Archive for August, 2012
Recently, we heard that Starbucks – the behemoth in coffee retailing business, invested in Square – the American Mobile Payment startup; as well Starbucks stores will be accepting payments via Square mobile app. Starbucks already had their mobile wallet solution and had seen a record number of transactions via this platform, wherein the customers would just wave the starbuck app barcode on their smarphones in front of a reader in a Starbuck store and the amount gets deducted from the user’s Starbucks mobile wallet.
Now Starbucks is betting on Square – that zingy startup which has attracted tons of VC money from big name investors. Starbucks buyin gives Square the credibility that is needed by the tech firm to sell into big name retail. So far Square app was popular for mobile payments, but primarily limited to thousands of small businesses which had adopted this solution. Starbucks approval puts Square square and centre in the Mobile payment contender space – along with the traditional digital payment firm Paypal. Paypal has been experimenting with Mobile Payments for sometime now and has the backing of millions of consumers and merchants who use Paypal daily for moving around money online.
Paypal, in turn, announced a partnership with Discover Card financial services, Paypal mobile app will mediate a Discover payment in select stores. Discover is the smallest of the 4 big Credit Card vendors in United States. Visa, Mastercard and American Express cards are working on their own mobile payment solutions or partnering with other internet and telco players. Discover is relying on Paypal to carry the smaller card vendor into the Mobile payments vertical (although Discover works in Mobile Payments via telco partnerships as well).
It seems like a dogfight between Square and Paypal has begin to try to dominate this upcoming area. Although there are other heavyweights in the ring – namely, ISIS (telecom carrier joint venture), Google Wallet, Apple potentially, banks and some others. It would be interesting to see what tricks Apple has up it’s sleeve. Apple is a killer firm which, when it enters a market, comes up with such innovations that few are able to compete with it.
The Mobile Payments space is fragmented and there is no clear winner or dominant player yet. The complexity in financial regulation and the difficulty in scaling this business over a large number of merchants has kept this area into the hobby domain so far. As it seems, it seems to be breaking out now with some startups and large firms making aggressive moves to create a market in this now. We watch this space with keen interest.
As far as India goes, there are local startups who have tried to tackle this space – firms like ngpay, paytm, obopay and some others. But most are still small and captive scale is not there yet. Many of these firms have survived in India by doing things other than Mobile payments. Eg Ngpay has become a mobile shopping mall, PayTM has gotten into recharge business and so on.
August 23rd, 2012
Mark Donnolo, managing partner of SalesGlobe (a CellStrat partner firm), has written a new book to be published by AMACOM this winter, “What Your CEO Needs to Know About Sales Compensation – Connecting the Corner Office to the Front Line.” This book is invaluable for C-suite audience in top firms as well as Sales Leadership in multionational corporations. It features interviews with top executives (e.g., Verizon, The Weather Channel, Aramark, Manpower, Salesforce.com) and includes best practices of how executives leverage the power of sales incentives in their organization. The book will be in stores in January and it’s available now for pre-order on Amazon and Barnes and Noble.
Below is an overview from the book.
The office lights flicker on at 7:00 Monday morning. The early risers arrive and the staff trickles in. The CEO, vice president of sales, CMO, and vice president of human resources sip their first cups of coffee, bleary-eyed from Sunday evening’s conference calls. The office chatter starts. In an hour the phones will begin to ring. A few miles away, manufacturing has been busy at the line for a couple of hours by now.
Despite the bustling activity, it will all come to a halt if the next sale isn’t made. “Sales” is the top line on nearly every income statement. Without it, the funding runs out, the stock doesn’t trade, the lights no longer burn, and the office chatter falls silent.
At the root of sales is a team of tenacious souls squeezed in middle seats without upgrades, walking the hallways of major corporations, making outbound calls to semi-qualified prospects, pacing customer reception areas waiting for a chance to have that critical conversation about the customer’s needs, and generally wearing out the soles of their Cole Haans. Each year on average, they experience eight to ten times more rejection than acceptance from their prospective customers. Yet they persevere – most with continued optimism – in pursuit of the close, the add-on sale, the contract renewal. Most of them are driven by a quest for three things: personal accomplishment, recognition, and compensation … sales compensation … commission … bonus … the deal that makes their year and the company’s year.
