The 5 C’s of Clairvoyant Companies

6 03 2016

Keys to successNo one is psychic at TechCoastAngels.  Yet, we believe there are keys to success for start-ups.  For the past couple of weeks, myself and 6 other angel investors from TechCoastAngels of Orange County have screened more than 120 entrepreneurs in preparation for the  “finals” of our fast pitch competition at TCA’s upcoming Celebration of Entrepreneurship event to be held on March 10.  We have listened to these entrepreneurs’ 60 second pitches which would be provoking enough to take a meeting with them and listen to their pitch decks. In my last blog, I shared the early pitch decks of 7 Unicorns courtesy of CB Insights.

For this blog, I want to put it all together and share what I see are the common themes that came out of the pitches and the pitch decks.  Now, while we have been focusing on start-ups, the principles enumerated in my 5 C’s of Clairvoyant Companies are equally applicable to on-going companies, large and small.

1.       Conveying the story.   The first “C” relates to conveying a story of what problem(s) the company is solving and telling a succinct story to entice the listener to ask for more information.   If it is a start-up, the entrepreneur has to put the listener in the shoes of the person having the problem and convey the solutions.  In the pitch deck (or business plan), the CEO (or presenter) provides the details on how he or she will execute on the plan and drive financial results.  Conveying the story clearly applies to ongoing companies as well, particularly if the company wants to attract new customers and brand itself in the market as something special.  Just think about the stories being conveyed by Nike and Under Armour or your favorite consumer or business product.

2.       Customer Clarity.   The second “C” relates to the target customers.  Who is the ideal customer?  Can you describe them and how do you find them?   If you think about Airbnb, the customers are both the person wanting to rent his property for a short period of time, to the other customer, a person wanting to rent a room or house.   The marketing and business plan should clearly indicate the problem the customer is facing and the solution offered.  Additionally, the company needs to present a cogent case for their marketing tactics to drive awareness, adoption and use.  Without clarity on the customer and how to find them and motivate them to action, financial success will not be achieved.

3.       Competencies of the Company.   This third “C” relates to the existing or needed competencies within the organization that can drive the financial results.  It also relates to the intellectual property (IP) that is required to support the business or product.    How do you acquire and sustain the competencies that are needed for success?  Do you hire software developers on your team to build the product or can you outsource that skill?   What is critical based on your strategy and your competition?

For an on-going company, this is equally as critical.   A competitive analysis and environmental scan may lead to the conclusion that skill sets that were once required are no longer required and new skills must be added.  That may lead the company to a training program, a partnership, or replacement of existing resources with new ones.

4.       Competitive Advantage and Moat.   This fourth “C” is pretty evident.  No company operates in a vacuum.  Both startups and on-going companies need to be aware of the existing and potential competition that exists.   A competitor in the future may not be apparent  today but may have the competencies, technology, leadership and resources to compete in a new and growing market.   Five years ago would GM or Lexus have considered that Tesla would be a competitor or that Google would enter the realm of cars with their automated car program?  A few short years ago, who would have thought that Red would be the camera of choice and used in three of the Academy Award nominees for best film?

With technology and apps changing so quickly, competition can change just as fast.  Technology is the new enabler helping young entrepreneurs compete with established companies and with each other.  Recall what Andy Grove, former Chairman of Intel said:  Only the Paranoid Survive.  Whether you are a startup or an established company, be paranoid and keep your eyes open.

5.       CEO vision and passion.    We at TechCoastAngels say that we have to like the horse (the business concept) but must LOVE the CEO (the jockey and her team.)  As we screened the candidates for our upcoming event, we looked for a CEO with passion and vision and who can relate to us, the investor.  We wanted to find someone who had a history of success, was decisive, yet approachable and coachable.   We believe we found those characteristics in each of the 12 finalists.

Think back to the great leaders of on-going businesses or coaches and CEOS of sports teams.   Who is your model for a CEO with vision and passion?  I personally thought Lee Iacocca was great when he resurrected Chrysler.  Jack Welch turned GE into a world class company with his vision to be #1 or #2 in his markets.   Steve Jobs showed the world a new vision for technology. And Alan Mullaly took Ford after the great recession to a new level of respect and performance.

What else did these CEO’s have in common?  They had the ability to execute a plan.  They were also the keys to establishing a culture in a company that was hard to replicate.  In many ways, they became the icon for their brands.  And they were highly regarded by their employees and feared by their competition.   In a startup it is perhaps hard to discern whether the CEO can execute, yet we can judge their past successes with other companies and who they select as operational execs, advisory board members, and board of directors.

As we near our Celebration of Entrepreneurship, I trust that these blogs and the ideas herein will help executives of start-ups be successful and also be used by executives of on-going companies to help them guide their companies to business success.  I would be glad to continue the dialog on what makes a successful company.  Feel free to reach me at dfriedman@clevelpartners.net and if you enjoyed this blog please like it, repost, and retweet it.

