Salesforce buys (part of) a farm
In an unmistakable sign of the times, Salesforce announced today that it bought 40 megawatts of a new West Virginia wind farm’s output. Somehow I missed their pledge to achieve net-zero greenhouse gas emissions by 2050 or to eventually power 100 percent of global operations with renewable energy. But leave it to them to find new ways to get into the news and to be hyper relevant in the process.
This provides an opportunity to talk about one of my favorite subjects, energy and the environment. It’s worth noting that the farm is still under construction but that it should be operational in about a year. Moreover the agreement calls for Salesforce to purchase 125,000 megawatt hours of electricity per year, more than the company will use in 2015.
It’s also worth saying that we don’t have a true national grid for electric power but that most of the power generated will be fed into the grid supporting the majority of Salesforce’s datacenter load. In such a situation it’s possible that some electricity will be sent elsewhere and that Salesforce would receive an equal amount of power from elsewhere. No big deal but if you’re thinking long term, a national grid really needs to be on the agenda.
Also worth noting is that Sonoma Valley is home to a public company (Calpine) that generates power from geothermal vents in the earth’s surface. Most of that power goes to San Francisco to the tune of supporting well over half of the city’s needs. So it turns out San Francisco is a rather green place to begin with.
I think the real news and benefit of today’s announcement is that by signing a 12-year contract Salesforce is providing demand that makes it easier for investors to put up the considerable funds needed to build out such a project. The press release from Salesforce says as much. According to Hervé Touati, a managing director at nonprofit Rocky Mountain Institute and head of the Business Renewables Center (BRC), “2015 has proven a record-setting year, with more than 3 gigawatts of wind and solar transactions signed by corporate buyers, compared to 1.2 gigawatts in 2014.”
Nonetheless only 20 corporations have gotten busy in this space according to the release so there’s ample opportunity for others to pioneer in this important effort too. That’s how a cleaner environment and global warming abatement are going to happen and I hope 2016 sees a lot of announcements like this.
Congratulations, It’s Over, What’s Next?
Forbes has an interesting post by Tien Tzuo, CEO of Zuora and one of the leaders of the subscription revolution in which he discusses the coming of age of the subscription economy. Coming of age might sound like a contradiction to say the least—where has everyone been for the last couple of decades? Subscriptions are down and in a curious way, this is the point.
You ought to read the post almost as an echo of Mark Twain’s “Innocents Abroad” because it discusses Tzuo’s first encounter with international governmental organizations through his recent participation in the G20 meeting. To be very brief, the G20 is the group of the largest countries by economic output and its finance and political leaders gather annually to discuss where this planet and its economy are going. You might have also heard of the G7 or G8 (depending on whether or not Russia is misbehaving), which is an even more exclusive group.
So Tzuo was invited to participate in some sub-group meetings for business and technology in Antalya, Turkey, site of the recent confab. Now you have context. Tzuo is happy to report that the word “Internet” broke into the collective consciousness in the form of a communiqué from the recent meeting with an assist from him. That’s how long it can take for an idea that we have regarded as foundational for over two decades to become so mainstream that it gets included in the thinking of the G20.
This should surprise no one. When you are dealing with the planet’s economy and the 20 largest players in it, then it’s reasonable that only the biggest ideas bubble up and the Internet (specifically subscriptions) is finally breaking the surface. But the fact of this emergence suggests that the Internet and even subscriptions are no longer the disruptive innovation we’ve nurtured for much of our working lives.
The technology revolution ushered in a world of data driven business processes, information sharing, social media, big data, analytics, tiny computers now called devices, and use of the word “online” as a prefix as in online shopping. It is now so integral to what we do that it is its own paradigm, rapidly replacing older structures and business models like face-to-face commerce, print media, and (gulp!) customer loyalty. Online everything is having enormous impacts on how we live and travel and it is now safe to say that the revolution is over.
To be clear, we will not retreat into some dark age and technology will continue to drive the global economy for quite some time. But when you think of the power that you can hold in your hand in the form of a device today, you can see that it’s getting rather hard to make a technology product at a profit and there is an important lesson. Technology and information are commoditizing the way that everything else from textiles, to cars, to TV did. They are all important parts of the global economy today but none drives it.
