Cloud Technology (now COVID19) upends Software License era Sales Mindset

Credits – Photo by Alex Azabache on Pexels.com

Executive Summary

Even though Cloud has grown in shape, size and relevance over the past decade in Enterprises, the evolution of “methods and mindset” of some Software license era GTM leaders have not kept pace. COVID19 is going to clearly accelerate the trend of Cloud adoption exponentially in Enterprises. Sales leaders with the right strategy and mindset would be the biggest winners while other companies with better products might not make it. Checkout the 1 pager blog on this topic. Companies that invest time and take help to review the GTM Strategy, performance metrics and coach the GTM team have a better chance of making it to the other side with a great execution model.

Cloud vs Software License (Who moved my Cheese?)

Before the widespread adoption of Cloud, Software giants like IBM, Oracle and others were selling monolithic, one-and-done, all-you-can-use license deals for key areas like ERP, HR, CRM, Marketing and others.

Cloud adoption by Enterprises accelerated since the start of the last decade. This had a huge impact on the Software giants and Cloud-natives like Salesforce/ServiceNow, on how they GTM. Please refer to “The Sales Playbook” chapter of Marc Benioff’s “Behind the Cloud” book for specifics on how they ran Sales and GTM.

Now, COVID-19 has clearly accelerated the need for digital transformation and Enterprise agility in the way they work, collaborate, and respond to fast changing trends, crisis and even acts of god (hope not). April 2020 study by IDC (IDC’s Apr 2nd 2020 IT Spend Report) highlights this trend. Though overall IT spend is forecasted to drop by 2.7% in 2020, SaaS and IaaS spend are expected to grow by 1.7 % and 5.3%, respectively.

So, WHAT?

Talking to Enterprise CxO, like Naidu, CIO of Inphi Corp., it is clear that Enterprises are looking for consultative problem-solving sales leader and are thinking of smaller use-cases to begin with for shorter durations (< 1 year)

But it is surprising to see the Sales culture and muscle memories from license era have not evolved yet.  Leaders hope to lock one large deal with a big client and be done for the year. There is a big difference in the way Sales leaders look at Enterprises, to how Enterprises look at their Products. Please check out below charts.

How Sales Leaders look at Enterprise Deals

How Enterprise Leaders look at Software Companies

Call for Action –

This wedge is growing fast at the rate of Cloud. Leaders can now take these 2 steps, while the market action is low

1. Review their GTM Strategy, Value Messaging, PMF and Funnel metrics – fill, flow and close rates
2. Coach Team on Solution-Led Demand Generation and Service-Led Demand Capture methods and mindset

 

PE or EP Ratio, for valuing Stocks?

PE as popularly known is the Price of a Share over Earning per Share (EPS). The Price is the latest price as of the last trading time and the EPS is as reported in the last financial statement.

I have wondered for a while as to why PE ratio has been in vogue for figuring out valuations of a company, and not E/P ratio. Investopedia explains E/P ratio as Earnings yield in this article Click here

While both ratios are inverse of each other, they optically indicate very different things.

A PE ratio pegs you to think of the price you would pay for the earnings they get per share. While a EP ratio would align with the investment return approach and the interest rate return one would get.

For example, a share with $3 annual EPS and $24 price, would indicate a PE of 8. To many it is hard to comprehend what this means and how to baseline this.

On the other hand, EP ratio of the same share is 3/24, which is 12.5%. This means every $ the investor invests in the share would get an annual return of 12.5%.

And if the share pays a 2.5% annual yield, then you are looking at a 15% return on capital for the shares you own.

Suddenly the view looks much different and clearer, isn’t it?

Because now you can compare this rate of return to the deposit rates, bond yields and others.

PE ratios have been used for 100s of years. They have been used by investment managers and portfolio leaders to model their investment ratios and weightages in their portfolio mix.

EP ratio when combined with Yield and Earnings Growth ratio (which would be the EP ratio divided by the rate of earning growth) would give a pretty wholesome view of the value one would get in return on the investments they make.

And interestingly even negative earnings would make a lot of sense in the EP world, where you would get a view of how much the company has been investing into itself or losing money.

Then an investor/trader can be well informed to decide, if what they are looking at is an Amazon or yet another cash bleeding dotcom that would go bust.

