Simplicity

Business Growth

You Go And I Go, There Should Be No Ego

The sub-prime situation in the US is far from over and Indian companies which get business from US clients stand to be impacted. If companies are not placing orders to manufacture things like cars or PCs out of China, then it is bound to impact their economy. By June 2009 the US would be back on its feet.

Bala V Balachandran, the 71-year-old distinguished professor with Kellogg School of Management goes by a simple philosophy - In the long run, you go and I go, there should be no ego.

The first Indian to be hired by Kellogg three decades back, the outspoken professor is concerned about the way the Indian and US economy seems to be heading. Add to that he laments about lack of leader and visionaries in India.

"The sub-prime situation in the US is far from over and Indian companies which get business from US clients stand to be impacted," he told HT on the sidelines of the opening of a new campus of his business school, Great Lakes Institute of Management, Chennai. His statement rings a loud bell considering that he has taught a lot of students who have now gone on to become key decision makers in financial companies in the US and the world.

According to him, the first signs are evident from IT companies who are reporting lower than expected net profits in the last two quarters and have given muted business outlook for the rest of the year.

"This fact is evident by the retrenchments that a few Indian and global IT companies made recently," he says.
According to him it is not services companies (like Infosys or Wipro) but even Chinese companies who are feeling the impact of the sub prime situation.

"If companies are not placing orders to manufacture things like cars or PCs out of China, then it is bound to impact their economy," he says. Ask him about when the US will come out of a recession and he assures that by June 2009 the US would be back on its feet.

While he is convinced that India's economic fundamentals are strong, he is concerned about the rising inflation. "A huge chunk of the middle class has moved up thereby making more money available, creating more demand, thereby resulting in this inflation scenario," he explains.

According to him, this rising inflation is a global problem and not an Indian one and he is convinced that the FM is addressing it in the right manner.

Courtesy - The Hindustan Times

Posted by Shiraz Datta on May 29, 2008 at 10:53 AM in Business Growth | Permalink

Corporate's Growing Social Responsibility

Corporate Social Responsibility has grown from mere debate to concrete actions on the part of Indian companies. While many are still vacillating between to do or not to do, numerous corporate are willing to give back to society

Every organization has an impact on the society and the environment through its operations, products and services. Also through its interaction with the key stakeholder groups including employees, customers or clients, investors, suppliers and the local community. There was a point in time when emphasis was given to the purely economic aspects of any activity being carried out. But now, issues like environment, ethics and society are given equal emphasis by India Inc.

At the same time, it stands true that it will take a while for many organizations to equate Corporate Social Responsibility (CSR) with value creation. It’s a continuing debate that can continue for as long as one wants. The proponents as well as the critics of CSR are unyielding. The good news is, things are taking a turn for the better.

A growing number of commercial profit makers, who are adding to corporate trash everyday, accept that they can and should manage their social and environmental impacts in ways that benefit both the organization and the wider society. According to N. R. Murthy, non-executive chairman and chief mentor of IT firm Infosys, “Corporate Social Responsibility is really about ensuring that the company can grow on a sustainable basis, while ensuring fairness to all stakeholders”.

Corporate India has done it in different forms. A cement factory in Southern Gujarat planted numerous seedlings atop its chimneys to reduce pollution. This was decades ago. CSR has turned a whole new leaf since. The latest entrants to India Inc., IT companies are also hopping onto the virtuous model. Cincom Systems, for instance, runs an iMAD program with an NGO named Society for Rural Urban & Tribal Initiative (SRUTI).

Talking about iMAD, or I Made a Difference, Cincom director Pantulu Avasarala says, “This association will help both organizations to work closely for the betterment of the society and sustain community empowerment. We accentuate the power of helping others internal or external to the company”. As part of this initiative, Cincom has already donated 15 computers to schools operated by SRUTI for underprivileged children living in slums and backward areas.

According to a study released by Oracle Corporation and the Economist Intelligence Unit, 85 percent of executives and investors rank corporate responsibility as a central consideration in investment decisions. This trend, it said, is being driven by factors like the erosion of trust in large corporations, the globalization of business, the corporate-governance movement, the rise in importance of socially responsible funds and sheer competitive pressures. The last factor, however, does not necessarily imply that firms emphasizing Corporate Responsibility will beat the competition.

CSR brings about intangible benefits such as brand value and greater investor confidence. But one cannot measure what benefits it adds to the balance sheet. On the contrary, there are costs associated with CSR that can very well be calculated. Reports say that a full-fledged Corporate Responsibility program at a large multinational can cost tens of millions of dollars, or as much as 2% of total revenue.

It is often believed that evolved economies have moved the more polluted industries to parts of the world where environmental and social standards are less stringent. Simultaneously, enthusiastic supporters of free markets debate that an organization should not turn away from its primary goal which is responsibility to shareholders and so they should not be thinking of wider good but should think only about their profits.

In his book Capitalism and Freedom, Friedman argues that, “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Critics feel that advocates of CSR are wrong in implying that there is something shameful about companies making profits. They feel the conviction that redemption lies only in these companies also being a moral “corporate citizen”, is incorrect. They propound that CSR moves companies away from their primary aim of making profits, throwing global capitalism out of gear with increased regulation and sundry costs to eventually burden stakeholders worldwide.

Corporate Responsibility is difficult to pin down in a company’s growth cycle, more so because it costs a bomb and there don’t seem any immediate returns. This could also explain why the most important stakeholders, after customers, are the traditionally important employees and shareholders.

With no real studies conducted on CSR, it is also difficult to notify exactly what standards a company should follow and how far they should go beyond the laws to claim beneficiaries to the society. What we really mean by “responsibility” is still under debate. There lies the biggest problem. It’s at the discretion of companies what they want to do and how they want to go about this intangible mode of value creation. Or if they care to venture there at all.

The punch of the debate is that the negative effects industries have on the environment we breathe in cannot be denied. It is true that they are constantly depleting natural resources and contributing to environmental hazards like pollution and global warming. Fossil fuels are said to contribute to global warming, and there is both governmental and societal pressure on corporations to adhere to stricter environmental standards. It might as well that they give back to the environment in some form. Fortunately, there is no denying that CSR has become an important issue facing the global business community and one that promises to grow in importance over the coming years.

While it is fair to say that unnecessary intrusion into a corporate’s working can harm the benefits it accrues to society by means of wealth creation, it is also true that companies need to return something as an entity by itself. Companies have long been criticized for the disruption they cause to the environment. It is time they value what they have and give back to society, some bit in return.

www.shirazdatta.com

Posted by Shiraz Datta on May 12, 2008 at 05:22 AM in Business Growth | Permalink

An Outlook - Call Centre Software Market

The market for call centre software is only expanding. This because companies realize that keeping in constant contact with customers will help them enjoy a steady growth. According to the Everest Research Institute, the market for contact centre outsourcing has grown rapidly to a US$55 billion opportunity. And if a Frost and Sullivan research is to be believed, the call centre outsourcing market is set to reach $27.5 billion in 2013, up from $20.7 billion in 2006. Business Insight opines that Indian Agents Positioning is projected to rise over the next five years, from just fewer than 180,000 in 2004 to nearly 365,000 by 2009.

Having mentioned such wonderful projections, the contact center projects are also likely to feel the impact of recent “temporary” recession. On the other hand, contact center technology remains the best lever for extracting more value from employees and make better use of customer data.

The need for innovation remains, and attempts are constantly on to extend the reach of customer contact and to make it more and more affordable. Few reports suggests that while service has been a key differentiator for a number of companies, how the organization manages and maintains its customer relationships will be of even more important if an organization is to remain solvent and competitive. Hence continuous and sustainable innovation would be required from technology provider.

The idea is not only to drive sales but also to evolve a lasting customer relationship that works for a longer duration with better results. It starts from getting the right calls to evolving the appropriate responses that are required to meet the client’s needs. It would be imperative for call centre to

• improve customer satisfaction levels, thus enabling companies to increase lifetime customer value;
• increase revenue generation by providing business users with the customer information necessary to make relevant offers to each customer; and
• enable companies to cut costs through advancements in operational efficiency.

Contact center and communications technology vendors are well placed to assist organizations in building the customer-centric enterprise. Traditional contact center outsourcing markets are maturing in their adoption of these services. However, newer industries like retail, manufacturing, power, etc appear poised to engage these technologies like never before. According to few reports the largest single emerging vertical investor in outsourcing services through 2012 will be the travel and hospitality sector with next largest portion to be energies and utilities. Hence there might be temporary slower rate of growth however I do see the future promising, provided organization can bring value to its customer and its customer’s customer.

