Why We Need Meerkat for the Enterprise

Meerkat_enterprise.jpg

I remember the first time Marc Benioff smashed the walls of Salesforce’s corporate hierarchy by hosting a live broadcast all-hands Q&A. It was both magical and prescient. The Chatter team and I watched with delight as entry-level employees engaged directly with their CEO in real-time. The live broadcast (actually at first it was just a conference call with a dedicated Chatter stream) was so popular that Marc made it a standard practice. From then on previously closed-door executive off-sites and sales kickoffs were broadcasted to the entire company via a combination of video, audio, and interactive Chatter feed. Many CEOs are following Marc’s lead toward radical transparency. Unfortunately, conventional tools have made this level of transparency quite difficult – until now. Today’s mobile chip technologies now have the processing power to broadcast live video anytime, anywhere. Meerkat, a new live streaming social technology, broke out at this year’s South by Southwest (SXSW) conference much in the same way Twitter did in 2007. While tech enthusiasts predict Meerkat will transform social media, I think its most profound impact may be inside corporate enterprises.
 
Meerkat Goes Viral at SXSW
South by Southwest (SXSW) has become the unofficial hatching grounds for breakthrough social technologies. Twitter had its breakout moment in in 2007 followed by Foursquare in 2009. Meerkat took the top honors for 2015. I've been using it for a week and have already watched my colleagues’ seminars from across the country and seen Jimmy Fallon’s monologue rehearsals. I’m a big fan of video (which is why I joined the founding team at Highfive) because it engenders a more authentic human connection than a filtered photo or carefully considered one-liner does. While I appreciate Meerkat’s social media significance (I did enjoy the behind-the-scenes view of the Tonight Show), I find a Meerkat equivalent inside my company infinitely more interesting.
 
Live Broadcasts at Work
Marissa Mayer was one of the first CEOs to video broadcast a company’s earnings call. General Motor's CEO Mary Barra regularly holds video town halls for GM employees and the broader community. Our industry is slowly realizing the power of video communication. However, most of these video communications are still highly structured, scripted, and produced. Meerkat proved what many of us in the collaboration industry have long believed – authentic, informal, real-time video is an extremely powerful medium. Here are just a few potential use cases in the enterprise:

  • Customer visits - why should sales and customer success be the only departments who hear firsthand from customers? Now engineers and other historically less customer-facing employees can hear product feedback directly from customers without leaving their desks.
  • Informal CEO addresses - executives shouldn’t have to wait for formal all-hands meetings to communicate with their teams. Short company-wide messages after winning a big deal, launching a new product, or crossing an important milestone, can be even more effective.
  • Sharing sales success - sales executives can now broadcast the winning strategies for recently closed with the entire sales force.
  • Retail - on-site associates can broadcast storefronts and merchandising displays to HQ to make sure the setup perfectly matches upcoming campaigns.
  • Manufacturing lines - frontline manufacturing employees can broadcast the latest production runs or elicit real-time feedback on physical prototypes. 

The potential use cases are endless.
 
Meerkat for the Enterprise
Meerkat is a consumer technology that will likely not focus on the needs of the enterprise. Sure, marketers can use Meerkat to create more authentic connections with their brands’ Twitter followers, but employees won’t be able to use Meerkat for the use cases I outlined above. I’d love to see a new company offer a Meerkat for the Enterprise. Below are a few basic modifications: 

Meerkat-table.png

 
What do you think? How would your team use an enterprise version of Meerkat?

The High Price of Free Resources

free

I didn’t expect my trip to the criminal division of the San Francisco Supreme Court to result in a business epiphany – but it did.  I spent the last two weeks fulfilling my civic duty by serving as a juror on a criminal domestic violence case. Jury duty is almost always inconvenient – although so is living in a democracy. Its one of the prices we pay for living in a free society. I never served in the military or worked in the public sector so I was happy to volunteer my time as a juror and expected nothing in return. I did, however, walk away with a valuable and counter-intuitive business insight: free resources stifle innovation.

Before I go any further I want to clarify that my thoughts here are more of a critique on how we run our businesses rather than how we run our judicial system. Our judicial system, while inefficient, is incredibly thorough. I’m sure there is plenty of room to improve our legal system, but I’ll leave those suggestions to public policy experts.

