Sanjeev Aggarwal's Blog

March 30, 2011

Is there a Method to Social Media Madness?



Co-authored by: Sanjeev Aggarwal and Laurie McCabe, SMB Group, and Brent Leary, CRM Essentials  SMB adoption of social media for sales, marketing, product development and customer service is on the rise – but how are SMBs tracking, analyzing and measuring the success of their social media endeavors?

In our joint SMB Group-CRM Essentials “2011 Small and Medium Business Social Business Study,” we surveyed 750 SMB (small business is 1-99 employees; medium business is 100-999 employees) decision-makers about their use and plans for social media for sales, marketing, customer service and support, product development, HR and other business functions.

Featured Study Highlights

To put social media adoption in context, we asked several questions to better understand how SMBs accomplish their business objectives though different channels and mechanisms, including, “How does your currently track, analyze and measure the success of the company’s social media efforts?”

In the medium business segment, 52% of respondents indicate that they currently use social media. Among these respondents, about 19% say they use it in and “ad hoc, informal” way, while 33% indicate they use it in a “structured, strategic” manner. When we take a deeper look at how medium businesses using social media track, analyze and measure success of social media efforts, we see that companies that take a strategic approach are more likely to incorporate a greater number and more actionable metrics to measure social media effectiveness than their informal, ad hoc counterparts (Figure 1).

  • For strategic users, actionable, customer-centric metrics such as referrals (14%), click-through rates (12%), and inbound links (11%) top the list. These are followed by social media measurements such as number of followers and friends (9%), and sentiment analysis (9%), along with anecdotal feedback (9%).

  •  Companies that use social media in an ad hoc manner are more likely to rate “softer” measurements, such as anecdotal favorable feedback (6%) and buzz from social media (4%) as top tracking criteria and yardsticks for success.

Not surprisingly, SMBs that take a structured, strategic approach–and use more actionable metrics–are also more satisfied with the results of their social media efforts than those engaging in an ad hoc manner.

This underscores the need for better integration of social media with traditional sales, marketing, and service/support solutions–along with better tools to track and measure results.
Figure 1: Medium Business: Comparison of Strategic and Ad Hoc Users Criteria to Track and Measure Social Media Implementation
 
 
 
 

 


Quick Take

For SMBs to truly evolve into “social businesses,” they need to be able to easily track, measure and tweak the results of their social media investments across a wide range of business activities, from marketing through customer service and product development.

Although the social media drumbeat is loud, SMBs’ enthusiasm will be curbed if they can’t figure out what impact their social media initiatives are having. Whether on their own or via partner solutions, vendors will need to give SMBs the tools they need to integrate and evaluate social media efforts into their larger business strategy and framework.

Because social media engagement does not occur in a vacuum, businesses will want to measure social media efforts in context of broader sales, marketing and customer service or other initiatives. Although collaboration, CRM, marketing automation and other vendors are integrating social media into their existing solutions, few provide the analytics required to track and measure the effectiveness of social media and its different channels in an actionable and streamlined manner.

January 20, 2010

Intuit and Microsoft – two SMB market leaders partnering on cloud platform strategies to deliver web applications

This agreement provides an end-to-end applications development environment and marketing/sales channels for application developers to develop and market application solutions to small businesses. Key elements of the agreement include:

  • Broadening the applications developer community to develop SMB focused applicationsIntuit to provide a SDK to help developers build applications on Microsoft Windows Azure Platform (and Visual Studio) and federate these web applications into Intuit Partner Platform (IPP) and launch these applications through the Intuit App Center (IAC).
  • Expand channel for application developers to promote and market their applications – Business Productivity Online Suite into Intuit Partner Platform (IPP) by year-end – Salesforce.com’s Force.com PaaS platform. Microsoft and Intuit will join forces to expand channels for application developers by introducing them to IAC. With capabilities to buy and access these cloud-based applications from the IAC and support for single sign-on will make it easier for SMBs to use these applications.
  • Microsoft to integrate Microsoft Business Productivity Online Standard Suite (BPOS) is a set of messaging and collaboration solutions hosted by Microsoft, and consists of Exchange Online, SharePoint Online, Office Live Meeting, and Office Communications Online. SMBs that use BPOS will have access to Intuit’s SMB focused business applications like QuickBooks and additional applications available through the IAC.

This relationship is focused on the U.S., the region where Intuit has majority of its presence. Microsoft and Intuit will support joint marketing programs targeted at the applications developers, channels and SMB companies.