Posted by Shiraz Datta on April 10, 2008 at 01:14 AM in Business Growth | Permalink

Are you Listening !

Just recently I saw a Indian movie - tare zameen par(http://taarezameenpar.com/) about what we are doing to our kids in the age of cut throat competition. Well I should say that sometimes I do wonder that why I have to see a movie when almost more than half the world population has already seen it. I guess I will blame it to my laziness or my laggardness. 

Nevertheless I must advocate for this film, it was true spectacle. Few days ago I posted a referred note on my site about how good the movie was and also how important it is for us to start changing the way we foster our children or at least make an attempt in doing so. From an Indian prospective it is really tough and even I don’t shy in saying that it is getting tougher day by day for our children. With over 700 suicides committed by school children, languished by studies, exams, peer pressure, etc. within last one year, are we talking studies, schools or are we talking war?

I wonder that my school days was tough, but when I see today’s studies I feel lucky. Given the situation of today’s “unwanted” competition in schools, I could have not even managed to complete or pass it.

“What is our parents role”, “what teachers are doing”, “man what a peer pressure”, “this is a wrong system” and so on. These are just words. No teacher or parent or society will change unless we “cumulatively” make an attempt or an effort in doing so. By opining this, no means I am trying to discount the power of one. We have great examples like Mahatma Gandhi, Mother Teresa and many more. Coming back to the point, now it’s a high time that we should do something for our kids. Let them blossom the way they like. I know by saying this you may wonder what about our values that we all want to give to our kids, and the aspirations of “my kid will become a.........”.

Just think for a moment that by “my kid will become a..........”, aren’t we making our kids into donkeys that will take the burden of our aspirations. Or should I reiterate what Aamir Khan (the hero) said “if you are so much into competition then breed horses not kids”.

It will be a long way till I may start to understand of what needs to be done. But I think I can say one thing and that is “listen”. Listen to your kids, what they want to say, how they feel, what they want or want to become, etc, etc.

I know I am asking a very tough thing here, aren’t I.

We listen, or rather “try” to listen to our colleagues, wife/husband, mother/father, news, commentary, bosses, even people like me writing blogs at midnight, and NOW I am asking you to listen to your kids.

I am not an expert in child psychology and by no means have an intention to become one. But as a marketer, I notice people around me, on the roads, in the shops, in numerous organizations; no one seems to be listening. Bosses are not listening to their team; team is not listening to their boss, sales are not listening to what their customer needs, etc., etc.

People just want to either do what they want to do or blindly follow others. No questions asked. With all the possible tools for communication are we listening?

While there are organizations that listen to what employees want; sales listen to what customer wants; marketers listen to what market wants; parent listen to what their children wants; teacher listens to what their students wants, and these are the organizations, people, parents, teachers, shops that stand out and makes a difference.

Isn’t it. Just think about your last good experience when you went to a shop, a restaurant, for a client meeting, teacher you liked the most, barber you regularly go to, etc.

Isn’t they all were listening………….Just think about it……and LISTEN !!!

Have a Good Weekend.

Posted by Shiraz Datta on April 3, 2008 at 02:59 PM in Business Growth | Permalink

Is outsourcing on a back foot?

As the US economy slows down, Indian companies face diminishing workload and lowering margins. But so far there have been no withdrawal symptoms. If the rupee is appreciating, it might be time for us to make the most of it by channelizing marketing in the right direction. It’s not a time for worry, it’s a time for some strategizing.

As the US market slackens, Indian outsourcing firms fear a danger. Of suffering lesser work, lesser profits and even having work taken away from them to countries like the Philippines.

“I don’t think it’s a situation of gloom for the industry. I think it’s a situation of cautiousness for the industry,” Azim Premji, chairman of India’s third largest software services exporter said recently. It is true. We needn’t panic about the appreciating rupee but about preparing ourselves well for what is to come.

The worst has not hit us yet. And it probably won’t. If there is one thing to learn, and many have learnt it from the 2001 crisis, we need to focus a little harder on the business. Glenn Gow of the Crimson Consulting Group opines in one of his pieces, “This time will be different. Software won’t get hit as hard – but it will suffer along with the rest of the economy. Vendors that shape their marketing strategy for the downturn will emerge stronger when economic growth returns.”

That is the trick. To make the most of what marketing costs offer you in a slump. As the economy slows down, this is the time you can leverage yourself to the utmost by investing in your image. If you present your strengths at the time of a slowdown, it puts you at an edge around your client. If you show results and enthusiasm at a time when all is not well, you are bound to reap benefits in the long run.

Instead of worrying over the US economic slowdown, it is a time of cost saving for most Indian companies. That is the only way you can recover from loosening profit margins. When you concentrate on confidence building with clients at this point, you are bound to make a stronger statement that will stay with them much after the slowdown has recovered. You can focus on some image building, find newer clients during the slump, and who knows, you might win a whole new set of friends.

It is up to the Indian software industry to make the most of the situation now. If everyone’s cutting costs in the US, which is where most of India’s business comes from (it is Indian software industry's largest market with a whooping 61 per cent share), there are all the more chances that more varied work will flow into countries like India. It gives us the opportunity to explore opportunities of doing more central software development instead of cloning processes that have simply been passed on by our Western counterparts.

So far we are primarily providing back-office services. There are little chances of doing premium work like coding and engineering management. So this might be a good time for Indian techies to learn the intricacies of the technology market as it works across the globe. This again requires us to undertake serious marketing so we are able to garner more work out of currently confused companies abroad that are not sure how they want to go about manoeuvring the economic recession.

The flipside, once again to India’s advantage, is that companies don’t cut down on processes that are mandatory to day-to-day processes. They would instead cut down on more nonobligatory jobs like consulting. This gives an advantage to Indian companies that undertake tasks indispensable to routine needs of an organisation. In an interview HCL chairman Shiv Nadar said, “Our work is the core of the client's business processes.” He says the company primarily focuses on technology services, which don’t impact their business in such a slowdown.

Innovation. That is another key to successfully rise out of the slowdown. Invest smart, get business that will impact you lesser and provide unique services at a good cost to new clients and old. This will boost your business now to propel outsourced work later. Indian technology firms can also look at exploring newer markets where they have not reached so far. With low costs, extended services and newer offerings, they can lure clients.

When in peace prepare for war. And that is what we ought to do. Many tech visionaries are likening India’s IT industry and the slowdown to what happened in Japan with the Auto industry and the appreciating Yen. Technology for India is an area of excellence and it is time for us to invest and use global best practices for India’s benefit. If we provide the right services at agreeable terms and invest into the image of the industry, we are likely to benefit in the long term.

www.shirazdatta.com

Posted by Shiraz Datta on March 26, 2008 at 05:25 AM in Business Growth, Business Optimization | Permalink | Comments (0) | TrackBack

Retailers, get ready for the magic of CRM

“International giants entering India in a big way was an impending trend only waiting to happen.  If you haven’t prepared for the tussle yet, this is your chance. Indian retailers are set to impress customers and increase their bottom-line with the aid of the right CRM”

It’s ironic that while the retail sector in India is estimated at US$350 billion, organised retail is estimated barely at US$8 billion. The upside is the expected growth rate. By 2010, organised retail is expected to grow up to US$22 billion, an estimated 40 percent compounded annual growth of return over the next few years.

Numerous international retail giants from Australia, the United Kingdom and the United States are entering the Indian market with enormous hope and investments. Retailers in India so far only prefer to increase the number of outlets within a city or to other regions as a part of their expansion drive. But they will now need to fight the burgeoning retail space with many new shopping centres and growing new markets like the kids’ retail revolution in apparel. To manage the tremendous volume of transactions and to beat international competition, Indian retailers have an immediate need for Customer Relationship Management (CRM) tools.

CRM will happen. It’s simply a question of how long it will take and in how many ways retailers will benefit. Customer Relationship Management is important, especially for your repeat customers and for them to feel camaraderie with the retailer. A good CRM will provide the right framework to retailers so that they can personalize merchandise purchases, services and responses across all communication channels for the customer’s satisfaction and for increased sales.

Low cost, high value

But before retailers embark on any CRM software, they need to ensure it comes at optimal cost, with minimal risk, high value, and a higher return on investment (ROI). It should install quickly, interface readily with existing systems, be easy to learn and to use, and deliver uncompromising performance.

Driven by changing lifestyles, strong income growth and favourable demographic patterns, the Indian retail market is growing at compounded annual rate of five percent and expected revenues of US$320 billion in 2007, according to a report by AT Kearney and the Confederation of Indian Industry. And big international and domestic retailers have realized this growth.

