It market evolution - WHY and HOW

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David Balazic @ European Innovation Academy Summer Session 2013

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  • Source: DemandGen report (http://www.slideshare.net/G3Com/content-preferences-surveyfinal)Source: Breaking out of the funnel http://www.genius.com/media/pdfs/mgResources/DGR_GeniusWP_3-11.pdf
  • Source: The 2012 State of Inbound Marketing (www.HubSpot.com/SOIM)
  • Campaigns are temporary, while the Internet is forever: The Internet’s permanence means that content marketers create can last forever. Think about it this way: The ads marketers created in 2006 and had printed in newspapers or shown on TV are gone. But a blog post or video from 2006 is still alive in cyberspace. This makes consistency so much more important. Marketers have to be committed to the brand. With all that content available to anybody, marketers don’t want some messages with one voice and others with another. Inbound marketers need to create a steady flow of leads by concentrating more on creating, publishing and promoting evergreen content rather than campaign level content. The latter gets washed away with the rising and lowering tides. Evergreen content lasts and continues driving inbound leads forever.Campaigns are about the company, but inbound marketing focuses on the customer:The customer now is in control and has all sorts of technology to avoid advertising. Marketers need to have a customer’s permission. That means marketers must tailor messages so they are about the customer.What types of evergreen content should you focus on? High quality blog articles that are personally focused and optimized with the right context for the person — including pain points and a clear call-to-action to some kind of down-the-funnel driving activity — and social proof. The ability to share the content easily also is important.Campaigns are slow, but today conversation is dynamic: In the past, marketers would stop and start messages. Now, people expect that once you start talking to them, you will continue. For example, once someone starts following a company on Facebook, they don’t expect you to stop showing up. They want to engage.
  • It market evolution - WHY and HOW

    1. 1. Copyright © Consalta Ltd. What’s in it for YOU? David Balazic, MBA, Consalta Ltd.
    2. 2. Copyright © Consalta Ltd. • An internationally renowned Cloud business enablement consultancy specialized for IT providers (more @ consalta.si). • 70+ references in CEE (100+ globally as a partner consortium). • Our client base includes IT providers from 35 up to 8200 employees. • Working in partnership with associated consultants from Denmark, US and SAR we build our expertise on real life international experiences backed up by latest industry insights. • Based in Slovenia (CEE) with great insight into CEE markets, business environment, relations and rhythm of business. David Balazic, MB A Dr. Andrej Krenker Assoc. Anders Trolle- Schultz Assoc. Kim Andersen Assoc. Max Buchler
    3. 3. Copyright © Consalta Ltd. • Background – Faculty of Electrical Engineering, Slovenia – Sales and Marketing Academy, US – Executive MBA program, Croatia • Work – 3 years in hospitality and entertainment (Sales & Marketing) – 2 years in energy sector (Business development manager) – 6,5 years at Microsoft (Sales director) – 3 years at Consalta Ltd. (Managing partner & consultant) • Pleasure – Family, friends, sport & Cloud computing 
    4. 4. Copyright © Consalta Ltd. • Today’s IT market • Reaching the customers – Understanding the buying behaviors – Articulating and communicating the value preposition – Selling! • Few best practices
    5. 5. Copyright © Consalta Ltd. 1. Future Start-ups with tech related offering – B2C: Killer app…next gen travel, socializing, dating etc. – B2B or B2G: Business IT solutions…improving processes, management etc. 2. People that just want to have fun … – Tallinn is a great city!
    6. 6. Copyright © Consalta Ltd. WARM UP COMPUTING
    7. 7. Copyright © Consalta Ltd. WHY SHOULD YOU CARE?
    8. 8. Copyright © Consalta Ltd. • Industry hype? • Market trends? • Market growth? • General education? • Sounds cool? • Can enable you to run your business better? • Can enable you to serve your customers better? • Common sense?
    9. 9. Copyright © Consalta Ltd. Why should you care about cloud computing?
