Starbucks As Race Uniter: Piss Everyone Off Equally

Starbucks found itself in hot water this week after encouraging baristas to write “racetogether” on coffee cups and discuss race relations with customers. And of course their is a #racetogether hashtag campaign. Sigh.

I give you Starbucks leadership team… you can’t blame them for being so white, there aren’t many sunny days in Seattle. I can’t explain why they are predominantly men.

It didn’t help when head PR honcho at the coffee purveyor, Corey DuBrowa, deleted his Twitter account after the deluge of negative reaction. This only reinforced the perception that this was little more than a marketing gimmick and the company really wasn’t interested in a “conversation”. Euphemistically or not.

No matter how you spin it, this is not a good day for Starbucks, which to it’s credit does have real diversity programs that throw business to minority and women owned businesses. These are the kinds of programs that companies like Starbucks should be investing in, because most people don’t want and won’t accept being talked to about serious issues through patronizing slogans written on coffee cups and 140 character missives anchored with a hashtag.

Outrage in America has itself been elevated to a cause, and there may be an element of that here but the critics seem to have a valid point by highlighting the hypocrisy of talking about diversity in a company led by old white guys. Fair or not, Starbucks can’t ignore that fact. This leads to an important threshold that companies wading into social commentary have to meet, which is your moral authority. It would be hard to argue that Starbucks has any moral authority to lead this debate given their leadership and customer demographic (break down the stats on store locations for further evidence of this). Of course you could also argue that no one is uniquely qualified to talk about race just because of their skin color… I could make the case either way but what I won’t defend is the idea that corporate sloganeering will lead to positive change.

Another element at work here is that most cause marketing that isn’t linked to explicit act is in itself a sham. Hashtag campaigns have jumped the shark and I believe that people are actually a lot smarter than advertisers give them credit for. People pick up on the cues and can call BS on these activities even if they don’t do it explicitly. Advertisers should do themselves a service and ditch the hashtags and calls for “conversation”… it’s the kabuki theatre of going through the motions without doing the work.

Look no further than the kidnapped school girls in Nigeria. #BringBackOurGirls may have made people feel good but a year later the girls are still missing and their fate a mystery… Boko Haram was, apparently, not impressed by a hashtag campaign.

Companies can be a force for social good when their good intentions are coupled with policies and hard work. Marketing slogans and diversity officers that are little more than paper tigers won’t qualify nor improve the standing of companies when called to stand up for diversity as a cause.

PS- If Starbucks is serious about race relations in America, put a Starbucks in Ferguson Missouri and contribute generously to the rebuilding of that city where white and black residents are paying the price for shameful yellow journalism built on a hands-up-don’t-shoot lie. There is no Starbucks in Ferguson, I’m sure the residents would appreciate the jobs.

Retooling Marketing in a B2B Company

Ping coporate logo 2014Ping Identity has gone through a top to bottom transformation in marketing over the last year. A successful organization that fed impressive growth, reaching growth and revenue records year over year, the marketing organization relied on a proven B2B outbound marketing model that precisely measured lead capture rates.

My interest for the last decade has been in inbound marketing models that rely on content to drive business opportunity. More significantly, I follow the advice of many friends who I would call contemporaries in B2B marketing, like Steve Mann at Lexis-Nexis and Chris Selland at HP-Vertica, who align their marketing demand gen efforts to account-based scoring… opportunities instead of leads.

When you combine inbound marketing with account-based scoring, you get a very potent combination of predictable opportunity funnel that also benefits from lower customer acquisition costs. The latter is essential for on-demand subscription models where customer acquisition costs (CAC) has to be recovered in a short upfront time period, and the former increases the volume of business funnel to work through, again essential in any business that has a wide range of pricing options, from free to enterprise license agreements.

When I took over the team in the 4th quarter of last year I made a couple of quick changes, most significantly breaking up the demand gen team into distinctive task teams focused on net new customers, base expansion, and retention outcomes. The demand center teams would respond to product & solution marketing, as well as partner marketing to drive campaigns, content, events, and interactive (SEO/SEM) for the specific outcome being targeted. We roll this up with a range of sales and marketing operations activities to drive opportunities, which are companies who buy our stuff as opposed to discrete contacts at companies.