 

20 game-changers from last 20 years

1. Apple showed people love to pay top $s for real quality and iconic user experience
2. Amazon showed how to blitz scale at sonic speed
3. Google formed a knowledge-led-democracy across the globe
4. Facebook brought the whole world into a digital village
5. Intel made inedible chips a household name
6. eBay built a digital auction house
7. Paypal made paying pals a cool experience
8. Twitter let anyone say anything to anyone
9. Tesla asked why a car needs any liquid but windshield fluids
10. Microsoft showed the art of collaborating with competition
11. Uber came to the rescue of folks who cannot whistle
12. Airbnb showed how not to own our house or even rooms in it
13. Netflix told us what movies we like, before we even knew it
14. Salesforce showed a cloud can hold not just water, but even applications
15. Starbucks showed how to concoct a fancy beverage for $5
16. Costco proved traditional Retail done right would work
17. Dominos showed how to gamify the boring pizza ordering experience
18. Disney-Pixar proved creating magic could be a timeless art
19. Warren Buffett showed how one can love capitalism and yet be gentle and human
20. SpaceX taught how not to fly the rockets into water, but reuse them

And there are 2 timeless geniuses who left their mark in more than 1 item on this list.

Steve Jobs and Elon Musk!

 

Starting a startup is easy. Growing it is hard!

Well begun is less than half done…for this generation of startups! 

Greetings! As one knows, it is way easier to start a startup these days, that too a technology startup.

But, it is extremely hard to sell the product/solution and scale the business and reach what I call the Minimum Viable Repeatability (MVR). MVR is the other extreme of the oft-used term in Product evolution roadmap, MVP

Public cloud, virtually free Wi-Fi, and gadgets help product and tech talent to ideate and build solutions within a very short period huddling in a café or the proverbial “garage”. Hence, starting a company has never been easier and so is getting funded in most cases.

If the product is focused on the Enterprise, then a buyer is overwhelmed more than ever. They are bombarded with overlapping products from startups, while the software giants promise everything under the sun on their all-you-can-eat Platforms.

So making your startup product stand out in the Enterprise world is super-hard and impossible, unless the founders seek external advice.

It is typical and inevitable for Tech Founders to look at every prospect via the lens of the product and why they should buy their solution. This is unavoidable bias as the founders live and breathe their product and may exhibit, if I may say so, a tunnel vision of how the world should operate. Interestingly, for any problem that a Customer has, their product becomes the panacea.

This would repel an Enterprise buyer…for good. I have seen quite a few of these in my experience and the lessons from those are price and timeless, because the issues are fundamental.

The ability of Founders and GTM team to adapt their product features and value proposition to the Customer’s business paradigm is sacrosanct. And it is critical to focus on the Customer and their LTV, and not look at them as one-off transactions.

I have seen, not just startup founders but also leaders of large companies, engaging with prospects from the lens of their solution. That is a golden opportunity missed by not looking at the Customer’s challenges in its context, empathizing and eventually earning the right to build solutions.

This is a very specialized expertise of converting a product’s value proposition and custom-messaging it for each industry/lead/geography/stakeholder.

Founders and leaders may have to invest in and seek GTM Advisors to inculcate and build the right culture, mindset, strategy and organization. This would help them approach the market with the right strategy, team and mindset, while they focus on the Product and give them exponential returns on the investment

I love calling this your “Iconic Mindset” – and this mindset should permeate from the core GTM strategy to ground tactics that Founders/Sales leaders could embrace and execute everyday on the field.

Would love to hear your thoughts, feedback and challenges and brainstorm the right way to overcome those and drive hyper-growth.

“Good” products thrive, while “Great” products perish. The difference?

Photo by Canva Studio on Pexels.com

Beyond the ever-elusive PMF

Product-Market Fit (PMF) is critical for a product to appeal, attract and accumulate ardent users. Don’t get me wrong. But PMF is just table stakes in a startup’s or even an established company’s journey to achieve growth at scale.

To achieve scale, one must see, plan and strategize beyond PMF. One might argue that PMF is simply evasive or even irrelevant in some cases. Think of the way Henry Ford classically quoted how he would have made carriages that run faster and pull more if he went figuring out what customers wanted; as against inventing the consumer automobile market.

Steve Jobs classical “reality distortion” theory comes into play here. Iconic founders and market leaders possess the ability to position a product/service way beyond its perceived value.

Along with Steve, leaders like Jeff Bezos, Bill Gates, Sam Walton, Phil McKnight and Marc Benioff belong to this category. These leaders articulated a grander vision, mission and purpose of their company. That made customers perceive the value they receive from these companies in a completely different light and hence take pride in associating with it.

How to attain Product-Market-Sales Fit?

Products by themselves hardly sell, as in the theory of a mirror and a beautiful woman. Even a mirror of a rich beautiful woman would show how good she looks ONLY when she comes in front of the mirror. Deep, right!