It’s the single biggest expense for most companies with the motivational power to move financial mountains, but many executives squander the opportunity sales incentives present to connect the business strategy to the sales organization.
For senior executives, the impact of the compensation plan on the sales organization is one of the most important drivers in reaching the company’s revenue and profit goals. The compensation plan directly guides the efforts of the sales organization. It trumps leadership messages, sales strategies, sales management, and sales training. Incentives talk. The sales organization will usually listen and move where compensation leads, good or bad.
Many CEOs understand this critical connection. But most senior leaders – from chief executive officers to chief sales officers –sit so far above the day-to-day operations they ask only the most general questions. The traditional CEO may pop into a sales incentive meeting and ask the cursory, “Is this going to cost me less than last year? Are we going to hit our numbers?” He misses the opportunity to employ sales compensation as a powerful tool to steer the performance of the sales organization and help achieve its business goals.
Below the CEO, sales compensation has long been a point of conflict in the company. Everyone has an opinion, yet few agree on the best approach to drive performance. Sales, sales operations, human resources, and finance regularly engage in battles on questions like:
- Is the plan too expensive?
- How should the plan represent our business objectives?
- How can we better motivate our organization to pursue the sales strategy?
- Are we paying our top sales people enough?
- Can we make the plan simpler to understand?
- Can we make the plan easier to administer?
- How can we set quotas so we’re not penalizing our best reps?
Too often these battles lead to sales compensation programs that are compromises between parties, ultimately sending mixed messages to the organization and accepting underperformance in the business.
What Your CEO Needs to Know About Sales Compensation is the first book to address sales compensation challenges from a C-suite perspective. It’s an executive-level guide to understanding the power and effect sales compensation can have on the business through the wisdom of CEOs and effective practices across industries. Sales performance isn’t owned just by the chief sales officer; sales performance starts and ends at the top of the house. This book tells the story of how the C-level has made the connection between corner office priorities and front line sales.
August 21st, 2012
(from our Bangalore desk)
This week I attended a seminar organized by TIE Bangalore on the topic of Mobile App Monetization. This is a vexing problem which has bedeviled most Mobile Apps developers around the world. Problems of app discovery, app marketing, too many apps, app development fatigue are well known.
This was an interesting panel discussion sponsored by Qualcomm Ventures. The speaker lineup was top-notch and included the following speakers :
- Karthee Madasamy, Sr. Director, India and Israel, Qualcomm Ventures
- Manik Arora, Founder & Managing Director, IDG Ventures India
- B. Vamshi Reddy, Co-Founder & CEO, Apalya Technologies
- Rahul Chowdhri, Director, Helion Venture Capital
- Suresh Narasimha, Founder & CEO, TELiBrahma Convergent Communications
- V. V. Ravindra, Managing Director, Idea Brahma
The discussion was riveting and inspiring with this star speaker lineup. Below are the key points of discussion from this seminar :
Karthee’s keynote :
- Globally, there exist 6 billion wireless connections now out of which 1.6 billion are 3G connections. This number is expected to swell to 3.1 billion 3G connections by 2015. Also, by 2015, emerging markets will contribute 50% of smartphone market share.
- A smartphone is now a full blown computing device. A smartphone now embeds more and more electronic functions like camera, GPS, watch etc. Tight silicon integration is driving this trend. Mobile processors now offering full windows experience Eg Windows 8 may run on the same processor has as the Windows 8 phone.
- As to India, in 2012, 200 million phones are expected to be sold in India. By 2015, 300 million phones will be sold in India. Smartphone sales will multiply by 4 times in India by 2015, compared to now. At the same time, the costs of high-end smartphones keep falling.
- Another great trend is that of the rise of mobile broadband users in India. Today, there are 52 million active users in India. 42% Facebook users in India are mobile users. India has 37 million 3G HSPA users today.
- India is very interesting in that, here, a phone is the first computer for a user, it is often the first camera as well as it is the first gaming device a person might have.