I am fortunate to have a data scientist on my team, a PhD in statistics no less, who also has a keen ability to aggregate data from many different sources, from Salesforce to Splunk. We know from this data that there are tipping points that occur in the opportunity (account) scoring that should and do cause additional sales activity. I won’t share the specifics here because they represent hard won intelligence that is a form of IP for us, but I also believe that much of this is actually not easily transferred to another company like us. In other words, each company needs to learn the unique attributes and dynamics of their sales and marketing model rather than simply copying what another company is doing.

Underlying all of our marketing strategy is the notion that we, as a business, have grown in size to the point that we are beyond the point that generalists, high bandwidth people who can do a lot of things well, will serve our growth. We have made a number of changes in the team composition in order to achieve a high degree of specialization in each function… I want the best people at each position in the team. The equation is simple, we use people and systems to feed a data model that we constantly iterate to explain and then predict our performance. 

I saw this fascinating video of a Ferrari F1 pit stop that reminded me of what we are striving to achieve. Each pit crew member has a job and there is no confusion about who is doing what. Notice how the crew members responsible for removing the front wheels know exactly where to place their hands in order to capture the approaching race car… this is the level of specialization that we are building.

Gmail Tabs: Heartburn for Email Marketers

Like many Gmail users I have adopted the new tabbed interface that started rolling out in June. I like the organization model and find their categorization remarkably accurate, which in light of the ongoing government data privacy scandals only makes me more concerned about the machine processing of communications. However, it is useful and I only wish I could create my own tabs.

Screenshot (21)However, not all is rosy and I have noticed with particular interest that a number of prominent email marketers are sending out “helpful” messages about moving their messages from the Promotions tab to the Primary tab.

There are a couple of outcomes here that are interesting to consider. First and foremost is that a subset of marketers will be successful in moving to the Primary tab, based on the appeal they present to their customers. This will create a two-tier model where preferred marketers are valued disproportionately based on their customer appeal while the blunt force trauma marketers will be forced to change tactics as more email systems, presumably, adopt the Gmail tabbed interface (which for the record is not a new idea, AOL’s Altomail service had this well before Gmail).

The impact on email marketers is being felt and several studies are now coming out that quantify that impact. Email marketing analytics firm Litmus has published some stats showing a significant decline in Gmail open rates. However, their data is more complicated than a single stat would suggest and what they are questioning is how many Gmail web users actually open email in general in the web interface and in alternative apps, such as iPhone’s integrated email app.

gmail-opens2

ReturnPath has a different study that states that delivery rates are up but open rates are down. My own experience aligns with the ReturnPath data, which is that consolidating marketing email in one tab has increased its visibility to me, and for the merchants I care about I actually read their content more regularly. This aligns with the 2 tier model I suggested in the intro, open rates in my inbox are down overall but for the select vendors that target well and present offers I care about, my open rates are up.

I actually like email marketing but find the vast majority of merchants doing it really poorly. They clearly don’t connect with me on the basis of what I care about and will respond to, it is for the most part dumb marketing. Email marketers will have to deal with the new UX controls that email providers are building in by presenting more utility in their marketing campaigns, which means knowing more about me at an interest level, not just my demographics.

Startup Lessons: Marketing

This is the 4th installment in the Startup Lessons series I have been writing in the wake of my experience with Get Satisfaction. We are getting into the topics that are much more specific to Get Satisfaction, therefore I have an obligation to redact certain details that are confidential however in the spirit of shared learnings I will cover as much as I feel is appropriate.

To recap, here is the series thus far:

1) Hiring
2) Dynamic Org Structures
3) Product First

4) Marketing. and all that implies: What can you say really, if there are 2 things that a startup in tech should be good at, it’s product and marketing, everything else succeeds or fails on the basis of being good at those core activities.

Get Satisfaction was blessed – and I mean truly blessed – with the kind of brand that most companies in the space would kill for. It is at it’s core an aspirational brand message about all of the promises that the social technology revolution has presented to companies as they remake how they interact with people. I really loved telling the story of GS for this reason alone, it is about what is possible by empowering people, customers and employees, rather than saving a few dollars here or picking up some extra revenue there.

