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March 2012

Social Media = Word of Mouth

I debated writing about Social Media as so so many people are already talking about the importance of social media – so my writing about Social Media could end up like my striking a match in a forest fire.  At the same time, I see most social media writings pertain to creating Business-To-Consumer relationships – and very little on use of social media in developing  Business-To-Business (B2B) relationships  – the environment I live within – as do many of you.

What follows is based on observation and results – and not theory.  My team and I are still figuring much of this out.  But we have seen several start-ups in our B2B environment make good use of social media to boot-strap their business. 

Back to Basics – Word of Mouth

As has been true for millennia, the number one way most businesses find new customers is word of mouth. Potential new customers don’t know you, have no reason to trust you, are likely to initially assume you shouldn’t be trusted, but what a friend, or just another customer “like them”, says and does is trusted.  Prior to social media, building your business through word of mouth took time – and could take a lot of time if your target customers don’t frequently talk to each other.  In the old days, printed publications often were the next best thing to word of mouth – a way for the experience of one or two customers to reach many people – but in many people’s minds print is suspect because of potentially having hidden motives – such as keeping advertisers happy.

It’s Still About Word of Mouth

Social media is in most part another form of word of mouth – and from a customer’s perspective – a much superior form of word of mouth. They can quickly get a variety of viewpoints from people just like themselves unedited by intermediaries – the “unvarnished truth”.  If they Google you and find nothing but your static website – the customer will immediately assume working with you means they are “guinea pigs” (test subjects) – which all but a few brave customers will avoid.

So you need to as quickly as possible build a web presence where your customers talk about you.  A web presence that web searches by your target customers will uncover your happy successful customers and show the prospect you are a viable potential source of a solution to a problem they are having.  Your web site doesn’t fill this need as the customer knows you are not going to give them insight into the hurdles and limitations in your solution.  They want/need word of mouth information on you before they trust you enough to invest time contacting you.  Plus your web site will get relatively little traffic compared to a good social site.  What customer would visit your web site every week or month for years – like they would do a good social property?  So your web site leaves you on the fourth page of a Google search – where a good active social property gets you on the front page.

Which social media to you develop first – that will grow your business through trust creating word of mouth?  Discussion Groups?  Blogs? Facebook? Twitter? 

For B2B relationships, we’ve found Discussion Forums and Blogs to be the most effective tools for creating trust based on word of mouth.  Over time, both Discussion Groups and Blogs create a large amount of “searchable/findable” material and repeat traffic that will get them 9and you) listed near the top of a Google (or Bing) search by your target customer.

Word of mouthDiscussion Groups

Discussion Groups enable prospective target customers to quickly see how your existing customers are doing with your products and/or services in a form they can trust.  They can see what problems and hurdles are – while also seeing what the answers are – from you and other customers.  If you have a significant “problem/limitation” with your product/service, they’ll see it.  If there is little traffic on your Discussion Group, they’ll see that too – and know they are working with young technology.  Yes there is no hiding in a Discussion Group – but that is why it’s so effective – an accelerated one-to-many form of word of mouth.  So whether you already have an ongoing business, or are about to start one, be sure to start a Discussion Group as soon as you can.  It will be one of your best sources of new customers.  It will also be a great source of customer feedback to help you steer your development direction. Last, you need to actively moderate the Discussion Group, and need to do it with a “light hand”.  Sure you can remove “mud-slinging”, but if folks say something negative, you need to answer it – and not hide it.  It’s all too easy for potential customers to “smell” a Discussion Group that is managed with a heavy hand – making it more of an advertisement then a source of truth by word of mouth.  Great answers to hard questions in a Discussion Group are very powerful convincing potential customers you can be trusted and are worth engaging with. Discussion Groups are a modest investment of your time – and you should expect it to take six plus months to develop into an effective tool that pulls in new customers.

