Paul Wallbank – Brilliant Communications

Tag: sales

  • Fleeing the group buying market

    Fleeing the group buying market

    As Apple becomes the highest capitalised stock in US market history, former daily deals site and market darling Groupon continues to sink into misery.

    Groupon led the group buying mania of 2011 and its stock market float in November of that year valued the business at 13 billion dollars, ten months later the business has a capitalisation of three billion, wiping out three quarters of its IPO shareholders’ investment.

    To make matters worse for the daily deals site the New York Times features a story looking at deal fatigue, where customers tire of the daily emails offering discounted cafe meals or personal training while businesses find the deals just aren’t worth the trouble.

    “I pretty much had to take a loan out to cover the loss, or we would have probably had to close,” the Times quotes Dyer Price, owner of Muddy’s Coffehouse in Portland, Oregon. “We will never, ever do it again”

    In a straw poll, the Times correspondent visited neighbouring businesses who had similar stories.

    The common factor with all the business horror stories surrounding group buying or deal of the day sites is high pressure sales tactics that blind the merchant to the downsides of these offers.

    For these services, it’s essential to move through as many deals as possible so salespeople are driven to sign up as many merchants as possible. When you put pressure on sales teams, they tend to behave in ways that aren’t always good for customers.

    Most of the customers Groupon attracts – or those of other deal of the day sites – are price sensitive and fussy. Having demanded their deal, most of these customers are not coming back so it may well be that daily deals are the most expensive, disruptive and pointless marketing channel ever invented.

    The results of the high pressure tactics are shown in a Venture Beat story which claims Groupon is now threatening to sue unhappy merchants as payments slow and the daily deals struggle to attract customers.

    What was always misunderstood during the group buying mania was that Deal Of The Day sites weren’t really technology plays – they were reliant on good sales teams driving deals. The technology being used was incidental to the core business concept.

    In this respect, services like Groupon had more in common with the Yellow Pages or multi-level marketing schemes. It was about salespeople delivering orders and taking a percentage off the top.  To compare Groupon with Google, Facebook or any tech start up was really missing the point.

    This isn’t to say that group buying or deals of the day services don’t have a role in business. For retailers clearing inventory, hotels working around quiet periods or new businesses wanting to get attention in a crowded marketplace, there’s an argument for offering a deal on one of these sites.

    For most though it was an expensive and pointless exercise that attracted the picky, price sensitive customers that most business would avoid rather than encourage. That’s the harsh lesson learned by many of the businesses who fell Groupon’s fast talking salesteams.

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  • Overselling technology

    Overselling technology

    “We’d like to allow remote band members – say a violinist in the Australian outback – be able to participate in an orchestra as if they were there. We hope the NBN will be able to do this.”

    When the band organiser said this at a business roundtable all the technologists, myself included, choked.

    There are many things the Australian National Broadband Network will deliver but the ability to teleport a violinist from the outback to downtown Sydney or Melbourne isn’t one of them.

    One of the problems with technology is we tend to oversell the immediate effects; as Bill Gates famously said “The impact of all new technologies is overestimated in the short term but under estimated in the long term.”

    Because we tend to sell the immediate sizzle, customers are disappointed when our promises don’t eventuate. In the decade it takes to win them back, those initial benefits we didn’t deliver in six months have become commonplace.

    This is probably one of the reasons why businesses are reluctant to invest in new technology or online services; they’ve heard the promises before and they don’t trust what they can hear.

    In the late 1990s businesses spent tens of thousands – sometimes millions – establishing websites that didn’t work. Those financial scars still hurt when they hear talk, some of them are still paying off those sites. So it’s barely surprising they are reluctant to return to a sector that has now matured.

    Perhaps it’s best to underpromise; instead of cloud computer vendors committing themselves to 80% savings and social media experts promising millions of customers from their new viral video, it may be better to be more realistic with the expectations.

    Customers have become deaf to wonderful promises, they are expecting us to deliver. Promising the world is no longer a business strategy.

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  • Channel blues

    Channel blues

    “We do the pre-sales work then they come along and steal the customers. It’s wrong, just wrong” growled the sales manager of an IT integrator while talking about one of the leading cloud computing services.

    The business model of systems integrators is to be a company’s, or home’s, trusted advisor on IT and make money from charging for their services and the profit in selling software and equipment.

    In the last few years that model has become tough – the collapsing price of hardware has made the profits on selling systems leaner while the increased life of systems has meant the big lucrative upgrades have become scarcer.

    At the same time services have become less lucrative as more participants have entered the market, many using offshored cheap labour to provide remote support. It hasn’t helped that computers have become vastly more reliable, particularly since Microsoft have largely solved Windows’ gaping security holes.

