In 1999 Seth Godin wrote an incredible book called “Permission Marketing” (you can check out part of “Permission Marketing” for free at Amazon or could read the entire first four chapters if you e-mail me at damiandavilarojas@gmail.com,  and yes, I am authorized to forward the first three chapters of this book via e-mail, as long as I don’t make any profit out of it).  Seth is a truly great author and you should check him out.  He’s such a good author that he often gives out  part of his work for free (as in the case of “Permission Marketing”) or even complete books.

The concept of permission marketing is best exemplified by the smart use of e-mail.

Use of permission marketing from Skitch.com.

Recognize this little checkbox? Every time that you are interested in an online service or product and you need to register to be able to use it, the makers will ask you this question.  Do you want to hear from us? This little question is very powerful because you are already engaging in a conversation with your users.  You’re letting them know that you want to keep in touch with them and likewise you are asking them, if they are ok with it.

Now, I understand that you might challenge this proposition:  people are ok with an organization reaching out to them.  Well, consider this survey from eMarketer:

Do you notice the change in user trends about e-mail messages from companies from 2005 to 2008?  People care about these e-mails because 1) they are REGISTERED, 2) they checked the little “it’s ok to contact me” box during registration,  3) the e-mails that they are receiving are personal, relevant, and ANTICIPATED messages (the three pillars of Seth’s permission marketing), and 4) they can choose when and where to check these messages.

“It’s about me, it’s about what I’m interested right now, and it’s delivered in a format that I want to get it.” – Seth Godin (“All Marketers are Liars” presentation at Google, 8:41)

The beauty behind e-mail permission marketing is that people do not have to be interrupted, they choose when to review the information (if, at all).

However, any organization can mess up this priceless, golden permission that its users have provided by abusing this permission and turning its e-mail messages into impersonal, irrelevant and unanticipated.

In conclusion:

1. Provide your users a check-box during registration so they can decide whether or not to give you permission to contact them.
2. Make your e-mail messages personal (ask for feedback, provide various channels for communication, thank them for giving you a job), relevant (tell them about how you are making their experience better, tell them how other users got in touch with you and they made a difference in the new release) , and anticipated (bi-weekly, monthly).
3. Don’t abuse the permission your users they have given you: NEVER sell your e-mail list to other vendors, ALWAYS provide the option for 1-click, easy unsubscription, and ALWAYS respect if they decide to unsubscribe from your e-mail list.

Thank you for your time.  In the next post I will discuss about web metrics of permission marketing e-mail campaigns.

As you may have read in the About the author section, I am enrolled in the Master of Business Administration at the Shidler College of Business at Honolulu, HI.  A very common question that I get all the time is:  “so…what do you do?”  Well, one of the most common assignments that we get is to solve business problems given a specific context.  This context is usally found within Harvard Business School cases.

So how do you solve one?

Let’s give it a try!

Today we will use the idaconcpts way to solve the Collabrys, Inc. case from the Harvard Business School.  Unfortunately I cannot post the PDF file because I would infringe their copyrights.

According to the Harvard Business School, this is the scenario:

The CEO of a two-year-old start-up must now decide whether to become a technology provider or a service agency. In a time of enormous uncertainty about the viability of various business models for Internet-delivered services and products, Collabrys has survived the burst Internet bubble by partnering with brand-name large companies and by responding to market feedback. This case traces the company from its earliest days and its original value proposition to a point at which the two very different future strategies appear feasible. Originally funded by venture capital, the company has changed key personnel, experimented with different distribution and partnering schemes, developed some sophisticated intellectual property, and raised a second round of funding.

