October 30, 2012
Well, the good news, as I survey the neighborhood on the day after is that we survived. Boston had its moments with more than a quarter million homes without power, but it is nothing compared to the reality of New York City and environs. We were relatively lucky on this one.
As I write this I am surveying articles about flooding in lower Manhattan and a curious story in the Wall Street Journal has me thinking. The NYSE was closed yesterday for the storm and today it will be closed again according to the story but curiously, the exchange is denying there has been any damage to the trading floor as in,
We stress that, as of now, there has been no damage to the NYSE Euronext NYC headquarters that would impair trading floor operations,” exchange officials said in a notice to traders.
Perhaps the data centers where all the clearing goes on were not as fortunate? The article goes on to discuss contingency plans. Whatever.
Maybe the exchange has done a bang-up job of contingency planning for just such an event or maybe it was looking forward to the complete melting of the ice caps. Whatever happened, and for whatever reason, the exchange is not operating today. Hurricane Sandy has provided a vivid demonstration to many powerful interests of the greater power of nature and it has reminded us that no one is immune to nature’s fury.
All this comes at a time when Americans are believing more in the assertion of global warming by scientists. A new report published in October by the Yale Project on Climate Change Communication had the following findings, published in the LA Times,
— Those who believe global warming is happening are more certain than those who do not. Over half of Americans who believe global warming is happening (57%) say they are “very” (30%) or “extremely sure” (27%).
— For the first time since 2008, more than half of Americans (54%) believe global warming is caused mostly by human activities. The proportion of Americans who say it is caused mostly by natural changes in the environment has declined to 30%.
— A growing number of Americans believe global warming is already harming people both at home and abroad. Four in 10 say people around the world are being harmed right now by climate change, while 36% say global warming is currently harming people in the United States.
Interestingly, the 57% who said they believed in global warming is a rebound number. It was as high as 71% in 2008 just before the financial meltdown.
If there is a silver lining to any of this, and you might need to have a pretty tough exterior to say or believe this, it might be a changed attitude in the ranks of the Masters of the Universe especially the climate change deniers who would have much to say about taking effective action because it costs money.
There are two ways to take such effective action. One is to build a dyke around your property and insulate yourself from the worst effects of another once in a century storm. The other is to take systemic action to cure or at least mitigate the worst effects of climate change for the planet.
Now that Wall Street is closed for another day, just as a precaution you see, perhaps powerful people will take a moment to reflect on their positions.
You might be tempted to consider social marketing just another idea in an endless stream of things dreamed up by the software industry (and pundits like me!) to generate more business. Well, you’d be right about some of that but I’d like to argue that the idea is more than hype and is, in fact, in synch with the times.
Conceptually, marketing and sales have not changed for a very long time. It’s all about finding someone with a problem to solve and budget for the purpose. It doesn’t matter if the situation is business to business or business to an end consumer, it’s all about finding a need and filling it. I can agree with that but at the same time I know that if this is as far as you take it you’ll starve.
Look at what’s going on in the marketplace.
Things are getting incrementally better nearly four years after the bottom fell out of the economy but CFOs still watch budgets like hawks. Demand is still squishy everywhere and the gross domestic product of the U.S. — and the whole planet for that matter — hasn’t grown in five years.
Moreover, new product category introduction is low, and this is very important. When a category is new everyone, at least in theory, needs it and sales people do great business. Marketers’ jobs are streamlined too. They need to focus on building brands and communicating the basic features and benefits of what they have. Products are also relatively simple. They typically come in one flavor and function as general purpose cousins of what they will eventually become as the market grows and differentiation sets in.
If you take an objective look at most of the marketplace today that’s about where we are. Established markets are already crammed with products that may not be the latest and greatest but they work and customers need compelling reasons for buying what’s newest.
You might say, what about products like the iPhone or the iPad? Every time Apple comes out with a new version the market goes wild and buys the new product even though the old ones still do their jobs. That’s all true but the phone industry has a different cadence run by the planned obsolescence embedded in the service contract.
After two years, you get a new phone and a new contract. If you don’t you stay on your old plan paying the same rate. Effectively, you pay the same rate to use a new phone or to stay with the old one, so it’s no surprise that iPhones sell briskly and no surprise that the company sells an increasing record number of new phones with each introduction. Every two years there are more “old” iPhones than ever and more people ready to change. But this is a digression.
In today’s markets, where there is no forced obsolescence, we need other reasons to buy new and there are smaller numbers of new buyers entering the markets for the first time. Smart vendors have realized that this means taking a different approach to sales and marketing. Rather than the selling-to-anyone strategy of early markets, smart vendors today recognize that they have to model who their customers are as well as model the sales cycle. For many this means using social tools but it also requires a different set of techniques with the tools themselves.