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Confessions of a Successful Entrepreneur: Dan Rodrigues

10 02 2016

Kareo 2The other night I was asked by a colleague who had a question from a reporter at INC Magazine what are some success tips for entrepreneurs and additionally what are some tips when you run into trouble.   I have written about tips for budding entrepreneurs in my blog on The Business of Business in the past and have written on behalf of the TechCoastAngels as well.

Serendipitously, the day after I wrote my comments to the reporter, I had the opportunity to listen to an interview by Andrew Bermudez of Digsy (www.getdigsy.com, www.meetup.com/OCfounders), of Dan Rodrigues, CEO and founder of Kareo (www.kareo.com).   Dan’s company, Kareo, has raised more than $100 million and is the fastest and largest growing company in Orange County, CA.  His company provides a cloud-based platform for independent medical practices and currently has more than 35000 providers served by more than 500 employees.

I want to share Dan’s perspective on how he grew his company and the road he had to travel.  Let’s lay out the journey in three chapters: Genesis and Euphoria; Reality of Funding and Growth: and the Path to Success.   And in each chapter there are lessons to be learned and tips for the entrepreneur.

Genesis and Euphoria

After Dan sold his first company, Scour, he started a software development consulting business.  During this time, he worked on a project for a client in the healthcare space. Through this project, he learned about healthcare IT.  Yet he also applied his knowledge of the consumer, gained from his stints at Vizeo and Real Networks, to the business.   He took the knowledge and the project and built the beginnings of Kareo and the first customer was the company for whom the original project was designed.

Lessons  learned:

  1. An inquisitive mind can yield interesting insights into new ideas. In this case, Dan used an inductive process to define the requirement to serve one customer and used that platform as a base of expansion to other similarly situated companies.  Entrepreneurs can take a custom project and move it to a generalized solution which might give you an immediate customer base.
  2. Integrate different perspectives to develop your business. Dan leveraged his prior experience in a different market space and was able to apply that knowledge to make Kareo different than other software companies in the same space. In a later chapter, Dan directed Kareo to be an online provider of SaaS services to this market.
  3. Build relationships as they will be valuable for funding as well as support and resources. Dan was able to use past relationships built over time to get to VCs on Sand Hill Road and High Net Worth individuals to help provide the initial funding.

Reality of Funding and Growth

Initially, Dan bootstrapped Kareo and now with some funding and the opportunity to gain more, the business seemed off to a solid start. And while you might read about Dan’s story thinking that it was all wine and roses, the truth is that Dan had some tough days early on with Kareo. In 2008, Dan received a difficult call from an investor who was unable to deliver a promised next round of funding. With no time to find another investor and significant bills to pay, Dan made a very tough decision. He reduced the company from 35 employees to 7, and found a new path for Kareo. During the entire year after, Dan did not take a salary as CEO so that others could be paid.  The goal was now survival and the focus was getting customers, reducing product expenditures, and finding more efficient ways to support existing customers to reduce cash burn.

Lessons Learned:

  1. Never take anything for granted. An investor can change his mind and funding may no longer a certainty.  The business environment might change too and entrepreneurs need to be fast, fluid, and flexible.
  2. Spend wisely and carefully. Kareo built a company and moved into expensive office space.  How many of the readers can relate to the euphoria of getting funded and spending lavishly with those funds?  I know I have been in companies that did not spend wisely and had to retrench.
  3. Learn the way to manage the business in the most efficient manner.
    1. Develop good solid cash management and make that a core competency
    2. Build a support infrastructure in synch with the services your company provides and find ways, at least initially for minimizing spending on infrastructure. Try to build a solid online help solution, provide excellent documentation, a good knowledge base.  But also have an additional second layer of support if needed.  Train people to do double duty.
  4. Learn to sell online. Other software in the healthcare market was sold through VARS.  Selling online gave Kareo an edge and reduced the cost of acquisition.

Path to Success

With revenue ramping to $3 million, and cash flow positive, Kareo was on the path to success.  During this phase, the goal was to grow the business through disciplined growth using the lessons learned during the prior chapter.   Over time, Kareo started adding back employees, expanding its product set, and increasing sales.

Lessons Learned:

  1. Maintain the discipline of cash management. Remember the lessons from when growth and cash flow were hard to come by.
  2. Define metrics for success. Share these metrics with your team and manage them religiously. Metrics used by Kareo included cost/customer, payback on margin, return on cost of customer acquisition, churn rate, and lifetime value of a customer.  Note: these are very similar to other SaaS and technical service companies that use subscription services as their business model.
  3. Hire the right talent. It is difficult in some ways for a small company to recruit good technical talent in Orange County vs. in San Jose.  There is frankly more talent there by virtue of the number of companies in the tech space.  Don’t let that be a daunting task.  Dan created a culture in Kareo and a solid reputation of being a progressive company which attracted talented individuals.  On the flip side, retention might be easier in OC and probably is for Kareo given their culture, the fact that the smaller company can provide a solid platform for growth of its employees, and Dan’s vision and leadership style.

According to Dan, when the company had fewer than 50 people it was easy to attract a great talent pool because of the excitement.  When the company had between 50-200 people, Kareo started to compete for talent as employees looked for other exciting opportunities or felt they had the ability to move out on their own.  After growth to 200 employees, Kareo had established its reputation and talented individuals wanted to work there.

