In a posting last year, I discussed the basics of cloud computing and its pros and cons . This posting looks at the progress cloud computing has made since then.
First a quick review:
Last year, I defined Cloud computing as sharing of computer, network and related applications such that they are virtual to the user. The attraction to cloud computing is its scalability, minimum start-up costs, selection of business applications, flexibility and cost savings (capital investment and/or a utility cost structure).
The cons or things to consider are the SLA agreements, actual performance, what vendors actually offer, what are the IT staffing requirements/ impact and Security.
So where are we today? First of all the definition of cloud computing has morphed from the original concept to, well you name it. There is the private, the public and the hybrid cloud, SaaS, IasS,PaaS, data storage, “big data”, data management, managed service, hosting, off premise and on premise, multi-tenancy versus single or few end point connections; the list goes on and on. I think there are cloud computing offers for dry cleaning and dance instructions, you get the point!
Given this proliferation of cloud computing definitions, one can see why various reports indicate there is a tremendous growth in cloud computing. The truth probably lies somewhere in between, meaning there is an increase in outsourcing, an increase in contract support of various applications like payroll or human resources, while no real growth of the true cloud computing because it is not actually available.
There are also surveys that indicate significant concerns that putting data in the cloud also carries risks, with a majority of the respondents citing security worries as the top barrier to their adoption of cloud computing. An article titled “Cloud Security” by Kaplan, Rezek and Sprague added a number of additional concerns, among them are compliance of the infrastructure. They ask, are you buying into a cloud architecture/infrastructure/ service which is not compliant? Another concern is audit and reporting with the concern that you may not have the ability to provide the required evidence and reports to show compliance to regulations such as PCI SOX or HIPAA? Can you satisfy legal requirements for information when operating in the cloud?
This article also points out that there has been a significant increase in web application vulnerabilities, so much so that these vulnerabilities make up more than half of the disclosed vulnerabilities over the past 4 years (67% of all web application vulnerabilities had no patch in 2009.).
Along with these concerns about compliance and security for more traditional IT resources, CIOs, CISOs and CEOs now have to worry about managing risk and building trust within a new computing environment, while facing increasing scrutiny and regulatory requirements.
Additional concerns of cloud computing are administration, management of the cloud and its related functions, Total Cost of Ownership (TCO), privacy issues, backup/disaster recovery, and Virtualization (ability to see the data, traffic, status, etc of your “network” and /or application and users), so one can track, monitor and account for one’s own activities.
So here are my suggestions/comments this year:
First, cloud computing is a moving target that is being caused by vendors jumping on the proverbial “band wagon”. You should cut through all the clutter and group vendors by what they can actual do, not what they say they can do.
Second, you must nail down your definition or needs for cloud computing. Do this by organizing a priority list relative to what makes sense for your company to have in the cloud. Consider what might happen to your company and its reputation if the cloud “fails” or is compromised. Will you actually reduce costs and /or personnel or will you actually need more people and time requirements. If you are having a tough time making a list, than make a list of services that do not make sense to be in the cloud. Examples are specialized/custom software or applications that require unique hardware.
Third, after you have categorized vendors, research which company aligns best with the application(s) that might be beneficial to be in the cloud. Does this company have the required support, a comprehensive SLA, adequate hardware, software and applications? Will the cloud you select be private or shared (and will you support and/or allow mobile access) and is your competition one of the clients of the vendor you are considering?
Fourth, develop a cloud computing strategy and test it throughout the organization and do a complete ROI or TCO to capture the real cost savings and investments. Will the charges be a flat rate, a utility cost by applications, or by user/end points or a combination of the charges? Word of caution, do your analysis both internally and externally and don’t make any assumptions!
Fifth, place a sign on the side of your company building stating you are utilizing cloud computing ( similar to having a home security system, you really don’t have to buy the system, just the signs that go on your doors and windows).
Lastly, and this is probably the most difficult, explain to management that while the perceived cost savings of using a cloud are making news, they are offset by increased costs within your organization combined with potentially increased risks and performance issues.
This is the second of a series of postings about the Fiscal Cliff and Marketing. The first (here) dealt with planning. This concerns leadership.
In the movie Lincoln, Daniel Day-Lewis portrays a President that is both a visionary and pragmatic.
As shown, Lincoln strongly believes that an amendment to the Constitution is needed in order in protect those people freed under his emancipation proclamation. At the same time, he recognizes that he has to work with varying constituencies, both within and outside his party , in order to see his vision realized. Working, in this case, extends from proverbial arm-twisting to bribery.
