Robbie Kellman Baxter on Market Strategy

Welcome!

Welcome to my weblog!   Baxter's Blog is a place where I comment on trends in business strategy.  Many of my clients have recurring revenue models, so I spend a lot of time thinking and writing about best practices in online subscriptions.  My personal belief is that successful subscription businesses share a lot of the same core fundamental strengths, and span consumer/SMB/enterprise as well as a number of industries and services--from entertainment to dating to accounting services to cloud-based businesses--this blog is about what can be shared across these groups. You can expect topics like tiered subscriptions, pricing strategy and the role for freemium, customer acquisition, partnerships,  I welcome your questions, suggestions and ideas.

Why Marketers Leave

I was chatting with a friend whose company sells SaaS solutions to marketing executives, and he was lamenting the turnover among senior marketers across organizations of all sizes.  Like him, I have noticed that there seems to be a higher turnover rate among marketing professionals than among most other functional specialties.  Why is that?

Here are a few reasons:

1. Marketers are extroverts (in general) and connectors, and are more likely to hear about new opportunities.  Really good marketers hear about lots of good opportunities.
2. Marketing is often seen as less critical to a company's survival than divisions building and selling the product.  As one CEO said to me, "I know I'm destroying my pipeline by slashing our marketing budget, but if I cut sales, and miss our number, I put our entire business in immediate jeopardy.  And without a product, we have nothing"
3. Marketing metrics are tricky to get right, and it can be hard to demostrate measurable value. When things go downhill, and the marketer doesn't have strong, compelling proof of impact, they become an easy target.
4. Many companies hire the wrong kind of marketer for their organization. Just because someone is great with creative, doesn't mean that they'll build a great pipeline.  And someone with a big company background may not be able to execute without a big staff, while someone from a small organization may not be able to effectively manage agencies.  There are lots of tactically excellent marketers who can't do strategy, and asking them to do strategy is a recipe for failure.
5. Marketers are often drawn to new ideas and learning, and are easily board by any one category.  Once they have the strategy defined and the people and programs in place, they get bored.

What does this mean for managers?  If you have a great marketer, keep them interested and engaged.  If you have mediocre marketers, or you aren't getting metrics that demonstrate clear value to you, you probably have the wrong people.  And finally, it means that your organization should be structured so that losing any one person won't slow you down.  Change happens, and it happens even more frequently in marketing.

The Membership Economy and Hospitality

We are seeing industry after industry transformed by moving from ownership models to access models, and focusing on turning customers into members.   

What does this trend mean for companies who have been talking membership since their inception?  Take a look at the hospitality industry, long a leader in loyalty programs.  They understand the importance of membership, supporting a credit card that touts "Membership has its privileges".  Nearly every hotel, casino, airline and car rental company has a well-developed program that provides benefits in exchange for time or dollars spent.  

However, most of the loyalty programs stop here.

Technology has enabled new options in content sharing, community building, asset sharing, always connected mobile apps and dozens of other features.  And business models are rapidly evolving to provide even more options.  But membership businesses aren't thinking strategically.  They are slow to encourage feedback from their members, or to let their members interact with one another, either virtually or in the physical world.  They aren't recognizing status of more active or successful members in ways that confer prestige and build loyalty.  The programs aren't designed to be viral, or even to encourage current members to recruit thier friends.  Also, these companies are slow to provide unique experiences or access to members, a key way to differentiate their memberships.

There are a few shining examples.  Disney has done a tremendous job of tracking behavior within their parks and hotels, down to the timing of certain rides and attractions with their cards and bracelets. The AARP constantly adds new benefits for members.  American Express has special events for their highest value cardholders, including some which allow them the meet one another.  But there's room for much more

Loyalty is the brass ring for most organizations, and membership-based businesses have a real head start. Unfortunately, the vast majority of these organizations are moving as if they have no competition.

Stanford GSB WIN Conference for Women

It's hard to believe the Women's Initiative Network Conference happened 2 weeks ago already. As part of the conference hosting team, I spent a lot of time with the organizers trying to develop an agenda that would appeal to a broad range of female GSB alums--from recent grads to those celebrating their 40th reunion, from people working 100 hours a week, to those who have stopped working for pay, and people in large and small organizations, entrepreneurs, nonprofit managers etc.  Every woman in attendance had her own story, and the stories were fascinating.