    10. 10. Copyright © Consalta Ltd. • There are 3 major customer groups out there with different needs, demands and buying behaviors: • Their needs and demands are driving changes happening in IT market CONSUMERS SMALL BUSINESSES ENTERPRISES
    11. 11. Copyright © Consalta Ltd. HOW CONSUMER GOT IT • Bought computer (in some cases with pre-installed software) • Downloaded & installed the software • Subscribed for the service (Hotmail, Gmail, Facebook, LinkedIn etc.) • In some cases also paid for the software  or service • Concerns about experience, design, trendiness, conne ctivity… MAIN CHALLENGE • User experience, data sync between
    12. 12. Copyright © Consalta Ltd. HOW SMALL BUSINESSES GOT IT • Bought few computer(s) & server (s) • Bought the software and paid for installation, customization, configuratio n etc. • Bought software with computer (or server) and paid for customization configuration etc. • Concerns about cost of maintenance & support, mobility, connectivity etc…! MAIN CHALLENGE • IT was HARD to afford upfront investment
    13. 13. Copyright © Consalta Ltd. • Best PIZZA in town, fast delivery… • Cool web site, Online ordering (well of course), Customer loyalty and premium satisfaction (customer relationship management), Support for mobile delivery guys NEED BUY RENT (first 3 months) DECISION Facility (kitchen) 150.000€ 3.600€ Rent Equipment 25.000€ 1.500€ Rent 3 delivery vans 30.000€ 1.500€ Rent IT (computers, server, software licenses) 20.000€ Not an option Are you kidding? IT – up and running in peak periods 5.000€ Not an option Are you kidding? … … … Rent
    14. 14. Copyright © Consalta Ltd. HOW ENTERPRISES AQUIRED IT • Bought hundreds computer(s), server (s) or even own datacenter and software licenses • Launched a project tender and paid for consultancy, installation, configuration, maintenance etc. to get a SOLUTION. • Planning for a worst case scenario. • Concerns about security, privacy, data leakage, maintenance etc…! AND ROI!!! MAIN CHALLENGE • Pressure on getting more for less money, low IT resources utilization
    15. 15. Copyright © Consalta Ltd. Predictable Bursting Services with micro seasonality trends Peaks due to periodic increased demand IT complexity and wasted capacity Server/Software Cost Unpredictable Bursting Unexpected/unplanned peak in demand Sudden spike impacts performance Can’t over provision for extreme cases Server/Software Cost Growing Fast Successful services needs to grow/scale Keeping up w/ growth is big IT challenge Cannot provision hardware fast enough Server/Software Cost On and Off On & off workloads (e.g. batch job) Over provisioned capacity is wasted Time to market can be cumbersome Server/Software Cost
    16. 16. Copyright © Consalta Ltd. • walmart.com • target.com • toysrus.com • barnesandnoble.com Source: Alexa ~4x normal load (Holiday shopping) Jan 2011 Jan 2012 • turbotax.com • taxcut.com • hrblock.com • taxact.com ~10x normal load (Tax season) Jan 2011 Jan 2012 Source: Alexa
    17. 17. Copyright © Consalta Ltd. • Customers could share the hardware and the software across applications, across organizations… • Customers could scale up/down to closely match application needs & pay only for what they are using… • Resilience was baked in: we could inherently deliver a 99.95% SLA • Building applications was easier, faster, & customers could reach new markets • We could offer customers less risk for their investment
    18. 18. Copyright © Consalta Ltd. Let’s move back to the
    19. 19. Copyright © Consalta Ltd. Common sense – localized power generators replaced with common power plant – economy of scale! Craftsman A Craftsman C Craftsman D Craftsman E Craftsman B
    20. 20. Copyright © Consalta Ltd. Common sense – localized servers replaced with common datacenter – economy of scale! Company A Company C Company D Company E Company B
    21. 21. Copyright © Consalta Ltd. • Cloud vendors are generating value from the economies of scale: – Buying hardware cheaper (cca 40%) – Buying software cheaper (cca 50%) – Achieving highest operational efficiency (automation - do more with less people) – Paying lower costs for electricity, cooling – Achieving highest standards for security, availability etc. – … • Cloud vendors can provide IT cheaper!
    22. 22. Copyright © Consalta Ltd. Infrastructure as a Service (IaaS) Traditional IT Data Applications Operating system Server Storage Network Facility Data Applications Operating system Server Storage Network Facility Platform as a Service (PaaS) Data Applications Operating system Server Storage Network Facility Software as a Service (SaaS) Data Applications Operating system Server Storage Network Facility PaaS SaaS IaaS More control <Organization has> Less control
    23. 23. Copyright © Consalta Ltd. TIME FOR AN EXERCISE
    24. 24. Copyright © Consalta Ltd. ¸FOR CUSTOMERS Advantages: – Affordability & lower financial risk – Time to market – Scalability (for up & down) – Consumerization • Challenges: – Trust – Knowledge FOR YOU Advantages: – Lower infra/dev entry costs – Geo reach – Predictable revenue streams – Gives you insight/feedback about your app usage Challenges: – Revenue builds up more slowly – Picking “the right” vendor
    25. 25. Copyright © Consalta Ltd. WHO buys and HOW
    26. 26. Copyright © Consalta Ltd.