President Roosevelt employed many of the same techniques in order to get elements of his New Deal passed during the Depression. We now have the opportunity to watch how President Obama works to accomplish his objectives relating to the fiscal cliff.
Although smaller by several magnitudes, the CMO is also faced with making trade-offs and decisions. He/she must have a vision of where the company is going, the position the company/brand should have in the market place and the time frame when his/her plan must be implemented. Achieving this vision requires the expenditure of resources by the company, both tactically and strategically.
At the same time the environment is moving, there are doubters and critics and not all plans work. In a true customer centric company, the CMO is at the heart of the company in how it relates to the customer. Failure to achieve the vision can severely, if not fatally, impact the company.
What do Lincoln, Roosevelt and Obama have in common that can be shared by the CMO?
- First, an articulated clear vision of what they want, i.e., the 13 amendment, the specific New Deal programs, a tax increase for those making over $250K, a #1 market share.
- Second, a view of how to get there. Arm-twisting, bribery, cajoling, going to the public, increasing promotional dollars.
- Third, flexibility. The ability to follow multiple paths at the same time, not knowing which is going to work best, and then jumping on the one that seems to be the sure winner.
- Lastly, humility. The ability to reinforce and praise those who work toward achieving the vision, making them aware of their contributions, and taking (if required) a back seat.
As the fiscal cliff comes closer it will be interesting to see which of these traits President Obama shows to the public. At the same time, the CMO who can incorporate all of these in his/her daily activities will reach their goal.
As the CMO in your company do you have, and are you using all these traits?
The current debate over the fiscal cliff and its potential impact has a number of lessons for Marketing people. This posting, along with the next few, identifies and addresses some of them.
Many decades ago I worked for GE in a consumer product department. This was when a Monroe adding machine was the highest tech tool available, and it had to handle the computations relating to numerous product lines and hundreds of products.
Starting in the summer we would begin planning the following year. The planning, which was done by all departments, started with the sales (revenue) forecast, which was built off the marketing plan for each product, covering those that were going to be introduced, those that were mainstream and those that were going to be retired. The revenue number and its resultant margin/profitability results drove the planning for the rest of the department, including headcount, programs, allocations, etc.
The GM at the time insisted on two plans being developed. One was the plan he presented upward to the company. The second, and higher plan, was the one which he used to manage his team, set objectives and goals, and resulting bonuses. Obviously this second plan filtered down to the troops.
During the fall revisions were made to both plans, up until after Thanksgiving, when they were cast in concrete. In this process many reams of large pieces of paper, and several calculators were sacrificed.
With the fiscal cliff fast approaching, astute Marketing managers should have two plans at the ready. One should be the plan that they feel comfortable with, built off of 2012 experience and the anticipation of 2013 being a “new-normal” year. The second should reflect the impact of buyer uncertainty/lack of confidence and the potential that there will be less disposable income available.
Having two plans should allow the CMO to quickly pivot, in the event that there are significant changes to the buying environment caused by changed economic circumstances.
Were significant changes to occur due to going off the fiscal cliff, are you prepared? Have you thought through the first 3 things you would do if the Bush era tax cuts are allowed to expire, and the sequester cuts take place? Note that if you do nothing (no planning), you will probably fall off your own cliff.
% Do you know what your customer retention rate is? If not, stop what you are doing and quickly figure it out before it might be too late. If you do know, are you sure it is correct or it might be a misleading percentage. Let me explain about both situations.
First, a reference point. Customer retention is a set of programs/activities designed to keep existing customers, plain and simple. Other than the very logical reason of reoccurring revenues why would one want to have a customer retention strategy? A study by Bain indicates that the average company loses about 10-15% of its customers each year. It has also been proven that an existing, happy customer generates a multiplying factor in revenue returns.
Second, according to Rocket Watcher the probability of selling to an existing customer is 60-70% versus 5-20% for a new customer.
Third, the 80/20 rule usually applies; 80 percent of a company’s revenues come from 20 percent of its customers, thus if one loses some of the 20 percent, one incurs a large revenue decline.
Fourth, without a good customer retention program, you might wake up one day and find out that you just lost a good percentage of your customers and this could have been prevented because signs of customers leaving usually happen before revenues leave. Thus with a customer retention (or broader speaking a customer satisfaction) program, one would have some early warning signs.
Fifth, generally speaking, companies only hear from a very small percentage of their customers who are dissatisfied. Again without a customer retention program, your percent ranking may be very misleading.
So what should one do relative to customer retention? There are a number of strategies and practices one can employ for customer retention. Here are some ideas that can get you off to a good start.
