Paul Wallbank – Brilliant Communications

Category: business advice

  • The year of the cloud

    The year of the cloud

    This post originally appeared in Smart Company on December 23, 2011.

    I was asked last week to join Stilgherrian and Jeff Waugh on ZDNet’s Patch Monday reviewing the year that was in technology. One of the things that came out of the session was much of what happened in the tech world over the last year was really a continuation of 2010’s trends.

    That’s certainly true and the biggest buzzword in business tech for the last two years has been “the cloud”.

    Over the last year we’ve seen a lot more providers getting on the cloud bandwagon with Microsoft responding to the Google Docs threat with their Office 365 product, MYOB launching Live Accounts, to respond to threats like Xero Accounting Software and Saasu and a whole range of vendors proclaiming they are ditching the desktop and moving onto the web.

    Despite the hype businesses are slow to respond as they evaluate the various risks with moving to web-based services. Partly this is due to suspicion of the more outrageous claims such as “saving 80% of your costs by going onto the cloud” that have been peddled by some vendors.

    A lot of that suspicion is fair enough, too. Many business owners – along with CEOs and government ministers – have been burned over the years by IT salespeople claiming big savings available if the gadget or software of the day is purchased.

    Unlike corporate leaders and government minsters, the managers and owners of smaller businesses tend to learn from their mistakes and so they are waiting to see if the cloud services really deliver.

    Eventually businesses will move a lot of their computing applications to the cloud as the cost-benefit equation is better for most services than running it in your own office as it eliminates the overheads of buying computer hardware and hiring some geeks to look after the things.

    Given the real advantages of cloud services – not just in terms of cost savings but also in business flexibility, productivity, security and reliability – it’s worthwhile using the quiet January period to have a look at where your organisation can benefit from moving online.

    Some of the other buzzwords like social media, collaboration and site optimisation are worth having a look at too. The holidays are an opportunity to see where these can be used better in your business.

    One thing is for sure – next year you’ll be hearing more about cloud computing as vendors are gearing up for some big marketing campaigns next year. So knowing what you want for your business may well pay dividends.

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  • How group buying can work for a business

    How group buying can work for a business

    Online deal finding site The Dealmix has an excellent blog post analysing how daily deals can work for a business.

    As the Dealmix points out, “daily deals can either hurt or help small businesses, depending on how they’re structured.”

    In figuring out whether a deal will work, Dealmix breaks a group buying deal into four elements; expiration, quantity, terms and price;

    Pricing the deal

    Of all the areas, the pricing is the most critical. Get this wrong and you won’t achieve your objectives and it could be very quickly drive you out of business.

    The Dealmix recommends two ways of pricing an offer – by making a net profit on the deal or structuring it a way that the customer’s total spend  offsets the cost of the offer.

    Using Average Customer Spend, or ACS, to estimate how much a customer will spend is problematic with specials and group buying deals as the takers are not going to be your average customers.

    It’s likely group buying customers are going to be far less open with their wallets than your regulars. Trying to upsell price conscious is probably what brings cafes and restaurants unstuck with many of these deals.

    Both methods rely on knowing the Cost Of Goods Sold and the Average Customer Spend. Notable in the stories of group buying disasters is just how many business owners don’t understand these basics.

    If you don’t know what the total cost is to your business in providing the goods or services, you should be talking to an accountant before going near these deals.

    Also keep in mind the group buying service is going to take their cut which will be between 15 and 100% depending on the size and nature of the deal. For many businesses the commission is a deal breaker.

    Quantity

    The biggest complaint from customers about group buying offers is the deals are booked out for months – it’s also how service businesses find themselves overwhelmed by the response to a keenly priced offer.

    Again, before launching a group buying offer, understand the spare capacity of your business and ensure there is a maximum limit to the number of deals available – as The Dealmix points out, a sold out deal is a great marketing tool.

    Terms

    Conditions are probably the trickiest; put in too many gotchas and you’ll scare customers away or find yourself fighting with the 90% of clients who buy the deal without reading the T&Cs.

    You can guarantee some of those fights will end up being public and it’s unlikely your business will win the public relations battle. This is not your business objective.

    Make sure key terms like what days the deal is available on, maximum limits, types of service are reasonable and clearly defined at the time of the offer.

    Expiration

    When the deal expires is the key condition, it’s madness offering deals that never expires as they can come back to haunt you for years and it may even affect the resale value of your business.

    The Dealmix suggests not restricting it to a month as you’ll be overwhelmed with customers while leaving it too long will dilute the value and any measurements.

    Ideally the deal will last three to six months, which is another reason for understanding your business’ capacity at various times of the year.

    Timing the expiry is important to, as The Dealmix suggests, the deal shouldn’t finish on a busy day and equally you should consider when your business is the quietest. If things are slow during school holidays, summer or Christmas then that might be the time you want to have the last minute rush of redemptions happening.

    Business Planning

    Probably the most important aspect of a group buying deal is how does it fit into your business objectives. Are you intending to build a customer base, contact list, pubicise your business, clear stock or give sales a boost? Those objectives are going to determine how you structure the offer.

    As The Dealmix’s diagram shows, group buying deals are complex and the merchant has to give some thought on getting the offer right. Those business who do get the mix right can do very well from a well thought out online offer.

    Like all business tools, group buying sites can be really useful when done well. The key is understanding what you’re doing with that tool.

    We discuss group buying and building your own campaign in e-business, Seven Steps to Online Success. If you need help or advice in building an offer, Netsmarts can help you.

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  • Rules

    Rules

    Three recent examples of rules from web based organisations.

