Fighting For Mobile Real Estate

The other day I wrote about the unbundling of web services. That's where an aggregator comes along and adds value by pulling lots of different services into one place -- Craigslist and Facebook are good examples. As these companies become successful, competitors come in and bite off little pieces of their service and build slick apps that do one thing really, really well. StubHub and AirBnB are good examples of apps that are 'unbundling' Craigslist.

With this in mind, I came across this chart noting that later this year mobile internet usage is going to exceed desktop usage.

As mobile usage overtakes desktop usage, specialized apps that do one thing really well are going to be more and more important.

As we know, the challenge with a mobile app is that they're very limited in what they can do. You can't do as much on an app as you can do on the desktop. So as mobile becomes a bigger part of our lives I think we'll see more and more of this unbundling.

But I think we'll also see more and more bundling of retailers and merchants. That is, we're not going to download multiple grocery store apps or multiple clothing store apps or multiple travel apps.

Using myself as an example, I travel a lot. I book with 5 different airlines and probably 6 different hotel chains. As we move towards more and more mobile usage, am I going to download 11 apps? Of course not – I’m going to download one -- Expedia.

The interesting paradox with mobile is that while it will certainly continue to force innovation and specialized, "unbundled" web services, it will also drive lots of "bundled" retailer and merchant applications. Consumers will increasingly demand (and need) less and less clutter on their screens.

In short, the apps that will win the fight for real estate on our home screens will be those that serve a very narrow function very effectively (buying a plane ticket) while at the same time offering the broadest variety of options (tickets from every carrier).

BlackBerry's Rise And Fall

The Globe & Mail had a great profile of the rise and fall of BlackBerry last week that’s worth reading when you have some time – it’s a fairly long piece. It got me thinking, BlackBerry is going to make a great business school case study some day. Anyway, I’ve always been of the opinion that BlackBerry didn’t fail because of hardware. As a very loyal user for eight years, I've always believed that they failed because they were way, way too late to the app game. I remember buying a new BlackBerry long after they launched the app store and finding that the app store didn’t come installed. I had to go download the App Store app so I could start downloading apps. And when I downloaded it I found that it was super hard to use. It’s clear that apps weren't a priority for BlackBerry.

When Apple released its App Store it was the core part of the phone. It was easy to use and the app options were nearly unlimited. The advent of apps literally made the iPhone 100x better. That's not an exaggeration. And for some reason BlackBerry missed this opportunity and got into the app game way too late. As a result they literally had no chance of competing against the iPhone or the Android.

I’ve always wondered why they missed this and the Globe & Mail article offers some insight. Check out this excerpt:

Trying to satisfy its two sets of customers – consumers and corporate users – could leave the company satisfying neither. When RIM executives showed off plans to add camera, game and music applications to its products to several hundred Fortune 500 chief information officers at a company event in Orlando in 2010, they weren’t prepared for the backlash that followed. Large corporate customers didn’t want personal applications on corporate phones, said a former RIM executive who attended the session.

Surely BlackBerry had lots of problems but imagine operating in a super competitive business and having one group of customers holding you back from creating the best product you can for another group of customers?

Blackberry could’ve tried to serve both sets of customers but intrinsically and culturally their corporate customers put them at a massive disadvantage when it came to innovation and serving the consumer.

What a paradox: it seems that what once made BlackBerry so successful – large corporate contracts – may be the thing that eventually caused their demise.

When Selling A B2C Marketplace, Worry About The C, Not The B

A traditional tactic for enterprise salespeople is to be very focused on their prospect’s business – their strategic priorities, their competitors, what keeps them up at night, how they’re growing, etc. But when you're selling a marketplace the focus should be less on the prospect’s business and more on the consumer. Some examples of these businesses include:

• Yelp
• Etsy
• Open Table
• WorkMarket
• Expedia
• Skillshare
• Amazon Marketplace

These businesses are selling their marketplace. They're really just a middleman between a business and a set of (hopefully) engaged consumers.