Here is my take on the Collabrys, Inc. case:

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I.    Situation Analysis

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Collabrys, Inc.’s situation is a textbook example straight out of the pages of Steven Gary Blank’s book The Four Steps to the Epiphany because of the company initial focus on the product development process rather than on the customer development process.  During the dot-com era, and some still today, Internet startups fail to understand that the most common source of failure for startups is a lack of customers and not a lack of product development.  Collabrys was good at managing its product development, but terrible at managing its customer development.  Let’s review what is wrong with the product development process as a business model:

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Steven G. Blank , 2003, The Customer Development Model: Sales, Marketing, and Business Development in a Startup. Power Point Presentation. Retrieved on 09/18/08 from http://www.stanford.edu/class/msande273/resources/Blank%20presentation%20101403.pdf

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The flowchart  above indicates the main problem with using the product development process as the cornerstone for an Internet startup is that it does neither generate customer demand nor sales until after a considerable amount of cash has been spent on building capacity and marketing campaigns.  Even Collabrys’s MVP manager, Villapando-Ibalio, found it difficult to explain the potential for BrandPrint to potential clients and Collabrys always encountered the question:  “What can I do with BrandPrint tomorrow that is different from what I do today?”  Obviously the company failed to solve an existing problem because it was still using the same outrageous sales projections from its written business plan from the financing rounds and it failed to understand that what it needed to do is to provide customers a solution for a problem that was critical for them and eating away their profits.  Collabrys’ sales deteriorated over time because it was not able to answer the following questions:

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1. What are their customer’s top problems?
2. Does Collabrys’ services concept solve these customer’s problems?
3. If Collabrys was to offer its services for free to its clients, will they still acquire them?
4. If Collabrys was to charge for these services, does it have a repeatable sales model?

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II.    Problem Definition

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Collabrys does not have a repeatable sales model because it failed to address its potential customers’ top problems, its customers did not agree that its current service offering added value, and its customers were not willing to pay for a service that did not offer a solution to their problems.  Collabrys did not have a proven sales roadmap previous to product concept development, did not understand the sales cycle of its customers, and did not have a set of orders that validated its sales roadmap.  In conclusion, Collabrys had a financial model that did not make sense.

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III.    Analysis of Alternatives

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Collabrys alternatives all aim to the customer development process:

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Steven G. Blank , 2003, The Customer Development Model: Sales, Marketing, and Business Development in a Startup. Power Point Presentation. Retrieved on 09/18/08 from http://www.stanford.edu/class/msande273/resources/Blank%20presentation%20101403.pdf

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Unfortunately for Collabrys, the company had already burnt a considerable amount of its funding to realize that it needed to validate a repeatable sales model before it could build a whole company around it.  The two alternatives were either for Collabrys:

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1.    to become an analytics software company

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or

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2.     to use the technology in-house, but as part of a service provision.

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Either of these solutions would have to provide a repeatable sales model to essential clients with these characteristics:

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•    Has a problem
•    Know they have a problem
•    Has been actively looking for a solution
•    Has put together a solution out of piece parts
•    Has or can acquire a budget

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Given the previous communications with clients, it was clear that Collabrys needed to establish a clear difference from other CRM applications in the mind of clients and that Collabrys should not spend time focusing on groups that did not have a clear idea of their problem, did not actively look for a solution (as opposed to explore options), and did not have access to a purchasing budget at all.

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IV.    Recommendations

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The second alternative, to use the technology in-house, but as part of a service provision. provides the right approach through the search of specific answers for the critical questions:  What are we selling? What are its benefits?  Who do we sell to?  At what price?  The creation of  the Tiger Team should have been the starting point for Collabrys and the cornerstone of its business model, because it focuses on the prescribed customer development process of Blank.  The process of contacting all existing partners and 35 potential clients to determine the budget of clients, necessary client interaction (e.g. sales cycle), existing competitors, and price ceiling of clients, would provide Collabrys with a clear idea whether clients are serious enough to buy a service that still needed some tweaking.  The Tiger Team process clearly addresses the customer discovery and customer validation sections of the customer development process, which in turn would allow the company to set realistic year-one objectives according to its market type, position the company and service, and create repeatable, sustainable demand.

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By focusing on being an agency that provides managed solutions for companies during their product launch an introduction and targeting the sales process to brand managers (instead of interactive marketing managers, market research people, or advertising agencies) the company will be able to make more efficient use of its resources and channel management and sales personnel to profitable activities.