Hidden costs

$73,327. That is the cost of selecting a fair jury for a basic domestic violence case in San Francisco. Taxpayers would consider it an abuse of funds if their government wrote a ~$70k check to select a jury for every single case that comes to trial. But nobody notices the cost because it is hidden. 120 civilians (including yours truly) showed up for jury duty. The judge and attorneys interviewed us over three days with the goal of eliminating people who they think may bias the trial. At the end of the three days they seated a dozen impartial jurors and the trial could begin. Selecting a fair jury for this one trial took 381 person days. 120 citizens plus the judge, two attorneys, a bailiff, a court reporter, an admin, and the defendant multiplied by three days equals 381 person days. According to public records the average wage of a San Francisco resident is $48,500 per year or $192.46 per business day. Multiply 381 days x $192.46 per day and you get a cost of $73,327. Of course the government doesn’t see it that way because it isn’t directly paying for people’s time. The government does pay for the attorneys and court personnel but their costs are viewed as sunk costs rather than incremental expenses. As a result, the government believes a 3-day jury selection process incurs no more cost than a 1-day jury selection process. Therefore, it has no incentive to find more effective and efficient ways of conducting jury selection. In business, as in our judicial system, we tend to ignore the costs we can’t see.

Want a breakthrough? Add a constraint

In my trial several potential jurors waited 2.5 days for their turn to be interviewed by the judge only to be immediately dismissed when the judge realized they had been victims of domestic violence. A simple pre-trial survey could have revealed that information before these individuals even showed up let alone after spending three days in the back of the courtroom. If the government had to pay each person his/her market wage for jury selection the process would look radically different. Instead of tying up 120 people for three days, the court could use an online survey and interview to identify and disqualify individuals with conflicts of interest before they show up to the courtroom. A simple web app could organize and schedule the remaining jurors for a final onsite interview with the judge and attorneys. The entire process would take less than a day and save ~$50k representing an incredible ROI. Paying for “free” resources leads to breakthrough innovations that can be more efficient and yield better outcomes. My simple jury selection survey and web app would save jurors time and control for biases that can be introduced by group dynamics.

We’re abusing “free” resources

As business people we are really good at making investments and optimizing our costs to yield profits. However, we aren’t very good at optimizing the use of resources that have hidden costs. Here are a couple examples:

Meetings – How many times do we call meetings to “just sync up?” If your company charged back the hourly costs of each meeting participant to your department you would change the way you conduct meetings. You’d only invite essential people to your meetings. Your meetings would have clear objectives and detailed agendas. Meeting participants would have pre-work and follow-up action items. You’d likely have fewer, more productive meetings. Amazon.com famously requires meeting organizers to prepare and distribute written memos prior to each meeting. Other companies have installed meeting cost calculators to remind people how expensive meetings are .

Email – What if email wasn’t free? Or what if email had a character limit like tweets do? We’d certainly have fewer email novels, which are often byproducts of lazy thinking. Historians credit Pascal with saying “I have made this longer than usual because I have not had time to make it shorter.” Perhaps we can modify the adage to say “if I realized the hidden costs of my emails I’d send fewer of them."

Slides – I think everyone in the world would welcome a $10 per slide tax on presentations. Most presenters would convey their messages more powerfully if they cut their number of slides by 75%.

In summary, if we step back and examine how we use free resources we will find ways to dramatically increase our productivity.

My jury duty service taught me a valuable lesson – things that are free can also be the most expensive.

 

The Fall of Curation and Rise of the Personal Assistant

discovery-matrix

Curation is all the rage these days. In an era of information overload, we look to curators to help us discover and consume music (Spotify), home furnishings (Houzz), local events (Sosh), journalism (Inside.com) and just about anything else on the web (Pinterest). We’re in love with curation. Why? We love curation because it lowers the effort we need to expend to discovering new things. In the past, we used search as our primary vehicle for discovering new information. Search requires the user to first formulate an inquiry about information the user wants to retrieve. Search tools then deliver very targeted and personally relevant results. However, search requires us to know what we don’t know. Curation is different. We simply specify our preferences and new information comes to us. We don’t need to have prior knowledge and we don’t need to apply any activation energy to discover new things. There is a big problem with curation. Curated content is not personalized. Curators and tastemakers build Spotify playlists, Pinterest boards, and Houzz collections based on their interests, not yours.

I believe we are on the cusp of the third major wave of information discovery – personal assistance. Personal assistance (PA) uses contextual data and predictive analytics to deliver personally relevant information to you at just the right time. Like curation, it does not require the user to expend energy to discover new things. And like search, it delivers very specific results. The beauty of personal assistance is that it can tailor information to you because it’s aware of your context (e.g. what is on your calendar, which websites you visited recently, your call and message history, your online purchases and more). Here is a simple example of PA in action:

Let’s say I land in LA for a meeting. My phone knows I have a meeting in an hour so it summons an Uber, gives the driver directions, and then pulls up my meeting preparation documents from Salesforce. After the meeting, my phone knows I have an hour gap in my schedule and am likely hungry so it recommends a hole-in-the-wall fish taco spot and a couple friends who live nearby.

Personal assistance initiatives such as Google Now and Amazon Anticipatory Shipping are just early examples of what the future holds.