To sustain competition from the giants, Indian retailers must differentiate or brand their business. Customers expect retailers to do this is by personalizing products and services. And this is where a rightly implemented CRM comes into play.

Growing Communication Channels

India has more than 129 million mobile communication subscribers and the number is expected to go up to 300 million in 2008. This is a strong marketing channel retailers cannot afford to miss. “Truly loyal customers can’t imagine doing business with anyone else. They are your best means of advertising because they’ve become advocates for your company. They bore their friends with stories of how great you are,” write Shaun Smith and Joe Wheeler, authors of Managing the Customer Experience.

To implement the right CRM, retailers need to analyze customer preferences and trends, and then merge analysis with inbound and outbound calling via CRM technology so that customers can communicate with the retail chain by fax, phone, web, SMS and the like. The CRM framework links and integrates these channels to individualize the customer’s experience and ensure satisfaction.

Similarly, competition must be kept under a check. If a retailer offers volume discounts, its competitors must likewise offer comparable value to the customers. If a retailer has tools to reach more customers with personalized purchase offers, or to process orders faster, or with fewer errors, or more efficiently, other vendors must adapt or gradually surrender market share.

But unfortunately, only 30 percent of companies worldwide have actually implemented a commercial CRM software package. And most of these are only a year old. Of this minority, 54 percent have implemented just one part of CRM. With so much room for improvement in meeting customer demands, CRM can only help.

Contact centres form an integral part of CRM because they directly impact how customers feel about the retailer’s products, services and business. With an efficient system at the contact centre, retailers can help customers buy what they want and need. For instance, retailers are yet to utilize the opportunity of selling daily needs to a population that is using the latest technology to purchase almost everything.

If you are looking at moving to customer-centric marketing, this means that all customer functions are subject to CRM’s analytical processes. This helps retailers understand both how the customer base is presently segmented and, for the future, according to what retailing values. Other analyses identify new services, evaluate their ROI, shift focus from less to more profitable customers, etc. The outcome from CRM analytics is better service, improved planning and profitability, and more appropriate pricing.

Customer Analysis

CRM analysis can help retailers make a smooth shift to a customer-focused enterprise by allowing processes like differentiating customers into segments, discovering precise needs of customers and redesigning compensation and rewards to effect behavioural changes. This process establishes the context that stimulates the customer to shop and buy. Hardcore marketers make their own analytical understandings with the help of a CRM to evaluate what their customers need.

Improved Sales

Better services imply the customer’s improved ability to make purchases. They will make informed decisions and be happy with their purchase. Such efficient shopping will only mean a patronizing customer. For the retailers, this means higher transaction rate, increased revenues, and a wider profit margin.

Smart retailers are looking up new and critical CRM tools like the unified agent desktop that allows customer service agents to respond faster and with greater accuracy and consistency every time a customer picks up the phone, accesses e-mails or chats. The unified agent desktop brings the customer into focus at the desktop and turns the agent’s screen into a hub that can access all enterprise applications and databases necessary to respond rapidly to the customer.

The result is increased quality and decreased operating costs, leading to one of the most handsome ROIs in the industry. It also eliminates data redundancy like repeating customers with the same requests or relying on agents to recall the correct systems to enter a new customer record or service request.

Questions to ask about any CRM Framework:

• Does it allow the supervisor or manager to access and process analytical data online? Preferably through a web portal?
• Does it use just one screen to manage all customer channels – e-mail, voice, chat, fax, web self service – so that agents stay productive and don’t get lost in the transaction?
• Does it offer a universal view of your retail CRM data on a single screen – contact information, history of recent activity, knowledge base, workflow interaction, resource management?
• Does it make efficient use of your and the customer’s time by minimizing clicks so that managers and agents don’t have to toggle to other screens or other applications while the customer waits impatiently?

www.shirazdatta.com

Posted by Shiraz Datta on March 19, 2008 at 09:21 AM in Business Growth, Customer Dialogue | Permalink

It’s just a wake up call for the IT industry

It would be pessimist and unfair to assume that we could no longer be the greatest providers of outsourced software services for the world. The industry simply needs to evolve to grow into a bigger industry with larger targets. At the same time, the country needs to prepare as a whole to provide an appreciable environment to overseas customers.

The country is fretting over what seems to be a not-so-bright-future for the Indian IT industry. For those making the bucks, India’s fairytale story can’t seem to go bust so soon. And it might not. Yes, the IT industry is being met with serious challenges that it needs to address immediately. But the good news is there is still a chance and all we need is to prepare for the future. Going by the past trends, the IT industry has always seen it ups and downs. Concluding anything on the Indian IT | ITeS industry would be premature. A recent interview with NASSCOM president Som Mittal, in which he stated that the IT sector expects to meet or even exceed its software export target of $ 60 billion and overall software and services revenue goal of $ 73-75 billion by 2010. So dismissing these numbers would not be appropriate.

However there are surly certain issues that require a thought or considerations. On the surface, there seems to be a downturn in India’s bright and booming IT industry. To start with, there is the appreciating rupee against the Dollar. The Indian rupee has strengthened 15% against the Dollar the last one year. But America being the primary provider of outsourced business to India’s IT companies, their dipping economy fares trouble for companies here.

Another twist to this tale is the reduced spending on IT services by American companies as their economy slows down. Not only has this caused a drop in the rate of salary hikes and hiring, American firms are also passing on and creating lesser work for Indian’s IT companies. As the bulk of work lessens, India being the largest provider of low-cost outsourced services, the impact is reflected surely and poorly.

As Infosys Chief Mentor and Non-Executive Chairman Narayan Murthy has constantly pointed out, another bottleneck the Indian IT space faces is India’s clogged infrastructure. Any foreigner, who steps down at the Indira Gandhi International Airport in Delhi or the Bengaluru International Airport for the first time, will not get the best first impression. For a country that opened its doors for other countries almost a decade back, the development growth has been relatively slow and I guess can be a hindrance for the growing Indian economy.

Our Indian airports need serious makeovers. Let’s hope the new ones will provide the extraordinary experience that a visitor deserves. If you walk down the road from Bangalore’s airport to the city’s best-known hotel Leela, the traffic and pollution are stifling. Similarly, if you land at Delhi or Mumbai’s international airports, there is nothing welcoming about them yet. The efforts are on, but it needs speed and urgency. Or we are bound to lose work to competitors like China, Eastern Europe and Russia, who not only provide low-cost services but also better propriety. With new fiscal budget awaited in near time I would advocate for policies that would aid to sustain the India IT shining story. The Government will also need to look in continuing the tax holiday to smaller STPs beyond 2009

Competitors are another major threat to Indian’s IT industry. While the industry might not be as organized in countries like Russia and China, they are on their way. And they are also producing quality engineers, comparable to India. Even countries in central Europe are not very far from achieving what we have been bloating over. Emergence of these countries in the IT space has already started impacting our client’s preferences and margins.

India needs to stabilize the way IT firms are working. The talent is there but we still fall short of the demand. If we want to continue supplying work to firms abroad, we need sufficient talent within the nation to meet the demand. Engineers don’t simply need to provide outsourced services that mainly involve testing services. If the industry wants to survive, it will need to train professionals to do substantial tasks that will help firms move up the value chain.

Even companies that are outsourcing work now want to pass on more evolved work to India. They will soon be automated and we will be forced to take on other work. We need to prepare our systems and professionals for a future that involves different work like developing systems and solutions for foreign clients including diversifying in the various other geographical regions. Companies like TCS and Infosys have taken the clue and are already undertaking work that will help them grow from a service provider to a policy enhancer with larger foot print. Besides, the kind of outsourcing services we are providing right now might become redundant very soon.

At the same time, despite what the scenario looks like, salaries are being hiked at tremendous rates. Salaries of those higher up in the ranks is soon likely to match of those in the United States. This is not a positive sign for the low-wage advantage that we currently offer. Cost arbitrage may very soon not be considered as a differential factor but a hygiene one.

Fortunately, this is not the end of the story. So far, Indian companies have been providing peripheral work to foreign firms. But times are a changing and any IT firm that wants to keep evolving at the same rate will have to grow to be able to provide higher margin work like consulting. We need to the move up the value chain to sustain the advantage that we are currently offering to the world. In the recent NASSCOM leadership forum there was a great talk or recommendation to the India IT | ITeS company to move up the value chain to sustain the competitive advantage.

The fundamental business model of Indian IT industry of earn is $$ dollar and spend in rupees would prevail in the coming years with amendments of Earn in Yen, Euro, Pound, Dollar…..and spend in Rupees. However sustaining this model would require a considerable cumulative effort of the industry and government.