Blogs

Blogs are a great way to provide potential customers insights into what your technology is all about – from benefits to successes to applications to working around limitations. The informality of Blogs makes them more trusted.  The customer questions that come from Blog postings are a very effective form of word of mouth.  A Blog enables you to create a virtual relationship with many many current customers – that will pass your writings on to their friends (word of mouth) – while enabling potential customers to learn more about your solution and see what “kind of people” you are to work with (i.e. build trust). Blogs are a big investment in time and effort.  We find it requires at least one posting per week – if not two or three – to build significant viewership.  It can also take near two years to build an effective lead generating Blog that is creating relationships and awareness of what your technology is all about, showing your customers are being successful with your solutions, building up content and traffic that gets you near the top of a Google search, and delivering potential customers that “word of mouth” experience that is the basis of their trusting you enough to invest in your technology.  You are thinking “two years” – you have to be kidding? Sure there are Business to Consumer Blogs that grow very quickly – but B2B blogs take more time because word of mouth moves slower in a B2B environment.

How About Facebook Twitter and Other Social Media?

I don’t know.  We are still learning how other Social Media can be used effectively in a B2B environment.  A few of my team members are using Twitter but it’s hard to say how effective they are developing new relationships.  Many of us are struggling with Facebook (and Google+) being first a personal “friends and family” tool – and unsure how to effective use in a B2B environment.  We’ve had some successes with YouTube – getting partners and customers to provide videos – as another source of word of mouth truth – but the volume of viewers of these videos is still modest.

Final Words

If you are a small software company looking to build your business, I without reservations strongly recommend you develop a lively Discussion Group and Blog.  It takes modest time/effort to moderate a Discussion Group – and quite a bit of work to maintain a lively Blog – but you need to do it.  They will absolutely pay for themselves by finding you new customers through tried and true word of mouth.


Elephants and Termites

As a small company, you and your team are very focused on the needs of your target customer needs, and making product and services improvements that delight these customers and grow your sales.  Very clear.  Isn’t that the same for everyone?  Isn’t the elephant very interested in the ability of your solution to delight their customers and grow both you and the elephant’s sales?

In a Termite Colony (or bee hive or ant colony) there are a number of specialized workers.  Some termites spend their day looking for new sources of food – basically “scouting”.  Other termites actually take the food back to the colony.  There are yet another group of termites that take the food – and use it as fertilizer for the garden they are growing under the ground – the garden that is their real source of food.  Then there are the construction workers that are making the termite mount, the nannies that are tending the eggs of the next generation, the queen laying the eggs and several more specialized roles. All these different roles are filled by termites that are physically quite different – large, small, oversize mandibles, and so on.  It’s very obvious sand easy to see the differences in the various termite worker roles.  So what does this Discovery Channel discussion have to do with dancing with an elephant?

Elephant and termite
The roles of individuals that work for an elephant are very similar to the termites – they have different roles, different skill sets and different goals and motivations.  What is hard is all these elephant employee’s look the same – and look like you too.  It’s easy to make the mistake and think they should think and behave much like you do. 

They don’t.

What is the focus and motivation of the elephants marketing people?  Isn’t it to find new customers to grow revenue?  It might be – but it’s also very possible that their goal – that their manager asks them to report on every week – is the number of new sales leads they produced.  Does this marketing person understand the customer’s needs?  Not necessarily.  Do they have a way to measure the quality of sales leads?  Maybe, maybe not – and their manager may be goaled just on numbers of new sales leads – and not quality (which we all know can be tricky to measure). If you engage the elephants marketing people, do you know how they are being measured?  What will make them and their manager be able to say they met their goals at year end (goals that drive their compensation)? 

How about engaging the elephant’s sales reps?  Aren’t they focused on driving customer sales?  Do you know how they are compensated?  Sales people can be compensated on named accounts – so accounts not on their named account list are of no interest to them as they do nothing to help them meet their quota.  Sales people can be compensated on all sales within a geographic region – so sales outside their region are viewed as a distraction.  They may be compensated for sales of specific products – so sales of other products are an annoyance – or even viewed as competition for the customer’s limited budget.  Does the sales rep expect what they get compensated on to change every year or two – which will drive near versus long term sales efforts?  If your product or service has a six month sales cycle, and it’s the elephants fourth quarter, and they know the customer you want to work with them on may not be theirs next year, should it surprise you they ignore your reaching out to work with them developing a large long term sale?