Mass curation will eventually be replaced by mass personalization. As marketers, we need to transition from segmenting our messaging to having 1:1 conversations at scale.

The Missing Role on Your Product Development Team

product_team

Whether you work for a tech startup or a large corporation, new product innovation is the lifeblood of your organization. Ben Horowitz writes that "innovation is the core competency for technology companies." Conventional wisdom suggests that you should bring a product to market in three consecutive steps; first build the product, then market the product, and finally sell and support the product. But in this case, as in many others, conventional wisdom is wrong. The problem with this linear approach is that no amount of sales and marketing can makeup for poor product-market fit. Kickstarter has turned the conventional product development process on its head. Kickstarter is a crowdfunding site that allows makers to pre-sell products before they invest the time and money to build them. These pre-sales give the maker valuable product feedback early in the product development cycle. But, what about B2B products? Corporate buyers don’t hang out on Kickstarter. Even if they did, competitive concerns often cause us to keep our product roadmaps close to the vest. So how can B2B companies discover customer needs and gauge demand early in the product development cycle? The answer is through pre-product sales and marketing. If your new product development team doesn’t include sales and marketing, your team is taking a long-distance rifle shot at product-market fit. Here are three ways sales and marketing can help you develop new products which hit the mark:

Cold email your target buyers:

The best way to gauge interest in your new product is to try to sell it. Sending cold emails to your target audience lets you see if your idea is powerful enough to cut through the clutter of your buyers’ inboxes. Email prospecting allows you to do two things: i) test your product hook subject line (measured by open rates) and ii) test your value proposition (measured by response rates). Use LinkedIn, DiscoverOrg, or any other of the readily available data services to get the contact information of your target buyers. Then, load two email templates into an email prospecting tool such as ToutApp. I like to split test the subject line while keeping the body copy the same (hence the two different email templates). Your subject line should be your product hook. Your body copy should explain your value proposition and provide a call-to-action. Asking your buyer for 15-minutes of his time is an excellent CTA as it creates just enough friction to gauge real interest. Your email tool should give you great data on open rates and response rates which you can analyze by industry, job title, and template. This data will give you insights into which message resonates with whom.

Show, don’t tell, your vision:

Now that buyers are responding to your outbound emails, its time to show them your product vision in a 15-minute screen sharing session. It is very important that you visually articulate the product experience to your buyer. In other words, show don’t tell. Of course at this point you don’t have a real product so you need to put together a short animated slide presentation. This can include prototype renderings and screenshot images pieced together into a user storyline. You don’t need pixel perfect designs, you simply need to be able to walk through the storyline without text. Think of your buyer’s questions and commentary on the presentation as market insight gold.

Put a price on it and ask for a commitment:

Dan Ariely, professor of behavioral economics at Duke University, talks about how humans simultaneously live in two different worlds – one where social norms prevail and the other where market norms prevail. We behave very differently according to which norms we are operating under. Ariely uses the example of Thanksgiving dinner to illustrate this phenomenon. Imagine your mom’s reaction if, after enjoying Thanksgiving dinner, you pull out your wallet and ask “how much do I owe you?” She would be offended because you are breaking social norms by trying to put a price on an act of kindness. The same question at a restaurant, however, would be perfectly acceptable because it is consistent with market norms. You may be wondering why I am providing background on social vs. market norms. I do so because we need to make sure our prospective buyers are giving us feedback under market norms instead of social norms. When you ask a person for feedback on a new product they are likely to sugarcoat the feedback to preserve their social relationship with you (even if it is a first meeting). They are operating under social norms. As social animals we have been (mostly) conditioned that it is not in our best interest to offend people the first time we meet them. We are much less likely to do this when we operate according to market norms.

The best way to get feedback under market norms is to put a price on the product and ask your buyer for a commitment. I like to create an exclusive “early access” program where customers commit upfront to buy the product at a slight discount once it is generally available. I ask them to sign a term sheet to join the program. You can make the term sheet risk-free by giving the buyer an option to back out of the commitment at any time if they aren’t satisfied with the product. While the agreement isn’t legally binding, it is a mechanism that will force your buyer to evaluate your product according to market norms. Your buyer’s objections will help you design a better product.

The Amazon Fire Phone is one of the most recent examples of a highly hyped product that failed to achieve product-market fit. Its possible that the product development team never received market norm feedback from consumers. This Amazon Fire Phone video shows consumers providing feedback based upon social norms. They rave about new features such as Dynamic Perspective. The Amazon team would have received market norm feedback had they asked the same people to trade in their iPhone and pay money for the Amazon Fire Phone. The team would have realized that consumers view certain features, such as compatibility with either the Apple or Google app ecosystems, as purchase pre-requisites.