With annual growth rates of nearly 30% in the past ten years, Indian IT industry has been resting in peace. We have provided a bulk of talent and spearheaded some of the greatest software development and ITeS any country has provided. The stats for future does looks encouraging provided the industry works together to over come the hurdles. It’s time to gear up. If we don’t change, and fast, we may very well be headed for a fall.

Posted by Shiraz Datta on March 12, 2008 at 01:56 AM in Business Growth | Permalink

Is the downturn "really" good for India

A recent article published in Economic Times on US Slowdown offers opportunity to Indian IT Industry, does highlights some interesting aspect of the current market situation. I must say it’s a coincident that recently I had a lengthy discussion with one of my friends Sandeep Bansal, working in an ITeS company, about this slowdown and how it’s an opportunity for us sitting here in India. He actually came up with few interesting examples to support his point of view. In line with same I saw this article about various opportunities that Indian companies may have from the US slowdown.

From the article’s perspective the author has tried to relate and convince about the current down turn to that of what has happened in the past. I must say that he has done fairly a decent job in certain aspect. However the current situation relating to that of what happened in the 2000-01 was superficial, as the fundamentals and the dynamism of the given market environment has drastically been changed. Weakening dollar could be well said example of such fundamental shift.

The articles does highlight that the company though in short terms is dealing with the problem by increasing the efficiencies of its productivity improvement re-pricing and more off shoring, doing more work at its offices in India that on-site in US. We all are aware about the downturn and a probable recession that the US Economy is facing, and with elections there seems to be no respite for the outsourcing industry. With both Mrs. Clinton and Mr. Obama proposing to give benefits to the companies those are not outsourcing their work to “shores”. So there is an analytical requirement of developing or Rethinking the tactics to sustain or even tide over the downturn.

Another highlight of the article was the target verticals identified, and among the list financial service was the first. Well I do not disagree with it being on the first however dose has reservation about the sustainability of the sector in the US market as a major revenue generator for the India IT and ITeS companies. As few reports that I had chance to go through does indicates the slowness in the US Financial Sector from the technological spend perspective, with a tremendous growth opportunity from the emerging markets in the same timeframe. Taking on a suggestive mode, I would like to recommend of companies to create Asian specific offerings to tap on the financial services sector of this region. Leverage on what you have learned in the matured markets and modify it for better utilization in the emerging ones.

The article does reflect on building and acquiring the “Intellectual Property”, which personally I am a big fan of. I believe with any downturn or upturn we need to build and/or revise the IP as per the changing dynamism and a look into the future. As an “IP” is what a company can differentiate itself from its friends known as Competition. The ability to create uniqueness in one’s process, delivery, implementation, etc. can provide the competitive advantage that is require to tied over any downturn(s). McDonald’s targeted service time for a burger is 7 minutes delivery, no matter which part of the globe you are. That is an IP for me.

An ability to create and recreate the magic and above all to sustain is imperative.

www.shirazdatta.com

Posted by Shiraz Datta on March 9, 2008 at 08:13 PM in Business Growth | Permalink | Comments (2)

The Gobbledygook Manifesto -- Cutting Edge! Mission Critical! An analysis of gobbledygook in over 388,000 press releases sent in 2006

Oh jeez, not another flexible, scalable, groundbreaking, industry-standard, cutting-edge product from a market-leading, well positioned company! Ugh. I think I'm gonna puke! Just like with a teenager's use of annoying catch phrases, I notice the same words cropping up again and again in Web sites and news releases—so much so that the gobbledygook grates against my nerves and many other people's, too. Well, duh. Like, companies just totally don't communicate very well, you know?
Many of the thousands of Web sites I've analyzed over the years and the hundred or so news releases I receive each week are laden with these meaningless gobbledygook adjectives. So I wanted to see exactly how many of these words are being used and created an analysis to do so.

AN ANALYSIS OF GOBBLEDYGOOK

First, I selected words and phrases that are overused in news releases by polling select PR people and journalists to get a list of gobbledygook phrases. Then I turned to Factiva, a Dow Jones & Reuters Company, for help with my analysis. The folks at the Factiva Reputation Lab used text mining tools to analyze news releases sent by companies in North America. Factiva analyzed each release in its database that had been sent to one of the North American news release wires it distributes for the period from January 1, 2006, to September 30, 2006. The news release wires included in the analysis were Business Wire, Canada NewsWire, CCNMatthews, Commweb.com, Market Wire, Moody’s, PR Newswire, and Primezone Media Network.
The results were staggering. The news release wires collectively distributed just over 388,000 news releases in the nine-month period, and just over 74,000 of them mentioned at least one of the Gobbledygook phrases. The winner was "next generation," with 9,895 uses. There were over 5,000 uses of each of the following words and phrases: "flexible," "robust," "world class," "scalable," and "easy to use." Other notably overused phrases with between 2,000 and 5,000 uses included "cutting edge," "mission critical," "market leading," "industry standard," "turnkey," and "groundbreaking." Oh and don't forget "interoperable," "best of breed," and "user friendly," each with over 1,000 uses in news releases.

Read the rest of The Gobbledygook Manifesto here.

Posted by David Meerman Scott on October 13, 2006 at 09:49 AM in Business Growth, Customer Dialogue | Permalink

Where Companies Are Getting Search Engine Marketing Results

Posted by Louis Columbus on June 21, 2006 at 08:45 PM in Business Growth, Customer Dialogue | Permalink | Comments (2) | TrackBack

The Magic of Thinking Big

There really is magic in thinking big.

First, we have to have a dream or vision of what we want to accomplish.  I would urge you to make that vision as big as possible. Think big. Think big for your organization. Think big for yourself. Why shortchange yourselves?

Now I’ll let you in on a little secret to accomplishing your big dream or big vision.

Compounded growth.

What's that? Just a small two or three percent improvement per month.  For example, spending just fifteen minutes per night reading good books, another fifteen minutes in the evening catching up on your trade magazines, news journals and things like that, instead of just lying back and watching TV. No one ever got anywhere doing that. That’s a passive process. It takes the “magic” of compounded growth to get anywhere.

For instance, remember the rule of 72? The rule of 72 is that a number divided into 72 will give you the number of years or months it takes to double your capability or double your asset. For example, if you invest at eight percent per year, eight percent per year in nine years will compound and be doubled.

The same principle applies to our own personal growth. If we say to ourselves, “I’m going to improve my capability, my skill, or my know-how just two percent per month - just a little improvement - in 36 months you are twice as productive, twice as capable, and perhaps able to earn twice as much and be twice as successful!

Descartes once said, “Give me extension and motion and I will construct the universe.” He took it further than Archimedes who said, “Give me a lever long enough and a place to stand, and I can move the earth.” Descartes says, “Give me unlimited extension and unlimited control of motion, and I will construct the universe.” Now that’s big thinking.

We’re each active re-shapers of our own world. Each one of us reshapes our own world, for better or for worse, every day - by the thoughts we think, the goals we set, the people we associate with, the effort we put forward, going the extra mile or an extra 15 minutes a night.

The key word here, the key idea, is activity. I’m urging you to be a businessperson, not a "sales rep." Be a businessperson and reshape the customer’s vision of the possible. Help them elevate their sites. Help them think bigger. Help them see potential they don’t see. Show them how you can help them accomplish that.

Remember, it just takes a few minutes each day to see your "big dreams" become reality - through the principle of compounded growth.  Open your mind to the potential and the “magic” of thinking big.

Posted by TomNies on January 30, 2006 at 05:49 PM in Business Growth | Permalink | Comments (0) | TrackBack

American Companies: Ready to Compete?

The Pulitzer Prize winning biographer and historian Edmund Morris once said that, "Good writing always has an unblinking acceptance of the truth." However, it is difficult to determine "the truth" about affairs as complex as today's globalized economy and America's status therein when there are so many conflicting opinions.

David Walker, who audits American government's accounting records in his role as the U.S. Comptroller General, said quite starkly to the Associated Press that, "I believe the country faces a critical crossroad and that the decisions made -- or not made -- within the next ten years or so will have a profound effect on the future of our country. The problem gets bigger every day, and the tidal wave gets closer every day."

Is an economic tsunami soon to break upon us? Some think so. Some think not. But, what really is the "truth" of America's situation? Perhaps, in the longer term, which is to say when historical realities become more apparent and widely different opinions are then sifted out by the development of events known more clearly, perhaps only in retrospect, we may then know what was "truth" and what was error in the mid-2000's decade.