So “positioning” is a very critical aspect in determining the success of a business. Sometimes the emotions created by iconic positioning might go way beyond the product’s intended value. And that is sheer branding genius.

Products that are good in its differentiated value have won the hearts of the customers and hence disproportionate market share, compared to their competitors who, arguably might have better product features.

Companies tend to invest a lot in maniacally fine-tuning the product, while hardly investing in figuring out the optimal GTM Strategy, Product Branding, Value Proposition, Differentiated Positioning, and Price vs Value.

Product Leaders should focus on MVR…not just MVP

Minimum-Viable-Repeatability (MVR) is the panacea to the uber-obsessed product manager focused on MVP.

At MVR, the product is not only functional, but also saleable. And for that, engaging a sales leader and marketeer early on in the product evolution cycle is crucial.

Simply put, MVR differentiates a “good product” reaching growth at scale, from a “great product” that has not have figured out the right way to position in the right markets at the right pricing/value proposition. Period.

2019- Beginning of a beginning: Retail growth looks even and distributed

2019 could arguably be the year where the one-sided “Amazon vs Rest of the Retail world” equation, gets noticeably even and balanced. Phenomenal growths in store comps and online sales growth of traditional retailers underscores this trend clearly. With holiday sales expected to grow more than 4% to ~$750B per Matthew Shay, CEO of NRF (https://www.cnbc.com/video/2019/11/29/national-retail-federation-holiday-sales-consumer-squawk-box.html) this is a great time for some of the retailers, while some are still struggling.

Retailers like Walmart, Target, Lowe’s, Best Buy, Costco and many others have started to discover the balance between stores and online, and have converted the once labelled as liabilities (Stores) into omnichannel assets.

This has been validated by the fact that digital-native DTC brands like Casper, Warby Parker and others are piloting physical stores to provide convenience and touch-and-feel component to consumers in their journey.

Obviously, the apocalypse of traditional retail was overhyped and it is time now to ring the beginning of a new beginning. This blog takes a fresh stock into the future trends in Retail, DTC and consumer behavior.

P2P x Convenience x Channel Design

No consumer we know (including us ) thinks, explores and shops with a channel in their mind. They shop in a way their needs (and wants) are satisfied at the time and place of their convenience at a price they feel right.

This is intrinsically misaligned in the way some retailers think and strategize their business processes. A retailer who has mastered the art and science of balancing a consumer’s P2P (path-to-purchase), their convenience and designed the channels to cater those profitably would win in the long run.

As we hear from quarterly results commentary and analysis, retailers like Walmart, Target and many others are starting to crack this code successfully.

Digital Search – “Fight for the 1st page”

While bidding for “Super-Bowl” ad spots is a once-a-year ritual for consumer brands, outbidding competition to find themselves on the 1st page of Google or other search engines is sacrosanct and a survival-of-the-fittest fight for retailers.

The P2P for most consumers, especially the digital-native Gen Xers to Gen Zs, include a search on their smartphones or other devices to compare similar items, designs, price and availability.

Retailers and brands who have invested in right SEO strategies would find themselves winning more as long as they are found on the 1st page and can satisfy most of the needs of a consumer.

Beyond this, investing in ad auctioning of keywords and appearing as sponsored websites on Google’s search platform (AdSense) is becoming a brutal race-to-the-top. And Amazon is investing in growing its ad platform and using its rich consumer buying behavior data to drive targeted ads. WSJ covered Google’s ad dominance in https://www.wsj.com/articles/why-googles-advertising-dominance-is-drawing-antitrust-scrutiny-11560763800 and it is no-brainer why it is drawing the attention of antitrust regulators.

Stores step-up to the omnichannel consumer

Gone are the days when a store manager or associate was not aware, motivated or incentivized to take care of an online customer at their door to pick, return or exchange an item.

Retailers have evolved their business models to incentivize, train and educate store associates to serve online customers better, without compromising the instore experience of the others.

This has morphed in the way Walmart does grocery delivery successfully with drive-up initiative and Target with its acquisition of Shipt. And some retailers like Kohl’s have stretched their luck to include Amazon returns with a hope that the increased store traffic would translate into higher sales and comps. Success stories of Walmart, Target and Best Buy are covered reflecting some of these points here https://www.retaildive.com/news/3-retail-turnaround-success-stories-and-3-turnarounds-to-watch/567162/

Experience and convenience nudging pureplay deals

Shopping trends indicate that consumers are starting to choose a mix of experience (which include post-purchase service) and convenience over pureplay pricing deals.