In summary, get market feedback early in your product development cycle through product marketing and pre-sales activities. I think they will quickly surface customer pain points and help you develop an even better product.

What else? How do you get real-world feedback on new product concepts?

 

How Different Functions View a Glass of Water

water-glass

People interested in tech careers often ask me about the differences between various functional roles within a company. I answer them by sharing my water metaphor. Here is how different functions view a glass of water:

Sales: “You’re thirsty. Buy my water."

Engineering: "Two hydrogen atoms bonded to one oxygen atom – we need to QA this water."

Product Management: “12 ounces of water will quench our customer’s thirst."

Product Design: “We need to observe people drinking water."

Corporate Marketing: “Let’s brand this water."

Product Marketing: “This water will enhance your performance."

Customer Success: “We need to teach our customers how to drink this water."

CEO: “There are oceans full of this water!"

The Key to Great Sales Dinners

sales-dinners

During our 2.5 years in stealth mode at Highfive we built a customer base of more than 100 customers with no website, no product, and no advertising. One of our most effective customer acquisition tactics was sales dinners. We hosted several of these dinners for heads of IT from the top companies in Silicon Valley including Dropbox, Uber, Evernote, Square, Pandora, and many more. Many of the companies became customers after the dinners. However, we didn’t invite our sales people and we didn’t do any selling. In fact, we had two rules for Highfive team members who attended these dinners: 1) never talk about us or our products and 2) don’t answer any questions unless explicitly asked. Sounds strange right? Not really. The secret to a great sales dinner is to stop selling. It's not about closing a sale, it's about cultivating a community. In this post, I’ll share the mechanics of how our dinners worked and why I believe similar events should be a regular part of any b2b company’s marketing mix.

The Sales Dinner
My old manager and the original CMO of salesforce.com claims to have invented the sales dinner. While his claim may inspire as much confidence as Al Gore's claim to inventing the Internet, he does appear to be one of the first people to bring customers and prospects together for sales dinners. His idea was that customers would help sell prospects if they broke bread together at the same table. The plan worked. These sales dinners have been a key part of the salesforce.com sales playbook for nearly 15 years. 

Stop Selling, Start Connecting
Every attendee at a sales dinner knows that at some point in the evening there will be a pitch where the sales person hawks the company's wares. The pitch usually includes a list of features and benefits. The only problem is, people don’t buy products for their features. They hire products to do a job. And part of that job is making sure that they continue to advance in their careers and add value to their employers. People don’t want to be pitched, they want to be connected. That’s why we decided to convert all of our sales dinners into roundtables.

Customer Roundtables
We regularly invite customers and prospects to roundtable discussions around particular themes. Our goal is to connect each attendee to his/her peers and to big ideas which may have nothing to do with our product. Here's how it works:

We invite 12-15 attendees with similar profiles (e.g. VP of IT at fast growing companies). I find that to be the optimal size for a diverse yet intimate conversation. We schedule 30-60 minutes for cocktails and 90-120 minutes for the dinner and discussion. After cocktails we seat everyone at a roundtable and kick off the discussion by having each person answer two questions:

  • What is the biggest challenge you are facing right now?
  • What is one thing you’d like to learn from someone else at the table?

Then the facilitator guides the discussion towards the hottest topics.

My friend (and former World Economic Forum executive), Simon Mulcahy, deserves the credit for coming up with this format. He modeled it after the WEF councils in Davos. Simon demonstrated how important the role of the facilitator is to the success of the roundtable. While I could never facilitate a roundtable as well as Simon does, I have discovered what works and what doesn’t when it comes to facilitation:

Facilitator do's:

  • Sit in the center or head of the table
  • Learn the attendees interests during cocktails so you can integrate them into the discussion
  • Take note of key themes and specific interests during the introductions
  • Get the discussion rolling with more vocal attendees
  • Ask specific (often quieter) people for their experience or thoughts on the subject

Facilitator don'ts:

  • Answer questions yourself
  • Take a firm point of view
  • Give a product pitch

The facilitator’s goal is to create an environment where each attendee self-discovers new perspectives and insights on the topic.

This roundtable format worked well for us at Highfive. Word of mouth spread and we received numerous emails from IT leaders asking for invitations to future events. We also closed 80% of prospects who attended our dinners despite never giving a sales pitch.

I believe the key to a great sales dinner is to stop selling. Simply listen, connect, and facilitate, and your customer community (and sales) will thrive.

I hope that helps. What’s working for you with your sales dinners or field events?

My 10 Favorite Books of 2014

reading-list-2014

Each year I build a backlog of books that I want to read. There are so many incredible works out right now that it’s awfully hard for me to prioritize what to read first. Of course, thanks to Kindle and Audible I’m able to enjoy more books than ever before (long runs and bike rides are now “reading" opportunities thanks to Audible). What must reads would you recommend for 2015?

