Monday, December 31, 2007 by Lincoln Murphy
I'm not going to attempt to predict the future, but I believe 2008 will be the year of the Small Vertical (intra-vertical focused) and Niche Horizontal (spanning only a few, related verticals) SaaS ISV. The headline producing SaaS ventures in 2007 were the big players, with horizontal offerings. These were Salesforce.com (CRM), Business Objects (BI), and NetSuite (Office Productivity). Just as in the deployed world, "big" horizontal applications are the same ones that have traditionally received the press. And 2008 will not be much different. Small ISVs that until now have remained in the "deployed" software and traditional licensing game will begin to break out. I predict that 2008 will see the largest influx of vertically focused and niche horizontal SaaS offerings to the market to date. The future of SaaS (the long tail, if you will) is the Small Vertical and Niche Horizontal products and tools. These will be new tools, tools ported from "deployed" solutions, and internal tools utilized by technology services organizations they would like to productize.The problems I wrote about in my articles in early 2007 regarding selling SaaS solutions to the Enterprise for the most part still hold true. Sure, the climate is changing, but many of the objections are still being faced. These challenges are actually a good thing for well-prepared ISVs as they provide barriers to entry for those SaaS vendors that are not ready to overcome them. In 2008, these barriers will become an even larger part of the story as more and more small ISVs attempt to sell SaaS products to F1000 companies. Large, well-funded, and well-connected, SaaS vendors had to overcome these same hurdles to get to where they are, but had the resources to wait out the market; small ISVs do not have that luxury.Since I work with companies to bring their vertically-focused and niche horizontal on-demand software and technology service products to market, 2008 will present some interesting challenges and opportunities.Happy New Year!Labels: business, marketing, SaaS, software, technology
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Thursday, December 6, 2007 by Lincoln Murphy
 Brand Autopsy has an incredible series on what it is going to take to save Starbucks. While Starbucks is far from heading into the deadpool, its same store traffic has dropped for the first time in history. While the folks over at Brand Autopsy have some wonderful ideas, and I can see where Seni Thomas is going with his new media ideas, but I say it is even simpler than all of that. In fact, it is simpler than what Starbucks is doing with traditional advertising. Are you ready for this? They should make their wi-fi free. That is all.You see, when their store traffic was high, they didn't need, or even want, people hanging out, leeching off the free Internet, even if they might buy an extra cup of coffee. The customer turnover was the key to the model; pushing people through like cattle. They simply had plenty of foot traffic and many of their stores were packed. Those that really just wanted a place to hang out, drink coffee, and work on the web found the local coffee shops, and some national chains, more than accommodating. And, frankly, for people still going to Starbucks for business meetings, many find a signal from an adjacent apartment complex or other business or use a mobile data card and connect that way. Starbucks lost a large share of people, not because the people found a better coffee product, but because the thing that was once a luxury, a free Internet connection, was now at the core of their decision on where to go for coffee. So, the net effect of providing free wi-fi is that you instantly get back the folks that would prefer Starbucks but choose the local coffee shop that has the free wi-fi. This, by the way, will also cause the local coffee shops to have to step up to compete on different level, rather than just offering something Starbucks doesn’t. Additionally, by providing a web-interface to gain access to the free wi-fi system that displays terms of service and disclaimers, Starbucks can also advertise to a captive audience (similar to Panera). While I wouldn't suggest selling ads to third-parties (or worse using contextual advertising from Google) on the login-portal outright, as that might dilute the brand, they could certainly drive users to partner online services, such as their iTunes tie-in. As an additional value-add, and revenue driver, Starbucks could present coupons that the customer can send to their mobile device and show the cashier for discounts on non-standard items, such as takeaways like mugs, packaged coffee, etc. No need to discount drinks, they'll already buy those at full price, but this would drive revenues through ancillary items and push slow movers in a big way. Additionally, I would provide a pay service that offers a better QoS guarantee for people that still want that, but they would still get the advertising and coupons because it is a value-add, not just a nuisance.So, in my estimation, that 1% traffic drop could be made up, and revenues increased, by opening up their wi-fi and marketing their retail products through that channel. No need to spend any money advertising through traditional channels, no need to develop new innovative drinks, no need to glue cups to cars, etc. I don’t think this is the end-all, be-all of what they need to do, but it is certainly a start. I do like the Brand Autopsy suggestion of making the stores smell more like coffee, however. Image via.