How about the elephant’s Product Managers – those folks that steer the direction of new product and services development that you are leveraging?  Are their goals – what will make their manager say good things about them and give them a raise and promotion – about meeting a release date, growing revenue for their product or service, or some sort of “customer delight” score?  Will they not care about a product or service another Product Manager is working on?  Will they view other elephant Product Managers as their competitors for marketing investment and sales focus?  Are they likely to be the Product Manager for the same product or services for several years so are interested in long term investments that you might present them?

What are the motivations of the elephant’s staff that manage partners like you?  Is success “just” the number of new partners they recruit (retention and quality matters less), total number of partners they manage (retention matters more and quality matters less), sales driven by partners (quality may matter more than numbers), partner’s response to quality of service surveys or…?  Would you be surprised to learn the elephant’s partner managers are focused on their goals for the year that their manager will “judge” them on – and that drives their salary increase and potential promotion?

How about senior managers for the elephant?  What are their success factors and goals?

So to get to the point, don’t make assumptions about the success factors for the various “specialized workers” at the elephant.  Just like the termites, they have specialized roles, skills and success factors.  If you want to effectively leverage, influence and maximize your benefits from working with the elephant, you need to intentionally and quickly find out what success is for the individual elephant’s employee’s you are talking to and working with. 

How do you find out what the success factors are for the elephant’s employees – what is motivating them?  What is motivating them “personally” (which is all that really matters when you are trying to get help from them – help they can choose to give or hold back)?

Ask them.  Just ask them.  Directly ask them what success means to them.  Ask them what their manager expects them to deliver over what period of time.  Ask them what their priorities are.  Asks them where the opportunity to work with you fits in their priorities and deliverables, and what their managers view is of their investing time and effort working with you. 

You can use these answers to determine if you are working with the right people (or are not and should pursue someone else – minimizing lost time and thrashing).  Knowing their success factors and motivations will help you explain to them how working with you will help them meet their goals and succeed.  The elephant’s employees are very much like your customers, you need to explain the benefits of helping you – selling them on not just the benefits to joint customers, but also the benefits to helping them met their personal goals and career aspirations.

Last…

Most (but not all) people love to be told that you are interested in helping them succeed – and the best way you can help them is having a clear understanding of what their success factors are.  It shows you care about their personal success.  Though it may feel a bit personal to ask an individual what their goals are that they are being measured against by their management, once you get them started talking they are very likely to tell you more than just what their goals are – but also what their challenges and frustrations are.   Knowing the goals challenges and frustrations of “all the elephant’s men” puts you in a great position to fully leverage the elephant.  You can take what was a mysterious uncertain and apparently random dance with the elephant (that is all elbows and stubbed toes) and turn it into a tightly choreographed dance to the delight of your customers and investors.

Termites do it.  So can you. Just ask.


My Trying to Dance with Two Elephants – A Recent Personal Experience

These last few weeks I have been the person trying to dance with a large and small elephant at the same time – or at least sort out which elephant is worth my really dancing with (my investing my team’s time and efforts integrating  Autodesk technology with their technology).  Names removed to protect the innocent – though it sadly protects the guilty too.

Elephants and Ballerina
The large elephant is the leader in their Cloud based industry.  They are a company I know very well having consulted with them a bit several years back on how to start developing a partner program and ecosystem of third party software providers adding value to their then young Cloud platform.  I hadn’t talked to them in several years and my contact at the elephant from years back had left – so I contacted them just as any of you would – as an unknown (to them) “newbie”.

They are located in my area so we had the first meeting face to face – getting situated with how we work with them and the basics of their Cloud technology and APIs. 