Here are some of my favorites from last year:

Genghis Khan and the Making of the Modern World by Jack Weatherford
Did you know that the Mongols once controlled a kingdom that was larger than Rome’s largest kingdom? And did you know that it was built in only 25-years by a homeless teenager who was socially outcast and abandoned from society? I think Genghis Khan’s rise to power and the Mongol’s world conquest has uncanny parallels to the rapid growth of today’s companies such as Google, Amazon, and Facebook. Read it for history, business, or pure enjoyment.

The Hard Thing About Hard Things by Ben Horowitz
This is probably the best startup book I have ever read. Ben Horowitz (now founding partner of Andreessen Horowitz) gives a from-the-trenches view of operating a company. When I face tough challenges I think about Ben’s quote: “there are no silver bullets for this, only lead bullets."

The Alchemist by Paulo Coelho 
I read this based on Will Smith’s recommendation. Yes, I’m a Will Smith fan, not because he’s a celebrity but because he’s a brilliant marketer and business man. Anyways, Coelho’s book is a brilliant hero’s journey tale which hints at a deeper truth about following your “personal legend."

Zero to One: Notes on Startups, Or How To Build The Future by Blake Masters and Peter Thiel
Peter Thiel is one of those rare individuals who is both a deeply thoughtful intellectual and savvy executor. Zero to One is a collection of his often counter intuitive observations about business and startups.

Resonate by Nancy Duarte
Nancy Duarte is the undisputed master of presentation and storytelling. She is widely known for her work on Al Gore’s “Inconvenient Truth” presentation and on the TED conference presentations. This book details her approach to resonating with audiences.

The Icarus Deception by Seth Godin
Another great work by marketing guru Seth Godin. Seth’s life work has been preparing us for the connection economy by encouraging us to create, build, and be remarkable. In this book, Seth once again implores us to raise our game.

Money: Master the Game by Tony Robbins
I have heard Tony speak at several salesforce.com events so I always enjoy following his new works. In his latest book, Money: Master the Game, Tony certainly brings his signature energy but also brings a deeper level of analysis and perspective which comes from his interviews with the world’s top money managers.

Hatching Twitter by Nick Bilton
Nick accurately compares the founding of Twitter to “Game of Thrones for geeks.” Bilton chronicles the Twitter story from founding through massive (albeit turbulent) success. The story is radically different than the story I thought I knew. Its a great read which further substantiates the claim that startups are really freaking hard.

The Everything Store by Brad Stone
Brad Stone dives deep into the history of Jeff Bezos and Amazon.com. Stone offers a very new perspective on a story I thought I knew. The deeper look at Jeff Bezos helped me appreciate his genius and insanity even more.

Essentialism: The Disciplined Pursuit of Less by Greg McKeown
Great book by my classmate Greg McKeown on how to focus on what’s most important.

I’m getting started on my 2015 backlog. Any titles I should consider?

Ski Resorts: Innovate or Die

Ski resorts are in danger of losing customers if they don't make skiing relevant and accessible.

Ski resorts are in danger of losing customers if they don't make skiing relevant and accessible.

Over the holidays I took my family skiing in Sun Valley, Idaho where I experienced the same feeling I get whenever I hop into a medallion taxi: this industry needs to innovate or die. I grew up skiing and always wanted to share my downhill passion with my kids. When I arrived in Sun Valley I realized nothing had change - and not in the good nostalgic way. Ski resorts have not innovated in the last 30 years and are falling out of touch with today’s consumer. We are living in a 140-character world. Ski resorts need to get relevant or die.

Where is the product innovation?

Sun Valley peak season full-day lift ticket prices vs. inflation since 1998

Sun Valley peak season full-day lift ticket prices vs. inflation since 1998


Ski resorts still rely on the same product they have for decades: the full-day all-mountain lift ticket. Ski resorts have rapidly increased prices in order to cover the costs of high speed quads, gondolas, and other infrastructure improvements. Over the past three years Sun Valley increased its lift ticket prices by more than 10% per year. That is more than 5x the rate of inflation. Other resorts have increased prices at similar rates. Here’s the problem: in a short-sighted attempt to recoup costs, ski resorts are ostracizing their core customer base and pricing the masses out of the market. I spent a single gondola ride thinking about a new marketing strategy for resorts like Sun Valley and here’s what I came up with:

Segment your customers:
Ski resorts should develop tailored offerings for three core customer segments:

i) Millenials - this segment represents the future of the sport. Ski resorts that want to be around in 20 years need to cater to millennial and hook them as lifelong customers. Millennials aren’t going to ski from 9am-4pm every day. They are multi-taskers who want action and variety - not fresh corduroy. They are also very price sensitive. $115 for a full-day lift ticket? Forget it.