In the end, I was thrilled with the speakers we invited:

• Professor Tina Seelig on Innovation
• CFOs Ciphora Herman and Sarah Friar in conversation with Sarah Smith
• Liz Lynch on Networking (see photo above of me with Lauren Levitan and Liz.  Liz has been a friend since we worked together at Booz-Allen & Hamilton many years ago, and Lauren, '92, is a classmate of Liz and she and I work together on the Advisory Committee of  GSB's Women's Initiative Network)

My personal takeaways:

1. From Tina: Think of your career as a patchwork, not a puzzle.  There is no "missing piece" just opportunities to put experiences together in creative ways.

2.  From Ciphora and Sarah: Take risks. Repot.

3.  From Liz:  Networking is as much about helping others as it as about asking for help.

4.  From myself:  The more I get out and talk to people, the more things happen, the more ideas I get, and the happier I am with my career.  Learning and connecting are key inputs into any successful career, and finding venues to do both is critical.

 

What's your legacy?

The other night, I attended an historic gathering of five deans of the Graduate School of Business at Stanford University: Arjay Miller, Robert Jaedicke, A. Michael Spence, and Robert Joss discuss the school’s past and its future, with Dean Garth Saloner moderating. The discussion was sponsored by the Oral History Program of the Stanford GSB Library.

A couple of things struck me.   I was struck by the fact that the conversation was way more macro than micro -- a type of conversation that was very rare for me.

Here in Silicon Valley, we tend to think of our work in terms of sprints, and occasionally marathons.  Our efforts are usually done alone, or maybe with our team of peers or employees.  But people are woefully unaware of how they fit into the bigger picture, how they're building on those who came earlier and how what they leave as their legacy will help or hinder the leaders to come.

The deans were talking about their work as a relay race.  They were very aware of the key successes and failures of their respective terms, as well as the role of those before and after them on the design of the GSB.

I was struck by something else.  was one of the few non-GSB-Staff guests under 60.  I attend and host numerous events at Stanford, many with bigger audiences, most with younger audiences.  Most of the events with younger and bigger audiences are focused on short term trends, or self-help skills.  But for me, the most useful event of the past several months was this one with the deans.  It helped me change my point of view, from microscope to telescope, and to take a moment to pause, and think about the bigger picture.

Asteroids and Opportunities

A few years ago, we hosted a "back to college" party, complete with foosball, beer pong, pop-a-shot, tacos at midnight, and a vintage Asteroids machine.  For those of you who don't remember Asteroids, it was a wildly popular arcade game in which the player earned points for shooting asteroids (and remains of asteroids, which moved more quickly than whole asteroids) before the asteroids crushed the player. What made the game tricky was the infrequent, unpredictable appearance of flying saucers, which moved rapidly across the top of the screen, sometimes shooting at the player.  These saucers were worth way more points than the asteroids, representing huge opportunity.  

Only the best players can protect themselves from the asteroids, business as usual, while simultaneously being on the lookout for the high-opportunity saucers.  

Those asteroids are like business as usual for most companies--increasing in frequency and difficult, but somewhat predictable.  The saucers represent those unexpected, new opportunities, that can have tremendous value, but require the ability to see out of the corner of your eye, and focus simultaneously on two totally different patterns.

Do you have the skills in your organization to recognize the flying saucers? Or are you so busy focusing on the asteroids that you can't get the high points?  We only see what we are looking for as this well-known psychological experiment
proves.  Make sure you're looking for the big wins and not just business-as-usual.

Congratulations to News360 for TechCrunch TV Interview

Congratulations to my client News360, an awesome (and free) news app.  They recently launched their Android app, and were featured on Tech Crunch TV.  The big advance with this version is the algorithm that finds news articles that are most relevant to readers-give it a try.

Great job to Roman Karachinsky, and the rest of his team!

http://techcrunch.com/2013/03/03/news360-android-ipad-demo/

2013 Trends in SaaS Marketing

SaaS continues to be a hot topic, especially here in Silicon Valley.  But widespread adoption in the enterprise hasn't quite arrived.  While there has been some significant success, notably with companies like Salesforce.com, Concur, ConstantContact, there are dozens of smaller, private companies still trying to gain traction.