The first meeting was disconcerting to say the least.  Though they had three people in the room, and though they were happy to tell us all about their partner program, they knew next to nothing about how their technology worked.  It’s nice to know what their partner program is about – but we needed to know if integrating our technologies was possible at all, how much we might have to learn to do the development (the character of their APIs) and what resources were available to us to start the technology learning curve.  Ideally we would have determined in this first meeting if what we hoped to do was easy or hard and what development skills were most needed.  This would help us sort out which of my engineers was best suited to research and prototype the integration – which would allow us to make a rough estimate of the investment we would need to make to bring the integration to market.  If it turned out to be a modest investment, we would move forward.  If it turned out it was going to be a too large, too difficult or too uncertain development effort, we would not move forward.

When we asked if they could bring someone technical into the meeting, they said no.  They then talked about how difficult it was for them to get technical resources to work with partners as they were all busy working on customer requests.  They seemed to be talking to themselves – not us.  The said all the technical information and support available was on their web site – and that’s what we had to work with.  They didn’t say it directly, but the message we were getting was “good luck – you are on your own.”  It was clear there was an organizational rift within the large elephant between the partner program people and technical resources.  As a potential partner this meant an overly long learning curve – and we would be in big trouble if we ran into a difficult technology hurdle that we needed help sorting out (never mind the possibility we run into a bug that needs fixing for us to move forward).    So though they were the large elephant in their industry, we shook our heads and moved on to the small elephant.

And what a difference. 

The small elephant met with us in our office where we learned about how they work with and support partners – and the basics of how their technology and APIs work.  Keep in mind these are Cloud technologies which we are learning and the elephants are experts in- so we had lots of questions and “basics” to learn.  We learned a lot in this first meeting which gave us confidence to take the next step.  We then had a follow-up conference call with the small elephants partner program manager, product manager (with a deep understanding of their customers), and software engineer.  We reviewed what we were thinking of doing, what they thought would be most valuable to their customers, what was likely straight forward to implement, what was likely hard to implement, and how to get started.  They set us up with a “sandbox” account within a day, pointed us at learning materials, and gave us a technical contact to call should we have questions.  At this point we had the answers we needed to get started, were reasonably confident we could prototype the integration in just a few weeks, knew the best engineer on our team to assign to do the work, and most importantly had the names of two people we could call if we found ourselves thrashing or in a pinch. 

So here we are actively working closely with the small elephant – with the large elephant put out to pasture (at least for now).

Will the large elephant regret their “sending us off” to work with one of their largest competitors?  I would think and hope so – but maybe they won’t.  Will I regret not pushing the large elephant harder?  Maybe – but part of my thinks the dysfunctional nature of their organization will likely lead to their maintaining their position as the large elephant (though maybe it’s just their partner program team that is dysfunctional).  Is the small elephant taking advantage of the large elephant’s dysfunctional partnering program, people, and processes?  Absolutely.

This experience was a reminder to me that partnering between elephants and small innovative software companies is at its core a 1 on 1 process/experience.  It’s not about a partnering “program”.  It’s all about developing a trusting relationship between the dancer and the elephant.  The dancer knowing they can reach out to the elephant for help – and they’ll get help.  The elephant knowing the dancer is serious about developing a new solution and business – so investing time and effort with the dancer is a good investment.

Saturday night I am off to Autodesk's annual "One Team Conference" (OTC) in Las Vegas.  OTC is basically a beginning of the year worldwide sales kick-off meeting for Autodesk.  There will be well over two thousand people attending with about half Autodesk sales staff and half Autodesk sales partners.  There are also a number of Autodesk software development partners attending - those targeting Autodesk sales staff and Authorized Resellers as part of their sales strategy.  Being able to reach almost the whole Autodesk sales ecosystem worldwide in a few days while never leaving the hotel - instead of flying around the world for a month eating bad airplane food and staying in cheap hotels while taking phone calls from customers at odd hours and dodging phone calls from an unhappy spouse - is goodness for many of our software parthers (me too!).  

Though I have spent too much time in Vegas over the years... and am at the "end" of the Vegas three stage emotional roller coaster (Shock and Awe, Disgust, and Resignation).  The opportunity to meet many of my software partners face to face helps keep me going back. 