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This option is less likely to lead to either an IPO or sale of the company, but it provides a clear spending plan, establishes that the current team is right for this stage of the company and provides a clear sales growth plan.  The company would now have the right mindset and tools to establish the goals for the next twelve months.   A main concern of this recommendation is whether or not existing competitors can replicate Collabrys service provision, because there is not enough information on the case to establish a valid conclusion.

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What do you think? : )

Note: If you are a current MBA student and are planning to use this as a reference, go ahead! But please include me in your references section.

First of all, it is important to point that it is not possible to see the Daily Unique Visitors graph of http://picasa.google.com using Google Trends. Also a big mahalo (thank you in Hawaiian!) to fellow Photo Lover, Katharine Osborne, for showing me Skitch. This great little image capturing & editing tool for Mac has made my blogging much easier.

Why Picasa?  Well, in my personal opinion, the 2 main players for desktop applications in photo organizing & sharing for Mac OS are:

• Google’s Picasa
• Apple’s iPhoto

Teaser: what are the differences between the 2 of them? : ) Coming soon!

Since it was not possible to look for the Daily Unique Visitors graph, I looked for the Search Volume Index of the term “picasa”.  Here’s what you get:

The letters correspond to relevant news, here’s the list:

The biggest spike, highlighted with the letter A, happened after the release of Picasa 2.0 by Google, back in 2005 which included a series of improvements such as picture captioning and blog-posting ability (for the whole list check here).  A spike in the search volume of the term “picasa” is expected around the date of a new release.  This is supported by event F, because on September 3, 2008, Picasa 3.0 was released.

What was really interesting is that the United States does not appear among the top 10 regions where the term “picasa” is searched for!!

Is this possible? Is it an error? Let’s analyze the following:

Notice that there appears no U.S. city on the top 10 cities that search for “picasa” and that English does not appear on the top 10 languages!

This finding is very interesting so I adjusted the upper right setting for region from:

to:

and I found that English is the 3rd language of the region when searching for “picasa”!

Conclusions:

1. The term “picasa” is searched more around the release date of a new version of Picasa.
2. Google’s Picasa has a stronger presence abroad than in the United States.
3. Google MUST consider that the majority of its users come from outside of the U.S., so web sites version in different languages might be needed to support its users.  This situation is not strange, the same thing happened to Flickr.com.

Why are these conclusions relevant?

Consider the following for Apple’s iPhoto, when looking for the term “iphoto”, this is what I found:

Notice that:

• United States is the second region where most searches happen.
• 8 of the top 10 cities, where the searches happened, are inside of the U.S.
• English is the top language of the queries.

This illustrates the difference in strategies between Apple’s iPhoto and Google’s Picasa.

What do you think?

• According to Gladwell, the Power of context infers that epidemics are sensitive to the conditions and circumstances of the times and places in which they occur .  This is a main idea within lateral marketing, because it involves an important transformation of a product or service:  there must be the radical addition of a use, situation, need or target that had not existed ever before (http://www.gladwell.com/tippingpoint/guide/chapter4.html).

Malcolm Gladwell. Photo Credit: Brooke Williams.

• While vertical marketing consists of modulations within a given market, lateral marketing restructures markets by creating a new category through new uses, situations, or targets with the appropriate changes in a product (Lateral Marketing, 2003, Kotler and Trias de Bes, p. 75).  I found it really interesting that Kotler and Trias de Bes state that lateral marketing is a complement of vertical marketing, because lateral marketing works in the areas where vertical marketing does not.  Throughout the first four chapters of Lateral Marketing, one gets the idea that lateral marketing should completely replace vertical marketing.  In chapter 5, the authors make it very clear that both types of marketing are complementary and necessary.
  

  Philip Kotler. Photo Credit: www.imm.org.my/My%20Webs/myweb3/images/kotler.jpg

Fernando Trias de Bes. Photo Credit: Ana Jimenez.