In today’s fast-paced and volatile business climate, SMB need cloud-based application as they provide much better total cost of ownership (TCO) compared to on-premise installed applications. This relationship will provide significant benefits to SMBs that have shown increasing appetite to adopt cloud based solutions. The key benefits to the SMB community from this relationship are:

  • For Microsoft Windows Azure cloud platform service (PaaS), the Intuit relationship is a key endorsement of Microsoft as a key player in the SMB segment and of a company that has a good understanding of how to work with application developers. This combination will provide good competition to the
  • With Microsoft withdrawing from the small business accounting application area, creates a much more favorable partnership environment between the two companies to collaborate on the applications and channels front. A cooperative relationship between these two SMB focused companies will yield tremendous benefits to the SMB community.
  • With more than four million Intuit’s QuickBooks customers, the Inuit App Center will present a very attractive opportunity for applications developers to showcase their applications to the QuickBooks user community.

September 27, 2009

Small Businesses interest in Social Media increasing rapidly

In a recent very small business (businesses with 10 employees or less), Social Media ranked at the top of the list among the tools used by small businesses to market/promote their business (see Figure 1). The use of all ‘Digital Media’ tools by SMB has seen a dramatic increase in the past 2 years at the at the expense of ‘traditional media’ tools. Many businesses are finding that marketing campaigns using traditional media tools are seeing reduced effectiveness in reaching their target audience. Consumers and businesses are placing less trust on information provided through traditional marketing vehicles, as those are mainly static tools supporting one-way conversations – other than word-of-mouth. The new digital media is changing the rules of marketing and even small businesses need to proactively participate in this change.

Figure 1photoshop-1

Why has social media seen this dramatic increase? This is primarily driven by 3 factors:

  • Change in the consumer and business workers personal communication environment and habits
  • Low barrier to start participating in the social media communications – tools like Twitter, Facebook, WordPress are free. Social media is much more than traditional forms of viral marketing – it is an effective and inexpensive way to convert contacts into a referral network
  • Much more real-time communication support to start conversations with existing customers and prospects

As the data shows, most small businesses are already participating in social media to varying degrees. Most of the social media adoption by small businesses is happening in an adhoc and sporadic manner. Majority of it is being driven by their use of of these social networking sites for personal communications. This use of social media in business today is more experimental, some to get a feel of the type of small businesses that are starting to participate in such communications and others to experiment with the type of conversations that are taking place and the type of communications they could have using this medium. As small businesses get more comfortable with these communications media over time, their importance in the marketing communications mix will increase. However, there are several issues that need to be resolved before they become mainstream communication tools for the small businesses. Some of them are:

  • Efficient and productive ways to monitor and participate in social media – small business do not have the time to individually monitor the various social media sites like Twitter, Facebook, LinkedIn, Blogs, etc. They need tools that can integrate with their existing business solutions to pull-in conversations that could have relevance to them. Some new solutions from vendors like Salesforce.com will help small businesses harness the power of social media through solutions like Service Cloud, Salesforce Answers and Salesforce for Twitter and Ideas. New vendors that provide some solutions in this area include Lithium, Helpstream and Elgg.
  • Finding areas where social media can add value and provide business benefit – potential areas include product marketing and customer service
  • Integrating Social Media solutions with current marketing tools – Now that we know small businesses are interested in social media, it would be a good (for ISVs) to integrate social media interaction with your current marketing solutions like CRM, e-mail marketing, marketing automation, etc.
  • Customer sentiment monitoring – This is area small businesses can monitor conversations that are taking place about their products, brands and competition. Although this area today is primarily leveraged by larger consumer focused companies, over time this information can be leveraged by small businesses also.

To make this communication and collaboration effective and supportive of key business objectives, small businesses need to craft a social media strategy as part of a marketing plan to positively reinforce brand awareness and improve customer relationships.

Key elements to this plan should include:

  • Integrate social media into your current marketing plan, don’t abandon what is working to get on the social media band wagon
  • Find out where your target audience (existing customers and prospects) gathers online and learn how they are engaged. Start by asking your current customers where they are and then join in.
  • Match your audience to the social media tools they use – some people like Twitter other prefer Facebook or LinkedIn. Focus on relationship building.
  • Don’t limit yourself to most immediate “universe” of your target. Find people who touch your universe and engage them too.
  • Listen to what people are saying about you in the social media world
  • Use social media to drive traffic to your website
  • Develop plan to measure the success of your social media efforts (topic for another blog)
     

July 31, 2009

Prognosis on SAP’s Business ByDesign – SaaS based ERP solution for the core mid-market

I came across a good analysis on some aspects of SaaS vs. on-premise vendors and solutions in the smoothspan post Why Do SaaS Companies Lose Money Hand Over Fist?