In one approach, marketers simply substitute outbound social media for things like email and direct mail. This gets them into social but not very effectively since their technique is still decidedly old school but with new technology. In my research, more vendors find themselves right here at a transition point somewhere between conventional marketing and social marketing.
The other approach, which I think is closer to “real” social marketing, marketers make great efforts to capture customer data so that they can filter it for telltale signs of interest. The same approach also works for service organizations seeking signs of customer dissatisfaction. That’s all good but it is also limited. If a vendor relies on keyword filtering or hashtags it will miss many instances that need a little nuance in the filtering.
The nuance takes a lot of forms. I once did a small project in which I searched for sentiment. My criteria were simple. In repeated Google searches I looked for two word combinations, a company name and the word ‘sucks’. Now, I will admit this was crude but it was also extremely effective. Suck may be the generic summation and judgment in our society for all that is wrong in any situation. My searches always came up with hits — hundreds of thousands of them.
So, the experiment proved a point but it also proved to be a rather blunt instrument. The search approach did nothing for a legitimate cry for help like Company + Product + Problem unless I made an explicit search. But you can see where this is going. If you had a way to do all kinds of searches at once you could turn up signs of people interested in a solution or a product category, people looking for help and people upset with something related to your business and much more.
To get there you need analytics and not just one kind but several. Humans can determine the difference between someone with a real problem and somebody just being sarcastic. Computers need to do multiple scans of the data using different software tuned to each to arrive at the same conclusion more or less.
In social marketing today there is a proliferation of software packages that help marketers to get close to understanding customers and markets in multiple dimensions. There are tools for emotion analysis, natural language processing (NLP), predictive and trending analytics, affinity and segmentation and influence.
Last week at Cloudforce, New York, salesforce.com announced the Social Insights Partner Ecosystem, a partnership between third party analytics suppliers and its Radian6 division. The announcement’s significance is that Radian6 users can now process their social data through as many filters as make sense for their situations. This was an important introduction because it addresses the way we market (and sell) today and it’s different from the way it was several years ago.
Now let’s go back to our original discussion. In a marketplace as constrained as today’s it’s critical for vendors to understand at a very fine grained level what customers are thinking. Are the installed customers generally happy? What are their simmering issues? Might we want to proactively address those issues before we introduce the new version of the product that won’t be successful unless we have significant buy-in from the base?
What about the possibility of gaining net new customers from the competition? How satisfied are our competitors’ customers? What openings might there be? How can we exploit them?
Don’t for get brand new customers. What ideas are trending in the market that relate to our business? Finally, are there new product ideas lurking in the data stream?
To me answering these questions is the key to successful social marketing because they are crucial to success in business today. Salesforce’s announcement suggests to me that they continue searching out Blue Ocean opportunities — markets and niches that have either not been penetrated at all or that have only been lightly touched. I expect that our dependence on social marketing will increase and that the approaches now being proposed through announcements like this will be critical to future success.
At Cloudforce, New York last Friday, we heard a smattering of things we also got at Dreamforce. That was part of the plan because Salesforce bills its regional events as a chance to bring Dreamforce to the customer. As proof I heard that Marc Benioff and crew are off to Japan this week to do it all again and there are various other trips like Europe that they also do. That’s quite a travel schedule.
One of the less well-known parts of both events is the press conference held immediately after the keynote for members of the technology and financial analyst communities as well as the technology press. It’s also the most intimate part of the whole conference, the time when we get one on one with Marc and the atmosphere more resembles a graduate seminar than anything else.
Of course, Benioff has to maintain a certain reserve given his status as the head of a publicly traded company. Questions about future earnings are not encouraged and they can’t really be answered but people still like to ask. It’s fun to watch the non-answers.
Two ideas struck my radar in the press conference — one, the idea that Windows is “over” but also, a more mature attitude by Benioff toward competition. First Windows.
This wasn’t the first time I have heard Marc say that Windows is over but this time it had the ring of truth rather than being more like the hyperbole of a competitor. Benioff thinks Windows is no longer necessary and when you say Windows you might also include OSX or any other operating system whose purpose is to provide a general purpose operating environment for applications.
You know this in your bones by now. With applications and data becoming increasingly cloud resident, a much smaller and more secure operating system that supports a browser and not much more is about all you need. Google Chrome is a kind of new era OS and the Chromebook a new device that leverages these ideas. So the stage is apparently being set and Benioff thinks that Windows 8 will be an important inflection point in the history of the operating system.
You can already see problems with Windows revenues especially in the latest numbers the company reported last week. The Windows Division’s revenue was down 33% year over year and the company’s net income was off 22% with revenue down eight points over the prior year.