The above excerpt is from Line 56: The E-business Executive Daily. Competitive issues facing American companies today are discussed in this article, including:

• What the Japanese Learned from America Others Have Learned Too
• Are American Manufacturing Workers Between a Rock and a Hard Place?
• Is America Failing to Keep Pace With International Productivity?
• America's Comparative Trading Success -- or Decline?
• Enter -- The China Factor
• America's Adverse Trade Balance
• Whatever Happened to Savings?
• Corporate Tax Rates
• Small and Mid-Size Firms as Engines of Employment Growth
• Median Household Incomes Declining While Job Risks Increase

To view the entire article, go to: http://www.line56.com/articles/default.asp?articleID=7196&TopicID=9

Posted by TomNies on January 16, 2006 at 02:46 PM in Business Growth | Permalink | Comments (0) | TrackBack

Profess Process - Revisited

I just reread Dale's post, "The Real Impact of Extended Buying Cycles."  (As an aside, I love Marketing Sherpa.  Ann Holland and I had a dialog several months ago about how people pirate articles (lots of mine, unfortunately) and posts, then publish them as their own.  Nasty business.  Illegal in many cases as well.  I've got a few little tricks that will enable you to know when that's being done to you.  If you're interested, let me know.

But it's the process thing that got me.  Dale is spot on.  As buyers get tougher (or more confused with options, or afraid to make decisions due to increased management and shareholder scrutiny), and the selling environment becomes more complex with bigger and bigger hurdles over which one has to jump, the only thing that provides a straight path to deliver on a goal is a process.  A component of that goal is closing business within the timeframe originally specified by the owner of that opportunity, usually the sales person. 

I've seen sales masters fall flat on their face when something changed in their environment because they had been selling as unconscious competents -- not really understanding how they were doing things -- just selling by the seat of their pants.  Those are the folks who claim selling is an art.  (I believe it's 90% science and 10% art.  Science is all about process, when you think about it.)

When a person or a sales organization employs a process, and then something changes in their environment, such as the entry of a new competitor, or a shift in the way customers buy, or the company for whom they sell has an "issue," the way to overcome that is to adjust the process, and then align the salespeople behind that through training and coaching.  What too many sales executives do when they recognize a change has cause them to miss their targets to wring their hands and leave it up to the salesperson to figure it out.

When you think about it, this all comes down to one thing in sales: either you plan or you don't.  If you plan, then you are, by definition, following a process. If you don't plan, you stumble through a random series of tactics never having a strategy to pave the path.  No wonder your selling cycles are getting longer.

It the most basic sense, every organization that sells must have a sales methodology (a set of processes) that been designed for and proven to work for them.  Sales education provides the opportunity for the people that sell to learn about and understand those processes.  Sales training enables them to practice using those processes.  Ongoing coaching supports their use in the field.

All of this is mission critical and quite strategic to a company's success.  Sales executives who have a kickoff meeting coming up and look on the Internet for someone to fill a two-day slot with some "training" don't really know what they are missing.  I do.  Process.

Dale, I profess process.

Posted by Dave Stein on December 1, 2005 at 07:38 PM in Business Growth | Permalink | Comments (0) | TrackBack

The Fifth P of Marketing - Passion

Nearly every business school teaches the traditional 4Ps of Marketing including product, price, promotion and distributon or place.  The key is to sychronize strategies to take each of these aspects into account and create results, either in terms of great channel growth or direct sales.  These are the core concepts of Marketing.

In the graduate-level courses I ocassionally teach on Marketing one more P sneaks into the conversation - Passion.  Nothing happens in Marketing without passion - and that's a passion to be the change agents of a company, not the holders of the status quo or worse, the historians of the past.

As my class goes through case studies and examples of exemplary marketing one fact emerges: Marketing is as much of a calling as it is a career.  Call it an avocation. 

Marketing is an act of agresssion against the status quo and it is definitely about making an impact in the market, all in the name of advancing brands, awareness and eventually Sales.

Passion truly is the fifth P of the Marketing mix. 

Posted by Louis Columbus on November 16, 2005 at 10:49 PM in Business Growth | Permalink | Comments (1) | TrackBack

Accelerate Business with Customer Service

By Steve Kayser

Let's put it into context.

If you're buying a $13 million jet aircraft engine, is getting the cheapest price or the best service more important?

Reveries reports that Rolls Royce proves that customers want and need service.

"Over the past 15 years," Rolls-Royce "has clawed its way up from bit player to No. 2 in the market for commercial airliner engines" via a deft combination of product, and -- even more important -- service, reports Stanley Reed in BusinessWeek (11/14/05). You may recall that Rolls nearly went out of business "in the 1970s before the British government took it over," keeping the aircraft engine business and selling off the motor car division. The critical moment for Rolls (which has been around 101 years) actually came in 1996, when "John Rose, a reticent former banker" became chief executive officer. Rose not only "pushed hard to broaden Rolls's product offerings" but also to provide maintenance services to match.

For Rolls, the service-and-maintenance part was key, because the margins in it are in the 30 percent range, far outstripping "those for original engine sales (monster turbofans, which may list for as much as $13.5 million a piece, are often sold at big discounts to win orders)." As a result, Rolls-Royce, www.rolls-royce.com, today has "one of the world's most sophisticated help desks. Using live satellite feeds displayed on video screens, its technicians continuously monitor the health of some 3,000 engines for 45 airline customers." Naturally, product design figures prominently into the service side, as "the layout of Rolls-Royce engines makes them easy to work on." Rolls packages it all up in a plan "called TotalCare, under which" customers pay them "a fee for every hour the engine is in flight.

In return, Rolls assumes the risks and costs of downtime and repairs." The upshot: "Rolls is incentivized to put expensive modifications into the engine to improve reliability," notes Bob Reding, svp for technical operations of American Airlines, "which operates 178 Rolls-powered planes." Some customers gripe that Rolls's "maintenance costs are well above those of the competition," but for the most part that doesn't seem to be hurting them any: "The company says it has clinched 86 percent of engine orders for the new Boeing 787, and orders for the Airbus A380 are evenly split with GE." According to analyst Sandy Morris of ABN Amro, Rolls Royce Group is poised to enjoy "a 65 percent year-on-year increase in operating profits in 2005" and investors "have bid them up 46 percent since the beginning of this year."

Does this work just for complex business-to-business companies? Nope. Customer service gets right down to the level of the grocery store. An independent researcher discovered that the vaunted TESCO, the leading UK supermarket, is vulnerable to a competitor's superior customer service.

As TESCO announces record profits and consolidates top ranking in the UKgrocery retail market, figures released today from independent customer loyalty experts TARP UK, show that TESCO`s business remains vulnerable to ASDA on service. But the general lack of service quality across the industry is costing the supermarkets GBP20billion P.A. as 3/4 of supermarket shoppers would happily shop at another retailer. The defining factor is staff availability and checkout service - not price or store location.

-- 43% of ASDA customers were very satisfied, compared to

-- 34% of Sainsbury`s customers, and

-- ONLY 37% of TESCO customers were very satisfied.

-- 32% would ALWAYS use ASDA if at all possible, compared to only

-- 19% of Sainsbury`s shoppers, and

-- ONLY 25% of TESCO shoppers.

Which is to suggest that when you're building any marketing program, you should be putting as much effort into improving customer service as you put into product development. Given the option, customers will opt for service.

Posted by Dale Wolf on November 7, 2005 at 10:06 AM in Business Growth | Permalink | Comments (0) | TrackBack

PR VS. Advertising : 3 Facts of Life

An interview with Al Ries, Best-Selling Author of "The Fall of Advertising & The Rise of PR."
by Cincom's Expert Access Steve Kayser

Steve: In your book the Fall of Advertising & The Rise of PR you state that today's major brands are born with publicity - not advertising...

Al Ries: Yes, all the recent brand successes have been PR successes, not advertising successes. Red Bull, Starbucks, Harry Potter, Linux, Palm, The Body Shop, JetBlue, and Google.

Steve: Examples?

Al: Starbucks spent less than $10 million in advertising its first 10 years. That's less than one million a year, a trivial amount for a national brand. Here's what Howard Schultz, CEO of Starbucks, has to say about advertising. "It is difficult to launch a product through consumer advertising because customers don't really pay attention as they did in the past. I look at the money spent on advertising and it surprises me that people still believe they are getting returns on their investments."

• The Body Shop is a worldwide brand that has never advertised. Instead, Anita Roddick travels the world looking for ingredients for her natural cosmetics, creating many publicity opportunities. Actually The Body Shop needs to do what Botox has done. Shift from a PR mode to an advertising mode. (Ms. Roddick was recently fired because sales have stagnated at The Body Shop.)