After reading through the post and various responses, I have some comments that could shed more light on the SaaS vs. on-premise topic and how this relates to SAP’s continued focus on Business ByDesign.

  • The global ERP market opportunity driven by the large number of SMB/mid-market companies. In the U.S. there are 11 times more mid-market companies and on a worldwide basis the number is 13.5X.

     

    # of U.S. Companies

    # of Worldwide companies

    Enterprises (1000+ empl.)

    9,000

    52,000

    Mid-Market (100-1000 empl.)

    100,000

    700,000

    Ratio – Mid-market/Enterprise

    11X

    13.5X

     

     

  • The enterprise market is heavily penetrated by ERP type solutions, mostly on-premise solutions. The U.S. mid-market has less than 42% ERP penetration. This penetration of ERP solutions is much lower outside the U.S. Existing SaaS solution vendors until now have primarily focused on the U.S. market, with less than 15-20% international sales (other than Salesforce.com). SAP being a global company, has the potential of ramping up fast in the international markets which is very under penetrated, where SAP already has established relationships and market presence (significantly more than any of the SaaS vendors). This presents a significant upside revenue opportunity for SAP in the mid-market (especially in the 100-500 employee segment which is outside of the sweet spot of other SAP midmarket solutions – BusinessOne and Business All-in-One).
  • One also needs to look at the Total Cost of Ownership (TCO) of SaaS vs. on-premise solutions. A recent paper investigated details on this, The TCO of Cloud Computing in the SMB and Mid–Market Enterprises; A total cost of ownership comparison of cloud and on–premise business applications. Thee general conclusions are:
    • Considering a 4 year TCO, works in favor of the SaaS ERP solutions when the number of users is less than 400 users. Beyond these numbers of users, the on-premise TCO starts to become better (lower). These would be mostly enterprise companies, who favor on-premise solutions.
    • When considers a TCO beyond 4 years, on-premise solutions are better (lower). Again, these tend to be larger companies.
  • Most of the SaaS vendors like Salesforce.com and NetSuite have a much higher sales and marketing expenses ratio (~ 54% of revenue as shown in the smoothspan post Why Do SaaS Companies Lose Money Hand Over Fist?) primarily driven by their direct sales model. For Business ByDesign, for which SAP is promoting a channel driven model, this percentage should be lower.
  • R&D spending of 16% by SaaS companies – the strategy that needs to be explored by vendors looking to develop SaaS products, they need to seriously consider SaaS platforms like force.com (from Salesforce.com) and QuickBase (from Intuit). The developers that have used these platforms, have significantly reduced both their initial R&D spending and also their product development timeframe, brining SaaS solutions to market in some cases 1-2 years sooner. These SaaS/cloud platforms-as-a-service were not available when SAP embarked on development of ByD (or would they have used one, even if it was available…I am sure they have developed a significant internal expertise with this development experience). It is prudent for SAP to control the roll-out of Business-ByDesign until the product, delivery and channel kinks have been worked out. Prediction – Past experience with German engineering should alert the ERP market that in 2010, SAP will probably deliver a successful mid-market SaaS ERP solution for the core mid-market.

Reviewing the above, including good reviews from the current customers of Business ByDesign, it would be prudent for SAP not to scale back efforts on the roll-out of Business ByDesign – as strategy they have consistently communicating to the market.

July 9, 2009

Business Intelligence (BI) – Does it have a place in the SMB and Mid-Market Enterprises?

The recent demise of LucidEra has brought forward the discussion of the need for BI in the SMB and Mid-Market enterprises (companies with 1-999 employees and revenues usually less than $1 billion). My take is that this was based on the limited BI value LuidEra offered and the current difficult economic conditions vs. their SaaS based business model. With the explosion of BI solution targeted at the SMB & mid-market, the BI industry is inundated with newer solutions and scaled-down versions of existing enterprise solution targeted at this segment. I have also seen several discussions on the potential increase in adoption of BI solution based on these solutions being delivered in a SaaS model to address the IT resources and infrastructure in the SMB and mid-market companies.

Business Intelligence is all about gaining 360 degree insight into a company’s business, and helping company executive make decisions based on the facts as opposed to information in Excel spreadsheets or gut feel. Business intelligence can offer significant benefits to small and mid-sized organizations. The problem becomes sifting through the plethora of solutions to select offerings that meet the SMB’s needs. SMBs don’t have the required resources or time to do this.