- COMMUNIATE with your existing customers. Make it a two way communication. Send information/alerts; ask survey questions, set up customer forums/roundtables, a customer blog. Remember out of sight, out of mind and thus potential migration to your competition!
- Have customer events, conferences, LinkedIn groups or some form of social network. Also, go easy on the selling during these specific events.
- Make the customer happy via some form of a loyalty program or incentive or recognition system.
- Have best in class customer service. Don’t have people who just answer the phone, but have people who listen, solve the customer’s problem and follow up.
- Set up a metric system that gives you information against the targeted goals and have some form of a prediction analysis so you can take corrective action when needed.
These are just a few ideas about having a real and reliable customer retention program. The key points are if you don’t monitor how you can measure, and in this case if you don’t get real feedback, your rating is absolutely meaningless.
Recently, I have read a number of articles about why businesses’ growth has either stopped, or worst, declined. Some reasons given for little or no growth are: the economy, lack of good marketing, wrong product, can’t find the right talent (really!) and my favorite, no one is buying. I contend there is really only one answer…poor leadership.
If one looks at successful companies, it is the leadership that makes them grow. Companies with leadership that provides the vision and makes critical decisions are the ones that grow in good times and bad times.
Why is leadership the most critical factor for growth and on-going success? Leadership not only gives the vision BUT makes the decisions that make the vision a reality. When leadership knows the vision, then they can make the correct decisions on what products or services should be developed, They know what the appropriate marketing strategy should be ( Now don’t get confused, leadership does not necessarily actually develop the marketing strategy, but they know the correct one from the wrong ones), they surround themselves with highly qualified management who have the specific expertise required to execute versus poor leadership, who surrounds him/herself with either friends or people who will not challenge leadership’s opinions. Good leadership is visible to the company and to the world, they articulate thought leadership, instill enthusiasm, develop confidence and pride in fellow employees.
Just look at a few companies and their leadership that have continuous or good growth. Microsoft and Bill Gates (when Bill talks the world listens), GE and Jack Welsh (talk about making decisions), Larry Ellison (competition look out), Cisco and John Chambers (Cisco’s marketing machine rules). Steve Jobs and Apple, say no more!
Companies with poor leadership exhibit the following attributes: no charisma, no enthusiasm, doesn’t know their markets and customers, don’t enable others to do their job and are not visible both internally and externally.
So before one blames, sales or marketing or product development; take a look at the direction that is being stated and how it is being executed. Success in companies starts at the top, BUT it can’t just be words or window dressing, it has to be leadership by acting and LEADING!
Marketing managers, Product Managers and CMOs are facing an environment that is out of their control. They can control the features, advantages and benefits of their products and services. They can control their inbound and outbound marketing spending and targeting. They can control (to some extent) how their brand is perceived in the market place.
What they cannot control is the market and specifically the economy. And, it seems that there are multiple factors, again outside their control, that influence the economy.
· Who will be elected President, and how will that change things?
· Will the angst about the Euro be resolved, and how will this impact sales?
· Will the slowdown in China impact the economy and my sales?
· Will the perceived “Fiscal Cliff” create less demand?
· Etc. etc.
Unfortunately, this is the “new normal.” An environment characterized by significant uncertainty, constant change and potentially wild swings in both buyer confidence and buying power.
In situations like today, and there have been similar times, carefully choosing and implementing tried and true actions can help weather the storm. Specifically:
1. Make sure that your products and services are fully differentiable from the competition. The greater the differences, whether in performance, distribution or price, the greater the advantage.
2. Remember that your customer base represents the cheapest sale you can make. They know you, they trust you, and you know how to reach them. Selling more to them or selling up is good business.
3. Avoid tricks, subtleties and flash in your communication and promotions. The average person today is overwhelmed with messages, whether from sellers or through social media. Their span of attention is limited, and if they have to work to understand what you are saying, you lose.
4. You only get one chance to make a first impression. Today that means that your web site is often the first “impression” that a potential buyer has of you and your company. Make sure that it clearly and cleanly says what you do, how you do it, and how the potential buyer can reach you. And, make sure that your links to social media that you choose to use (LinkedIn, Facebook, and Twitter) work and are current.
5. In B2B, case studies and references are key. Show how customers have used your product and encourage good customers to talk about your solutions via blogs or comments.
The “new normal” is difficult and risky. Adhering to basics when there is chaos everywhere helps to reduce the risk which, when coupled with luck and an improving economy, can lead to success.
One definition of a sales channel is that “it is the pipe through which a producer’s product flows to the user.” Like all pipes it can be straight, crooked or have many branches. And reflecting today’s new technologies the pipe can have a flow of information in two directions.