• The fastest-growing retail chain in the world is Zara, headquartered in Spain and now operating in 27 different countries. As a matter of fact, their tags show the price of their merchandise in 27 different currencies. Zara does no advertising except for two sale ads a year.

• JetBlue is flying high, primarily because of PR. The October 14, 2002 issue of Forbes, referred to them as "Lord of the Skies."

• PlayStation and PlayStation 2 were introduced with a fanfare of publicity and went on to become the leading video-game brand.

• Microsoft Xbox followed the same pattern. As a matter of fact, 75 percent of the target audience expressed an "interest to buy" before the first Xbox ad ran.

• Linux has not advertised because no one owns the brand. It's open-source software. Yet Linux has some 99.9 percent name recognition in the high-tech community.

• The Wall Street Journal has become a high-technology trade paper. If you are in the high-tech field and your brand is not mentioned favorably and frequently in The Journal, you are not going to make it in the high-tech field.

It was publicity in The Wall Street Journal and other management publications that built brands like Cisco, Dell, Oracle, Microsoft, Palm, SAP, Sun Microsystems and Yahoo.

Steve: But didn't some major dot.coms succeed with advertising?

Al: What dot.coms are successful? Amazon, Ebay and other dot.coms that relied on PR to build their brands. Those that tried to do it with advertising were notable failures. Google is another dot.com brand that rode to the top primarily with PR.

Fact of life number 1:
Advertising often gets the credit for PR successes.

Advertising Age recently ran a special issue on the best advertising campaigns of the 20th century. The number-one advertising campaign, as you might have guessed, was the Volkswagen campaign. The first advertisement in the campaign, "Think small," was run by Doyle Dane Bernbach in the year 1960. Almost everyone credits this campaign for building the Volkswagen brand.

But in the year before the campaign was launched, Volkswagen was already the largest-selling imported car in the country with 19 percent of the imported car market. Volkswagen was already a successful brand due primarily to favorable publicity. Granted, the DDB campaign accelerated Volkswagen's sales, which is exactly what the best advertising should do.

The best single advertisement of the 20th century, according to many commentators, was a Rolls-Royce ad. "At 60 miles per hour, the loudest noise in the new Rolls-Royce comes from the electric clock."

David Ogilvy said: "The best headline I ever wrote contained 18 words: "At 60 miles per hour, the loudest noise in the new Rolls-Royce comes from the electric clock."

Have you read the first paragraph of the ad? I'll read it for you. "At 60 miles per hour, the loudest noise comes from the electric clock," reports the Technical Editor of The Motor, the leading automotive publication in the United Kingdom.

David Ogilvy took his headline directly from a road test in a motor magazine. Do I think any less of Ogilvy's genius? Of course not. That's what advertising ought to do. Pick up and reinforce ideas put into the mind by PR.

Fact of life number 2:
Advertising often gets the credit for campaigns that don't deserve it. Take the Energizer Bunny, one of the most admired advertising campaigns of all time. Is Energizer the leading appliance battery brand? Of course not. The leading appliance battery brand is Duracell, by a big margin.

Recently, MasterCard's "Priceless" campaign has gotten a lot of publicity. Terrific, but Visa leads MasterCard by more than two to one.

Steve: So when it comes down to bottom-line ROI?

Fact of life number 3:
Advertising dollars cannot compensate for the lack of favorable PR.

Al: No-brainer. The largest advertised brand in America spent $780 million on advertising last year. Do you know the name of the largest advertised brand? It's not McDonald's, Budweiser or Coca-Cola.

The largest advertised brand in America last year, would you believe, was Chevrolet. Now let me ask you a question, what's a Chevrolet? If I told you I would meet you out front in my Chevrolet, would you be able to recognize my car?

What's a Chevrolet? A large, small, cheap, expensive car … or truck. But you already knew that. $780 million and there probably isn't one thing stuck in your mind that you can connect with Chevrolet. What a waste.

The largest corporate advertiser in America last year was Chevrolet's parent, General Motors. As a matter of fact, the company has been the largest corporation advertiser for five of the last eight years.

In eight years, General Motors spent $23 billion on advertising. What did they get for their money? They lost six percent of market share, that's what they got - from 34 percent in 1995 to 28 percent in 2001.

Big advertisers often are companies with big problems. Advertising can often accelerate success, but it usually does nothing to forestall failure.

When US Airways went bankrupt, for example, what was the first thing they did? They ran full-page advertisements signed by the chief executive in The Wall Street Journal, The New York Times and USA Today. "Foundation for the future."

When United Airlines went bankrupt, what did they do? They ran full-page advertisements in The Wall Street Journal, The New York Times and USA Today. It's not really Chapter 11, it's Chapter 1.

When Firestone got in trouble, it ran full-page advertisements signed by the chief executive in The Wall Street Journal, The New York Times and USA Today. "Making it right." Translation: We have been making our tires wrong for 50 years, now we are going to start making our tires right.

When Arthur Andersen got in trouble, it ran full-page advertisements signed by the managing partner, the ex-managing partner, in The Wall Street Journal, The New York Times and USA Today.

When Merrill Lynch got in trouble, big trouble, it didn't run full-page advertisements in The Wall Street Journal, The New York Times and USA Today. It ran two-page spreads in those publications signed by both the CEO and the president.

"Lately you've been hearing a lot about Merrill Lynch." Now we are going to set you straight. And what two guys in two thousand dollar suits tell you, you know you can believe.

Steve: PR vs. Advertising … biggest takeaway?

Al: Advertising's Achilles' heel is not a heel at all. It's the mind of the prospect. Advertising has little credibility in the mind.

Enamelon, a toothpaste that adds enamel to your teeth, spent $25 million dollars launching the brand and received $10 million in sales. Adds enamel to your teeth? A product like this needs to start with a PR program in publications like The Journal of the American Dental Association.

Advertising is self-serving. What you say about yourself has little or no credibility in the mind.

"I did not have sexual relations with that woman, Miss Lewinsky," said Bill Clinton. Did you believe that? Did Hillary believe that?

"I will not resign," said Richard Nixon and then promptly resigned.

PR has credibility in the mind. It's the third-party effect.

It was PR that built the safety position for Volvo. And advertising reinforced it. It's what we call PR-oriented advertising. PR first to establish the credibility of the brand, advertising second to reaffirm and reinforce the brand's credibility.

This ad works because "safety and Volvo" are synonymous in the mind. "We design every Volvo to look like this."

But this ad doesn't work. "We design every Dodge to look like this?" The steering of a Dodge must be defective because look at all the accidents they have been having.

Advertising agencies, as you know, generally ignore the credibility issue and focus on creativity. Take the sock puppet owned by Pets.com. The sock puppet received $60 million in advertising yet delivered only $22 million in sales.

As it happens so often in advertising, creativity dies again.

As strange as it might seem, the ad agency disagrees. Here is what the world's most famous creative director said about the Pets.com campaign. "Business models, market conditions, the Nasdaq, VCs - they're not in my control. This has nothing to do with the success of the advertising. Ad agencies are hired to create brands, and we did that in spades."

It's the classic advertising error. The ad agency apparently thinks the brand is the sock puppet. But consumers don't buy sock puppets. Consumers buy pet supplies. And few did because the advertising didn't build the Pets.com brand.

About Ries & Ries
Al Ries is one of the world's best-known marketing strategists. He is also the coauthor of the best-selling Positioning. Along with his partner and daughter, Laura Ries of The 22 Immutable Laws of Branding, their Atlanta consulting firm, Ries & Ries, works with many Fortune 500 companies. For more information, visit www.ries.com.

Posted by AlRies on November 3, 2005 at 04:57 AM in Business Growth | Permalink | Comments (0) | TrackBack

The Fundamental Law of Marketing

The Fundamental Law of Marketing

By Al Ries, Chairman,
Ries & Ries, Atlanta, Georgia, USA

What’s the fundamental law of warfare? It was Civil War General Nathan Bedford Forrest who expressed it the best: “Get there firstest with the mostest.”

Marketing is warfare conducted with communications rather than guns and bullets. But the same fundamental principle applies  get there firstest.

In our books and articles, we call this principle “the law of leadership.” There are enormous consequences of leadership, and they are all favorable.

Your leadership position attracts the best people, the best distribution, and the best news coverage. (When a media outlet is doing a story about the fast-food business, who do you suppose is the first company they call? McDonald’s, of course.)

Competitors that enter the market later are forced to cut their prices, which makes it difficult for a me-too brand to make much money.

Take Red Bull, the first energy drink. Here in the U.S., Coca-Cola countered with its own energy drink, a product called KMX. In spite of the fact that Coca-Cola is the world’s largest soft drink company, the marketing victory went to Red Bull, a product that outsells KMX in the U.S. market 20 to 1.