The problem with aspirational brand messages is that if you don’t back it up with hard hitting marketing that converts goodwill into revenue, you are wasting it or worse, educating the market about how to evaluate competitive products.

We did very well in 2010 and 2011 with a highly differentiated creative marketing strategy but then we had our VP Marketing leave just after the B round closed (awkward.) and the role went unfilled for the better part of a year. Actually, it was worse than that, we had a consultant that one of our investors recommended and that was a disaster that resulted in a botched website project, what I thought was a stupid book project, and a lurching repositioning of the company to traditional enterprise software. Disaster.

The last issue is particularly sensitive for me because at the time I was responsible for the freemium business and nobody was trying to understand what this part of the business needed in a website. The result was, predictably, a website that catered to the old world traditional call-to-action of “call us and talk about enterprise”. Not surprisingly, the new customer acquisition ramp for the monthly subscription business flattened out dramatically almost immediately when this site launched.

We did eventually replace the marketing consultant with a VP Marketing but by then the damage was done. Brand voice was lost, our demand gen was wonky because of the confusion we were creating around our market focus, and “shit wasn’t getting done”. Remember what I wrote about in my first post in this series about hiring and how bad hires are a cancer?

Even after putting in place a full time marketing leader things didn’t really get that much better. I think this goes to the dynamic that executives in this industry, and others for that matter, exhibit which is in times of challenge they go back to what they know. I do not believe that Get Satisfaction should have been directed at large enterprise sales opportunities as a primary revenue source, but that’s what happened and our marketing reflected that in spades.

My stated preference was to point the marketing at the upper SMB and mid-market buyer, also called the departmental buyer, and qualify 100% of the business off what was coming in from the web funnel. The is what companies like Yammer, Hootsuite, and Zendesk have done, they drive the traffic to the site and skim the enterprise opportunity funnel off the top. The objective in this approach is getting people into a rich product experience and then converting them or upselling them into an enterprise buying lane, rather stating a preference or making them choose up front.

Succeeding at zero to low touch web direct sales models is not a challenge to take lightly, it requires an intense focus on web traffic generation and instrumentation of assets for funnel analytics. It also requires that people think outside of their comfort zone of campaigns, PPC, webinars, and landing pages. in fact I feel more strongly than ever that in order to be successful with this customer acquisition model that tech companies need to act more like media companies with a distinct editorial agenda and content strategy. For this kind of model to work you need a lot of traffic. paid, sponsored, and earned traffic, all of the above.

Even if we did all that I am not sure we would have been successful because at the core we were underinvesting in marketing, both people and spend. However, it is hard to fault us for not investing more in marketing because we clearly had not solidified the Magic Number math that is essential for justifying increases in marketing spend.

There was a bigger issue with the marketing performance that all companies need to be aware of. When you marketing team has as a primary objective enterprise demand generation, well what they measure is enterprise lead generation. Meanwhile, GetSat also had a line of business that was dependent on getting people into the website and into a product experience that converts into a monthly subscription relationship, therefore we had a real sync problem that would not have been resolved with more money thrown at it.

When you measure your marketing spend solely on the basis of lead generation, the slippery slope is changing the definition of lead to juke the stats and show improvement in the specific activity you are measuring. This is something I will forever be aware of, measure the result instead of the activity.

I will close by highlighting something really special I saw happen at Get Satisfaction. Based on the early product work and what we discovered as the first iterations of the business came together, it was clear that social technologies were driving a consolidation of the customer lifecycle that all companies are subject to, with customer support and marketing coming together for the purpose of serving the customers you already have while using that momentum to acquire new ones. Whether or not we did this well in the business is not the point, the fact remains that we identified an important shift in the market well ahead of competing companies. While we did not fully capitalize on this, in no way does that take away from the innovative work that was done to develop a differentiated marketing story to compliment the product.

The False Dichotomy of B2C and B2B

Ray Wang wrote a summary of CRM Evolution that I found particularly interesting, and one point in particular resonated with me because it aligns to something I have been talking about at Get Satisfaction for a while now… B2B and B2C distinctions are dead.