    27. 27. Copyright © Consalta Ltd. Laggards / Skeptics (cca 16%) Late majority / Conservatives (cca 34%) Early majority / Pragmatists (cca 34 %) Early adopters / Visionaries (cca 13,5%) Innovators / Enthusiasts (cca 2,5%) Early Markets Mainstream Markets Late Markets
    28. 28. Copyright © Consalta Ltd. LaggardsLate majorityEarly MajorityEarly Adopters Innovators Traditional On-premise ITCloud vendors, gl obal and local... Current Cloud Services players in the technology adoption circle
    29. 29. Copyright © Consalta Ltd. LaggardsLate majorityEarly MajorityEarly Adopters Innovators The growth of the Cloud will require crossing the Chasm Traditional On-premise ITCloud vendors, gl obal and local...
    30. 30. Copyright © Consalta Ltd. Be aware of the implications to your business!
    31. 31. Copyright © Consalta Ltd. Lead is Cash and Marketing is the King
    32. 32. Copyright © Consalta Ltd. Traditional marketing - OUTBOUND • Telesales • Conferences • Public Relations • Direct Mail • Events • Print Advertising Online marketing - INBOUND
    33. 33. Copyright © Consalta Ltd. DemandGen report (http://www.slideshare.net/G3Com/c ontent-preferences-surveyfinal)
    34. 34. Copyright © Consalta Ltd. • 9 out of 10 business buyers say when they are ready to buy, they will find you • 81% of them start the process with a web search • 78% are looking for information around their business challenge • 84% said word of mouth recommendations influence their purchase decisions • 58% engage with peers, 48% follow industry conversations, and 41% read research papers and postings from thought leaders
    35. 35. Copyright © Consalta Ltd. • SEO: Search Engine Optimization • Dynamic content & blogging: Define your strategy & rhythm • Social Media: LinkedIn, Twitter, Facebook • Marketing Automation: automated emails for downloads/clicks/registrations • Lead Tracking & Analytics: Higher conversion rates of leads to sales when tracking
    36. 36. Copyright © Consalta Ltd. Inbound marketing- dominated organizations experience a 61% lower cost per lead than outbound marketing dominated organizations. Source: The 2012 State of Inbound Marketing (www.HubSpot.com/SOIM)
    37. 37. Copyright © Consalta Ltd. • Ads created in 2006 printed in newspapers or shown on TV are gone. But a blog post or video from 2006 is still alive in cyberspace Campaigns are temporary, the Internet is forever • Customers are in control & have ways to avoid noise (spam blockers, filtering, etc). High quality blogs/sites with proper content and SEO let customers find you Campaigns are about the company, inbound marketing is about the customer • In the past, marketing was event driven, now the conversation continues. If you have a LinkedIn & Facebook page, customers expect you to engage them Campaigns are slow, but conversation is dynamic
    38. 38. Copyright © Consalta Ltd. YOUR AUDIENCE IS DIFFERENT •Market to the CIO, COO, CEO, CFO & CMO •CMOs are continuing to have more cloud buying power •By 2014, 50% of cloud services purchases will be made by CIO & CFO together DIFFERENT PERSPECTIVES • The CIO views the cloud very differently from the CMO, CFO, etc • Consider these perspectives when delivering marketing materials/campaigns DECISION MAKERS WANT CLEAR DETAILS •Cloud is disruptive & buyers are cautious and confused •Traditional IT services can be marketed with vague benefits (Higher ROI! Lower TCO!) •This approach isn’t effective for cloud services CUSTOMER IS BUYING A RELATIONSHIP •Customers know they are entering a relationship that will evolve •Your marketing strategy should acknowledge this •Your marketing should highlight opportunities for customers to buy more services.
    39. 39. Copyright © Consalta Ltd. • Start Small • Connect the Dots • Ripple Outward
    40. 40. Copyright © Consalta Ltd. Regardless of the mix of Outbound vs. Inbound Marketing… …the web is the backbone of every campaign Trade Shows Channel Marketing Direct Sales Events Channel Sales Tele Marketing Advertising Public Relations Keep The Conversation Going! Keep the conversation going online
    41. 41. Copyright © Consalta Ltd. TIME FOR AN EXERCISE REACH
    42. 42. Copyright © Consalta Ltd. Reaching the customers
    43. 43. Copyright © Consalta Ltd. Christopher McDougall, Born to Run
    44. 44. Copyright © Consalta Ltd. Consumer Small business Medium business Enterprise Web / Marketplace Telephone / Telesales Partners / resellers Personal
    45. 45. Copyright © Consalta Ltd. Selling price Sales Force Customer acquisition cost Customer relationship Available user training Typical customer profile High External High Personal Significant Enterprise Moderate Inside Moderate Telephone Moderate Department SMB Low None Low Web Minimal SMB, SOHO, Individual
    46. 46. Copyright © Consalta Ltd. Introducing
    47. 47. Copyright © Consalta Ltd. CLOUD COMPANY PROFILE: Initial research started in 2009, company founded in 2011. Service is based on the technology developed by founders. Today 25 emp., 1.7M$ VC investment, HU OFFERING: Simple and secure online content sharing. A “Dropbox like” service, however encrypting everything you store in Cloud, easy to use. Advanced and cross platform technology. TARGET CUSTOMER(S): Private users and businesses that require “higher level” of security in Cloud (concerned or regulated). TARGET MARKET(S): Global! PRICING & BUSINESS RELATIONSHIP: Freemium (acquiring customer base), Premium and Enterprise offering launch planned for Sept 2013. STORY MARKETING NOW: Free PR, digital marketing, thought leaders FUTURE: Conferences, articles, blogging SALES SMALL & MEDIUM BUSINESSES: Online / indirect ENTERPRISES (when ready): 1:1 / direct CHALLENGES ON THE WAY: • EXPERIENCES: Company was started by 3 UNI students (2009 initial research, 2011 founded) • MONEY: No strong history or culture of VC in Hungary (hard to get investment money) • USER BASE: time needed to acquire user base • SHIPPING: For all platforms, features & conversion process (from free to paid users) • MANAGEMENT: Company grew to 25 people in 3 years (still hiring) and needs to professionalize people management, compensation etc.