The Trinity

Are you most interested in starting a software company to work for yourself – and be in control of how you make a living – or do you really want to build a large software company? 

Having watched hundreds of small software companies grow their business; it’s become clear the ones with the “Trinity” are the ones that grow Big fast.  My definition of “Big” is over 100 employees, revenue exceeding $10 million per year, and consistent annual growth exceeding 30% year over several years. 

The Trinity is all about a management team that has a strong leader in each of three core areas – Technology, Sales, and Business Development. 

If you are starting or have already started your business – which if the three areas is your strength?  Do you believe you are strong in two of the three core areas?  All three?  Whether or not you believe you are strong in more than one of the core areas – you can really only focus and become great at one of the three skill areas required to grow your business into a large company – Technology, Sales, and Business Development.

Trinitysymbol

The Technology Leader

The Technology Leader is insuring your software or web service is architected for flexibility and re-architected to be able to ride changes in platform technologies – whether that be the OS, Mobile, Cloud or whatever.  Having a flexible and extensible technology foundation lets you zig and zag around technology obstacles and react quickly to changes in customer demands – as well as allowing you to jump on new market opportunities.  If your Technology Leader is not someone who “just” delivers what you and customers asks for, and is not talking about how your solutions are architected for flexibility and extensibility, you need to find someone new to lead your Technology team – or you are going to hit the limits of your technology foundation before you ever get Big.

The Sales Leader

The Sales Leader is both closing every quarter insuring you are have flow positive – and looking forward at what is needed to continue to grow Sales at a high rate for the coming two to three years.  Sales strategies evolve – and developing new sales avenues that are really producing and cash flow positive can easily take two to three years.  Think you might want a VAR channel?  Think it’s time to expand internationally?  Need to hire some great Sales Reps in an under developed region or in a new market area?  You have to start developing these additional Sales resources well in advance to keep that high Sales growth rate over a period of several years.  Unfortunately many people believe high Sales growth “just happens” when you have a great product.  It doesn’t.  If your Sales Leader cannot tell you today what they are working on this year to prepare the foundation for growth next year, and is solely focused on sales this quarter and this year, you need to find a new Sales Leader – or you are going to hit the limits of your sales organization before you ever get Big.

The Business Development Leader

The Business Development Leader is scanning the horizon for market and product opportunities that can be leveraged to grow the business rapidly.  This could be creating a partnership with a new elephant, insuring you are getting maximum value with the elephant you are currently dancing with, looking for mergers and acquisitions of companies with great complementary technology, going to tradeshows to spot new industry trends, and looking at how your business is organized – and might be better organized.  The Business Development Leader is thinking big and broadly – how to grow the company by an order of magnitude over the coming five years.

These members of the Trinity are very very different personality types.  No one can play more than one of these three roles really really well.  The Technology Leader is intrigued by new technology, loves prototyping, but is a pragmatic software developer at heart.  Will usually be an introvert.  The Sales Leader is a highly disciplined and organized deployer of their Sales resources – acting very intentionally with one eye in the present and one eye looking to next year. The Sales Leader is not your stereotypical “people person” – being more organized and likely with some sort of Financial training.  You might envision him as a very aggressive accountant.  The Business Development Leader is thinking outside the box.  Someone who can sound at times like a Wheeler Dealer – but is behind the scenes a steely eyed realist who makes for a great Poker player.

So to put a bit of a point on this post, which of the three members of the Trinity are you?  Don’t say you are two of the three or all three.  You are not.  You need to start searching for the two other members of the Trinity that are needed to put your business on the fast track to “Big”. 

If you are running a small business that is “stalled out”, take a hard look at your Technology, Sales and Business Development Leaders.  If it’s not very clear you have those Leaders, it’s time for change.  Don’t get me wrong, getting “Big” is not what everyone wants.  It’s okay to decide to stay a small independent “lifestyle” company. If that is what you want.  I know many happy independent small business owners making good money while very much enjoying themselves.