We shouldn’t mourn information technology’s passing and as I said, technology is with us now for better or worse. Interestingly another disruption that’s been on the horizon for decades got a major boost over the weekend when the global community ratified an agreement summarizing individual nations’ efforts to stem carbon pollution and save the planet from overheating.
From here on the technologies that will have venture capitalists’ greatest attention will be those that reduce emissions, generate clean electricity, and even take carbon out of the atmosphere. This new paradigm will be the work of a generation and people in the job market today will increasingly feel the gravitational pull of energy and environment in information, finance, product development, sales and marketing, and much, much more.
The new paradigm will be heavily dependent on the information management structures and tools that the current generation—all of us—have wrought. It is a worthy legacy.
2015, the year of intelligence
This year we traded in terminologies going from big data and analytics to digital disruption as the market moving meme. I am not sure either one hits the spot but they give me something to write about. Other things happened in 2015 too but I’m just going to focus here. It seems to me
we focus on the symptoms and not the root causes too often in this business.
Symptoms sell software in part because they instill a sense of panic in the buyer. If you don’t buy this new framis or widget you’ll fall behind the competition and then we know what happens—you buy a one way ticket to Palookaville, (and you could have been somebody).
That’s why we still see new products guaranteed to accelerate the sales cycle or lift customer loyalty to new heights. In reality both are very important and they are laudable goals but our symptomatic approaches ensure very little changes because we don’t examine and change the basics, we get new weapons and shoot at the same targets—in the fog.
In sales we long ago reached a ceiling, a place where further acceleration may no longer be possible because we’ve done everything we can to accelerate the vendor side of the equation. On the customer side, they still make deliberate decisions that require thought and application of energy. Customers operate at customer speed and that becomes the speed limit of sales.
In the last year though, we saw multiple vendors begin delivering not analytics per se but intelligence, the ability to stack rank options in real time and learn from past events to provide vendors with next best ideas for what information to provide or which products to suggest. The result has been relevance as in reducing the customer’s thinking time because a suggestion makes reasonable sense, and you know what? Relevance actually can help accelerate vital business processes.
So, I’m giving the whole industry my coveted Awesome ‘Possum award for delivering an innovation that offers the possibility of actually accelerating business activity for the first time since some genius decided to put a telephone on each sales rep’s desk, or when reps were reimbursed for mileage, or maybe it was when we all got PCs and networks or, no wait I have it, since a bunch of geniuses invented CRM. Yes, that’s it, I think intelligence is that important and it really got cooking this year.
Now, the big issue with intelligence technology is technology. You can’t do intelligence-based business without it and that’s where the root causes thing comes in. You could spend a lot of time and effort next year reading about digital disruption and attending lectures on the subject and I am fearful that you’ll end up buying some great tools for unspecified reasons. We buy tools for the results they’ll enable but often we forget that the tool and the result are different and that we need some schooling in the problem and its solution before we make ROI on the tools.
Digital technology—quick sidebar, why the insistence on using “digital?” We’ve been in a digital revolution since World War Two when Alan Turing and company broke the German naval code. Anyhow, digital technology has crossed a Rubicon of sorts as best described in Brynjolfsson and McAfee’s, “The Second Machine Age.” They say that we now have so much processing power at our command that machines are beginning to do truly amazing things like mimicking real intelligence.
The year now ending was good for introducing a raft of products with intelligence and it certainly whet our appetites for more. It’s more important than it ever was to think clearly about that next purchase because the pace of innovation is what’s really accelerating and with that acceleration comes greater risk of making a mistake. So, if all you do next year is purchase anything that has the word intelligence in its name, you might find yourself with that one way ticket to Palookaville after all. Happy Holidays!
Engaging at moments of truth
Lost somewhere in the pile that is a current research project, there’s an article on customer loyalty that says that over half of customers who recently exhibited loyal behavior towards a vendor said that they’d switch to another vendor in an instant. The question prompting this answer is whether these customers would switch for a better deal. It was a trick question trying to determine loyalty.