    48. 48. Copyright © Consalta Ltd. CLOUD COMPANY PROFILE: Spin-off from an advertising (online) agency, 4y ago they had an idea about the innovative product. Founded in 2009, founder coming from a music industry, VC investment, OFFERING Professional white label music streaming services supported with data analytical solutions. Advanced & cross platform technology. TARGET CUSTOMER(S): Telcos (streaming services.), Retailers (background music srv) TARGET MARKET(S): Asia, CEE, India, “Exotic markets” - emerging markets where big guys are not present yet…or gave up. PRICING & BUSINESS RELATIONSHIP: Small company with flexible terms! Project transactional (selling the license and services) or revenue sharing (usually includes some prepayment - STORY MARKETING Conferences, trade shows (e.g. Barcelona 3G), direct meetings & contacts. No digital / online marketing (yet). SALES Direct 1:1 sales approach (enterprise customers). Utilizing Skype, Lync etc. a lot! CHALLENGES ON THE WAY: • BIZSPARK PLUS: Limited period of a discounted price for the platform is coming to an end – full expense soon! • POTENTIAL OUTAGES: Realizing that few sec of outage is a normal behavior for Cloud. • LACK OF “BIG BUSINESS” EXPERIENCES: First project was not financially profitable, charging too little! • PEOPLE: Fire as soon as you realize they are not a good fit for the company. Motivation is not limited to $! • FUNDS: No strong history or culture of VC in
    49. 49. Copyright © Consalta Ltd. CLOUD COMPANY PROFILE: Idea in Feb2012, beta program in Nov2012, company founded in Dec2012, launch in FEB2013, 3 founders (2 with tech, 1 with marketing background), bootstrapped, RO OFFERING Online rendering services for 3D projects. TARGET CUSTOMER(S): Self employed, Small & mid sized companies, (architecture, media, design and movie with post production studios). TARGET MARKET(S): Global! PRICING & BUSINESS RELATIONSHIP: Pay as you use (prepayment and use it from that credit), monthly subscription + prepayment (subscription gives you the right to lower rates and more resources). Limited trial option. STORY MARKETING Social media, adwords, blogging, events for the target audience. Direct contacts with individuals (not the company). SALES Primarily online (directing them to the website), for bigger projects could be direct 1:1. Utilizing Skype a lot! CHALLENGES ON THE WAY: - CUSTOMERS: how to reach the right people with the right message (avoid spammer perception) - TECHNOLOGY: trying to use cloud services in an optimum fashion – adapting the solution for a particular cloud platform (WAS, AWS…). Looking for cost effectiveness! - MONEY: Founded with personal savings. Hard to explain the service & market and get understanding from investors. - NICHE PRODUCT: Unfamiliar service to the investors or general public. - USER PERCEPTION: some users are expecting to get a
    50. 50. Copyright © Consalta Ltd.
    51. 51. Copyright © Consalta Ltd. 1. Internet, broadband, Web browser, and HTML 2. PC/laptop computers 3. Mobile phones 4. E-mail 5. DNA testing and sequencing/Human genome mapping 6. Magnetic Resonance Imaging (MRI) 7. Microprocessors 8. Fiber optics 9. Office software (spreadsheets, word processors) 10. Non-invasive laser/robotic surgery (laparoscopy) From the Wharton School of Business
    52. 52. Copyright © Consalta Ltd. David Balažic, MBA e: david.balazic@consalta.si m: +386 31 699 622 in: http://si.linkedin.com/in/davidbalazic/ www.consalta.si

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