SaaS, or Software as a Service, is a business model that involves providing customers with access to technology through the Cloud--meaning that the SaaS vendor hosts the software, in a highly secure, scalable environment, and takes full responsibility for maintaining and managing the customer's implementation, offsite. In exchange, the customer pays a monthly or annual fee. The benefits of the SaaS model are obvious for the vendors--the holy grail of business models "recurring revenue".  And the benefits are huge for the customer too--reduced labor to manage the software (and associated hardware, databases etc), as well as instantaneous upgrades, easy configuration, and generous services and support.

Despite these benefits, marketing SaaS, and especially SaaS for the enterprise, can be a tricky endeavor. Many of SaaS's business benefits negatively impact the IT department, by decreasing the amount of IT folks needed to manage the system.  And ironically, the IT team is nearly always brought in to evaluate the SaaS solution on matters like scalability, regulatory compliance and security.  Asking IT to advocate for SaaS is a little like asking the turkey to advocate for thanksgiving.  While many will celebrate, he's the guy with the most to lose!

I'm seeing a lot of companies succeed in this difficult dance.  Here are some of the successful trends on the horizon:

1.  Focus on companies who have demonstrated support for SaaS...Qualify, Qualify, Qualify  If they already have other SaaS implementations, especially enterprise wide, that's good.  If the CIO or CTO has explicitly endorsed SaaS as the way of the future, that's even better.  If the IT guy "has some concerns, but is open minded"--consider passing on this selling opportunity.

2.  Letting the customers do the selling  The nice thing about having the "next generation" solution is that customers who embrace it are usually proud to be associated with it.  That implies a willingness to participate with their vendor by speaking at industry events, participating in webinars, and guest blogging on the corporate webiste. Even the more reticent among them are often willing to serve as customer references, including the ones who aren't officially allowed to endorse vendors.  The most successful SaaS companies have well structured, vibrant reference programs.

3.  Use the Zero Moment of Truth  Google's idea of the ZMOT is a powerful one.  It's the concept that the majority of all sales, whether B2B or B2C, begin well before the buyer announces herself to the company (by contacting a salesperson or entering a store).  Anyone thinking about SaaS is probably doing online research before they ever call you.  Make sure you have lots of content that explains and makes the case for your product and for SaaS.  Otherwise, you won't even make the short list.

4. Coming in on the Trojan Horse  One of the best strategies that has been used by SaaS companies is to start small, and to come in via the side door.  Unlike premise-based software solutions which often require a major financial and time commitment to implement, and which also may require a "rip and replace" approach to the prior technology, many SaaS solutions can be piloted in a in inexpensive and time-efficent way.  Instead of pitching "replace", try pitching "add" or "test".  Once they see the impact, they'll sell for you! (see trend #2)

5.  Market Directly to the Business Buyer  By 2017, Marketers will have a bigger "IT" budget than IT--according to industry analysts at Gartner.  This trend is also evident across other functional areas in the organization--finance, operations and sales.  Because technology is such a key driver of success in every functional area, budgets are shifting, and every business is now a digital business.  As functional leaders become tech savvy and command tech budgets, they become attractive tech buyers.  This trend has tremendous implications for the kinds of campaigns you want to develop--as you appeal to the business owner instead of making the tech play--but if you can do it, you will succeed!

Tech is no longer its own discipline--it has become a part of nearly every aspect of business.  This major change in the business landscape has big implications for selling SaaS.

2013 Trends in Educational Software

This morning,I got a call from a Consumers Digest Reporter for an upcoming report on educational software. We last talked in 2009, whien the landscape was very different.  At the time, I was working on a project for one of the pre-eminent makers of educational cd-roms.   Today, I'm not sure there is such a thing as a "pre-eminent maker of educational cd-roms.  The most interesting digital educational content is online, or in the form of apps.  Much of it is free today.

People are still willing to pay for 3 types of educational content:

 

1.  Content with proven results.  If you can show me that your app will help my child learn to read, help me pass the bar exam, or teach my mom to speak Spanish like a native, I'll pay you.