• One generally accepted assumption for Gladwell, Kotler, Trias de Bes is that all kinds of high-tech products fail, never making it beyond the Early Adopters, because companies fail to transform an idea that makes perfect sense to an Early Adopter to one that makes perfect sense to a member of the Early Majority (http://www.gladwell.com/tippingpoint/guide/chapter6.html).  Most high-tech products fall under the lateral marketing area and require a greater effort on consumer education.  Consumers can assimilate and adopt more readily vertical marketing innovations because they fall within their comfort zones.
• The last statement ties in directly with the “Stickiness Factor”.  There are small but critical adjustments in how we need to present ideas to the average individual, so that we can overcome the weaknesses from these ideas and make what we have to say memorable.
• An example: Both Investopedia.com and Fool.com seek to educate all investors, from novice to advanced, because they believe that the key to success in investment banking is the access to information and that is why, online investing education sites offer a variety of glossaries, investing tutorials, articles, tools to calculate return on investments and investment simulators.  The main objective is to have a better understanding of how the financial market operates so that individuals can maximize their potential profit and minimize their risks by becoming aware of potential hazards in investing.  This is all nice and fine, but it completely misses the other two rules to start an epidemic, “the stickiness factor” and “the power of context”.  Both educational sites miss “a simple way to package information that, under the right circumstances, can make it irresistible” (Gladwell, 2002, p. 132).

Screenshot of Investopedia.com in January 2005.

• Throughout many years these two websites failed to become “epidemic” because they failed to: identify the level of expertise of the investor; create as many hyperlinks as possible; recognize that most users on online education websites already hold some education about investments; put everything into the context of the investment industry (because the goal of online investing education is authentic learning); and provide training material for the certificates, licenses and other forms of legitimization that the investment industry requires.

Another screenshot of Investopedia.com in January 2005.

• A great area of opportunity for the investing education sector was the gap between what takes place in educational practices and what takes place in current work practices, and this creates an educational gap.  Gladwell (2002) refers to this as the “Power of context”.  Both Fool.com and Investopedia.com realized that even though it was necessary to expose the novice learner to the industry vocabulary, the two main goals of an online investing education website should be (1) putting vocabulary in context and (2) reinforcing the trust of the community in its non-material elements.  This is called authentic learning and it specifies performance standards in a profession. Therefore, it was necessary to develop more articles and tutorials about industry practices and specific industry skills like due diligence, portfolio management and professional certification.

Partial screenshot of Investopedia.com in October 2008.

• So, did these sites follow this advice?

Daily unique visitors of Fool.com (blue) and Investopedia.com (red) according to Google Trends.

• For many years, Fool.com had a clear advantage over Investopedia.com.  However, the graph above clearly shows that Fool.com has lost visitors, while Investopedia.com has a steady upwards trend of daily unique visitors.  To minimize the asymmetry of information in the areas of Finance and Investing, there should an increase in the teaching-learning practices that use the concept of a community of practice to diminish that asymmetry.  The investing sector is a community of practice that uses authentic learning to develop learning activities that are similar to those that take place in the current practice of finance and investing, which it is assumed that he or she wants to take part of later in the future.  There have been important advances in the field on online investing education but there is yet much to be done.

]]> http://idaconcpts.com/2008/10/01/lateral-marketing-and-the-tipping-point-part-3-investopediacom-and-foolcom/feed/ 1 http://idaconcpts.com/2008/09/24/lateral-marketing-and-the-tipping-point-part-2/?utm_source=rss&utm_medium=rss&utm_campaign=lateral-marketing-and-the-tipping-point-part-2 http://idaconcpts.com/2008/09/24/lateral-marketing-and-the-tipping-point-part-2/#comments Wed, 24 Sep 2008 20:40:53 +0000 Damian Davila http://idaconcpts.wordpress.com/?p=309