The segmentation of business (B2B) and consumer (B2C) behaviors is a false dichotomy to begin from, what really matters is the customer lifecycle and renew-ability of the relationship. Is a purchase cycle highly deliberative in nature, does the post transaction phase focus on repetition of purchase or a shift to services and add-ons, how does the retail experience inform purchases, and much more.

Cars and diapers… that’s what I keep thinking about.

A car is one of the major purchases a consumer will make and represents the pinnacle of brand-to-customer lifecycle in the b2c space. It involves peer review, needs assessment, technical evaluation, financing, service agreements… all like B2B as we know it today. Once the transaction is complete the relationship shifts to one of services between the dealer and the customer involving maintenance and accessories and the lifecycle repeats with a lower entry bar at each interaction.

Diapers are a situational purchase that is effectively commodity driven, in spite of diaper manufacturers touting specific feature benefits the fact is that buyers view diapers as fungible. As a result companies are now shifting to marketing the relationship they have with a customer around the journey of newborn to potty training. The entire point of the marketing strategy is to ensure that you reach for Pampers every time you are in the aisle for the 3+ years you will be buying diapers and that is because you trust the brand more than competitive offerings, and interacting with your customer community, wherever it is, is essential for sustaining the customer relationship.

B2B purchases also span the highly deliberative capital expenditure to the fungible commodity and the buying impulses for each map precisely to each end of the spectrum in the consumer space, yet because the person making the purchase has a business card and pays for it with company funds we call it B2B. It doesn’t make sense.

The marketing and sales tactics for B2B and B2C may be different but the point is that thanks to the Internet the differences are now outweighed by the similarities. For software companies the reality could not be more stark, in order to survive and prosper in future years the need to create multiple channels to market that address how SMB buyers are behaving is critical and that means delivering through an e-commerce channel, adopting marketing techniques that are common in the B2C space (ratings/reviews, SEO, promotions), deliver information products, and adopting pricing/packaging strategies that scale from the very small to the very large without becoming overwhelmed time/cost of sales on the very large end of the spectrum.

B2C and B2B is dead.

Is Freemium Compatible with Enterprise Software?

Sure it is… despite the gnashing of teeth that regularly flares up when the discussion of freemium is engaged in.

Freemium is not magical pixel dust, it is a way to deliver a multi-channel business model that intersects customer segments regardless of size, complexity, and revenue opportunity. It does require you to rethink your business from top to bottom, beginning with how you meter your pricing model and ending with how you use your website.

The metering discussion is critical and you have a range of implements you can take advantage of, including metering by number of users, time, type of organization, features, and specific capacity dimensions. If you are offering free to high priced enterprise license agreements the metering by feature model creates landmines that you will have to deal with, most notably the bias that will emerge in your development process which results in packaging of high value features to defend your high price points which then results in the most interesting stuff you build being available to the smallest audience in your customer base.

Pricing for growth and pricing for margin are on different ends of the spectrum and if metering features supports margin then capacity must be in support of growth, right? Wrong, pricing on pure capacity creates a different kind of problem that you have to consider, which is leaving a lot of money on the table as a result of product realities that frustrate consumption. An example is a complex signup process that frustrates casual users or a deficient getting started process that creates barriers in the initial trial process. When pricing by capacity everything your development organization does must be viewed through the lens of creating consumption, even at the expense of value.

By the way, speaking of the initial trial process… will you have one? The trial process is valuable only if you are using it to facilitate a purchase decision otherwise you are better off having a “buy now” process or at a minimum have it as an option. If someone coming into a trial product experience isn’t using it in the first 30 minutes then it’s unlikely you will get them to use it over 30 days (which by the way is optimal if for no other reason than managing your internal reporting… all trials created in one month convert in the next).

Will the free product experience initiate in the trial process or as an explicit free product signup? If I were you I would go with a single trial product that converts into a paid or free product at the end of the trial, which works only if you don’t front load the trial process with payment information. The conversion rate for trial-to-paid will be low, probably 3-6%, at which point the debate shifts to getting people into the website and as efficiently as possible into a trial experience… it’s a pure numbers game at this point, feed the funnel with x number of site visitors to get to y number of trials to z number of paid customers.

