Tennant Consulting

David Skok: Customer Acquisition Costs

Check out this excellent post by David Skok from Matrix Partners on how to factor customer acquisition costs into your business plan.  David recommends the lifetime value of your customer be 3x your customer acquisition costs, and all customer acquisition costs be recovered in the first 12 months, or else you will require excessive capital to grow the business.

David also offers an excellent spreadsheet showing the incremental costs of having humans assist in the sales process -- which creates interesting implications for everyone out there currently working in sales -- and offers several Sales 2.0 techniques to lower customer acquisition costs.

Highly recommended for entrepreneurs developing business plans, and anyone involved in starting a company, or in sales or marketing.

2010 Economic Forecast Discussion

What's your economic forecast for 2010? What information are you looking at to draw your conclusions?  Check out this month's Tennant Consulting Times article on predicting the economy as you develop your business plan for 2010, then return to share your thoughts in the comments below.  Looking to tap into the collective intelligence of the community...

Uncovering Entrepreneurial Education Requirements: Innovation Games at the EBIG Startups/VCs SIG

Last night, we got some excellent "customer input" from our members at the East Bay IT Group Startups and Venture Capital Special Interest Group (SIG) meeting. Tom Johanix facilitated a session where we played two  "Innovation Games" developed by Luke Hohmann, product management consulting firm Enthiosys.  Innovation Games are a dozen interactive exercises that help to uncover customer needs, product functionality and priorities.  I have been working with Enthiosys at a joint client, and during that time, Luke has been bending my ear about Innovation Games for the past year or so, but I had not seen the games in action.

Innovation continues to be a hot topic throughout the technology industry, and Innovation Games is one way of accessing customers' unspoken requirements.  In this case, instead of talking about a hypothetical product, we used our monthly entrepreneur SIG meeting as our "product" in order to eat our own dogfood and test the ideas we're teaching--and used two of the Innovation Games to gather customer requirements.  I had seen Luke Hohmann present Innovation Games at M.R. Rangaswami's Software 2007 Conference, and though the session was extremely short, was favorably impressed based on all the customer testimonials during that session.

So I thought we would present an educational topic for our entrepreneurial networking group and at the same time, get some feedback about how we can improve the SIG going forward.

We played two games.  First, we played Product Box, then we did a quick version of 20:20 Vision to prioritize the ideas that had been genertaed from the Product Box conversation.  We identified over 30 topics for future sessions, and the kinds of information that entrepreneurs would most value.

To be honest -- and as I had told Luke -- I was somewhat skeptical that you could put a bunch of markers and boxes on tables and people would engage – but you know, it worked!  And I can't speak for everyone, but it sure looked to me like everyone had a good time.

In Product Box, each person developed a mock-up of an actual "product box" -- an actual white cardboard box with the participant's sketches of product functionality and features -- and then each participant was gracious enough to give us a brief presentation "selling" their box to the group while I furiously took down notes about their desired features, benefits and outcomes.

In 20:20 Vision, we took the ideas recorded on large post-it notes, and prioritized them on the wall.  The group decided to prioritize based on a show of hands for how many people were interested in each topic or suggested idea.  I found seeing the shows of hands as interesting as the first exercise to generate the ideas to begin with.  Some ideas that I thought were great, the group didn't like, and thing I didn't think would be  very popular got nearly unanimous votes.  The #1 item?  Storytelling from other entrepreneurs about their successes and disasters.

Not taking anything away from our session evaluation forms -- which we pretty consistently use to survey attendees at the end of each monthly session -- I can count on two hands the number of suggestions for new topics we’ve received from participants in the last two years.  None generated anywhere near what we were able to gather tonight, and there was a surprising number of ideas that I would not have thought of before. So for those of you keeping score at home, put a checkmark in the “It works!” column for Innovation Games, as it definitely worked for us.  I look forward to working with my co-chair, Holly Nelson from Randick, O'Dea and Tooliatos to incorporate the suggestions in our program over the coming year.

Thanks again to all our members and guests for providing some outstanding feedback.  Thanks to Tom Johanix for his great facilitation, and Luke Hohmann of Enthiosys for inventing the Innovation Games.  If you are interested in learning more about it, I encourage you to check out Luke's book Innovation Games and try the games for yourself!

Salesforce.com: Marketing in the Google Era

Yesterday, I listened to a Salesforce.com seminar, "Marketing in the Google Era", presented by Kraig Swensrud of Salesforce.com's marketing team.  They were good enough to make a recorded version of his presentation available for you to view here (email registration required).