2.  Content with highly engaging user interface.  Great interaction design will keep people online longer, and people are willing to pay for things they love to do.  The concept of "gamification" is pervasive across all kinds of content, but especially in educational content, as a means of engaging students in the learning process.  And no, automated flashcards do not qualify as  "great interaction design" 

3.  Truly unique content.  There is still a place for high quality educational instruction.  If you have a truly differentiated methodology for teaching, or have content that is not available anywhere else, people will pay.  The problem is that most content developers believe that just because they put a lot of effort into developing the content, that the content is unique and in demand.  If you wonder if your content is truly unique, ask your customers.  They'll tell you.

The decline in cost to create content, and cost to distribute content have led to a devaluation of much of the educational content avaialble today.  The "not-for-free" bar is a lot higher than it was, because it's just so darn easy and cheap to create useful content.  Sites like Khan Academy, with their huge library of instructional videos,  educational apps on the AppStore,  and the proliferation of free podcasts are all part of this huge trend in free content.

People are still wiling to pay for more sophisticated and differentiated technology that solves a purpose, saves money or creates efficiency.  While people are not willing to pay for simple, tactical apps like flash cards or vocabulary games, megatrends in mobile technology, Cloud Computing, and self-publishing have created a whole new paradigm for learning.  There are tremendous opportunities for creative, differentiated learning tools reimagine how people can learn.  Some examples of areas where companies are making money with educational technology include broad based solutions for school in support of academic curricula and schedules. Many schools now require or even provide laptops and tablet devices to all students--which opens up huge demand for educational software and applications of all kinds.  Online collaboration, targeting student populations is also important, as schools and universities increasing value team-based learning.  More and more people are obtaining  credentials and degrees on line, and apps to prepare or certify people for important tests are showing healthy margins.

The age of CD-rom learning games selling for $49.99 is long gone. Reader Rabbit is $2.99 these days.  And hundreds of simple learning games are available for free or at least on a freemium model.  But 2013 is a time of transformation in educational instruction, and companies that stay connected with these trends will find tremendous opportunity.

 

AARP and the Membership Economy

The AARP's social community just hit 1 million.  Amazing, right?  Most companies in Silicon Valley have written off senior citizens as too old for the digital revolution.  And yet, the AARP is building online community by providing value to their members.  They've learned that seniors prefer news-related articles as well as highly visual pictures.  And seniors, like the rest of us, enjoy a little humor as well.

The AARP learned these truths through trial and error.  By creating lots of content and trying an assortment of campaigns, they eventually figured out what worked for their market.  The AARP is one of the most powerful membership communities in the world, although traditionally not seen as a tech savvy one.  And yet, they have shown how discipline, data mining and creativity can come together to strengthen the sense of connection their members enjoy, as well as to create new value for their members through technology.

All kinds of businesses, associations and groups are recognizing that technology can provide connection and access that transforms the value that they can provide to their members.  The need for belonging is a timeless human value, and one which drives much of our economy.  Every organization should consider this basic need as the develop new offerings for their constituents.

5 Ways to Fill Your Pipeline NOW

In a perfect world, marketers have budget to simultaneously invest in short term pipeline building AND building awareness.  But sometimes, you have limited budget and not enough revenue.  You need more business now.  Here are a few tactics to build your pipeline right away.

1.  Start at the bottom.  Invest whatever short term resources you have in the bottom of the pipeline--people who already have heard of your business and with whom you have a relationship.  Long term awareness activities, designed to build your database, are not likely to fill the pipeline in the short term, although they can be critical to long term help.  If you need business now, focus on converting those who already know you.

2.  New Product/Same Customers Or Same Product/New Customers.  But NOT "New/New".  Over the long term, you may be working to transition from your current target audience via new products--but that is a long range, high investment strategy.  Right now, you need revenue--so focus on what you know and can do well, right now.  Provide some new value for your existing customers or reach out to new customers who could benefit from the services and products.

3.  Partner up  Wholesale your business through a partner who already has relationships with your key buyers.  Give these partners a great deal, that incents them to offer your products and services to their clients, either as part of a bundle, or as a bonus.

4.  Ask for the business.  Pick up the phone.  Call past customers.  See what they need and how you can help.  Ask them for referrals.  These are activities you should be doing on a regular basis, but they often end up on the back burner.  Now is the time to reach out.

5.  Offer a special.  Provide some value for free to your target audience--a webinar? an hour of consultation?  a proof of concept?

Once you take some of the pressure off your business, by filling your pipeline, it becomes easier to justify investing in the long term health of your business.