Consumers’ willingness to pay for last mile delivery to food and merchandize delivery companies indicate that trend. Beyond that consumers are starting to prefer the brand with a trustworthy service when the price has even some premium to it.

This is a great news for retailers as they can invest in providing holistic services to consumers than just driving each other to the bottom of the pricing funnel. One area where retailers and brands can differentiate is in investing in post-purchase service. As any marketer would know it takes lots of investments and time in acquiring a consumer and it would pay lot more to keep them as happy customers at a fraction of that cost and time.

“It takes many good deeds to build a good reputation, and only one bad one to lose it” Benjamin Franklin

How would Apple look now if there was no Steve Jobs?

Could I ask you to visualize how Apple would look today, if there was no Steve Jobs?

Or for that matter, can you imagine a Microsoft without Gates, Amazon without Bezos, Tesla without Musk or Nike without Knight.

I know right! We can keep going on with a long list of iconic leaders and their
companies.

But this short list of charismatic leaders is enough to establish the priceless
contributions that these icons have brought to their companies and industry.
They took their company’s products/offerings and shaped them into iconic brands that Customers would crave to have…and then rave about it, voluntarily.

While none of them, for the most part, were technically involved in building their
products hands-on, they had a strong vision for what their product would mean to different customer segments and knew well to position it with the right messages to evoke the right emotions. This essentially arises out of an “Iconic Mindset”.

Easier said than done, as you see from above examples, this could decide the fate of the company.

As you know it is easy to start to startup, but hard to make it standout, grow and scale.

Founders, board and investors must enable this expertise organically, or by having strategic market advisors who can give the needed twist, swagger and oomph to position the product in a niche and desirable way. Trust me, it is super-hard to get folks who can paint a future filled with rainbows and butterflies, while today looks murky.

A big part of the effort and capital that a startup puts in building a killer product must be budgeted for building the right marketing strategy, brand identity, market messages, value proposition and how their products can change the world.

I am sure this would make a huge difference and help startups from not becoming a mere statistic, but make them stand the test of time and market forces.

WELL BEGUN IS LESS THAN HALF DONE…FOR THIS GEN OF TECH STARTUPS

Greetings! As one knows, it is way easier to start a startup these days, that too a technology startup.

But, it is extremely hard to sell the product/solution and scale the business and reach what I call the Minimum Viable Repeatability (MVR). MVR is the other extreme of the oft-used term in Product evolution roadmap, MVP

Public cloud, virtually free Wi-Fi, and gadgets help product and tech talent to ideate and build solutions within a very short period huddling in a café or the proverbial “garage”. Hence, starting a company has never been easier and so is getting funded in most cases.

If the product is focused on the Enterprise, then a buyer is overwhelmed more than ever. They are bombarded with overlapping products from startups, while the software giants promise everything under the sun on their all-you-can-eat Platforms.

So making your startup product stand out in the Enterprise world is super-hard and impossible, unless the founders seek external advice.

It is typical and inevitable for Tech Founders to look at every prospect via the lens of the product and why they should buy their solution. This is unavoidable bias as the founders live and breathe their product and may exhibit, if I may say so, a tunnel vision of how the world should operate. Interestingly, for any problem that a Customer has, their product becomes the panacea.

This would repel an Enterprise buyer…for good. I have seen quite a few of these in my experience and the lessons from those are price and timeless, because the issues are fundamental.

The ability of Founders and GTM team to adapt their product features and value proposition to the Customer’s business paradigm is sacrosanct. And it is critical to focus on the Customer and their LTV, and not look at them as one-off transactions.

I have seen, not just startup founders but also leaders of large companies, engaging with prospects from the lens of their solution. That is a golden opportunity missed by not looking at the Customer’s challenges in its context, empathizing and eventually earning the right to build solutions.

This is a very specialized expertise of converting a product’s value proposition and custom-messaging it for each industry/lead/geography/stakeholder.

Founders and leaders may have to invest in and seek GTM Advisors to inculcate and build the right culture, mindset, strategy and organization. This would help them approach the market with the right strategy, team and mindset, while they focus on the Product and give them exponential returns on the investment

I love calling this your “Iconic Mindset” – and this mindset should permeate from the core GTM strategy to ground tactics that Founders/Sales leaders could embrace and execute everyday on the field.

Would love to hear your thoughts, feedback and challenges and brainstorm the right way to overcome those and drive hyper-growth.