It's important for Open Table’s restaurant salespeople to understand their prospect’s business, but it’s much more important for them to understand the consumer. What do they want to eat, when do they want to eat, what kind of experience do they want, how do they want to be marketed to, etc. And most importantly, why is Open Table going to be their destination when they look for a restaurant?

Your customer’s know their business better than you do. There’s not much you can tell them that they don’t already know. But they very likely don't understand the consumer as well as you do. So when you’re selling a marketplace, don’t bore them by trying to be an expert on their business, educate them by being an expert on the consumer.

In An Internet Marketplace, Competiton Helps

Fred Wilson had a good post yesterday talking about the Fallacy of Zero Sum Game Thinking in internet marketplaces. The Zero Sum Theory suggests that as more sellers come onto a marketplace it hurts the early adopters. I’ve worked in internet marketplaces in 3 different industries -- real estate, e-commerce and now healthcare -- and I can tell you that this theory is a myth. I posted the following comment on Fred's blog:

The zero sum game theory is really just a misunderstanding of how good marketplaces drive traffic and acquire new users.

If most of Etsy's traffic came from them buying SEM or running TV ads, then yes, there is a fixed amount of traffic that sellers are competing for. But I'd bet that the vast majority of Etsy's new buyers come to them organically. That is, a buyer has a good experience on Etsy, then tells a friend, and that friend tells a friend, and that friend tells a friend, and on and on.

More sellers >> more good buying experiences >> more buyers.

The beautiful thing about marketplaces where traffic is driven by a quality buying experience (and word of mouth) is that instead of sellers competing with one another for traffic, they actually rely on one another for traffic.

I recommend checking out the original post. There's some great stuff in there on how, despite the controversy, Spike Lee raising money on Kickstarter actually increased funding for lesser known filmmakers. Great topic.

Some SEO Insights

I picked up some good insights on search engine optimization (SEO) over the last few weeks. For those that aren't familiar, SEO is the process of affecting the visibility of a website or a web page in a search engine's "natural" or un-paid ("organic") search results. So these are not the 'bolded' results at the top or right hand side of a Google search page. 80% of users click on the organic links instead of the paid links (personally, I almost never click on paid links).

16% of Google searches that occur each day were never searched for before.

Google’s primary job is to satisfy the user, so they’re going to send the user to the place that will make them the happiest. So the primary drivers of good SEO results (in no particular order) are:

1. Number of inbound links to the content
2. Amount of content
3. Recency of content
4. Click-through rate (from search result to click)
5. Stickiness of site (time spent on site)
6. Lack of dummy content (content that isn't relevant to the page or topic)

There have been incidents in the past where e-commerce sites would intentionally and blatantly ripoff a portion of their customers -- causing those customers to go to the internet and write bad reviews with links back to the offending site. It used to be that this kind of behavior would cause the site to be listed higher in organic search results (more links = higher SEO score).

To prevent this, Google has started to use something called sentiment analysis or opinion mining. By applying an algorithm against a variety of social media sites, discussion boards, blogs and news sites, Google can get a pretty good sense of whether or not the internet likes your site. And if they do, you'll rank higher.

Of course, sentiment analysis is complicated and not 100% reliable (due to cultural factors, language nuances and wide-ranging contexts) but is a useful way for Google to ensure that individuals aren't gaming the system.

In short, I think the key insight is that if you want to rank high in SEO over the long term, you have to do the right thing. You have to give users a site that makes them happy. You may be able to fool Google for a little while, but they'll eventually catch up and when they do you can forget about SEO as a source for acquiring new business.

Patient Acquisition Segments

I had a great conversation with a healthcare executive last week about segmenting and targeting new patients. When you think about acquiring new patients, you can bucket them into four segments. Patients that care about...