• Throughout the fourth chapter of Lateral Marketing, Kotler and Trias de Bes discuss how “new market or category creation is the most efficient way to compete in mature markets where microsegmentation and an excess of brands do not leave room for new opportunities” (2003, p. 72).
• The cited examples of Lateral Marketing by Kotler and Trias de Bes tie in with The Tipping Point in that they take into account the “power of context” and the “stickiness factor”.  The power of context states that one must accept that the immediate context of behavior is the one that guides one’s actions.  The stickiness factor deals with the small but critical adjustments in that an idea is presented to the average individual, so that it can overcome previous weaknesses and become memorable.
• Lateral marketing uses the power of context and the stickiness factor concepts of Gladwell to create “a simple way to package information that, under the right circumstances, can make it irresistible” (Gladwell, 2002, p. 132).  The case of “Big Brother” TV Contest in the United States and the Sony Walkman in Japan are good examples of well executed lateral marketing.
• Unfortunately, the abuse of segmentation and positioning has created an aversion for the introduction of new brands.  The information age and excessive amount of choice has proved a bit counter-productive for consumerism.  The stickiness problem is even more problematic for marketers in the United States.
• It would seem plausible that both Gladwell and Kotler and Trias de Bes would agree in that the use of shock tactics by advertisers, publicists and celebrities grab public attention runs the risk of desensitizing us as culture and making us immune to the eyebrow-raising, attention-grabbing ploys of marketers.

• On this post, I will discuss the first two chapters of The Tipping Point by Gladwell and the third chapter of Lateral Marketing by Kotler and Trias de Bes because I found a lot of similar points on both books.

Malcolm Gladwell. Photo Credit: Brooke Williams.

• Kotler and Trias de Bes discuss the most common way of creating innovations by working from the market definition downward, which results in new products that are just variations of existing products and services.  Similarly, Gladwell argues that things can happen all at once, and little changes can make a huge difference.   Gladwell defines as social epidemics the way that change often happens in the rest of the world.  Both Kotler and Trias de Bes, and Gladwell agree that little variations or changes can have a big impact.

Philip Kotler. Photo Credit: www.imm.org.my/My%20Webs/myweb3/images/kotler.jpg

• At the same time, these authors warn that even though this innovation process is productive, it will reach a point of saturation.  Kotler and Trias de Bes claim that segmentation and positioning (the most basic marketing strategies) are in crisis, and that a new innovation process is needed.  Kotler and Trias de Bes call it lateral marketing.  Gladwell would argue that it is just a variation of a social epidemic (or word of mouth epidemic).

Fernando Trias de Bes. Photo Credit: Ana Jimenez.

• In chapter two of The Tipping Point, Gladwell talks about  about the central role that three personality types, defined as Connectors, Mavens, and Salesmen, play in social epidemics.
• Since the first time that I read the work of Gladwell, I liked the definition of mavens:  “Mavens have the knowledge and the social skills to start word-of-mouth epidemics.  What sets Mavens apart, though is not so much what they know but how they pass it along.  The fact that Mavens want to help, for no other reason than because they like to help, turns out to be an awfully effective way of getting someone’s attention” (Gladwell, 2002, p. 67).
• The definition of a connector is not bad either: “Sprinkled among every walk of life, in other words, are a handful of people with a truly extraordinary knack of making friends and acquaintances. They are Connector” (taken from http://www.gladwell.com/tippingpoint/tp_excerpt2.html).
• I have always believed myself to be a maven but most of my friends believe that I am a connector.  They might have a point because a quick review of my social networks reveals so.  At Facebook, I have 687 contacts; at MySpace, 519: at LinkedIn, 95 contacts, and so on.  They might have a point because I enjoying spreading a good message and I am pretty good at figuring out what person would be interested in something or would be a good contact to find about something.
• In conclusion, I agree that innovation requires a different approach that goes beyond the category where the idea originated and that there are special kinds of people needed for this process.  Among those people are appropriate connectors (people able to spread a message) and salesmen (people with the skill to persuade those unconvinced by the message).

March 2004 @ Hippie Market - Rio de Janeiro. Photo Credit: me.