In some ways this is not surprising, who doesn’t want a better deal? But it also encompasses all that is not well in our approaches to customer loyalty today. We’ve developed a culture in which price is the primary motivator and one’s effort in the marketplace is all about getting the lowest price. But getting a low price and obtaining a great deal are not the same. For instance, the price of a car and the perception of getting a great deal hinges on the car’s brand.
We have also trained customers to expect a reward, discount, special deal, or whatever you want to call it, just for showing up. It makes the 8 year-old soccer league look positively draconian. In fact, we’ve so confused the idea of customer loyalty with rewards that both are practically useless. We reward customers, they collect points, miles, and stamps, and we consider those acts of collection to be evidence of loyalty. But if the article is to be believed (wish I could find it) we’re deluding ourselves, thinking that rewards and loyalty are the same, or perhaps that one breeds the other.
They are separate and distinct though. Rewards, or discounts which is what they amount to, were once thought to be tools for optimizing something called the marginal consumer—someone who didn’t see value at your price point but might be induced to make a purchase at a lower price. Gathering trade from the marginal consumer is a way to increase revenue, even if you can’t get the full price and it’s particularly useful in a market that’s growing at the rate of population and no faster. It’s a way to goose revenues even if it erodes margins (and it is the direct ancestor of the punch line, “We’ll make it up on volume.”) What happens though if every customer becomes a marginal one? Specifically what does this mean for list prices? You already know.
Nevertheless, current reward programs are working, or they’re working well enough. Of course, they aren’t making customers loyal and they aren’t enabling vendors to charge a premium for their wares, so maybe they aren’t working. When I hear rewards I automatically think about the wanted posters in the post office. We want you but you probably don’t want us. Right?
Just when you think things couldn’t get worse for loyalty programs, another report (which I can find) from McKinsey, “The Power of Points: Strategies for Making Loyalty Programs Work,” by Liz Hilton Segel, Phil Auerbach and Ido Segev, delivers the devastating news that, “Companies with loyalty programs posted a 2.28 percent comp sales increase, while those without loyalty programs saw 4.26 percent gains.” Just because you’ve got a loyalty program doesn’t mean it’s working
To add insult to injury, there are many companies that still don’t use rewards or loyalty plans that are doing just fine. Apple comes to mind, they have a robust business and everybody pays list price. Starbucks, mentioned last time, has more than 10 million customers in its loyalty program who are actually loyal by various measures like buying more.
To be clear, loyal customers are those who would make repeat purchases even if there were no inducement. Over time loyal customers buy more, expand their exposure to your brand, and they become more profitable because they know and understand your drill.
So what’s the similarity between companies like Apple and Starbucks and the rest of the trade who are giving the store away and barely making it? Engagement plays a big role in loyalty. Presumably only masochists engage with vendors they don’t like so engagement seems like a good place to start, but what comes first? Engaged customers become loyal over time but you could say that every coupon clipper in the world is therefore engaged, so what’s the deal?
Simply put, when customers engage with a vendor on an area of mutual interest there’s the necessary spark for loyalty. Note the mutuality because it’s important. Coupon-clippers are engaged but the vendors really aren’t and it takes no special talent to offer a discount. But vendors have to be able to pick their spots for engagement; to engage in everything is profoundly wasteful. That’s why I advocate for identifying moments of truth. They are the things that customers care about and that vendors need to uncover so that they can engage in a mutually beneficial way.
To engage customers this way is a route to developing their loyalty and as more vendors discover this they effectively train customers in new practices. All of this makes older rewards programs seem quaint.
The next time you’re wondering how to generate loyalty in your customers or speculating about why they take the discount and run, don’t automatically assume that “customers have changed” or some other marketing cliché, and what you have is all you get. Customers always do what they’re supposed to do and if it’s not what vendors want them to do, then it’s likely because vendors haven’t figured out how to ask the right question.
End of year goodies
End of year brings out some interesting goodies from various workshops competing with Santa for big kids’ attention. Some of it is pretty good stuff. Here’s a sampling of the best end of year product announcements from the cloud community designed to put you in the post holiday, already-back-at-work spirit.