The website is where the conflict between enterprise and monthly subscription customer segments will be realized. Enterprise marketing – the traditional kind – is entirely focused on content and getting contact information from a site visitor in order to have a sales resource follow up with them. This doesn’t work well for online freemium goto market strategies because it frustrates the goal of moving site visitors from the top of the funnel (your homepage) into a trial experience.

The conflict gets exacerbated when you realize that enterprise leads are opting into the low friction trial experience and once in that buying path the effort to shift them into the traditional enterprise path is cumbersome, mostly because of the pricing disparity. However, this fails to acknowledge that you, as a business, should not care how prospects come into your funnel and if your pricing model is appropriate for your business then prospects will naturally coagulate around the pricing plan most appropriate for them… pricing for growth.

The other dimension of the perceived channel conflict that you should consider is that it is unreasonable to think that the majority of your customers will start in free and end up in enterprise. Customers who select into one buying path are doing so because of what they want rather than what you are getting them to do… a customer who comes in via self-service trial, automatic conversion and monthly subscription renewal, and never talks with someone on your team is doing exactly what they want…. and that is not talking to you. Get over it, you can still serve them well and they will be happy, as evidenced by the fact that they renew each month.

You can help customers find the best fit for them among your product portfolio but doing so successfully at scale is as much dependent on in application marketing as it is good content on your website. Once you acquire a customer spend money designing and delivering a compelling product experience that facilitates upgrades and add-ons, rather than extensive email marketing campaigns and call centers.

Some enterprise products are not appropriate for freemium models but almost exclusively the result of high COGS and/or specific industry vertical issues (e.g. compliance). These are edge cases but you do need to be aware of them.

In summary, freemium works for enterprise software if you:

  1. Carefully consider all of the consequences of various packaging and metering models.
  2. Build your product to maximize the Hour-1 customer experience and then in support of the metering model you select.
  3. Build your website for throughput and efficiency in support of customer acquisition through the trial experience.

Retargeting Ad Campaigns

I read that RadiumOne raised more money at a valuation rumored to be $200m. I can see that.

Retargeting is very popular and for good reason, it works. You have seen this in action, you go to a website and then the display ads seem to follow you in subsequent unrelated websites that you click on. What is happening is that the first site uses a retargeting script provided by an ad network partner and that script drops a cookie on your computer through a pixel, which then triggers the display ads to show up for, usually, 5 or 6 more impressions.

At Get Satisfaction we do not buy vanilla display ads, search keywords, or pay for placement of content. Everything we do is organic with one exception, we run a persistent retargeting campaign through Retargeter.com.

The reason I do this is that I see the results in click-to-paid conversions. Using a “burn script” in my shopping cart I connect site visitors who enter my trial account process with those who click on external display ads served by Retargeter so each month I can calculate the cost per customer acquisition on my ad spend. The stats I get for impressions, clicks, and conversions easily justifies running the campaign for another month and that is exactly what I have been doing for going on 6 months now.

I pay attention to display ads served by companies now and it’s really pretty surprising to me how many companies are, apparently, also running retargeting campaigns.

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Community Manager Appreciation Day

The call to action among leading companies in recent years has been that customer service is the new marketing. This is true but it has always been true, companies as diverse as Southwest Airlines, Avis, Lexus and Johnson & Johnson have been at the forefront of the trend to use great customer service as a competitive differentiator and a way to attract that best employees that the market has to offer.

If an appreciation of customer service is not a new thing, then what is? Clearly it is the ability to technology to efficiently connect companies with consumers and with social networks the number of channels that companies have to maintain in order to connect with customers has been blown up to a daunting number.

The role of Community Manager has quickly evolved from a new age social ambassador, a supporting player, to being conductor of the orchestra. Today more than ever before companies are relying on individual customer engagement to cement brand loyalty and leverage word of mouth marketing, The Community Manager has the daunting but essential responsibility of keeping the various resources of the organization in sync and playing to the same sheet music, ensuring that customer needs are met, concerns are addressed, and their product and service ideas and suggestions are brought into the process in order to shorten product lifecycles and better map to needs. If customer service is the new marketing then the Community Manager is the new CMO.