Open Letter – Product Ideas to make Uber provide better Customer Xperience

Dear Uber Team,

Uber obviously is one of the best things that has happened to travelers and consumers across the Globe and is already disrupting many industry sectors beyond your traditional yellow cab taxi world we think of. That is no brainer and great job to you guys for providing a literally touchless yet seamless and awesome experience and value to consumers.

As a regular user of Uber services and erstwhile platinum level membership owner of many rental car companies (which I lost all of them as I stopped renting cars for a while now), I would like to share a frequent problem and possible solutions. Now one idea, in all fairness, is mine while the other one came from my smart tweenager daughter.

In crowded areas like airports the chances of a wrong passenger taking a wrong cab, as his car brand and/or driver name and/or destinations are same, is high. And in most cases passengers do not check all details of car/driver before boarding and getting off. I know the chances for this happening are small/discrete but as you scale up you certainly don’t want this to be a thorn in your roadmap to growth and dominance. In the last 1 month this happened twice to me and both times I had to cancel and pay $5.14 as cancellation fee or something. Very depressing if you are customer and worst of all you end up paying for someone else’s goof up! Mull this over for a while.

Ideas:

1. You can provide a LED board on the windshield for each Uber car and it would display the name of the passenger the car is going to pick up. This would avoid a lot of confusion and mix-up
2. And/Or to first idea, you can add a process where once boarding the driver would send a ping and that would come to the right passenger and if its not, you won’t even start the ride.

I feel these 2 steps together or seperately would avoid and eliminate this mix-up and provide an assured and risk-free travel expereince.

Hope this helps…if not at least you heard one of your loyal Customer’s experience using Uber 🙂

Cheers and happy riding,

Anand

 

 

Target has the perfect bullseye opportunity…

When you compare Target with Walmart or Costco or an equivalent big box or wholesale retailer it is obvious on the surface that Target has the most potential to strike the right balance between a Walmart and Costco.

Target has the ability and the breadth and depth of Walmart with debatably a better brand perception and equity (more debatable after their recent data breach). And Target has a similar ability as Costco or Sams Club to understand who its Customers are, what they buy, when and how. With close to 20% penetration of their loyalty cards (called RED Cards) they have the basic Customer profile, demographics and buying patterns to perform all sorts of analytics and big data deductions to understand their customers better and serve them across all possible channels of interaction that exist today.

To draw more parallels, most Target stores across the US have a Pizza Hut parlor and a Starbucks Cafe in it to service its customers, similar to the Costco food courts or McDonalds in some Walmart stores. To top it off RED card customers would get a 5% discount on the food prices at these partner stores as well.

In my opinion Target has to focus on the following key pillars to improve their business performance significantly and be the perfect storm between Walmart and Costco:

1. Market its RED Loyalty Card Benefits better

I do feel that their marketing of RED Loyalty card’s benefits are not done enough to really create that vibe and positive energy that is needed for them to tip the scales on Costco. At no annual fee and an instant 5% discount at checkout, online or in store, their RED cards are absolutely lethal when its comes to attracting consumers and making them stick with their brand consistently for regular purchases. Compare that to a Amex card which gives your loyalty $$$s back once a year or a Discover or comparable card which would give after you accumulate a certain value.

Beyond this on the giving back front, Target used to give back (not sure if they still do) a portion of their RED Card customer purchases back to the school of choice of the individual customer. This way a customer shopping at Target felt that they were giving back to their own school community where their kids might be schooling.

2. Focus on creating a shopping experience equivalent to Costco Stores

Most families go to Costco as they go to a fun shopping mall or a food tasting event. Costco aisles are filled with heavy-cart pushing customers who are doing more than 30% of discrete and impulsive purchases which is a huge plus to Costco. And a small portion of those consumers end up having their lunch, dinner or snack meal at Costco at the food court and hence it becomes a weekend fun family activity for many to explore, shop, eat out and spend a good 1-2 hours in the store.

Target of course has a good brand perception when it comes to its stores hip factor, clean and haute look, and well laid and maintained aisles and shelves. It can of course focus on creating a similar experience as Costco (not copy it) without really compromising its core brand values and store experience and making its customers spend together with their entire family for couple of good hours in their store along with dining or drinking at the cafe

3. Omnichannel Customer Engagement

Omnichannel customer identification and engagement is fairly easier for Target compared to a Walmart where the customer loyalty data is mostly not present. Investing in technologies and process that enable them to identify their loyal customers and service them well would definitely go a big way in increasing their basket sizes and shopping frequencies. Beyond that leveraging its vast store footprint in the US for its ecommerce and mobile shopping experiences would be a huge boost for its business as it needs to combat Amazon and the likes on the ecommerce front.