Lessons learned:

  1. Recruit a top level executive team. Building the team is critical to any company and is especially true for start-ups and growing companies.  Some of the executives were recruited from outside of Orange County and complemented those from the OC.
  2. Find leaders who know others and can attract talent and capital. This makes it easier to sustain growth.
  3. Change the culture with changes in the business. Dan indicated that culture changes at different stages of growth.  When you have between 1-10 people you are in survival mode.  As his company grew, it felt more like a family.  At a certain point as additional employees were on-boarded and new geographic locations were opened, the culture changed because not everyone knew each other nor worked with each other on continual basis.
  4. The company is a platform for growth for its employees. Reinforce and support educating employees, building their skills, and adding to an employee’s competencies.  I know many executives who don’t want to invest in employees because they are fearful of losing them to competitors.   I personally believe Dan’s approach is the better one and creates a culture and brand that ensures talent will stay with Kareo.

Dan was asked what he would do differently if he could do it over again.   After reflecting Dan accepted that there were mistakes and missed opportunities.  So let’s frame them.

Additional tips and lessons:

  1. Build a business first and a product second. This means don’t normally chase individual customer requests and spend money on unique features and services for different customers.
  2. You need to keep the lights on even if the product stands still for a while.
    1. Under invest in the product and invest in the business side. From my viewpoint, this is a difficult lesson for many engineer-founders.  Therefore make sure you have a good solid business partner as the ying to your yang.
  3. Companies need to be agile and reorganize at transition points and at changing stages of growth.
  4. Companies need the right advisors and investors. While the CEO is focused on growth and getting the product into the market, advisors and investors have the opportunity to look forward and may see minefields ahead.  The CEO needs to heed them.

On behalf of TechCoastAngels, Andrew Bermudez, and Dan Rodrigues, I trust you find this blog and its contents useful for entrepreneurs in their own quest for success.  Please share and forward to others.

Let’s work together to build a strong entrepreneurial eco-system in Orange County.   And if you want to talk further feel free to contact me at dfriedman@clevelpartners.net.  Hope to see you at our March 10 event on celebrating entrepreneurship at the Segerstrom (www.techcoastangelscelebration.com.)





Building Differentiation into a Product or Service: Creating a Sustainable Moat.

4 02 2016

product differentiationThis is a particularly interesting subject as we, investors, think about investing in a company.  And while this blog is directed to those potential entrepreneurs, the ideas suggested in this blog are equally applicable to new products and services developed by a business to increase their revenue, replace existing products/services, or compete in the market.

Many entrepreneurs – and investors alike- think that differentiation is based on the Intellectual Property underlying the product.   That may be true if the IP is really unique.  Yet, as one knows patent protection only goes so far.  If a new smaller company has a patent that “infringes” on a larger company’s business, for example, the larger better financed company can sue for infringement and cause the smaller company to lose focus on their end game.

Differentiation can enable a company to create a moat around their business that would make it difficult for a competitor to penetrate.   At best, it protects the company for the long term.  At worse, it enables protection for a period of time so the new company can establish their brand and get first mover advantage.  And, in the best case, the new company has such an advantage with their product that the larger company buys the smaller company for $1 billion or more and the founders feel pleased that they created a unicorn!!!   (We can all dream, right?)

Differentiation can take place on several levels.  The following diagram shows and input/output schematic for product/service differentiation.  In the diagram, there are 11 different areas where differentiation can take place.    The entrepreneur can focus on one or several of these areas keeping in mind that they are competing for a customer’s mind share relative to what either direct competitors can offer or other solutions that the customer may find acceptable.  For example, when I was commercializing Wi-Fi on airplanes we initially thought that the competition was the on-board entertainment system.  In fact, that was only one competitor; the other “competition” that competed for the customers’ attention included eating, sleeping or reading!!  It was evident in the rear view mirror.

Product Service Architecture for Differentiation

Differentiation can take place at one or several of the components of the product or service.  In this diagram there are 11 different areas where the entrepreneur can focus.  Most of the time, the focus is on the main platform or product and its features.  Yet differentiation can take place in the following areas as well:

  1. Accessibility: How a customer finds the product or service.  This includes channels of distribution, online, door to door, word of mouth and is part of the input process.
  2. Interactivity: Does the product or service require input from the customer? Is this input active requiring the customer to input information or is it more passive, with the input process providing the input by reaching out to other databases?
  3. Input process: Is there a unique way that the product or service uses the data to and integrates or converts the data into elements which can be acted upon by the platform?
  4. The platform: this is the core of the product and the essence of the technology. It is the engine to drive applications and features.
  5. Features: the specific features that provide benefits to the customer and are inherent in the platform.
  6. Applications: the specific uses for the product that the customer may or may not realize. These applications can be developed by the company or by partners.
  7. Maintenance and customer support: Is the product self-testing or do customers have to provide some input into testing and maintenance?  Is customer support online only or a combination of online and human interaction?  Maybe I am old-school, but occasionally I would like to speak with a human and the documentation and self-help guides are not necessarily very clear.
  8. Output process: What is the output process necessary to translate and provide an output to the customer? Can the output process be linked to another product or service from one of the company’s partners or another provider?  For example, if the product/service is a new CRM system for the small business, can that system be integrated into a marketing automation or e-commerce system from Salesforce or Marketo?
  9. Reports and Results: This is what the customer actually sees as an output and is usable.  Maybe this is a timeline, a report, a database, a social interaction, a picture or a posting, or even a data (Think of Match.com.)