KMX didn’t work, so Coca-Cola recently came back with Full Throttle, an energy drink that is unlikely to do much better than KMX.

Take Gatorade, the first sports drink. Coca-Cola countered with its own sports drink, a product called PowerAde. In spite of the fact that Coca-Cola is the world’s largest soft drink company, the marketing victory went to Gatorade, a product that outsells PowerAde in the U.S. market 7 to 1.

Seven to one isn’t the whole story. In order to compete, a number-two brand usually sells for less, greatly reducing profit margins. PowerAde, for example, is currently sold at a local supermarket for 20 percent less than Gatorade.

The first carbonated citrus drink was Mountain Dew. Coca-Cola countered with its own carbonated citrus drink, a product called Mello Yello. In spite of the fact that Coca-Cola is the world’s largest soft drink company, the marketing victory went to Mountain Dew, a product that outsells Mello Yellow in the U.S. market 9 to 1.

Mello Yello wasn’t going anywhere, so Coca-Cola also tried Surge, which didn’t go anywhere either.

The first spicy cola drink was Dr Pepper. Coca-Cola countered with its own spicy cola drink, a product called Mr. Pibb. In spite of the fact that Coca-Cola is the world’s largest soft drink company, the marketing victory went to Dr Pepper, a product that outsells Mr. Pibb in the U.S. market 8 to 1.

And so it goes.
The first all-natural drink was Snapple. Coca-Cola countered with its own all-natural drink, a product called Fruitopia. In spite of the fact that Coca-Cola is the world’s largest soft drink company, the marketing victory went to Snapple, a product that greatly outsells Fruitopia.

Question: If the Coca-Cola Company, the world’s largest soft drink maker, can’t make a success of a me-too product, why should you expect your company to do so?

What are we saying? That the marketing function doesn’t matter? That the key to a company success is research and development? That all a company has to do to become successful is to be the first company to introduce a new category?

Not at all. The second most important law of marketing is the law of the mind.

“First in the market is nothing. First in the mind is everything.”

That’s why marketing is the key to success. It doesn’t matter which brand or which company is literally first. It only matters which brand or which company gets into the mind first.

The first beer on the U.S. market was Yuengling, but not in the mind. The first beer in the mind was Budweiser. As a matter of fact, Budweiser was the first national brand of beer.

The first computer was Remington Rand’s Univac, but not in the mind. The first computer in the mind was IBM. And IBM went on to dominate the mainframe computer business with as much as 80 percent of the market.

The first MP3 player with a hard drive was introduced by Creative Technology, but it didn’t get into the mind. The first MP3 player with a hard drive to get into the mind was Apple’s iPod. And so it goes.

What if you can’t be first? There is still an opportunity to be second. It’s the law of opposites: “If you can’t be first, you can be a strong number-two brand by being the opposite of the leader.”

Coca-Cola is the old, established brand of cola. Your parents drank Coca-Cola, so Pepsi-Cola became a strong number-two brand by focusing on the younger generation. “The Pepsi Generation” was the theme.

Listerine is the bad-tasting mouthwash, so Scope became a strong number-two brand by being the first good-tasting mouthwash.

Mercedes-Benz makes big, comfortable cars, so BMW became a strong number-two brand by focusing on smaller, more nimble cars. “The ultimate driving machine” was the theme.

What about being number three? Forget about it. In most categories, there is room for only two brands. Coca-Cola and Pepsi-Cola. McDonald’s and Burger King. Duracell and Energizer.

Posted by AlRies on October 19, 2005 at 01:17 PM in Business Growth | Permalink | Comments (0) | TrackBack

Have CIO’s Lost Their Purchasing Power?

For all of us technology vendors, there’s been a significant change underway that impacts how we go about growing revenue for our companies. This was reported in an article by Ben Worthhen on CIO Magazine’s website.

For the last year or so, Ben has been asking the same question of every software vendor he meets with: “Who in a company do you sell to?” This usually provokes an awkward pause, followed by a quiet answer: the CFO, the COO, VP of supply chain. The title depends on the product, but in every instance it’s not the CIO. The fact is CIOs don’t buy software anymore.

A recent CIO magazine survey of IT execs found that interacting with IT vendors and learning about technologies finished near the bottom of the things CIOs spend time on. Eventually technology vendors realized that talking to the VP of supply chain was actually a much easier way to sell supply chain software. Generally speaking, vendors haven’t gone back to the CIO—or anyone in the IT organization—and most CIOs haven’t missed them.

Posted by Dale Wolf on September 30, 2005 at 01:01 PM in Business Growth | Permalink | Comments (0) | TrackBack

New Analysis on Customer Lifetime Value

Cincom's European team has just completed a comprehensive analysis on the impact of Customer Lifetime Value in the Financial Services industry. Their conclusion is that CLV is an essential strategy, but one that must be carefully driven:

• CLV requires C-level direct implementation
• Small implementation teams under C-level direction is the most effective organizational approach
• The business case must evaluate vision, risks, cost and justification

While providers always struggle with resource allocation and while there are many competing demands for resources (for example, compliance issues around IAS, Basel II and SOX), organizations must begin turning resources to the profit and retention issues that will guarantee long term success.

Download clv_strategic_research.pdf

Posted by Dale Wolf on September 7, 2005 at 11:36 AM in Business Growth | Permalink | Comments (0) | TrackBack

Give Me Liberty or Give Me … an IPO?

By Steve Kayser

The Case for Remaining a Private Company

One of the most celebrated events in American business is the initial public offering (IPO). Many see it as a transforming event that:

• Creates wealth, sometimes almost unbelievable wealth,
• Ensures a company’s near-term survival, and
• Paints a company with the aura of elevation into the business big leagues.

Right now, in America there are approximately 17,000 public companies.

So, Why Remain a Private Company?

Why would a company forego all of the glamour, fanfare, and wealth that a well-publicized IPO would generate?

Believe it or not, a myriad of reasons. When compiling reasons not to go public, one stands out above all the others: 
Freedom:

• Remaining a private company gives one the freedom to make decisions based on the needs of customers, not the demands of the shareholders.
• Freedom to make bold business decisions and to create innovation by acting on these bold decisions.
• Freedom from excessive regulatory burdens and to adjust to changes in the business environment that you may happen more than a few quarters down the road.
• Freedom to control your own destiny.

Growth - Complexity

To meet revenue or growth expectations, many publicly owned companies are forced to merge or acquire other companies. This leads to a host of complexity issues such as disparate product lines; product, process and employee redundancies; integration; employee layoffs (which severely affect employee morale); and ultimately, while faced inward trying to cope with these issues, customer service suffers greatly.

Simplicity … the Ultimate Sophistication

Leonardo da Vinci once said, “Simplicity is the ultimate sophistication.”  So being a private company, you are not under pressure to grow by merging or acquiring companies to meet shareholder expectations.

Sounds simple.

It is.

Regulatory Money Gobbling ... an Infinitely Expanding Black Hole

The current legislative environment has also made it less attractive to pursue the public path. The Sarbanes-Oxley (SarBox) legislation, spurred by public accounting scandals and corporate fraud of a few to the deleterious effect of the many, has created a compliance burden that would be prohibitive for many small-to-intermediate-size companies that may have considered going public. Today, those companies would incur an unjustifiable compliance cost (millions of dollars per year) just to keep pace with all of the reporting demanded by the legislation.

Most Expensive Words Ever

Section 404 of the 2002 Sarbanes Oxley Legislation is 180 words. Yet estimates of costs for publicly traded companies to comply are between $10 billion to $20 billion  yes, $10 billion to $20 billion, or approximately $55 million to $111 million per word.

According to one study, SarBox compliance could cost approximately $1.4 trillion dollars. “The loss in total market value around the most significant rulemaking events amounts to $1.4 trillion,” according to Ivy Xiying Zhang of the William E. Simon Graduate School of Business Administration.

Ouch … for public companies anyway.

A survey by Korn/Ferry International found that Sarbox legislation cost Fortune 1000 companies an average of $5.1 million in compliance expenses last year. Big accounting firms estimate the cost to be an average of $7.8 million dollars.

For small-to-intermediate-size public companies, the law firm Foley & Lardner found that Sarbox has increased the “cost of being public” by 130 percent.

Don’t Focus on the Business … Focus on the BS (Bureaucratic Stuff)

Senior management now, instead of concentrating on planning a future, building a business, filling customer needs, creating jobs and becoming a valuable cog in the economic engine of prosperity, is tasked with design, implementation, assessment, controls and auditing results.