ii) Young families – teaching their kids how to ski is one of the primary reasons parents take family ski vacations. Parents view it as an investment in a lifelong sport for their children. However, this investment needs to offer a reasonable value. Ski resorts need to make child care, ski school, and kids activities cheap, fun, and Facebook likable.

iii) Baby boomers – the boomers represent the golden age of skiing. They are the traditionalists who remember slow chairs and straight skies. They also tend to have more discretionary income. They no longer have the energy to ski all day long and would prefer to ski groomers for a couple hours and then retreat to a gorgeous lodge to drink chardonnay and talk with friends. Most resorts have catered to this audience so there isn’t a big need for new product offerings - just new pricing and packaging.

Create new product offerings:
Ski resorts should then develop products which cater to each of their customer segments.

i) Millenials – Devote a chair and section of the mountain to an X Games-style terrain park, slopestyle, and half pipe. The Greyhawk chair at Sun Valley would be perfect for this. I’d pump music through loud speakers on the hill and have a bar, stage, and viewing area at the bottom. People can sip microbrews and watch their buddies go big via real-time video feeds. I’d charge $40 for a park-only pass. Of course, there would also be live music, big air competitions, food and drink specials, t-shirts available for purchase which would probably bring the per day spend up to $60-70 per person.

Next, develop a multi-sport offering. Millennials like variety so ski resorts should create a single pass which gives customers all-day access to a suite of activities and gear including: skiing, snowboarding, terrain park, fat tire snow biking, and snowshoe trail running. Customers could do multiple activities in a day and end up at the base camp eating, drinking, listening to live music, and watching a nighttime competition.

ii) Young families – Sun Valley charges $300 for day care and $200/hour for private lessons. Crazy. They are profit maximizing on each transaction instead of optimizing for lifetime value. For small kids I’d offer a kids camp for a reasonable tuition and include a free adult lift ticket. I’d make it full-week pricing very attractive (e.g. the same price as 3 individual days). The resorts could offer enrichment add-ons including private lessons and an evening pajama party so parents can dine out.

I’d also incorporate wearables. Each family member should get a GPS-enabed bracelet which serves as an ID badge, GPS locator, lift pass, and payment system. Parents can add value to the bracelet and keep track of their kids’ spending and whereabouts. This would give older kids independence while keeping them safe and making it easy to meet up with parents for a few obligatory runs.

iii) Baby boomers – As I mentioned, ski resorts have already catered to baby boomers with high-speed lifts, grooming, and luxurious lodges. Boomers still go on ski vacations but tend to only ski for a few hours and don’t ski every day. Offer a “forever young” discount and include a free glass of wine for a day pass as well as per run pricing and this segment should be happy.

Build a pipeline:
Ski resorts need feeder programs which introduce people to the sport and their resorts. Baseball uses little league and farm leagues to develop players. Disney uses movies and books to captivate its audience and drive theme park visits. Destination ski resorts need local programs to drive pipeline for the resort. That could mean buying local mountains like Vail has done. Or simply offering compelling promotions through alliances with local mountains, airlines, and schools. Resorts need to create critical mass within specific geographies because people want to vacation at the same resort as their friends, neighbors, and classmates. If I were Sun Valley, I’d pick five cities to dominate: let’s say Seattle, San Francisco, Los Angeles, Minneapolis, and Chicago (I’m just making those up, the best way would be to look at its current customer geographic makeup). Then I’d structure programs to make it easy and cost effective for locals to visit the destination resort.

Offer flexible pricing:
Since we have already introduced wearable bracelets it would be easy to introduce per run pricing. Ski resorts should welcome skiers who may only ski a couple runs and call it a day. After all, they will likely indulge in other services (food, drinks, gear, rentals) and by definition won’t clog up the mountain. The skier can ski as many or as few runs as he or she wants and pays accordingly. The skier is never charged more than the cost of a full-day lift ticket. Resorts can use Uber-like surge pricing to avoid congestion at 9am on powder days. This will bring more skiers to the hill more often while not congesting the mountain.

Lastly, make seasons passes affordable. Sun Valley’s season pass is $2,299 which is equal to 20 days of peak season lift tickets. That means only locals would buy it. Instead, ski resorts should price season’s passes at just over a week of skiing. That creates an incentive to visit the mountain for two separate week vacations. Seasons passes are powerful because they provide upfront cash and give the resort predictability and financial liquidity.

Alright, that’s a quick summary of my gondola brainstorm on how ski resorts can get relevant and thrive. I didn’t have time to get into how to make the resort relevant in all four seasons (another key to survival - maybe that’s a future post). I want to make sure I can enjoy the sport with my kids the same way I enjoyed it with my parents. The only way that will happen is if ski resorts get aggressive and innovate.