Kraig gave an overview of 7 techniques of effective marketing in the Google era.  I agreed with all of what Kraig presented - companies are still coming to grips with how the world of marketing has changed, and I agree all the suggestions provided are good ideas to consider:

• Invest in Web properties
• Invest in search marketing
• Make your message relevant
• Create landing pages for every program
• Measure everything in real time
• Use the Web for PR
• Engage your community.

What I liked about the presentation was Kraig gave a good overview of all these concepts - some of which are pretty complex.  He also did a good job of describing blogging and RSS - and some of the best graphics I've seen illustrating those concepts.  The presentation was also rich in examples and other online services you could use - in a very short period of time.

8 out of 10 times, Kraig's online concepts will come into play in some form, but the relative level of investment people put into these online initiatives versus other investments will vary widely depending on your business.

While there's little room for improvement, I felt like the presentation was a bit marketing-centric, and online-centric.  Kraig was implying companies should invest in search, blogging, online communities.  I agree these activities make sense for Salesforce.com - but they may or may not make sense for other depending on your industry, business, budget and resources, and prospective or existing customer interactions.  It also didn't help the marketer understand how important it is to link these programs to how your customers actually buy, your competition, and if you have a human salesforce, how to support them more effectively.

For example, someone buying, say, rice has a very different set of needs than someone buying a CRM system, or someone hiring a lawyer.  I would recommend starting with the customer - and what they need to be successful throughout their purchase and use of the company's products or services, and what the sales force needs to be successful.  The consumer rice buyer may not be going to look for "rice" online - but they might want healthy recipes, or ideas on how to make rice more interesting. 

A lawyer needs to show they are knowledgable, experienced, and able to add value in excess of their fees - so speaking or writing a book on their area of specialty may be a more appropriate marketing investment. 

A CRM company - especially if they have an online offering - should absolutely do the things Kraig describes.  And Salesforce is probably at the forefront of those - albeit with messaging that's too company-centric for my tastes, and at a very high sales and marketing spend relative to R&D.

All things considered, though, my feedback is minor relative to the presentation's strengths.  I recommend highly that you check it out!

Business Concept Questionnaire

Do you have a new business idea?  Wondering where to start?  Many high-tech entrepreneurs tend to focus on their technology, without examining other factors surrounding their core business concept that will have greater impact on the success or failure of the business.

This month, Technology Venture Corporation's entrepreneurial training seminar focuses on the entrepreneur's assessment of a business opportunity.  This is session #1 of a 6-seminar series.  You can jump off and jump on the series whenever you like.

To download your electronic copy of the Business Concept Questionnaire, click here.

Some from the session wanted a copy of the slides from the session, which are available here  (8MB PowerPoint file - attempt only with a high-speed connection).

Strategic Marketing Consultant San Francisco Bay Area Seeks More Hours in Day

I guess in 10 years, we'll have replaced our job titles with the search terms we'd most like to be found by.  Given how much driving I've been doing in the car lately, I wish mine was, Strategic Marketing Consultant - Orinda, CA -- or even Strategic Marketing Consultant - East Bay.   There are some great software companies in Orinda - like Intraware, and Maxis, makers of Sim City started in Orinda.  Down the road in Walnut Creek, CA, Dave Duffield founded PeopleSoft in 1987 and in 2005 Dave and Aneel Bhusri founded their newest startup, Workday.

I've not been posting a lot to the blog lately, thanks to some exciting new client projects.  What few writing cycles I've had have gone to my online newsletter, Tennant Consulting Times.

This month's issue of Tennant Consulting Times talks about sales models -- and the many mistakes entrepreneurs make in putting together the go-to-market section of their business plan.  I also took to the road to interview Joe Blank and Paul Gariboldi from Virsalent, a company offering a sales force-for-hire that may be relevant for many high-tech startups as an alternative to bringing on a VP Sales and entire team.  Joe and Paul offer 10 common mistakes entreprenuers make - and I highly recommend you tap into their experience if you're starting your own company, launching a product in an existing company, or are in a sales or marketing role.

To subscribe, just enter your name and email on my home page, www.tennantconsulting.com.  I only use the information for the newsletter, which currently comes once a month.  You'll get  a confirmation email back, click a link and - presto! - you'll  immediately receive this month's issue.

I've used the most conservative email list building approach - double-opt-in - which results in a smaller email list, but a more enthusiastic audience because they're all people who explicity choose to hear from me.  That means better delivery rates long term.  I believe one can be successful marketing to people without SPAMMING them, and I plan to use my newsletter as a one small business data point to prove it. 

In the Tennant Consulting Times newsletter, I'm committed to printing free articles from me and interviews of smart people I know to add value to my clients.  Don't worry, it won't be hogwash about me which you could care less about, or pitching you my services.