1. Brand -- they want to see a doctor that is employed or affiliated with a prominent hospital or health system.
2. Facilities -- they want nice, clean offices in a good neighborhood.
3. Convenience -- they want easy access to good doctors near their home and to get in and out quickly
4. Cost -- they want to pay a smaller co-pay, receive less expensive services, etc.

We agreed that very roughly 25% of patients prioritize brand, 35% prioritize facilities, 35% prioritize convenience and only 5% prioritize cost.

My personal take is that the fastest growing segments are the cost and convenience segments. Federal and state governments are providing a variety of incentives that are driving patients toward the lower cost providers, and I think we'll see that trend continue. And just like most industries that begin to move online (healthcare is a laggard in this area) consumers will begin to value convenience and ease of access more and more.

And I think it is the brand segment that is shrinking. As quality and cost become more and more transparent to patients, brands will become less important. If a patient finds a doctor online that went to a decent medical school, that has good reviews from other patients, and good availability, the brand that they're affiliated will matter less and less.

3 Random Marketing Thoughts

Here are three random marketing related things on my mind this week.

1. Facebook is becoming more and more powerful as a marketing channel. One neat thing they’re doing is allowing advertisers to send them a list of all of their customers' email addresses. Facebook will then cross reference the advertiser's emails with their own user base and re-target ads to drive repeat purchases. I’m sure there are some privacy questions around this but that’s a super compelling proposition for advertisers -- a very efficient way to spend ad dollars.
2. If you’re shopping for a television on Best Buy’s website, you might be shocked to see small advertisements for televisions from other merchants on the page (with links out to their websites). The risk that you might click on one of these ads is apparently offset by the high CPA Best Buy will get if you end up clicking away and buying the television from someone else. That’s pretty amazing – and a clear sign that the consumer is so much more in control these days. Best Buy's thinking is, "hey, if people are going to shop around, we might as well get a piece of it."
3. A while back, I learned (the hard way) that when you misspell a word in the subject line of a marketing email, it’s very likely that you’ll get a higher response rate than if you had spelled the word correctly. The mistake jumps out and gets people’s attention. I got an email from Choice Hotels last week that spelled Worcester, Massachusetts as “Worchester”. I opened it right away…to find that they had spelled it correctly in the body of the email. Not a tactic I’d recommend, but sometimes you just gotta do what works.

The Photocopier Effect

I've written in the past that one of the secrets to negotiating with partners or potential partners is to always communicate the reasons behind your position. It's critical. The partner doesn't have to agree with your position, but you must explain the business logic behind it. People don't like things that don't make sense. With this in mind, I came across an interesting phenomenon called the "Photocopier Effect" in a Malcolm Gladwell New Yorker article from a while back. The Photocopier Effect proves, scientifically, why it's so important to emphasize the reasons behind your position. From the column:

...Harvard social scientist Ellen Langer. Langer examined the apparently common-sense idea that if you are trying to persuade someone to do something for you, you are always better off if you provide a reason.

She went up to a group of people waiting in line to use a library copying machine and said, "Excuse me, I have five pages. May I use the Xerox machine?" Sixty per cent said yes.

Then she repeated the experiment on another group, except that she changed her request to "Excuse me, I have five pages. May I use the Xerox machine, because I'm in a rush?" Ninety-four per cent said yes.

This much sounds like common sense: if you say, "because I'm in a rush"--if you explain your need--people are willing to step aside.

But here's where the study gets interesting. Langer then did the experiment a third time, in this case replacing the specific reason with a statement of the obvious: "Excuse me, I have five pages. May I use the Xerox machine, because I have to make some copies?" The percentage who let her do so this time was almost exactly the same as the one in the previous round--ninety-three per cent.

The key to getting people to say yes, in other words, wasn't the explanation "because I'm in a rush" but merely the use of the word "because." What mattered wasn't the substance of the explanation but merely the rhetorical form--the conjunctional footprint--of an explanation.

Two Good Super Bowl Commercials

There were two Super Bowl commercials that caught my eye the other night.  One really funny one from Doritos and a somewhat serious, but very cool one from Dodge, narrated by the great Paul Harvey. I've embedded both below.