- India has a huge amount of mobile opportunity. In fact, for India, mobile may be the only primary computing device which a huge amount of users might have.
- 3G tariffs have dropped drastically in India. India is one of the cheapest 3G markets now, anywhere.
- There was a time when there were hardly any Indian-brand devices. Now India has seen several homegrown device brands - who have increased market share using innovative strategies like dual SIM or Tier 2 market penetration. Indian brands like Micromax and Lava now own 20-30% of the market in India.
- There are too many apps now and app fatigue exists, however good apps can still see a bright future.
Karthee also mentioned about the Qualcomm program to find successful startup models – this program is called the QPrize and it has total 1 million USD available in prize finding. One of the previous QPrize winner has been Capillary Tech.
Question : Is mobile apps just extension of VAS ?
Vamshi – Apps are to engage and entertain customers as far as Service Provider is concerned. Monetization of Apps, however, does have a VAS feel in India.
Suresh – TeliBrahma had decided early on not to work with operators and focus on domestic markets, however it is now trying to work with operators and is also marketing abroad. Advertising is a tough market. Need a billion impressions to make 1 million dollars.
Rahul - Their firm is concious that VAS market is challenging. As to working with carriers, it is a country specific issue and mostly an Indian problem. Mobile payments is a tough business to crack (but one of Helion investments ngpay has succeeded after some efforts). App monetization is generally difficult, somehow apps have to go local to add value. B2B2C seems to be a monetization model so far.
Question : How to make money on apps ?
Ravindra – To make money, need persistence. Positioning is important. For mHealth, doctors have to be targeted. App Store is not a good model – need to go through B2B channel eg via clinics or other healthcare firms. Selling via B2B2C seems only viable option in India to make money so far.
Vamshi – Apalya is selling via operators and direct to consumers also now. Collecting money today is via operators – that is one of rare ways to collect money. Apart from that, app monetization is very hard. Sheer persistence is key to get to inflection point in environment. Collection agent today is service provider. Another model – Vodafone is trying to act as change agent and willing to take only 30% app revenue share
similar to the app stores. Discovery thru app stores etc is hard.
Manik – with app stores, mobile social networking or mobile travel firms are hot again. Mobile is anytime anywhere location-based experience. Internet penetration is low but mobile penetrations is high. Especially, targeting tier two cities and local language support can help.
Social networks in India and search are in India are not promising as global guys do this. Mobile Commerce or m-Commerce requires local people, and hence is promising.
Angry bird started with a Finnish operator first, and then reached scale. And then Apple accepted them.
Rahul – ngpay – primary monetization is via payments. It has been difficult for ngpay in the beginning. Making money directly from end users is hard but possible.
Question : Paid apps vs ad-based apps?
Suresh – brand advertising is interesting but it is not easy. Eg Angry Birds became success after Rovio had tried many other apps. Mobile CPMs are too low compared to web CPMs. Mobile ad based revenue is not a viable model. White label apps do not work as IP gets transferred to the customer.
Manik – has a mobile advertising firm-vserv – in app advertising. It is early days for sure. if a firm has a little bit success, need to promote that. Eg Angry Birds. Long tail for mobile advertising in India is quite long. Only two media agencies in India have a dedicated mobile guy. Digital ad budgets will double at least in the next few years. But next growth has to come from mobile. Clearly there is a shift in positioning.
India has 900 million subscribers. So critical mass is there. Vserv has 60 million addressable users.
Vamshi – Angry birds focused on viral marketing.
Ravindra – India is about sheer size. Just smartphones are 15 million.
Rahul – invested in Dhingana. If one has a single app firm, need to have a deep app. Stay in low burn mode. Show engagement. Dhingana is radio ad market as radio has 100s of crores in ad revenue
Manik – IDG is bottom up firm. Sees app opportunities in :
1) Infrastructure and enablers – eg advertising , security, discovery
2) enterprise mobility – still very new in India
3) cool movie movie hits type approach
1) B2B2C model is promising, that is hwere mobile and tablets are interchangeably used.
2) LBS services can be interesting
3) Global markets are promising
Karthee – Tablets are interesting – have a larger screen.