Labels: business, coffee, ideas, marketing, retail, starbucks
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Tuesday, November 27, 2007 by Lincoln Murphy
 Ewan MacLeod, who runs SMS Text News, an all-things-mobile blog that is updated multiple times every day, agreed to help me out. Ewan posted some questions I sent in order to solicit feedback from his audience. The question pertains to mobile (SMS) network aggregators and large ASPs and whether they take an active role in the success of their lower-tier partners.
Here is a link to the post and I will leave it there. If you have any answers for me, please post them there. Feel free to contact me directly, as well, but I want to make sure Ewan gets the traffic and that everyone can share in the resulting responses.
Image viaLabels: business, channel, management, marketing, mobile, sms
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Thursday, October 18, 2007 by Lincoln Murphy
 You probably capture a lot of data in your web or SaaS app, but how often do you mine that data for Actionable Business Intelligence; information you can use to solve business problems, such as slumping revenue, high client turnover, etc? It might be time to stop everything else you’re doing and go write some queries. Below are some scenarios that I helped a start-up solve recently with information right at their fingertips.
If you have paying customers who aren’t using your system, find out why they aren’t actively using the system and fix it.
Ask them what you can do to make their experience better, what problems they are having, etc. If you do not, when their contract is up, or they get their next bill, there is a high probability they will no longer be paying customers. It is much easier and cheaper to keep these customers than it is to go find new ones.
If the majority of your system’s usage is from non-premium users, maybe you are giving away too much.
Contact those free users who are actively using the system and find out why they haven’t upgraded. If the answer is “I don’t need those premium features” then you are giving away too much. You can either reduce the feature set on the free version or introduce advertising within the free product.
The former might cause some problems with your users, but the reality is it has to be done. Tell them you are scaling back on the feature set in the free version but you would be happy to upgrade them to the premium version at a discount.The latter can be implemented without making existing users too upset and would be one of the reasons someone would upgrade to the premium version; to get rid of those pesky ads. Remember, however, that if your user base is small, ads might not make up for the lost premium revenue.If you have multiple people from the same company using your service, perhaps you could leverage that into a corporate account.
Those users may not even know the others in their office are using it. If you don’t feel you have enough users at that company for them to consider a corporate account, leverage the few users you do have to spread the word internally… give them an incentive to spread the word (free month for every new user, etc.). This will quickly get you to that magical number you’ve conjured up that would give you confidence to sell to corporate. Alternatively, you might find that you have a large, un-related user base in certain cities, and that might be a great place to go for an early-adopter round table (with free pizza!) to get their feedback and to get them to spread the word for you.If the usage of your system is very small or the majority of the users are not paying, perhaps you can use that data to justify reducing your overhead.