Is anyone else thinking about this subject? What are your thoughts?

photo credit: angelocesare

A Pragmatic Approach to Pricing

Pricing new products is one of the most important things a marketer does. Afterall, its one of the four Ps of marketing (product, pricing, promotion, place/distribution). Unfortunately, I find marketers spend either far too much time or far too little time on pricing. During every product development cycle the inevitable question arises: “So, how should we price it?” An awkward silence fills the room. Someone speaks up and throws out a number. Someone else suggests you hire a consulting firm to do a comprehensive pricing analysis. The team defers the question and kicks the can down the road for a future meeting. Pricing is important and everyone wants to get it right. After all, if your price your product too high it may never gain market traction. On the other hand, if you price it too low you’ll end up leaving money on the table. Here is a pragmatic approach to pricing strategy which I adapted from my days on Wall Street and have applied to launching products. I think its a Goldilocks approach which provides an appropriate level of analysis while still leaving room for intuition.

Here is the outline of a pricing analysis which you can do in-house in a couple weeks. I have found that this analysis makes pricing discussions much more productive. I hope it will save you hours of unproductive team meetings and thousands of dollars in consulting fees. Note all numbers in this analysis are made up and are for illustrative purposes only.

The Money Slides:
The primary output of your analysis is two money slides: an executive summary and a floating bar chart. The executive summary should highlight your interpretation of the analyses and provide rationale for your recommendations. The floating bar chart shows the suggested price points of your product based on several different analyses.

Floating bar "money slide"

Floating bar "money slide"

The Underlying Analyses:
I like to use four different types of analyses: 

  • Comparable product analysis
  • Bottoms up margin analysis
  • Van Westendorp analysis (proxy for value-based pricing)
  • Cost of substitutes analysis

Obviously, one could do a lot more work (which may be appropriate in certain scenarios) but I find that these four analyses provide great reference points to further hone your intuition. Let’s discuss each analysis:

Comparable Product Analysis:
For established product categories, comparable product analysis is an extremely useful analysis. Look at the range of price points for existing products in the marketplace. It's important to categorize products by comparable feature set as products often have “basic” or “pro” feature sets which may straddle the perceived value of your product. 

Bottoms Up Margin Analysis:
The bottoms up margin analysis gives you an idea of where your floor is for your pricing analysis. In this analysis you need to evaluate the unit cost of goods sold for each product. For cloud software this may be quite small (although be sure to factor in the cost of bandwidth, storage, infrastructure management etc.) and for physical products this can be quite significant. Then use a sensitivity table to determine the price points you need to hit your margin requirements. While I always recommend pricing based on value instead of cost, it is important to understand your cost structure – particularly if you are going to pursue a freemium strategy.

pricing_bottom_up

Cost of Substitutes:
Substitutes are anything a customer can use to solve their problem instead of using your product. Every product has a substitute. With new product categories the substitute is typically the status quo. Two examples of substitutes for in-room video conferencing are i) the speakerphone and ii) Skype running on a Mac Mini with a webcam. 

Van Westendorp:
The Van Westendorp analysis provides a decent proxy for the customer's willingness to pay. Van Westendorp requires asking customers (via survey or a series of focus groups) three questions:

  • What price would you expect to pay for this product?
  • At what price would this product be too expensive that you wouldn’t consider buying it?
  • At what price would this product be so cheap that you’d question its quality?
pricing_vanwestendorp

Voila. There is your Goldilocks pricing analysis. Not too much, not too little.  It should include the two money slides plus a couple slides for each analysis. The whole thing should take only a couple weeks which leaves plenty of time to test your pricing with real customers.

Remember that unless you are selling a commodity product, your customers' perceptions are far more important than the academic “correctness” of your pricing model. That’s why its important to get out of the office and refine your intuition by pre-selling your product. I like to try to get pre-orders at a couple different price points and with a couple different terms. You may find, for example, that your buyer cares more about not paying for inactive users than they care about the product’s actual price point (in which case active-user pricing may be appropriate). Your buyer’s body language and objections will help you arrive at the perfect pricing model.

I hope that helps. How do you price products? Any interesting tips?

What is Messaging?

Great messaging can make the difference between ideas that inspire people versus ideas that fall flat. As a result, messaging is one of the most important things a marketer does. But I often hear a lot of confusion about what messaging is and how it differs from positioning and copywriting. Messaging, positioning, and copywriting are different tools marketers can use to connect with their audiences. When woven together, differentiated positioning, clear messaging, and connective copywriting can make the difference between products (or ideas) which breakthrough and those that don’t. This blog post covers how to develop a simple but powerful messaging platform.