The key question that needs to be addressed is – what are the BI related need of the SMB and mid-market companies and weather these needs are being met by these BI solutions? The solution delivery model is secondary to the key question. This segment of companies is realizing that business decisions need to be made on more than excel spreadsheets and gut instinct.

SMBs don’t understand data warehouses and BI, as it is applied to large enterprises as they do not have staff that can make sense out of the reporting provided by these standalone BI tools nor do they have IT resources/budgets to integrate standalone BI applications to data from various business applications and business processes. SMBs understand BI in the form of dashboards and reports with drill down capabilities. They need solutions that can provide quick real-time insights and ROI that can have measurable business results. How can the use information from the past to more accurately predict the future or to look at real-time data to more efficiently utilize the existing resources or inventory; make changes to enhance business process or operational efficiencies?

In my recent interaction with business solution vendors that focus on the SMB and mid-market, BI solutions are now available and embedded as part of a larger business solution – integrated business solution like NetSuite; SAP (based on Business Objects acquisition) – Businessone, Business-by-Design, Business All-in-One; Oracle Business Intelligence Standard Edition; other ERP and CRM solutions (Salesforce.com) .

SMB and mid-market companies need to first investigate the BI capabilities that are already provided by these applications or modules that are already integrated and can be easily add-on to their business application solutions. It does not matter whether these solutions are cloud-based (SaaS), hosted or on-premise; utilizing these exiting BI functionality will provide much easier implementation and ROI compared to bringing in new vendors. Most of the vendors mentioned provide easy to use dashboards with BI analytics capabilities to enhance operational efficiencies, analytical and predictive analysis, risk analysis, forecasting, etc. Business application vendors need to increase their focus on their BI solutions as a key value proposition to the SMB and mid-market.


 

July 7, 2009

The Compelling TCO Case for Cloud-based business applications in SMB and Mid-Market Enterprises

A 4-year total cost of ownership (TCO) perspective comparing cloud and on-premise business application deployment

Small and medium businesses (SMBs) face a tricky dilemma in today’s tough economic climate. It’s no longer business as usual; companies need to figure out how to survive through the current downturn, and get on track to capitalize on new opportunities that will emerge as the economy starts to grow again. They need business solutions to help them to manage more efficiently day-to-day, and also the intelligence they need to move the business forward.

As SMBs weather through turbulent economic storms, total cost of ownership (TCO) is often top of mind when evaluating new business applications. Many customers have become interested in how cloud computing or software-as-a-service (SaaS) can help lower their costs by eliminating upfront capital investments and ongoing maintenance costs associated with on-premise solutions.

Hurwitz & Associates recently completed an in-depth study comparing TCO of cloud-based business application and equivalent on-premise solutions.

Cloud computing essentially eliminates the need for customers to buy, deploy and maintain IT infrastructure or application software individually. Regardless of the application, the cloud computing vendor takes responsibility for all of the infrastructure required to run the solution–servers, backup, software, operating systems, databases, updates, migration, power and cooling, facility space, etc., and associated internal and third-party staffing costs. Because cloud computing vendors manage all of their customers on a single instance of the software, they can amortize costs over thousands of customers. This yields substantial economies of scale and skill, and lowers TCO.

Key findings from our analysis include:

  • Overall TCO for cloud-based integrated solution suite is significantly lower than a comparable on-premise solution. This holds true for both SMB and mid-market firms.
  • IT Infrastructure costs (hardware, software and maintenance) account for about 10% of the total cost of deploying on-premise business applications.
  • The cost advantages of cloud computing slowly taper off as the number of users increases beyond mid-market to larger enterprise companies.
  • Application subscription costs account for two-thirds of the total solution cost in the cloud computing model, where the subscription fee encompasses underlying IT infrastructure and personnel costs required to manage business solution. In comparison, business application costs comprise about 27% of total cost in an on-premise situation.
  • Costs for internal IT staff and/or value-added reseller (VAR), consultant or systems integrator (SI) resources required for application implementation and support represent a significantly higher percentage of total cost for on-premise solutions than for cloud-based business solutions.
  • Pre-integrated front and back office functionality in the integrated business application offering contributes to reducing integration complexity and lowers application implementation costs.

June 3, 2009

The next generation Contact Center – Social Networking + Traditional Contact Center

The traditional contact centers now support more real-time communications technologies – VoIP, IVR, e-mail, IM. However, the intelligence and information repositories that are leveraged by these contact centers is very much static and internally focused.