In each of these elements, the entrepreneur has a few choices.  We use the concept of PPT: people, process (automated), and technology to look at ways the element is enabled, used and managed.  It is up to the entrepreneur how he/she wants to balance each of these three components because they will affect effectiveness and efficiency.

I want to point out one other way to differentiate and develop a moat for your company and product.  In a book called Profit Zone, authors Adrian Slywotsky and David Morrison point out ways that a company can protect its profit and revenue stream.  In developing and commercializing a new product the entrepreneur can think about the following elements as well.  Strategic control points are normally industry specific yet we can general from most protective to least protective:

  1. Owning the standard through technology and IP
  2. Managing the value chain- including channels of distribution, input materials, shelf space etc.
  3. Developing a super dominant position by dint of their market share in specific markets, through specific channels, or with specific products. This is probably less likely for a start-up.  Yet, perhaps the technology originated in a university and by dint of that they are super dominant in that market and want to expand beyond the university.
  4. Process including a unique way to provide information to a customer. Think Amazon
  5. People including the relationship of their customer support team to addressing issues. Think Nordstrom or Zappos.
  6. Own the customer relationship by focusing and understanding the unique preferences of a well-defined niche.
  7. Brand and trademarks. Think McDonalds, IBM, Google, Snapchat.
  8. Development lead time enabling the company to be first to market and build up first mover advantage.
  9. Cost advantage or cost parity enabling the company to compete should there be a price reaction from a competitor.

I trust this blog- perhaps a little lengthy- can provide some useful information for the budding entrepreneur and even those in corporate America engaged in developing and commercializing new products, services, or businesses.  There is no easy answer; yet having a framework or two and breaking a complex problem into smaller manageable components can perhaps lead to success………. and the next unicorn.

You can hear and see entrepreneurs pitch their products at the TechCoastAngels Celebration of Entrepreneurship at the Segerstrom in Costa Mesa on March 10.  Check out http://www.techcoastanagelscelebration.com to get tickets.  Also, feel free to continue the dialog or contact David Friedman at dfriedman@clevelpartners.net or via phone at 949 4394503.  Or retweet this to people who would like a good read.





What Makes a Company Great

21 12 2015

Company cultureI was at a very interesting meeting hosted by Brett Olinger and Susan Howington, founder, Power Connections on Dec. 16, 2015.   There were about a dozen high level executives around the table with titles ranging from VP to COO to CMO to CEO.  Susan got us together to talk about business issues and she asked a relatively simple question: What makes a company great? And the subordinate theme of what kind of company would you want to work for or build?

As a tech executive and one involved in the entrepreneurial eco-system in southern California, I would have imagined that I would hear about things such as the latest and greatest technology that captures people’s hearts and minds.  Or maybe I was hoping to hear about the great opportunities for career advancement or companies doing social good.

I did not hear of specific industries, technologies, functions, unique characteristics of the leaders or anything that you might glean from an employee survey.  Remember the ones commenting have been and are successful executives.   After listening intently – and contributing as well- I captured their thoughts into three areas:  Culture, Leadership, and Customer Focus.   And I have to admit that is probably the order of importance because to me, culture is a platform upon which to build and enact leadership and a customer philosophy.  As you read the following, just ask yourself about the companies for which you worked.  What made them good?  Why did you like coming to work?  What drove your passion?  What made these companies great for you?

Culture

Culture was the number one item.  Culture was a necessary but not sufficient condition for making a company great.  Think about Tony Hsieh of Zappos.  He has instilled a clear culture in that company that focuses on the customer.  Do what is right for the customer. Certainly his vision and bent is the customer.  But without a cultural underpinning, Zappos would not be as successful as it has been.

Culture is also unique to a company.  It is hard to duplicate and is normally set by the CEO.  Think about other companies that are successful and have a truly unique culture.  Think about Disney and the culture about Imagineering.  Think about Intel and the culture of innovation.  Think about 3M and their culture that they encourage people to invest their time on new ideas.  Without a culture of innovation and support for innovators, many companies may not achieve success.

We discussed other components of culture as well.  Those components included telling it like it is……. but respectfully and constructively.  (As an aside, I can certainly relate to this coming from Brooklyn, NY and have seen direct cultures like New York and oblique cultures like I have seen in the Mid-west.)  Another element was pushing employees to the next level, i.e. making them believe they can succeed and giving them opportunities to succeed.   In the process of encouraging people, the culture must also accept failure (fast failure is preferred) and must set up a reward system for those that are successful.