Oracle to lay off 2,000, mostly from Oracle

We've certainly seen an uptick in activity at the PeopleSoft Alumni Network, due to the Siebel acquisition and Oracle laying off 2,000...

SAP: hosted CRM?

Well, it's official.  Everyone's on board with hosted applications now.  Okay, not Microsoft.  And only parts of Oracle, right.  But the next biggest player with the most vested interest in preserving the enterprise-licensed-software-behind-your-firewall approach is embracing the hosted applications paradigm.  Yes, SAP claims to be coming forth with a hosted CRM application.  Or not.  OK, it's just rumors at this point.  But they might.  Nobody knows.

So it's hard to know what they're actually doing, or if what they're doing will actually work, but this is yet another validation point for the hosted application model - and good to see SAP acknowledges a blank-sheet of paper approach, purpose-build for a hosted paradigm is needed...

Marc Benioff and his team at Salesforce.com are no doubt in scramble mode to make the most of this opportunity.

BusinessWeek: The Power of Us

Business Week has an interesting technology article on participatory networks - empowered by the Internet.  Just when you thought we'd gotten over that high-tech Internet bubble-bursting, it turns out there are a variety of applications that the Internet has made possible. 

Even our PeopleSoft Alumni/LinkedIn relationship gets a plug in their slideshow.

Interim VP Marketing Presentation

I had the pleasure of presenting this week on Sand Hill Road, but instead of pitching venture capitalists, the pitch was to 25 VP's of Marketing!  My audience was the Silicon Valley Association of Startup Entrepreneurs (SVASE) VP Marketing Forum.  Every three months, a group of Marketing VP's gets together in the Silicon Valley or San Francisco to discuss their burning issues and learn from each other in a peer-to-peer environment.

Mark Addison, owner of the PR firm Rocket Science, who coordinates the group, invited me to present on "How to build a better life as an interim VP Marketing".  Several folks asked for copies of the slides.  I've posted them here for the benefit of those who wanted a copy, but I imagine they're of limited value to folks who were not at the presentation:

Download interim_vp_marketing_presentation.pdf

We started by going around the room with introductions - and how long people had been in their current position.  People were equally clustered around "Less than a year", "1 year", "4 years".  One out of 25 had been with his company 15 years.  No one at 2-3 years, no one else in a full-time role beyond 4 years.  There were a couple folks doing consulting now for 5-6 years.

So in a sense, we're all interim.  The days of a lifetime employment contract are dead.  From my days at PeopleSoft, we always talked about how the average tenure for employees had fallen from 6.3 years in 1983 to 4.8 years by 1998, according to the Brookings Institute (Row Henson, former HRMS strategist at PeopleSoft, if you have more up to date statistics, I need a refresh!). 

In the Silicon Valley, that churn is obviously even greater in the startup community.  As Mark mentioned, he didn't know of many VP's of Marketing who were still doing the same thing for more than a year!

So how should marketing executives in startup environments respond?  My belief is that first, you need to be on top of your game in terms of your ability to quickly add value to clients.  Second, whether you're full time or a consultant, your network provides stability even in times of increased volitility.  Even if people change companies, we still live in the same area and move on to new opportunities.  The amount of work to be done continues to grow, and there's no shortage of really big problems to solve.  The people who have the best networks and relationships with talented people will be the ones who prosper.

It's also important to focus on a specific market and develop a solution to that market's pains.  That's why I've chosen not to solely be limited to "Interim VP Marketing" activities - but also fundraising, business plans and alliances - startups need help with fundraising and generating revenue, and many entrpreneurs are uninterested in marketing, or think marketing is as its depicted by Scott Adams (who is a very funny guy) in a Dilbert cartoon.  But that's a post for another day...

Here's some relevant books that I was mentioning, some of which formed the backdrop for going into consulting and getting from 2001 to 2005 in one piece:

Brand You - Tom Peter's book from the dot-com heyday - 1999 - but the concepts and principles about thinking about work as creating your own brand, innovating and adding value are still relevant today.

Attracting Perfect Clients - this helped me define my ideal client profile - especially psychographics - and the kinds of companies I want to work with - something I find I'm never "done with" either, by the way...

The Tipping Point,  Linked - talk about concepts around networking and how to think about it "exponentially".

Million Dollar Consulting - Alan Weiss has an interesting perspective on consulting; many good ideas here.

Flawless Consulting - Peter Block does an excellent job, particularly in describing the contracting and execution phases of consulting.

Thanks to Mark for the opportunity to present, and thanks to everyone who attended for such a rich discussion.  I look forward to continuing the dialog with many of you!