With the growing popularity of social networking and community knowledge, where contact center agents can take advantage of consumers/customers helping each other with issues and queries – reducing the number of inquiry interactions the contact center service reps have to make, delivery real cost savings and improving the contact center ROI. The issue is – the lack of a comprehensive easy-to-use solution that integrates blogs, social networking sites (Twitter, Facebook, and LinkedIn, etc.) and search to easily aggregate the desired knowledge and mesh it with the internal knowledge repository, including the customer information stored in the enterprises CRM systems.

I was at the Salesforce.com CloudForce.com seminar some time ago, where they showcased their service cloud strategy. This Service Cloud showed an elegant and easy-to-use dashboard to present and search the popular social networking sites to the contact center agents – this will help them take advantage of all the community knowledge without spending a lot of time and effort following individual solutions like Twitter, Facebook, LinkedIn, WordPress,

Traditional contact center solutions when integrated with an easy-to-use comprehensive community knowledge solution – presents a market disruption elevating this new contact center solution to one that provides significantly higher ROI and customer satisfaction. The Salesforce.com ServiceCloud can be integrated with the traditional contact centers solutions that have primarily relied on static internal information to service the customers, and have been separated from the community knowledge in the cloud from social networking conversations, blogs and Google. The Service Cloud presents an excellent dashboard to bring these two disparate clouds to establish a cloud-based customer service platform and knowledge for contact/call centers – for customer service agents, customer self-service portals and partners. SIP and presence enable this cloud service platform, and it is ready for some very significant communication and collaboration – via VoIP phones (click to call), e-mail, or IM based conversations.

Why is this of value to Customer Contact Center solutions companies? The current leading Contact Center solutions from the leading telecom equipment vendors like Avaya, Cisco, and Nortel are more along the lines of the traditional on-premise solutions and do not present an easy solution to integrate the cloud-based community knowledge, except in some cases they have integrated search solutions by integration with Google. The Salesforce.com Service Cloud platform can be used to provide an integrated internal knowledge base and the community knowledge/social network (enterprises can define the scope, and members of their communities) from Twitter, Facebook, blogs, Google search, etc. In addition, one can include CRM to monitor customer satisfaction, address any questions/concerns, resolve problems quickly, provide product tips and tricks, and send out information in the customers’ preferred way of communication – without long waiting times or endless forwards and escalations. This could present a disruptive service solution which has the capability to significantly improve customer satisfaction and at the same time reduce the cost to provide this service.

This presents a good partnership opportunity for the traditional contact center application vendors to integrate with the social networking/community knowledge cloud-based service platform without the long internal development cycle. Adopting the Salesforce.com Service Cloud platform will provide a 1-2 years time-to-market advantage vs. the vendors that choose to do it themselves.

 


 

Social Networking – The SMB challenge and how the SMBs can gain value from Salesforce.com Cloud Service solution

Social networking sites like Twitter, Facebook, LinkedIn, WordPress are all the range in the B2B and B2C world today. But does the SMB business owners/CEOs or a lone marketing person have the time to devote to track and follow these sites without spending an inordinate amount to time and effort – especially when there is no clearly identifiable direct linkage that this leads to increased sales. How can SMBs participate in and leverage these market trends effectively to address their business and marketing needs?

All these social networking sites present vast amount of unstructured information to the SMBs. In addition, SMBs are also beginning to see a large number of e-mails sent to our e-mail In-boxes from these social sites – leading to information overload, and in many cases turning away the SMB that could benefit from it. What is needed is a solution that aggregates information from all these social networking/community knowledge sites and presents it to the SMBs in a manner that make the information (which at times is very valuable) more easily consumable and easily searchable.

I was at the Salesforce.com CloudForce.com seminar some time ago, where they showcased their social networking integration and service cloud strategy. The Service Cloud shows an elegant and easy-to-use dashboard to present and search the popular social networking sites to the SMB and mid-market enterprises – this will help the SMBs take advantage of all the community knowledge without spending a lot of time and effort following individual solutions like Twitter, Facebook, LinkedIn, WordPress, etc. CRM platform has the potential to pull together information/community knowledge from the various social networking sites and meaningfully relate it current customers, prospects, and partners to deliver more engaging conversations and communications – providing significantly better ROI compared to an ad-hoc social networking access.

Social networking & community services do have the potential to:

  • Improve customer interactions and relationships
  • Actively engage customers and partners
  • Engage potential customers in technology education and learning
  • Interacting with the channel/VARs for information exchange and support

SMBs are actively exploring how to participate and incorporate all of these social networking sites/feeds to develop a social networking strategy that drives a broader marketing and services strategy.

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