Culture is also critical as the underpinning of being customer focused.   Think about a company that is just focused on the bottom line versus a company that is trying to help a customer and wanting them to be happy.  Think about your experience with Zappos.  Or if you have web service or webhosting from 1and1, think about the great customer service you have received from them.  Was it easy to talk with the company and its reps?  When they talked with you did you believe that you were the only person in the world on their mind or did you feel that you were imposing by asking them a question?   We heard a story this morning about how Steve Wynn chose people to work for him.  Applicants were told to go to another part of the building and when they got there, Steve was sitting behind a desk, rose to greet the applicant and wanted to see their reaction.  If they were friendly and responsive, they were hired.  True?  I am not sure but it makes a good story.

Leadership

We all know that leadership is critical.  Leadership starts with the CEO and filters down to people in the organization.   The leader sets the culture.  When I was head of marketing at US Cellular, our founding CEO, Don Nelson, was a great leader.  He selected an eclectic group of people, set the objectives and measured results meticulously and religiously.  But what distinguished him was his willingness to listen to his people, set and change vision and set a clear direction for the company.  The result, during my tenure was that the company grew fourfold in revenue in only five years.

Think back to the CEOs and possibly mentors you have had in your career.  What has distinguished them?   This morning, the executives around the table believed that not only did the CEO establish and set the culture for the company, in essence being the chief culture officer, but also set a clear and compelling vision for the company.  As the Cheshire Cat said, “if you don’t know where you are going, any road will get you there.”  Leaders know where they are going.

Coupled with the vision is the ability to articulate the clarity and alignment of the messages across the entire company, and in my humble opinion, do it in a personal way.   As companies grow, become more complex, and are geographically disbursed, having a common vision and alignment of messages are critical to ensure everyone is marching in the same direction.   In this case organizations become both effective in generating profits (the end game for most) and efficient in doing so.

The group believed that a great company has a servant-leader.  A servant-leader focuses primarily on the growth and well-being of people and the communities to which they belong. By focusing on people first, it empowers employees to be successful.  It also has a mentoring quality enabling employees to trust the leader such that when these employees are pushed to success by the leader, they trust that their best interests, and in turn the company’s, are aligned.    To be a true servant leader, two other elements must ring true.  The leader must be authentic and must be transparent.  There should be no hidden motive or ego at play.

 Customer Focus

As a businessman and marketing executive, I have written extensively and talked about customer focus.  The customer, the one who buys your company’s products and services, must be foremost in your mind.  Companies who are customer focused truly understand the behavioral drivers of the customer and why they buy your products and services.

The executives at our meeting believed that great companies connect with the customer.  These connections may come from a better user interface, or the way they train their front line people to interact with customers.    We bandied about the concept of Customer Experience Officer because customers, who are not happy, not satisfied, become disloyal.   And, all of us recognized that retention of customers is critical to a company’s success.  Further if you connect with the customer and relate to the customer, if a company makes a mistake there are positive “chits” that have accrued over time and forgiveness by the customer of any faux pas is normally granted.

Note that customer focus relies on a specific culture.  Again, think back to Zappos or think about any experience you have had at a retail store or an online store.  Systems are critical to help achieve customer focus but in reality it is the people, those front line sales people and customer support people that guarantee that the customer is important. Most of us go to Starbucks to get coffee.   Think about your experience.  They ask your name and if you visit the same store more than a few times, the baristas and others will get to know you.  How do you feel?  Pretty loyal I would assume.

Starbucks, Zappos, US Cellular and other companies have realized something very critical.  The people who interact with the customers ARE the brand.  Leadership sets the vision and a customer centric culture is established.  Yet customer focus is executed by the people.   All of us agreed that great companies are those that have this passion for the customer, exercised by supporting a customer first philosophy on the front line.

Going back to the original question posed by Susan Howington of What makes a company great, it comes down to three areas:  culture, leadership, and customer focus.   All three are interrelated.  In short, great companies balance the needs of customers, employees, and owners.  What companies would you want to work for?  What makes a company great in your mind?  Let’s continue the dialog.

For more thoughts and ideas, feel free to contact me at dfriedman@clevelpartners.net  or visit us at www.clevelpartners.net.  I will also guarantee that if you write or call me, I will pick up the phone and talk with you.  Why?  Because we, too, love our customers and we have implemented a culture in our company of helping and sharing.





StreetSavvy Marketing Predictions for 2016

21 12 2015

prediction-forecast-crystal-ball-future-ss-1920-800x450It’s that time again when just about everyone has predictions for the New Year. In November, Forbes contributor Kimberly Whitler posted predictions from the C-suite.   Adam Davidi, from the Guardian, posted predictions on branding based on conversations with “experts.”   I am sure we will see predictions from Forrester, Gartner and others as well.

As a Managing Director at C-Level Partners, I don’t want us to be left out.  My colleague, Vince Ferraro, and I have been C-level executives in marketing and general management for many years. We now consult with companies on marketing and their go-to-market strategies.   We decided to look at “Big M” marketing, relating to predictions for how companies and brands go to market and how they interact with customers.  So without fanfare and any biased perspective, we share these predictions for Marketing for 2016.