Do you need all that hardware at the co-lo if you are only getting 70 hits per day or do you really care if the freeloaders have to wait a second longer for processing to occur? This is difficult for tech-founders who might have a geek crush on their servers but could be enough to save a company with low revenues.Finally, whether you are mining data or not, make sure to constantly solicit feedback from your early-adopter customers. It reminds them, and you, who exactly you are building your web service for.Image via. Labels: actionable, application, business, data, ideas, intelligence, marketing, mining, SaaS, technology, web
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Thursday, October 11, 2007 by Lincoln Murphy
 Sales = ABC (Always Be Closing)
Business Development = ABO (Always Be Opening)The focus of business development is not to close as many sales as possible in the shortest time possible (no quotas here), but to build as many relationships as possible over time. In business development you are looking to open doors to create opportunity for the sales team to close sales. These doors must be open or the sales team has less chance. Often, these relationships take years to nurture and are more than worth the trouble.I thought I came up with this, but I found this from the Book Yourself Solid blog that mentions this different mindset. If you search for ABC, on the other hand, you will find a million articles.Door kicker via Labels: business, development, marketing, networking, sales
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Wednesday, September 26, 2007 by Lincoln Murphy
 John Ludwig posted a link to a presentation by Amy Jo Kim at ShuffleBrain titled "Putting the Fun in Functional – Applying game mechanics to functional software". I'm not even sure why I clicked on it, I'm not a gamer, but I decided to check it out. I was pleasantly surprised with what I found.While the entire presentation is great, the best lesson of all, IMHO, comes on slides 46 & 47: "Customization creates investment and creates barriers to exit". This is huge and it was nice to see someone lay it out like that. We are always talking about lowering barriers to entry, but it is rare to see someone write about barriers to exit. When building a product, it is difficult to constantly play "let's out-feature the competition". While you must always have new or updated features in the pipeline (ideally developed and ready to launch in a competitive response), the reality is a better product will always come along and people will want to switch (its human nature). Your user, I'm sorry to say, will sign-up for an account (if it's free), look around, go back to the service they currently use, and, if you've done your job, determine that it would simply be too much work to switch.As much as I have issues with the current crop of social networks, the reality is, they have this down pat. The nature of a "social network" implies that I am actively connecting with other people, and therefore am making an implicit investment. The problem for non-social networks is that you have to work at building this type of user investment. Take the image hosting service Flickr. They have built in a number of features that, to take full advantage of the system, require investment. The user can look at other photo-sharing sites that come online, and probably will, but as soon as they look at the work it will take to move their images and the associated meta-data, this becomes quite daunting and they will stick with Flickr, thank you very much.Image viaLabels: business, design, experience, functional, networking, product, social, software, technology, user
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Thursday, March 1, 2007 by Lincoln Murphy
Is competition bad? This is always a hotly debated topic. How many entrepreneurs, when asked about competition for their new venture, respond "there is none?"Not only does that response make the entrepreneur look foolish by saying that there is no competition, but that lack of competition does two things:- It shows that the entrepreneur did not do his homework (going back to "foolish")
- It un-validates the market
First of all, it really does make the entrepreneur look foolish. There is no other product or service, anywhere, that does what you are trying to do? Really? At all? Okay, so they may not be doing exactly what you are, down to the last detail, but are there other products or services that come close? How about substitutes? Even the status quo is the competition. An entrepreneur must think of every potential competitor, even if the only competition is "no action".Assuming that there is not even a substitute product (other than doing nothing), by stating that no one is playing in your field could be a turn off to investors. Why is no one playing in this field? Could it be that there is no economic reason to enter the market? Is there no money to be made? Like selling ice to Eskimos? (With global warming, this might just be a viable market now!) Perhaps the niche is simply to tight. What if you expand a bit, do you now see competition? But what if... just what if you did find that one thing that no one has ever thought of before and there really is no competition (except there always is the status quo), then you better be able to prove that no person has thought of it before and you really are the first. This is not impossible, and I hope that you do find that needle in a haystack, but it is a bit improbable these days. If it is true though, you must be able to prove that there really is an economic model behind it.The bottom line is, if you enter a market with no competition, you have your work cut out for you, both in finding investors and customers. The investors won't believe you have a market and the customers don't know there is a pain you have a solution for. Competition is good; a fragmented market with lots of small competitors is even better. Look, everyone is jumping in, but no one has significant market share! Whoo Hoo!In case you wish to keep track of your competitors, my buddy Andrew Holt started a site last year, which I use extensively, called Competitious. It is a great competitive intelligence site, especially for web companies. It aggregates data from around the web on both you and your competitors, keeps up with your buzz on the blogosphere, etc. Go read their front page and learn all about what they do. Fantastic site, and free!- LincolnLabels: business, competition, marketing
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I help companies bring their Software-as-a-Service (SaaS) and Web applications to market by leveraging the Morph Application Platform and Morph AppSpaces, the first Platform-as-a-Service (PaaS) for Ruby on Rails.
I am located in Dallas, Texas. Contact me via email.
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