I support Jeremiah Owyang’s quest to make the 4th Monday of every January a time to honor the dedication and hard work of community managers. Today is Community Manager Appreciation Day and at Get Satisfaction there is no group of professionals more important to our success so we put together a survey of community manager insights for you to enjoy, and hopefully learn from as well.

The PR Agency of Satan

UPDATE: I picked up the title for this post while looking at a Twitter search result, not realizing that it was the title of Jacob Morgan’s post on the same subject… so in the interest of credit where credit is due I point you to his post on this subject.

This morning I opened up my email and there was a message to a list called “DigitalBrand” from a PR agency pitching a book. It was bulk email to a list of people, I have no idea how many but as the events unfolded in the morning I recognized many of the people on the list, mostly journalists, authors, public speakers, and other influential bloggers (note that I am in none of the above categories… so I was kind of honored to be included!). The list name was in the CC, meaning anyone who replied to the email ended up respamming the entire list, by the end of the day over 50 messages were traded, not a lot considering but I think that by late morning they had shut down the list server to control the traffic.

Lesson #1: Don’t use lists but if you must then think ahead and put the list in the bcc field. PR pitches should be personal in this day and age, spamming a list isn’t going to make you any friends.

Throughout the morning people, also on the list, were replying back questioning how they got on the list, demanding to be taken off, and sundry other harshly worded messages. I have no idea how I ended up on this mailing list, but a quick search revealed I had nothing from them previously (I only delete outright spam from my inbox, which explains why I have 50k messages in my gmail account.

Lesson #2: Don’t pitch or promote a service or product to an email list consisting of people who didn’t ask to be on the list. Pissing off the people you are trying to court is not smart.

Despite many pleas from people to take them off the list, demanding to know why they were on it, and expressing dismay that it was happening in the first place, no one from the offending agency stepped in to offer an explanation of what happened, why, and what they were doing to fix it. Later came torrent of emails from the list server with unsubscribe help ticket confirmations, it felt a virtual black hole sucking in everyone on the original list.

Lesson #3: Being engaged may seem so 2008 but it still matters. If you are pitching something about social media, make a blatant mistake, and then don’t step up to explain yourself, you have not only pissed off a lot of people but you throw away any sympathy and “don’t worry about it” sentiment that certainly exists. We have all made mistakes with email, and will certainly make mistakes in the future…

The final observation is that because their is no latency in communication today, individual acts like sending an mail to a list and setting off a cascading series of unfortunate events, can happen with blinding speed and far greater amplitude than anyone expects. By the afternoon the twitterverse was picking up on this incident and blog posts were appearing, none of it complimentary and certainly not beneficial to this firm’s clients.

People who communicate for a living and to groups not connected to their firm need to be very careful about these small acts that can quickly spiral out of control. I deliberately didn’t include the name of the firm, although no doubt you will quickly figure it out if you follow the links, because I don’t think they deserve to be burned in effigy… it was a mistake and I’m sure more than a few people had a very bad day today. Having said that, I can’t help but notice that this event underscores the idea that people who are used to being pitched for a living don’t want to be pitched like they used to. In this unfortunate incident are some real lessons to be learned about how PR firms deal with the people they want to court support from.

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Email Marketing Primed For Massive Disruption

I just had a great conversation with a friend that covered, among many things, email marketing and how broken it really is. Then I come home and open up my email, finding this.

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Email marketing is so fundamentally broken that it defies the imagination. Single digit response rates are considered a great success and not pissing off your market is a good day. Companies in all market segments turn to email marketing knowing full well it is not an optimal solution, meanwhile email service providers and software companies actively develop solutions that defeat email marketing. Users have been conditioned to avoid “unsubscribe” links because they serve primarily to validate email addresses purchased from lists, while legitimate unsubscribe links often do not work or take up to 30 days to remove you from a list that took a nanosecond to add you to.

Obviously the biggest problem with email marketing is the lack of effective targeting technology. Current generation solutions use blunt force instruments for targeting and the result is that prospects are rarely matched with information and offers that appeal to them. This also explains why the takeup rate is so low.

There simply has to be a better way to do this, whether it be tapping into activity streams and feeds, affiliate arrangements, or location based services. Something… anything has to be better than what we have today.