First, here are the distinctions between positioning, messaging, and copywriting.

Positioning - Positioning (see post on positioning) is the market space your offering occupies in the mind of your audience. For example, when I say “safe car” what comes to mind? Probably a Volvo. That’s because Volvo owns the “safe car” position within the automobile landscape. What if I ask you to name a reliable car?  You’d probably say Toyota. Or the ultimate driving machine? BMW. It would take an incredible amount of advertising dollars to convince the general public that BMW is a “safe car” or Volvo is an “ultimate driving machine” even though both could be true. Our minds categorize and anchor products in specific positions. Nailing product positioning is one of the most important things a marketer can do. The single best resource on this concept is “Positioning: The Battle for Your Mind” by Al Ries and Jack Trout.

Messaging - Messaging is how you communicate your brand story and product details to your audience in a way which reinforces your positioning while resonating with your audience. Your messaging communicates across many different channels including your website, videos, ads, PR, presentations, prospecting emails, sales conversations, product packaging, and support channels. Every touch point with the customer either reinforces or detracts from your message. 

Copywriting - Copy is simply the words you use to convey your message. Great copywriters consider the tone of the message and the preferences of the audience. For example, does the audience expect sophisticated language or simple language? Should the tone be friendly or matter of fact? Great copywriters artfully weave together words which convey the message and personality of the brand.

Okay. So how do I create great messaging?

In order to create great messaging you need to know a few things:

  • What is the differentiated position in the market you are seeking to occupy?

  • Who is your audience? And what do they care about?

  • What is the simplest explanation of your offering that resonates with your audience?

  • What are the three primary benefits of your offering?

Of course, you may not know all these when you first get started. That’s okay. The process of developing messaging is iterative. So you can start with a hypothesis and test it with your audience through different channels. More on that in a bit.

Develop Your Messaging Platform

Here is a messaging platform I have adapted over the years and find incredibly helpful when it comes to structuring your messaging. You can download a free copy of this messaging platform here. To illustrate the components of the messaging platform I’ll walk you through an example which we used at Highfive.

Download a copy of this  messaging framework here .

Download a copy of this messaging framework here.

Brand promise - Your brand promise is a commitment your brand makes to its audience. Don’t confuse this with a tagline. Taglines are often clever jingles that sound great in TV spots. Your brand promise doesn’t have to be clever. It has to be true. It’s a promise you make to your audience in return for their trust in your brand.

Positioning statement - This is space in the market you want to occupy. The most powerful positioning is one that is highly desired by your audience yet unoccupied by competitors. For Highfive our unique positioning in the video conferencing market was the fact that its the only video product you can put in every single conference room company-wide. That is an important benefit to IT buyers and is something that no other video conferencing product can deliver.

Target audience - You’ll often have a couple different audiences. Two or three are reasonable. More than that and you run the risk of diluting your message.

Mission - Simon Sinek said it best: "People don’t buy what you do; they buy why you do it.” Say what you believe. If people don’t believe what you do then you need to be comfortable telling them “this isn’t for you.”

Tone of voice - This is helpful for the copywriters who need to add personality to your messaging. A good question to ask here is: how would your describe your brand if it were a person talking with you over coffee?

Elevator pitch - Silicon Valley loves elevator pitches for good reason. Brevity is important. You need to convey your message in under sixty seconds. Remember, the goal of the elevator pitch is not to explain what your product does its for your audience to understand what your product does. There is a difference.

Brand pillars - These are the primary attributes upon which your brand is built. Most people tend to list dozens of product attributes. But if you can’t articulate your three primary brand pillars you will have a very difficult time creating clear and consistent messaging.

Headline benefits - These are the top benefits your audience can expect to realize from your offering.

Supporting examples - Each benefit needs to have supporting evidence whether it is a product feature or customer example.

Test Your Messaging

Remember great messaging needs to resonate with its intended audience. So it doesn’t matter if you like your messaging. It matters if your audience likes it. Here are ways to test your messaging:

Pitch it!  - Put together a slide deck and then go pitch it to individuals in your target audience. Try to sell something so you get real feedback. Just asking for “feedback” will water down the feedback. Only when you ask people to commit or buy will you get real feedback. Doing this in person is always best as you want to see which slides and messages get you audience’s heads nodding.

Email prospecting - Try sending emails with different subject headers and evaluate the open rates. You can also try different body messages and evaluate the response rates.

Online ads - Google and Facebook are brilliant places to test one line value propositions. Take your top messages whether they are brand promises or headline benefits and put them as the text for Google AdWords or Facebook Ads. You may be surprised on which ones receive the most clicks.

Once you have new insights be sure to update your messaging platform and try it all again!

Was this helpful? What tips and tricks do you have when it comes to messaging?