Vamshi – tablets market is still very small.
Suresh – tablets are promising. Eg winstores on tablets. Tablet will be bigger than PC at some point.
Ravindra – very bullish on tablet growth. Everybody knows tablets now and people understand their use now. People see PC replacement to a large extent. Clinics are good use cases for tablets. As doctors and radiologists are small compared to population, healthcare sector needs productivity improvements using mobile devices.
August 16th, 2012
Today Chetan Sharma, prominent Wireless Consultant in US and a friend of CellStrat team, released a great summary of Mobile Data market updates from Q2 2012 quarter (some are US specific stats while others are global stats). The key points from Chetan’s note are :
- US Mobile Data market is $19.3 billion in Q2 2012. Data now accounts for 42% of US mobile industry revenues.
- In terms of Y/Y growth, Connected Devices segment grew 21%, Prepaid 12%, Wholesale 4%, and Postpaid was flat. AT&T, AT&T, Sprint, and Verizon are number one respectively in these categories.
- Prepaid subscriptions exceeded 100 million for the first time in the US. This is also indicative of US’s downward economics trends. Postpaid growth is slowing in the US.
- iOS and Android are the two dominant mobile OSes. Windows Mobile may be third but with a very tiny market share.
- Samsung dominates global device unit shipments – however Apple has 70% of global mobile device profits in spite of just 5% of device market share. Samsung now leads in every major unit sale category both on the world stage as well as in the US. However, profits are a different equation where Apple overshadows its rivals like Gulliver on the Lilliput land.
- Apple iPad has 97% of global tablet profits with the remaining tablet players fighting for remaining crumbs.
- Smartphone penetration crossed 50% in the US.
- Ranking for top mobile data profits globally includes China Mobile, Apple, Verizon, AT&T, and NTT DoCoMo, in that order.
- AT&T and Verizon have launched shared data plans (a first – where two or more folks share the same data plan on a family account) in the USA.
- US continues to sell over 40% of the world’s smartphone every quarter thus making it the most attractive market for OEMs.
- The overall data consumption in the US market in 2012 is expected to exceed 2000 Petabytes or 2 Exabytes. The smartphone data consumption at some operators is averaging close to 850 MB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.
- Globally, one sees a Mobile First approach by firms now evolving into Mobile Only approach. Leading apps and services like Facebook, Twitter, Pandora are already operating in the world where mobile is driving majority of their user engagement. Expedia, Fandango and others are seeing the early signs of migration into the mobile dominated world. Very soon, mCommerce revenues will overtake eCommerce revenues.
- Q2 2012 again saw tremendous activity in the mobile commerce and payments space with a lot of announcements from the operators, Internet players, and startups as well as the retailers and the ecommerce players. All are vying for a piece of the mobile wallet. Much more to come in the next 12 months. On the retail side, Starbucks is a player to watch as it tries to become a more active participant in the digital ecosystem.
- Race to a billion – China is first nation to cross a billion subscriptions. (I guess India is second, massive population helps of course)
You can refer to this Update from Chetan and the other content on his site at http://www.chetansharma.com/.
Chetan Sharma is also organizing his high-end mobile conference Mobile Future Forward on Sept 10th in Seattle. Highly recommended, with a great set of speakers and topics.
August 13th, 2012
excerpted from Harvard Business Review (Jul-Aug 2012 edition) article on Social Selling titled “Tweet Me, Friend Me, Make Me Buy”
Social Networks are important to sales people, that’s where the customers are.. Social Media selling has risks, but the biggest risk is sitting on the sidelines while your competitors grab customers on social networks. It makes sense for businesses today, of all kinds, to explore selling on social media. This can be achieved via structured training the sales team. Interestingly, there is scant training programs catering to Social Media selling. This activity, so far, remains in the perview of a smattering of a few leading Social Media consultants who are trying to creat awareness in this area.
The world is moving from push to pull marketing tactics. Subject matter expertise delivered via white papers and tweets is part of sales strategy now. The coorelation between such high quality SME content to actual sales achieved is difficult to measure, but the fact remains that customer engagement, brand recognition and buying decisions are dependent on content posted on such social networks. The sales executives from Online Teleconference services provider PGi use their company blog to broadcast useful content to their audience and followers, helping create a brand recognition and awareness of PGi portfolio.