Let me be candid.  While most of these are predictions based on our work with clients, with start-ups and in talking with our marketing colleagues, there are also some “aspirational trends” that we hope come true for the profession as well as we believe they are important for marketing professionals and the businesses they manage.  Some of these trends overlap and leverage each other.   To us, that will represent the power of good marketing.  In no particular order, our top sweet 16 are:

  1. Cognitive Commerce has begun. Marketers will use information on customers from their databases, the internet, and other sources to build stronger relationships, build predictive algorithms, personalize content, and deliver products and services to meet their specific needs.
  2. The distinction between offline and online will disappear as real time analytics will unite both camps. Marketers will consider all (omni) marketing channels to optimize their marketing programs based on cost, effectiveness, ROI and the satisfaction quotient from building relationships with customers.
  3. Branding will be from the inside out. Companies will not push the brand but the brand will be built on trust, engagement, referrals, authentic dialog, and transparency.
  4. Digital Marketing will cease to exist as a standalone part of marketing. There isn’t a need for separation anymore. World class marketers will know how to market in a digital world. Traditional and online marketing not only will coexist, but one will leverage the other and work better together.
  5. Advances in video broadcasting and continued growth in mobile devices will change TV marketing forever. Marketers will use new technologies to enable a more immersive experience and TV and other broadcast video usage will expand on all screens – laptops, desktops, tablets, smartphones, HDTVs and even screens in cars,( i.e. telematics).
  6. Content will be created specifically with video channels in mind. Further, there will continue to be a migration to mobile video which will become de rigor on a company’s website, in blogs, in training, and on Youtube.  Youtube channels for marketers will continue to expand.  In addition, the use of video podcasting and live streaming are also in a growth mode.  The world is clearly digital and going video and marketers will take advantage of that.
  7. Personalization will grow as its ROI is measured and as customers come to expect to be treated as individuals. We, at C-Level Partners, have written that there are now 7Ps of marketing and personalization is one of them.  Technology and marketing automation will enable this to happen.  This personalization will improve company branding and the ability to build stronger relationships with customers.
  8. Marketers will get back to basics. Solid, well planned marketing will trump the sexy marketing in the past.  The CMO and business leaders will focus on marketing as a strategic investment to generate profitable revenue.
  9. The human touch will return to marketing. How many of you love to listen to an automated customer service system saying that “your call is important to us…”  That’s bull!  Companies will realize that you are important and will show it by having more touch than tech or at least do a better job of integrating the two.  Being human will also apply to helping customers understand the value of the company’s products and determining what motivates buying behavior.  This is like getting back to the future… and I love it.
  10. Employee experience (EX) will be as important as customer experience (CX). Engaged employees are critical because at the front line – in retail, sales and customer service- they ARE the brand, or at least a fair representation of it.   Engaged employees also feel part of the company, behave like owners, and will be promoters of the company’s products and services.  According to our anecdotal evidence, only about 30% are engaged today.  Think Zappos, Starbucks, 1and1, and Jet for companies who provide both good EX and CX.
  11. Marketing and Data Science will be the new dynamic duo. This will be key to understanding the customer persona from many angles – demographics, psychographics, sentiments, and buying behavior.  Vince and I, both being engineers, can relate and understand this dynamic.  We expect to see the CIO and CMO becoming BFF’s.
  12. As a corollary to #11, data will be the new currency for the younger generation. Data will enable the ability to personalize the marketing message and make that message more meaningful and differentiated for a particular customer. But it doesn’t only apply to the younger generation; big data will be used to help understand buying behavior of all customers and couple that information with the dynamics of profitable revenue growth for the corporation.   The new marketer will be, must be, a datahead or recruit the right people in his/her organization who have the skills to analyze the myriad of data available from business and marketing systems.
  13. Marketers will provide more original insights into business. Marketers will not be mere curators of data and content.  The key word is  By having more insight into business, the CMO will be able to justify his/her seat at the executive table.  (This is a belief and expectation!)
  14. Customer success will be determined by a combination of satisfaction, retention, and referral. We have always believed that the combination of the three components will yield the most loyal customers.   In conjunction with this, customers themselves, through social media, will become the company’s best sales people. Technology to help build customer engagement will continue to evolve and become more sophisticated.
  15. Marketing and selling will be in an omni-channel world. Marketing execs will understand the buying persona of their customers and will use math and analytics to optimize the sales and distribution channels.  But the key here is that it will not be one channel vs. the other.  The marketer will blend online and offline, retail and wholesale, third party distribution and direct to ensure the buying experience matches the customer and to improve the profitability of the company.
  16. Chief Marketing Officers will evolve to become strategic businesspeople first and “marketing” executives second. This is our wish and expectation; therefore, we took the liberty to include it as one of our predictions.  The CMO will be the linking pin from the outside world of the customer to the inside world of production, manufacturing and operations.  He/she will have a unique view on building and capturing valued.  In the past, we have not seen this from most of our traditional marketing colleagues as many have been focused on one area e.g. advertising, digital, brand, and product.  The new marketing executive will be a generalist, a businessperson with a focus on top and bottom line growth, steeped in data analytics, change management, and growth levers, coupled with creative and innovative bent.  We may be wrong about this one for 2016, but we believe it will eventually take root over time.