Doritos - Goat For Sale

[youtube http://www.youtube.com/watch?v=4d8ZDSyFS2g&w=420&h=315]

Dodge Ram - Farmer

[youtube http://www.youtube.com/watch?v=AMpZ0TGjbWE&w=420&h=315]

Blocking Out The Competition

Over the last few months, Twitter has removed the auto-preview feature for Instagram Tweets. So now you have to click through the link in the Tweet to see the photo. Presumably Twitter did this to encourage their users to use their native photo sharing application. When LinkedIn redesigned their profile page about a month ago, they dramatically decreased the exposure of a user's Twitter account. In fact, it's not even on the main profile page, you have to click "contact info" to see a user's Twitter account. This is a drastic change given the LinkedIn/Twitter integration that used to exist.

So LinkedIn is blocking out Twitter and Twitter is blocking out Instagram.

I think this is dangerous for LinkedIn and Twitter. I've written in the past about how difficult it is to build a successful B2C business. Your product has to be so great and so valuable if you want to win. You don't have the luxury of a salesperson whispering in the user's ear giving them context on your decisions or information about what's coming soon and how the product will improve. The product has to be great, right now.

Of course, I don't know all of the facts behind these decisions. But I do know that the effect of blocking out applications that users like is bad. And in a B2C business, what's bad for the "C" very quickly becomes bad for the "B".

Research & Preparing For Meetings

When preparing for an important sales meeting, salespeople will generally do a bunch of research; they'll read news articles, read the company's 10-k, check out the LinkedIn profiles of the people in the meeting, etc. Often, they'll spend money on Hoovers or other databases to gain any edge they can. Of course there's nothing wrong with this, but one thing to consider: how often has the thing that you currently care about most at work (the thing that is going to get you a big bonus) been available in a 10-k or a press release.

Sure, directionally we know that you want to grow revenue or cuts costs or prioritize a new product launch. But I can't learn the important specifics of that in the media or in a 10-k. Further, business has become so much more iterative over the years that, in my experience, by the time the media picked up on an initiative I was working on, we were already onto the next thing.

With that in mind, I would propose that when you do research, you prioritize having conversations with people on the inside. Before a meeting, find someone you can talk to that will help you prepare. It could be a junior person, it could be a personal assistant, it could be anyone that can help you get information.

These people should be happy to talk to you. You're not having these conversations to get inside info you shouldn't have access to, you're having these conversations to make the upcoming meeting more productive.

So when preparing for a meeting, yes, do your research. But more importantly, have conversations with people on the inside that know what people on the inside care about.

Selling To CEOs

Seth Godin had a good post a couple weeks ago titled, The danger of starting at the top where he talks about the downside of selling directly to a company's CEO. They key line is this:

When making a b2b sale, the instinct is always to get into the CEO's office. If you can just get her to hear your pitch, to understand the value, to see why she should buy from or lease from or partner with or even buy you... that's the holy grail.

What do you think happens after that mythical meeting?

She asks her team.

And when the team is in the dark, you've not only blown your best shot, but you never get another chance at it.

I agree and disagree with this. Two thoughts:

1. Yes, you need to be careful when going straight to the top, but I don't think you need to be afraid of selling to the CEO directly. But you do need to be careful in your approach. In short, don't sell. Have a conversation. Ask about her business, what problems she has, talk about what you do, your industry, her industry, potential synergies, who would be good to talk to, etc. If you're not selling, you should be comfortable talking to anybody.
2. While you're having conversations, you should also be evangelizing. That is, you should be drip marketing your prospects. I defined drip marketing in earlier posts as:

Regular, short and highly interesting/engaging/insightful pieces of information (most often without an ask) that educate the recipient and — just as importantly — change their perception of what you do in a favorable way.

If you're having conversations and "dripping" the right people, you should be free to navigate your prospect's company to find the person that will be most interested in your solution.