Which channel is best for your business? As with all such broad questions the immediate answer is “It depends.” It depends on how your customer wants to buy, the price and complexity of your product, the length of the buying cycle and a myriad of other intertwined elements.
The most common channels today are:
· Direct, where a company’s sales people interact directly with the buyers
· Indirect, where a company sells to distributers, who in turn sell to either other distributors or buyers
· On-line, where the buyer contacts the company directly over the Internet
And, once a company decides on its main distribution channel, secondary or alternative channels often spring up. Managing the relationships that arise due to multiple channels of distribution is a difficult and time consuming process. The failure to pick the right channel can result in business failure, as key buyers are missed and competitors swoop in and win sales.
Sales channels or Distribution is one of the classic “4 P’s” (Product, Place, Promotion, Price) of Marketing. On May 3rd, Dick Lush and I will be discussing Sales Channels at 2:30 in Platform A at the Rhode Island Business Exchange (RIBX), and look forward to answering any questions you may have.
You can find out more information about RIBX, other speakers, directions, etc. here: http://http.ribx.wordpress.com/.
A recent conversation with a potential client (PC) went something like this:
(PC) “I need someone to develop a white paper on our new product that can be used to fulfill the offer in our upcoming email program. The content will also be used in a brochure that we plan to hand out at the annual trade show, and can be used in a direct mail campaign.”
(FAM) “That’s great. It sounds as though you have thought this through. One question, why are you doing this?”
(PC) “Huh? This is the way we generate leads.”
(FAM) OK, let me ask some questions before we get started, relating to your desire to generate leads:
· Who is your target market?
· What have been your results in the past 12 months in reaching them?
· How is your product significantly different from the competition in solving the problems in your target market?
· What is the “normal” open and conversion rate for your emails?
· What has been your return for trade show activities?
· What have been the results of your direct mail programs in the past?
(PC) Gee, you don’t understand me do you? We just want somebody to deliver a white paper, not ask questions about us. We know what we are doing, and want you to deliver the documents requested.
(FAM) Thank you for considering us.
This exchange represents a mindset that is common today, i.e., people who are employed on a contract or temporary basis are expected to deliver a specific item which is then to be used by the contracting firm as they see fit. The “contractors” are not expected to understand the broad picture or strategic plan of how and where their effort fits.
The result is that the worker provides what he/she thinks is needed, based on conversations, reading and observation of the product/service/company. The buyer gets the work product and is often dissatisfied, complaining that when they had their own marcom, copywriter, designer, etc. the work product was better.
Experience has shown that the longer a “contractor” works with a company, the better the work product. Generally this is because the “contractor” learns and understands over time, the strategy, plans and objectives of the company.
Companies seeking help on a short-term basis should follow two simple rules:
1. Over communicate with contract workers. Share with them what you are doing, planning and where you want to go. The probability of them running across the street to your competitor with your intellectual property is low. In short, make them part of your team.
2. If you have even partial success with a contractor, keep him/her, train him/her about your company and culture and give them more to do. Until a requisition is open for a full time position, keeping a person for an extended time is your best bet.
Our experience is that the more companies share with us, the more and better work we deliver; that while we market ourselves as “consultants” we do provide deliverables, and the more we know about our clients the better we can meet their needs.
If you have personal experiences in this area, chime in.
Having watched, observed and implemented many of the current social media tools, I felt I was in fairly good shape toward the end of 2011. I got a little confused by Google+, but it went in OK, although very few people seem to be using it. Then came Pinterest. Again, installation was easy, but for me and many of our clients, its applicability to hi-tech B2B is unclear.
2012 has brought a new wave of applications and platforms which, along with the push toward using video and mobile applications, has me wondering if social media is the next bubble. It is unclear where to put scarce resources, especially since the return on existing tools has a limited track record, with one blogger reporting that only 13% of B2B companies drive leads with social media. Should I chase after Highlight, Glancee, Banjo, Chime.In, Scrolldit and others?
As with everything related to consumers and businesses, the competitive arena will thin out over time, but backing the wrong horse early can be costly. Imagine believing that the Stanley Steamer was the car of the future, that DC current was the form electricity to use, or that MySpace was the way to reach your buyers. In the past, reasonable people chose all these options.
Another element contributing to my fatigue is that “expert” advice is conflicting. One group urges companies to get involved in social media as quickly as possible, and to engage with the customers and buyers immediately. But another group of “experts” strongly suggests that you do everything right, that an error resulting in negative customer perception is very difficult to overcome, in short be like Zappos out of the gate.