Microsoft has become another example of what Clay Christensen described in The Innovator’s Dilemma of a company wedded to its golden goose unable to pivot to the new revenue generator in part because the new generator would force revenues down. New things cost less and in the ever-ongoing product commoditization cycle less means less and you have to make it up on volume — that’s the cloud.
So, devices are what’s driving the market — the handheld a.k.a. phone and tablet, which come in multiple sizes for different applications. Devices use stripped down operating systems like iOS, Android and Windows Mobile (and Chrome) and users spend much more time in a vendor’s site or app than ever making the general purpose OS less and less necessary.
Microsoft has more or less seen the same thing coming, which explains at least on one level, the company’s rush to the cloud. You might even say similar things for Oracle and its latest release 12c. It goes without saying that the UI and the data center are different places and operating systems will continue to be as important in the data center as the air you breathe, at least for now. But Oracle is showing that it understands the new reality though it isn’t necessarily playing at the same level as Salesforce, which brings us to my second point.
I also saw a more mature attitude about competition than I could see just a few years ago and I think that was at least in part because Benioff knows he’s winning. He made the comment that the competition used to say they had a better approach than Salesforce, as in Larry Ellison’s words that cloud computing was all vapor. Competitors used to say that cloud or SaaS was dangerous to your business, that it was not secure or any of a hundred other things designed to spread FUD (fear, uncertainty and doubt). But that’s ancient history.
Now, Benioff noted, all the competition is saying, “They have what Salesforce has”, which is typically a variant of cloud computing designed to provide infrastructure as a service (IaaS) and thus keep customers locked in. Nevertheless, in other words, the dynamic has shifted and the competition has learned that is has to play a new game.
Finally, one more impression. It seems that Salesforce has now articulated three distinct ways of socializing the enterprise and they’ve done a good job of showing how their products apply in each case. The three cases involve socializing the vendor-customer interface, socializing the employer-employee interface and socializing the man-machine interface.
The vendor-customer interface is the oldest challenge and the place where Salesforce and CRM got started. The employer-employee interface is a bit newer and it is still being fleshed out but Salesforce and its partner ecosystem with companies like Jobscience, are populating the market with credible solutions. The man machine interface is both the newest and possibly the thing most dreamed about for the longest time.
Much of the advancement is coming by way of Chatter, which is advancing on all fronts. With its suite of socialized business solutions Salesforce is now able to approach its customers on multiple levels. Socializing the enterprise will be a slow process and there is no telling which socializing approach will first appeal to customers. For example, GE and Coke are apparently starting with the man-machine interface but it will be logical to expect success to breed success. Success in one area like the man machine interface will give a company confidence to try something in another area like the vendor-customer interface and in so doing a company will socialize itself. Most importantly, and this should really be in ALL capital letters, the economy will be socialized as well.
I am fond of studying macroeconomics and looking at long-term economic cycles called K-waves after the Russian economist Kondratiev. From Wikipedia we get this on the Kondratiev cycle:
Kondratiev’s economic cycle theory held that there were long cycles of about fifty years. In the beginning of the cycle economies produce high cost capital goods and infrastructure investments creating new employment and income and a demand for consumer goods. However, after a few decades the expected return on investment falls below the interest rate and people refuse to invest, even as overcapacity in capital goods gives rise to massive layoffs, reducing the demand for consumer goods. Unemployment and a long economic crisis ensue as economies contract.
If that sounds at all familiar you understand my interest. So my big question as I continue to watch and report on the evolution of the Social Economy is simply to try and understand if social is the new K-wave or at least part of it. It’s not the only contender and things like raw materials and resource management and alternative energy development seem to be more germane as fundamental K-wave candidates. But social will at least be an important substrate for the next K-wave linking together people and, increasingly, devices and that’s why I go to events and try to listen carefully at press conferences.
Today at Cloudforce New York, being held in the Jacob Javitz Center, Salesforce.com unveiled a powerful new approach to marketing data analysis designed to give marketers much clearer insights into the social data they collect. The company says that this insight will drive more actionable information and sales.
Just what the social doctor ordered, I think.
One of the big issues of social marketing has been the under appreciated need for analytics — but analytics specific to a task. It’s fine to capture a lot of customer data for analysis and many of us have discussed that but what’s been downplayed in the conversation has been a sense of what the analysis is supposed to do. For many, “analytics” or “analysis” has been a black box and “sentiment” a far too generic word.
But if you spend any time thinking about the challenge you realize that the key question in analytics can be phrased as, What kind of analytics? or more bluntly, What are you looking for? There is a saying I am fond of — if you bring your car to Meineke you’re going to get a muffler. That’s not saying anything bad about Meineke it’s just an updated way of saying that the man with a hammer sees all the world’s problems as a nail. Bad marketing follows that logic.
Social marketing has been there but it is moving away from a monolithic approach to something more nuanced and Salesforce’s Radian6 group is providing some important leadership.
