem with people attaching additional information like those funky square bar code-like things that I don’t even know the name of. But taking information away — especially when it’s human readable — makes no sense. So if this is a new trend, in all sincerity, stop it right now. Please.