Sifting through this overload of choices and advice, I am urging our B2B clients to do the following, once their strategy and objectives are in place:
1. Today, before they begin working with you buyers know about your product and services. Recognizing this, allocating resources to your web site and establishing industry thought leadership is job one. To generate leads, one must cover all aspects of SEO, along with developing integrated marketing campaigns that nurture leads, while maintaining brand and position. To obtain thought leadership, blogging, speaking, writing articles and commenting on applicable groups is mandatory. These elements must be covered both well and completely before any diversion into social media.
2. Find out which social media tool the bulk of your buyers use, be it Facebook, LinkedIn, Twitter, YouTube, etc.
3. Implement your social media offering on and around that platform.
4. Ensure that the organization is prepared for the commitment, in time and resources, to meet the needs/demands of your involvement regarding both the website and social media platform.
5. Measure your results at 3, 6 and 12 month intervals.
6. Ignore, for the present, the buzz surrounding the “next best thing” in the social media space. There will be major and niche players that may or may not be useful to you. In the short term, let them establish themselves and let the dust settle before allocating resources to them.
Dealing with social media is difficult and time/resource consuming. If you are not careful, it can cause you to lose focus on what is really important, which is generating leads and promoting your brand. The path to success lies on keeping your social media efforts simple, and measuring your progress on a regular basis.
How tired are you when it comes to social media?
Before I get into different methods to improve your business analysis, let me be very clear about one thing.
I am not so concerned about the method or methods you use but more importantly that you or someone is DOING an analysis. In today’s age with all of the types of methods and tools available, I find it absolutely amazing how many companies are either not doing any analysis or do it once and think they are done. Like death and taxes, one thing you can count on is that your competitors are doing an analysis on you!
Given that let’s first start with the SWOT analysis, some pros and cons regarding it and then a few alternatives methods.
First, SWOT analysis is the identification of Strengths, Weaknesses, Opportunities and Threats that are related to the strategic and tactical direction of a company. The “scanning “or analysis of the internal factors that relate to your direction and strategy are the strengths and weaknesses. Examples of strengths could be vertical integration or distinctive skills/ intellectual talent, while some weaknesses could be a poor sales channel or lacking of sufficient financial resources. Scanning of external forces are opportunities such as new markets or new products, and threats are areas like governmental regulation or lack of market share. While SWOT analysis is one of the most commonly used methods (2007 global survey of top executives by McKinsey stated that 82% used SWOT, second to competitive analysis) it like other methods has its pros and cons.
The pros are:
- Easy to understand and the four categories can be acknowledge quite quickly.
-It really does not require a rigorous level of research
-The context is usually within the understanding of the corporation
The cons are:
-Lists can become long
– Lists can be poorly defined and ambiguous
-Not a very detailed or well verified list
Some suggestion on how to improve your strategic analysis:
1-You can augment the SWOT analysis by adding a weight and rating factor to each entry on the SWOT analysis. The weight is a factor (0 to 1) that ranges from very important to not important for each internal and external entry. Next have a rating factor (1 to 5) that indicates how well your company is doing regarding this entry. Multiply the weight times the rating to get a weighted score. Next, rate each entry how it might impact your company in the short or medium or long term situation. These enhancement greatly helps eliminating a lot of the guess work, ambiguity, long lists and improves the overall ranking of the to be developed tasks as related to each entry.
2-Another variation of the SWOT analysis is to form a matrix just like one does in the SWOT but have the Strengths, Weaknesses, Opportunities and Threats on the vertical and horizontal axis and is the four sectors produce Strategies for strengths for working on opportunities (SO), Strategies for avoiding threats (ST), Strategies for opportunities to overcome weaknesses (WO) and WT, strategies for a company to minimize weaknesses and avoid threats.
3-A different analysis method is the Balanced Scorecard Method; this tool is used to align business activities to the strategy of the organization. It works off of four areas; 1-financial by using important financial “levers” or targets,2- customers, it tracks and measures inputs about how customers view the company,3- business processes that measure where the business excels and 4-growth, measurements to see if the company is growing and improving.
4-A fourth method is the PEST analysis which stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental and scanning component of strategic management. Here we introduce external factors that in the current environment have become critical to the success or failure of many companies. One very current example is the price of oil and gas and its impact on companies that are very dependent on oil and gas in one form or another.
In summary, it is not so much which method or tool one uses but most importantly, you must do some form of analysis and do it on a continuous basis! If you would like to know more about these analytical methods or other methods that might be well suited to your company, send me a note.