A raft of new companies has sprouted up over the last few years that focus on things like emotion, natural language processing (NLP), predictive and trending analytics, affinity and segmentation and, of course, influence. But these are all point solutions. The problem with this richness is that a marketer has to have access to all these tools if he or she expects to begin to understand what all the collected data actually says.
Today’s announcement ties this all up in a bow. Salesforce is announcing its Social Insights Partner Ecosystem, which consists of twenty analytics partners with a variety of analytics capabilities to provide the insights that social marketers crave.
Less celebrated but definitely worth mentioning is the Radian6 platform technology that provides a common interface for all the partners to access social data, perform analysis and submit the results. The platform is open and additional analytics partners will be added in the future. Radian6 had most of this in place when it was bought by Salesforce but in the intervening months, the companies have focused on the business and technology merger, so it’s good to see this return to the knitting.
The result is a system that can collect data and turn it into useful information — they call it insight — upon which marketers can take action like making campaigns and drive decisions and sales.
But marketers are not the only beneficiaries. For instance, service and support workers accessing the social channel can use sentiment, emotion and natural language analysis to find customer situations where a service call is in order. At least in theory, no customer with a legitimate problem will be able to Tweet #$%^&! COMPANY without a reasonable expectation of action from a vendor using this tool.
That’s 180 degrees away from old fashioned calling and waiting in a queue. More importantly, though, all the various forms of analytics make it possible to screen out the false positives too. That means being able to focus on the issues that really matter while leaving behind the sarcasm or, hopefully, the double entendres.
Is it perfect? Nope. Does it have to be? Nope, again.
At the end of the day these are sophisticated screening tools designed to take the majority of the noise out of the data. It’s like using a powerful magnet to find your needle in a haystack and that’s progress. As time goes on the screening becomes more sophisticated, the magnets more powerful and that’s what’s important.
I can’t help a self-reference here.
Over the summer ninja analyst, Esteban Kolsky and I did some research into social media adoption and customer attitudes. We found that the marketing department followed by service and support were the more advanced groups employing social media in the enterprise. But we also discovered that most of the uptake was in the FLiT group — Facebook, LinkedIn, Twitter — social products, plus blogs.
But these are all outbound channels and there was a certain amount of latent frustration noted in the research that social wasn’t able to do more than provide cheap outbound contact. Using social output without pausing to consider the customer’s needs serves no one and you could say that social marketing doesn’t even start until you have first analyzed the customer situation. Salesforce announced more sophisticated analysis and insight today which leads naturally to action and deals and that is what I think is so important about today’s announcements at Cloudforce.
So, just about a month after Dreamforce, Salesforce.com is coming to New York for one of its regional Cloudforce conferences. The event will be at the Javitz Center in Manhattan on October 19. Salesforce is expecting six thousand attendees.
The focus of the event is supposed to be on the newly re-announced Marketing Cloud — the amalgamation, so far, of Buddy Media and Radian6. I will be briefed under NDA about the news to be announced at the event but that hasn’t happened yet so, hey, let’s speculate.
As many of my colleagues have suggested, the Marketing Cloud is a good and important down payment on a full-featured marketing component but it is heavily weighted toward social marketing. They expect more acquisitions primarily to beef up the Marketing Cloud’s lack of a conventional marketing campaigns element — the kind that runs traditional marketing programs. I am not so sure.
Salesforce already has a bevy of more or less conventional marketing partners in the AppExchange like Eloqua, Marketo and others. It’s true that these vendors are not monogamous but so what? They have good connectors and integration and are doing everything they can to carpet bomb, er, I mean cover, the Salesforce installed base so why buy what’s free?
My instincts (which are right about half the time — and less when I’m driving according to my wife) tell me that Salesforce is going in another direction. The company has always exhibited a Blue Ocean Strategy approach to its business seeking out niches that haven’t been named and I expect it to do the same in marketing.
That means they’ll concentrate on the myriad ways to market in the social world. If they make an acquisition — and I bet there’s nothing on the radar right now — it will be to beef up social marketing not conventional stuff. That would mean companies like HubSpot or Awareness or Nearstream or others (some in the CRM Idol contest) that use a healthy dose of new age thinking and social media to access and communicate with customers.
So, what to look for in New York? In addition to October baseball, I think you’ll see elaboration of the basic message doled out at Dreamforce. The San Francisco session was packed with information and image-making and there really wasn’t time to unpack all of what the Marketing Cloud means for customers. I think Cloudforce is the place where the unpacking will happen.
Salesforce has been great at three-pronged marketing for a long time. That’s where they tell you what they’re going to tell you, then they tell you and finally the circle back to tell you what they told you. I think they’re at part two and Cloudforce New York will be more of a deep dive.
I could be very wrong but that’s what it means to speculate. Right?