It’s where the customers are
Studies conducted by Experian Marketing Services indicate that social networking now accounts for 15% of internet visits in the USA. LinkedIn, the professional networking site, now boasts 100 million users, most corporate folks who are at various levels of potential customer firms.Twitter has more than 100 million active users and Facebook has almost close to 1 billion users, 14% of global population.
How Social selling helps
a) Prospecting : Cold Calling and email blasts are being fast replaced by prospecting potential customers on social networks. It seems the customers are more responsive to short messages sent via social networks from friends and contacts. Often the sales reps do not have to start the conversation, but rather can insert into an existing problem or situation being discussed on Social networks. Eg a client executive could be complaining about phone services, phone company sales reps can pick up such conversation and approach that customers with telco solutions and offerings. “A lead today can be a complaint on Twitter, a question on LinkedIn, or a discussion on a Facebook page.” Social monitoring tools like HootSuite allow such lead generation to be automated and integrated into a firm’s CRM system.
b) Qualifying leads : Using data intelligence tools like InsideView, salespeople can gain relevant, real-time insights about the companies and buyers they’ve targeted. “Follow”, trigger alerts, direct messaging are compelling tools on social networks which allow sales reps to research their prospects and be prepared for the sales presentations or sales calls. The key decision makers can be researched and targeted as direct contacts on social networks.
(CellStrat experience : LinkedIn is surprisingly powerful to make contacts and penetrate firms at senior level as per our experience)
c) Managing relationships : Sales remains a relationship-driven activity, but “who you know” is now trumped by “what you know about who you know”. Social networks are being used by sales reps to “know their customers” and what their customers are discussion online or in tweets. This helps empower the sales reps with valuable knowledge about prospects when making contact with them.
As to governance and credential risks associated with using social networks, firms can have in place policies and training for sales teams, to ensure that the employees do not end up causing trouble for their firm via inappropriate or questionable activities online.
It would not be a stretch to say that not participating in social selling puts a firm at a competitive disadvantage compared to it’s competitors, as the latter are certainly leveraging the social selling paradigm already.
August 5th, 2012
News Corp. is forming a partnership with AT&T Inc. to provide tablet-based learning and assessment products for kindergarten through grade 12.
The two companies said Monday they would offer a 4G mobile platform on tablets through a pilot program this coming school year. News Corp. also announced that its education business would be named Amplify.
The media company’s statement on Monday was its most detailed outline of its plans for expanding into the education sector since it spent $360 million in late 2010 to buy 90% of Wireless Generation, an education technology company that makes online tools to evaluate students and personalize instruction. Wireless Generation forms the core of Amplify.
Amplify will take Wireless Generation’s offerings a step further by introducing more original curricula and tools designed for students rather than teachers. In an interview, Joel Klein, News Corp.’s executive vice president in charge of Amplify, said it was critical that students have access to the platform both at school and when they take tablets home. “The idea that you can do this 24-7 can really change the game,” said Mr. Klein, who was chancellor of the New York City Department of Education before joining News Corp. in 2011.
The K-12 e-learning market in the U.S. is roughly $5.4 billion currently, a fraction of the amount spent on traditional educational materials like textbooks. But the digital market is growing about 20% annually, according to Michael Horn of Innosight Institute, a non-profit think tank.
Educational publishers such as Pearson PLC, Houghton Mifflin Harcourt Publishing Co. and McGraw-Hill Cos. education unit are already endeavoring to expand in digital, while technology companies including Apple Inc. also are trying to establish a presence. At the same time, states are cutting back on spending for textbooks.
Most of the content of companies like Pearson, McGraw-Hill and many others for K-12 segment is being digitised and programmed into tablet formats in Bangalore, India too as a cost cutting measure as well as they are also able to find market for their products in India and thus lot of schools and corporates are getting subscription based services for accessing such content on tablets.
(Excerpted from article in WSJ)
August 1st, 2012