A large part of this work is ultimately controlled through the IT department. Business managers already have enough problems trying to align business goals with IT processes, let alone adding a completely vainglorious, monolithic, ever-expanding, costly and complex system.

How to Efficiently Discourage Bold Decisions

If senior management makes an honest boo-boo (mistake) under Sarbox legislation, they could still be subject to 20 years in prison and as much as $5 million in fines.

Sounds like a great incentive system to me!

Where Do I Sign Up?

This is a most efficient (and effective) way to waste good money, human resources, and future potential (societal and business)  by throwing it down the ever-expanding regulatory black hole.

Each year government agencies issue approximately 4,000 new regulations.(1) American businesses now pay more than $850 billion (2) in annual regulatory costs and $233 billion in unnecessary or out-of-control legal costs (3) per year.

And now, just for kicks to see how far we can push American business, throw in the highest corporate tax rates among our major competitors.

This is a blueprint for economic disaster.

If the cumbersome regulatory environment continues to increasingly burden business, you will see a drastic downturn in American competitiveness, jobs will be lost, and the economy will be severely battered.

• Public Company=Sarbanes Oxley
• Private Company=No Sarbanes Oxley

A Better Way?

How much better would America be if even a small percentage of this wasted time and money on unnecessary costly compliance was spent enhancing innovation, creating jobs, and aiding competitiveness instead of shackling it?

How much better could we be? 

My not-so-bold statement is …

Astoundingly Better

I believe customers and employees are better served by investing the money that would be wasted in unnecessary regulatory compliance into R&D, better customer service, better jobs for  employees, and most importantly, I believe job creation.

Creating a Unique Culture

Another clear advantage of remaining a private company is that it is much easier to create a unique corporate culture. If you value loyalty, a fair balance between work and family, and community involvement, then you are free as a private company to promote and reward these values.

A Different Kind of Pressure

Public ownership can make any unique culture difficult to sustain if one bad quarter forces you to lay off 20% of your workforce, or the market drives pressure for meeting certain results  regardless of their long-term implications – and that pressure is passed down the line in the organization.

A Really Big Penny

One penny.

One cent.

A paltry pittance … right? 

Ouch … again.

In a publicly owned company, a penny difference in predicted earnings can drop the stock value 10%4.

Advantages Considered

Of course there are good reasons to go public. Access to capital is clearly a compelling reason to launch an initial public offering, and many great companies have successfully followed this path.

If you are determined to become a very large company, or if creating substantial wealth for your managers and employees is a key objective, going public could make sense.

Disadvantages Considered

Many public offerings have failed because the disadvantages haven’t been fully considered. For example, after an IPO, future successes have to be shared with outsiders. Typically after an IPO, insiders own only 30-49% of the business, and this range sometimes varies wildly, for example, up to 85%.

Smells Like Bad Flounder

Not only do you have to share your successes with outsiders, they may be in the position to take over the company and fire top staff, or even the founder of the company. If you are a "Founder" of a company I suspect this may smell like bad flounder.

You also lose important confidentiality aspects such as technologies and profitability numbers, which competitors could (and do) seize upon and turn around to your detriment.

What’s Really Important

Many of these companies might be here today, perhaps smaller, but thriving, had they considered what is really important:

• The freedom to innovate without a rigid timetable for a return on investment,
• The freedom to think long term,
• The freedom to build a corporate culture that reflects the leadership of the organization, and finally,
• The freedom to make decisions that make sense, rather than decisions that please the analysts on the quarterly conference call.

The Good, the Bad, and All Things Considered …

The flexibility and freedom of remaining private is fundamentally ingrained into a corporate character, culture, and commitment. This redounds to the greater benefit for customers, employees, and the communities in which they live and serve, all around this wonderful world.

So … in the Case of Private vs. Public

My verdict is in. 

And …

It’s an IPO-A-NO-GO!

#####################END##########################

Footnotes
1. The National Archives and Records Foundation
2. Office of Advocacy, U.S. Small Business Administration
3. U.S. Chamber Report on the State of American Business
4. Harold Burson – Greatest Generation of PR Speech, May 17,2005

Posted by SteveKayser on August 31, 2005 at 10:26 AM in Business Growth | Permalink | Comments (0) | TrackBack

The Real Impact of Extended Buying Cycles

By Dale Wolf

Ann Holland pumps out more good marketing facts and ideas in her Marketing Sherpa newsletter than the next 20 of us combined.

So without embellishing her words from a recent article in her newsletter -- "How to Create & Use an Audio Testimonial Library to Shorten Your Sales Cycle" -->

Last year, 67% of surveyed b-to-b marketers said their average cycle was six months or less. Now the tide has turned, and 55% of surveyed b-to-b marketers say their average cycle is *more* than six months.

All of us must understand the impact of sales cycles that are getting longer and longer. This adds a tremendous burden to the cost of sales and marketing. But it also demands that we develop better marketing and sales processes designed to guide a buying committee over nearly a year before they make a final vendor decision.

Profess Process!

Write these two words on your whiteboard a thousand times. Take out a Sharpie permanent ink pen and write "Profess Process" in the palm of your hand. Tatoo "Profess Process" on the back of your eyelids. Put "Profess Process" on an index card and slip it into your pillow case so you can sleep on it. Say it ten times while you brush your teeth and wash your hands.

Change how you go to market:

Look at it first from the customer's point of view. What is the value that the customer is looking for. Then back up one step at a time and build a process that will deliver this value. It's called value stream mapping and Microsoft Visio or some other flowcharting software should become your best friend. Get internal buyin from senior management, from the marketing team and from the sales team.

Change the culture:

Marketing is not the lead and sales is not the lead ... instead the two of us must get our collective house in order. Know each step in the value stream map for each particular prospect walking toward a 9-month decision. Know what marketing and sales should each be doing at each of these steps. Stop the infighting over "control" ... there's no longer time for the debate over whether a sales rep or a direct marketing specialist or a contact center rep owns the prospect. Everyone owns the prospect, but in a time-shifting flow. Communicate with one another. Capture knowledge together. Make decisions together. Close the sale together. Win together.

Posted by Dale Wolf on August 25, 2005 at 11:40 AM in Business Growth | Permalink | Comments (0) | TrackBack

RX for Marketing: Know Your Customers’ House of Pain

By Louis Columbus

There is a crisis of creativity in many marketing departments today, and that is affecting everything from how enterprise software gets sold to which airlines will survive or not.  Too many software companies are caught up in imitating competitors’ strategies, and others out of sheer complacency and the mistaken belief that working the same strategy year in and year out – doubling down on the past in essence – will deliver better results – yet fail to get to their goals. 

When it comes to product strategies, this thinking delivers yesterday’s products tomorrow. It’s been my experience that when manufacturing companies run out of new marketing, product, and sales strategies it’s a sure sign they have no idea what the pain points of their prospects and customers are. Instead of taking risks with innovative new products, these companies stay focused on what worked in the past – stuck in a holding pattern of building products for the same pain points, again and again.  The spiral continues until the Marketing department isn’t relevant anymore and eventually an entire company. 

The bottom line is that Marketing in many companies is inching towards being irrelevant and dragging the entire company with them because they have lost touch with the most excruciating pain points of their prospects and customers.

No Pain No Gain

It’s time for Marketing to quit judging and applauding itself by how it excels on inward-centric metrics and start being experts in their customers’ House of Pain.

In the many forms of independent content lurks the greatest pains any company’s customers face.  Yet it’s been the last place they look for feedback, and in the case of the highly publicized situation of Dell’s faceless and bureaucratic response to customer inquiries that were posted to blogs worldwide one can see how quickly pain points partially self-induced get noticed and now, promoted through blogs.

Marketing needs to map their customers’ House of Pain by putting all forms of independent, unstructured content at the center of how they listen to and interact with customers.  These forms of independent content include:

• Blogs
• Call Center Logs and Recorded Calls
• Customer Service e-mails and Instant Messages
• Message Boards
• USENET
• Website comment forms

Constructing Your Customers’ House of Pain

Let’s be honest, the customer service e-mail addresses end up in an account that your well-meaning Director of Marketing or Product Management set up four years ago and since then it’s been mentioned.  Sins of customer omission abound and it’s no one’s fault – the processes and incentives are in place to actually pay people more to ignore their customers, because they can make more slam-dunking internally defined goals.  In a sense, some marketing departments are incented to deliver a terrible customer experience.

Call to Action

Marketing departments need to re-evaluate how they look at their performance and realize that the path to long-term relevance starts by finding their way to the door of their customers’ house of pain.

Posted by Louis Columbus on August 23, 2005 at 02:36 PM in Business Growth | Permalink |