    The icing on the cake has been the end of boxed software and corporate licenses. These were extremely profitable for the systems integrator – a big sale of Microsoft Office or Oracle licenses to a government department could see an IT salesperson pay for a holiday home or cover the kids’ school and college fees.

    Cloud computing has largely been the driver of all of these factors’ decline and now it is really hurting those integrators and their salesfolk who were used to a very profitable existence.

    While that’s good news for computer consumers – and even better news for hapless shareholder and taxpayers who’ve been largely dudded by big IT sales pitches to gullible directors and ministers – it does beg the question of how customers now get advice and support.

    Largely cloud based services rely upon customer self service and many of the providers would struggle to include user support in their list of core competencies.

    There’s a business model there for systems integrators, but it’s difficult to see how many those used to fat profits in the past can, or will, adapt to the new environment.

    An interesting side effect of this change is how it affects companies like Microsoft where their channel partners – largely those big and small systems integrators – are one of the most important distribution networks for their products and probably their best defense against competitors like Google and Apple. That strength is being steadily eroded.

    It’s tempting to think that change affects just “old” industries like retail, publishing or car manufacturing; in reality it affects all sectors and sometimes the most modern might be hurt more than the established players.

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  • Creepy business

    Creepy business

    In Entrepreneur magazine, writer Alina Tugend suggests we forget networking and become connectors and gives the reader some ideas on how to build connections.

    One of the suggestions is, quite reasonably, to eschew networking events and join organisations you have a real interests in, like a sporting club.

    Alina quotes Keith Ferrazzi, author of Never Eat Alone, who says he has never been to an official networking event.

    “I have a friend who is the executive vice president of a large bank in Charlotte,” he writes in his book. “His networking hotspot is, of all places, the YMCA. He tells me that at 5 and 6 in the morning, the place is buzzing with exercise fanatics like himself getting in a workout before they go to the office. He scouts the place for entrepreneurs, current customers and prospects.”

    Prowl gym locker rooms for business prospects? Sounds a bit creepy and you may end up with not quite the connections you expected.

    I guess we could call it the Village People model of business development.

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  • Closed for business

    Closed for business

    This post originally appeared in Smart Company.

    Many industries hoped this Christmas was going to be their saviour – across the country businesses in the retail, tourism, real estate and many other service sectors hoped they’d see an upbeat end to a tough year.

    When you’re doing it tough you don’t turn customers away, yet thousands of businesses did that over the Christmas and New Year break by not updating their website to reflect their holiday trading hours.

    Almost every business I encountered over the break had little – if any – information about their Christmas trading hours. In holiday towns where visitors are unfamiliar with the local businesses many cafes, restaurants and service businesses didn’t have a website or a local listing despite customers searching for them on iPads and smartphones.

    Smart Company’s sister site Property Observer discussed this problem in the real estate industry where tenants were being left with problems over Christmas because there are no emergency contact numbers shown on websites.

    What’s even more amazing about real estate agents in holiday areas is many pack up for a week or two and miss possible vacation rentals or even sales to enthusiastic out of towners. Who would have thought real estate agents would let commissions pass them by?

    For me, I found information lacking on sites for both small and big businesses. To check the opening hours of Myer stores for instance required downloading a PDF file, Australia’s biggest retailer surely can spare a few hours of a junior’s time to updating the opening hours in their already inadequate store finder.

    Similarly the City of Sydney fell down on their swimming pools, with their fabulous Victoria Park and Boy Charlton complexes both showing the wrong opening hours. This customer took his business to Leichhardt and North Sydney instead.

    Most of the local shops did poorly as well – few had any mention of opening hours at all let alone Christmas trading times. Those who did open probably missed business because people assumed they were closed or found another place online.

    Not updating a website would have made sense ten years ago when even the smallest change meant a fat bill from your web designer. Today online publishing tools like WordPress and Drupal mean there is no reason for you or your staff not to log on and make minor changes like revised hours or holiday specials.

    If you still fear a fat bill each time you ask for a change to the website then it’s time to sit your designer down and discuss making some changes to the way your site works – not to mention some strong words about your billing arrangements.

    Having up to date content isn’t just good for helping your customers, it also adds credibility to search engines like Google and Microsoft Bing which like sites that are regularly updated.

    Almost every business has something to say during the year, whether it’s a new product line, welcoming a new staff member or having a special offer. There are also seasonal factors like Christmas, back-to-school, end of financial year and whole range of annual events that affect your industry.

    The beauty of the web right now is that we aren’t constrained in what we want to say about our businesses, so next Christmas let your customers know great you are and which days and times you open.

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