Xactly Inspire
Xactly, the sales compensation experts in the cloud, announced Xactly Inspire the other day. It’s the kind of tool that managers will love because it gives them both insight into what’s happening in the sales funnel while providing advice about how to use it. For a very long time, sales managers could have one but not necessarily the other so this announcement should please the sales manager who has everything except quota.
This cloud-based coaching and on-boarding solution enables managers to monitor and predict sales activity based on the data flying around in the SFA and compensations systems. So what, you might say, we could always do that in sales meetings, what’s the big deal? Ummm, it’s the meeting part that I think is most interesting.
We’re always talking about ways to boost sales rep productivity but it rarely dawns on us that one less meeting could do a lot to put reps in the field and maintain their managers’ sanity and blood pressure. This is essentially an analytics application designed to derive meaning from the chaos that is sales—something that could actually accelerate the sales process. So, I’d give this innovation 5 out of 5 reindeer in my magical mythical year-end scoring system.
NetSuite OneWorld
Yes, we’re not going in alphabetical order this time. I do this to discourage entrepreneurs from naming their companies AAAAsoftware and the like, an idea that comes directly from the analog world of the yellow pages and bail bondsmen.
Anyhow, NetSuite has for many years aimed at providing a back office suite in the cloud that enables any size of enterprise to manage a global empire completely in the cloud from any terrestrial location. That’s a tall order considering business models, ecommerce strategies, currencies, languages, accounting rules, and global opportunities.
NetSuite has just put a marker down on a slew of new and improved products with names like Multi-subsidiary management, Multi-location inventory management, Multi-book accounting, global item and vendor records and more. I don’t understand some of this but it looks like the people who need to, indeed do.
NetSuite is on the threshold of being a billion dollar company and this functionality should do a lot to propel it to that club. If you’re counting, that would be 2 billion-dollar companies for Larry. Not too shabby. NetSuite has been a solid 4 out of 5 reindeer company for a long time but this introduction deserves an extra Rudolph so it’s 5 out of 5 for me here.
Salesforce
Several years ago Salesforce passed a tipping point, which makes it virtually impossible for it to not introduce products, so big has its footprint in platform technology become. It also doesn’t hurt that Salesforce buys compatible companies with leadership teams and technologies that bolt together into its vision.
One of its latest wrinkles is to offer an array of solutions for both the enterprise and the SMB markets, the better to maintain its pricing at the higher end, I think. This week, Salesforce introduced Opportunity Management for its SMB service and support offering, Desk.com. The idea is on solid footing. In small companies especially, employees wear multiple hats, the situation is more fluid and people take on the responsibilities that excite them, at least in my experience.
Opportunity Management for Desk.com relieves service people from the bureaucratic overhead of telling customers that they can’t take an order but that they can connect you with the sales desk which will only place you on a brief hold with—pick your least favorite music, it’s always there.
Seriously, though, the lines have been blurring for a long time between sales and service and this introduction simply follows the trend of enabling SMBs to be more responsive to commonsense customer needs. Another solid 5 out of 5 Reindeer performance for the company.
Selfie-mirror
Speaking of commonsense, the Selfie-mirror provides a bit of comic relief just when you might need it. Not in line with the holidays, my first impression of the mirror was straight out of the Brothers Grimm—“mirror, mirror on the wall…” that should be enough to give you the concept though you can get more here in a short video. Is this finally the future of the telephone beyond your pocket?
The futurist in me saw huge possibilities. The mirror has an HD camera, hi-fi sound, and Internet integration built in. Some of its uses include recording and transmitting anything you record in the mirror, which would make video blogging or social media participation a snap. The mirror also has home security benefits that enable the user to monitor anything happening in front of it at any time.
What’s impressive about this, to me, is merging multiple advanced capabilities into a single product unimaginable just a few moments ago. It is a great example of niche creation and of supply creating its own demand. Selfie Mirror gets 6 out of 5 reindeer for innovation. Don’t ask me how you get 6 out of 5, it’s part of the magic of the season. Enjoy yours!