We would be interested in hearing your thoughts on your sweet 16 predictions for 2016.  Let’s keep the dialog going at www.clevelpartners.net.   And feel free to contact me at dfriedman@clevelpartners.net or Vince at vferraro@clevelpartners.net for a complimentary discussion on how we can help you achieve value creation and profitable revenue growth.





The New 7Ps of Marketing: Disregard at Your Own Risk!

7 12 2015

Marketing CloudI was reading an article in the recent Forbes online CMO Network by Kimberly Whitler entitled: What are the top predictions for marketers heading into 2016?   Ms. Whitler surveyed some experts, including CEOs, Presidents/GMs, CMOs, authors and executive recruiters.  In a different but recent article, Forbes CMO also ranked the top 50 CMOs.  To me, I would have rather heard their predictions.

I always enjoy reading “predictions” because they keep me on my toes- maybe I missed something- and makes me challenge what I believe are the upcoming trends.  As a businessman and marketer I certainly don’t want to be caught short.

I found the article very interesting and certain worthy of consideration.  I feel after reading the comments that each person is looking at the “elephant” from their unique vantage point.  And frankly, I am not sure they are predictions or wishful thinking based on the viewpoints of the interviewee. Nevertheless, they are certainly food for thought.

From a holistic view, my prediction – or wishful thinking – is that marketers need to start with the customer and realize that marketing has become multi-channel and multi-dimensional.   The smart CMO must orchestrate the new marketing mix. That means they need to simplify messages sent to consumers through whatever channel is relevant to them i.e. digital, small screen, large screen, Point-of-Purchase.  And they need to determine which is most relevant for the target personas.   Moreover, the smart marketer should consider all the tools in his/her toolbox and select those tools that are most effective for getting the right message and INTERACTION with the customer.

When I put this together, i find that the old model of 4P’s is antiquated.  I believe the new prediction is that good CMOs are now considering 7Ps in a holistic view: the original 4 (product including product/service development, price, promotion, placement (digital or traditional), and the new three consisting of process (including customer engagement, referral and loyalty), people as brand messengers at point of purchase or via customer care, and personalization (through technology).

The “traditional” 4Ps of marketing are well known.    In the day, marketing was about creating demand, and to a large degree it still is today.  But the focus was on selling a product to meet a need.   In general, promotion was based on advertising push.  The marketer’s mantra was to shout out the virtues of the product by mass advertising. To some who read the history books, the “soaps” on TV were called that because the consumer goods manufacturers such as Tide, All, and Fab were sponsoring and advertising on the TV shows aimed at the housewives and other stay at home folks.

Pricing was simple.  Manufacturer’s set price and used a price point philosophy of good, better, best. Placement represented where the consumer could buy the product i.e. at the neighborhood store or a mass retailer or even door-to-door sales and home delivery.

Because of technology such as the internet, and the movement away from a manufacturing to a service company, even the original 4 P’s have changed.

FROM                             TO

Product         –>       Solution

Promotion    –>       Information

Price               –>       Value

Place               –>       Access

 

Consumers and businesses want solutions to their problems and want to understand how the product/service will perform.  Due to the internet, both as catalogs of information and online reviews that are omnipresent through a myriad of sources, information has replaced pure promotion.   Certainly consumers and businesses want to find the right product at the right price, yet price by itself has been replaced by value with the value add sometimes being generated by service agreements and extended warranties.  And primarily due to the internet, place (distribution) has increased to a multi-channel access.  Think about the changes from the 1990s when e-commerce was first getting started to today.  Consumers and businesses now have electronic exchanges and other online venues from which to buy goods and services.   And now, coming full circle, we see Amazon opened its first brick and mortar store in Seattle.

Now let’s add the new three elements to the marketing mix.  First is the element of PEOPLE.    When I was head of marketing at US Cellular, we changed our brand and positioned our company using the tag line “the way people talked around here.”   Why did we do that?  In part, we recognized from our research in the late 90s and early 2000s that customers in our market wanted something more than what other cellcos offered.  We were not going to be the most technologically advanced (although our network and engineering were superb), nor were we going to cover the most customers in the country.  What our customers wanted was a relationship with our company, represented by our front line sales and customer service people.  They wanted a company they could trust.  At that point, we realized that people were the brand messengers and in our touchpoint marketing system, represented a way to affect the relationship and alter the buying habits of our consumers.  And it worked.  Our retention rate i.e. loyalty, was the best in the in the business.