    Example 1

    “Your article does not adhere to the following Editorial Guidelines:

    Issue 1 (Section 3.f.i.c)
    http://EzineArticles.com/editorial-guidelines/guideline/3f#i-c

    Issue 2 (Section 3.f.i.a)
    http://EzineArticles.com/editorial-guidelines/guideline/3f#i-a

    Example 2

    Hi,

    Please don’t include a URL in the question text. Links should go in question details, preferably labelled.

    Quora content team

    Example 3

    Account suspended. Make sure your listings meet the quality guidelines.

    Why rules can be a problem

    Rules are necessary in any society though if you’re trying to build a community one sure way of killing it is to welcome new users with a wall of rules and a bunch of “leaders” inflexibly enforcing them.

    An interesting thing all three of the above services – Quora, eZineArticles and Google Places – have in common is they need free content from contributors to build their communities and realise their business plans.

    It’s one thing to give power hungry moderators and administrators control when you’re in a position of power, but it’s silly when you need people more than they need you.

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  • All hail the vacuum tube

    All hail the vacuum tube

    In 1931, the New York Times celebrated its 80th anniversary and invited some of the era’s greatest minds to speculate on what the world would like in the next 80 years.

    80 years on, Business Insider looked at those predictions and few interesting things stood out that show us how, even when we are right, things don’t turn out the way we expect.

    Sir Arthur Keith – a doctor, scientist and prodigious writer who was one of the pioneers in popularising science – correctly forecast that medicine would become increasing specialised, predicting “I tremble when I think what its (The New York Times’) readers will find on their doorsteps every Sunday morning.”

    Those very advances have contributed to the slimming down of the New York Times and the that many readers don’t collect it from their doorstep each morning, threatening the very future of the organisation.

    William Ogburn was the prominent sociologist of the day, and predicted “Humanity’s most versatile servant will be the electron tube” and that “labor displacement will proceed even to automatic factories.” All of which was true.

    The “electron tube” – or vacuum tube – is an interesting allusion to the prevailing technology of the day. Vacuum tubes were changing the world with the first wave of electronics and digitalisation.

    Morse Code’s system of dots and dashes could be replaced with Zeros and Ones that allowed the technologies to be applied to radio sets, machinery and telephones.

    The real benefits of these technologies had to wait until the vacuum tube was replaced with the transistor in the 1970s. Transistors were even more portable and as integrated circuit and manufacturing processes evolve, we saw “Moore’s Law” develop where computer power doubles every eighteen months.

    Both William Obburn and Sir Arthur Keith were proved right, but not quite in the way anyone could have foreseen at the time.

    Which shows how fraught predictions are; even if we are correct how things turn out might not be quite what we expect. It’s worthwhile considering this when we look at how trends and innovations may affect our businesses.

    The Business Insider article on the original predictions is worth reading, along with its sister article on how the world will look in 2050.

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  • Lords of the digital manor

    Lords of the digital manor

    There is something fundamentally wrong with AOL’s media business states a Business Insider headline.

    What is fundamentally wrong is quite basic to anyone who has owned or managed a business – money.

    The problems at AOL illustrate the deep flaws in the “digital sharecropper” business model of putting free or cheap content on the web to harvest online advertising.

    Lords of the digital manor

    Sites like Demand Media and Huffington Post can’t make money from content if too many staff expect to get paid. Chris Anderson illustrated this in a rebuttal to Malcolm Gladwell where he examined the economics of his GeekDad blog and the work of its manager, Ken;

    So here’s the calculus:

    • Wired.com makes good money selling ads on GeekDad (it’s very popular with advertisers)
    • Ken gets a nominal retainer, but has also managed to parlay GeekDad into a book deal and a lifelong dream of being a writer
    • The other contributors largely write for free, although if one of their posts becomes insanely popular they’ll get a few bucks. None of them are doing it for the money, but instead for the fun, audience and satisfaction of writing about something they love and getting read by a lot of people.

    It’s almost touching to picture the modern day digital serf touching his flat cap and murmuring “thank you m’lud” on receiving a ha’penny from the lord of the digital manor before scampering back to working on becoming a well read, but unpaid writer.

    We don’t pay writers

    The business model of the Geek Dad blog or the Huffington Post relies upon these unpaid writers donating their work and time –the digital sharecroppers as described by Jeff Attwood.

    Low paid or free labour is essential to the success of these site, when the bulk of advertising income goes straight to the proprietors the digital aristocrats – Lord Chris of Wired or Duchess Arianna – can live well.

    The business model falls apart when management starts taking a cut of the profits; install a highly paid CEO and management team with their squadrons of Executive Vice Presidents or Group General Managers with the Medici-esque perks and entitlements these folk demand and the profits disappear.

    AOL’s problem is it has too many highly paid managers extracting wealth from the company’s cashflow.

    This is exactly the same problem print and television media empires have, once the rich rivers of gold allowed them to build up well paid management castes that are now crippling the businesses as revenues can’t support their financial burden.

    Paying for digital media’s future

    Over time, online media revenues are improving. As Morgan Stanley analyst Mary Meeker pointed out in 2010 that U.S. consumers spend 28 percent of their media time online, yet in 2010 only 13 percent of ad spending goes to the Internet. As advertisers follow consumers, publishing on the web will become more profitable.

    The risk for big media organisations is their money will run out before the digital renaissance arrives and when it does, they may have squandered their natural advantages by shedding quality journalists, experienced sub-editors and good editors in an effort to prop up executive bonuses.

    AOL’s management problem is part of a much bigger problem across markets and industries, we can call it managerialism – there are too many highly paid managers getting in the way of the writers, engineers, scientists, artists and tradesman who add real value to their organisations.

    Strangely, it may be Chris Anderson’s “free” model that kills the managerial culture as enterprises that can’t afford to pay product creators certainly won’t pay an Executive Vice President’s entitlements.

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