The second new element is PROCESS. Many companies loathe the word process because they feel it is bureaucratic.  To me, process is the mechanism for repeatability. We want processes to help the customer in building its relationship with the company and also empower the employees to do their job to satisfy the customer.  Clearly, it is a tricky balance!   The processes today – mostly enabled by technology- relate to tools that help the company serve the customer.    There is a dizzying array of tools that the marketer has to understand and use.  See Marketing Technology Landscape by Scott Brinker or some of the Lumascapes by Luma Partners.  Some of these tools include ways to mass customize a product or service to the customer needs.  Witness the new companies entering the market to build relationships with consumers and business buyers.  There are processes enabled by digital and web technologies that enable social engagement and the marketers use these new tools to build and maintain relationships with their customers.   This improves value through new services and interactive engagement in the eyes of the buyer.

The final area is PERSONALIZATION. Several of the interviewees pointed out that understanding the customers’ persona is critical to segmentation.  Once you understand who they are, the company has to satisfy their unique requirements.  I have always been a fan of mass customization (read Joe Pines original work) or macro-niching as I use to call it 5 years before mass customization became vogue.   Personalization is easy today with technology.  You can see it when you buy a car.  Go into a BMW or Jaguar dealer in their store or online and the system will build the car for you.  Buy a house from Toll Brothers and you get a platform and options to tailor the house to your needs.   Go on the web and find a case for your smart phone and you can easily customize it with your school logo and colors.   Consumers want to feel special and that ensures a solid on-going relationship with their customers.

Traditional and Social Media MarketingMarketing has changed and will continue to evolve over the next several years.  Clearly there will be a natural bonding between the CIO and CMO as marketing technology has become more important in defining the marketing mix.  While Ms. Whitler did not ask my prediction for 2016, I will share it with my readers.    I predict that marketing will be more about the customer and the great marketer will find the right combination of the 7 elements to build and sustain relationships with that customer.  At least I hope so.

I would be glad to continue the dialog or share additional thought.  Feel free to visit us on our web at www.clevelpartners.net or contact me at dfriedman@clevelpartnes.net.





The 7 Attributes of a Highly Successful Start-up CEO.

11 08 2015

I met Kirsten Mangers several years ago after she successfully sold her startup, Webvisible.   And over the years I have gained a strong appreciation for her abilities and most important, her style.   Kirsten is the founder of ChickLabs, an incubator that focuses on helping primarily women entrepreneurs.  She is also the CEO of Immunogum, a start-up in Newport, CA and one in which TechCoastAngels invested.entrepreneurial CEO

I was invited to a meeting at an entrepreneurial office called the VINE which is off the UC Irvine campus because I am an angel investor with TCA and one who works with startup CEOS in my consulting practice.   The key- and only- speaker, though, was Kirsten and she shared her thoughts on what makes a successful start-up CEO with a large cadre of young aspiring entrepreneurs.

I thought I would share some of those thoughts with my readers.  Clearly, the CEO is THE most important role in a company.  She is the quarterback of the business.  I want to point out, as well, that angel investors are looking at the CEO, his/her characteristics, trustworthiness, and credibility as a critical and sometimes the most important decision factor in making an investment.

Here are Kirsten’s Magnificent Seven attributes and roles for an entrepreneurial CEO.

  1. Chief sales person. Selling is required whether it is for sales of the company’s products or selling the business idea to investors. Pure and simple, it is the number one attribute.  If a CEO cannot get comfortable selling then he/she needs to find a strong complement or a replacement CEO.
  2. Culture Maven. The culture of a company attracts and retains great people.   Think about the culture of Google or Apple and you get somewhat different impressions.   But culture will help you succeed and be one of the differentiators to also-rans.
  3. Chief Strategist. As Louis Carroll said in Alice and Wonderland:  “if you don’t know where you are going, any road will take you there.”  CEOs need to set the direction and if necessary make the decisions to pivot the company.  Early startups will go through false starts and pivoting will be essential.
  4. Teacher, tutor, and mentor. Kirsten claimed to be a whiteboard fanatic.  Where there is a whiteboard, she could share ideas and interact with the staff on a regular basis and even get others to critique, comment, and debate those ideas.   This goes along with the concept that the CEO needs to be a visible leader and wander about with the team.
  5. You have to challenge yourself and others even with ideas that seem outrageous.   Why?  You stay fresh and there may be a kernel of insight into the new idea or someone else may see another path to success buried in that idea. Someone may say: that’s crazy but what if we did this?  Challenging prevailing wisdom and valuing the diversity of though among people is critical to engage your team.
  6. Chief Reporter and Scribe. This is the issue of transparency.   The CEO of a start-up needs to create an environment where everyone on the team feels that they understand and can contribute to the business’s success.   With normally smallish teams and fewer people, such discussions keep the team engaged and motivated.  I have personally witnessed employees banding together to find solutions to seemingly unsolvable problems.
  7. Chief Recruiter. To be successful, a strong team needs to be assembled and nurtured.  As Kirsten said, it all starts with people and finding the best people is the biggest challenge.  When she interviews someone, she has asked some interesting questions to probe the character, drive, and attitudes of the recruit.   One question I like is: if you were on a three hour flight and could sit next to one person, who would that person be and why?   From this answer you can determine motivation and quest for learning, both of which are critical in a start-up

These sage words of wisdom from Kirsten will help the aspiring entrepreneur be successful and potentially be as successful as Kirsten.

Let me know your thoughts.

david