Tag Archives: ebay

Uncle Fester says, “Focus on the customer!” Snap snap.

Screen Shot 2015-08-18 at 8.28.39 PMLast week I had lunch with a member of the leadership team of an e-commerce company I am advising. I love these lunches for I get to hear about the challenges, provide a point of view, suggest an action plan, but I’m not responsible to drive the implementation. Sigh, it’s a nice change for I’ve spent many years driving and it’s nice not to have to provide a well thought out plan and sell it to all the stakeholders.

The company is struggling with many of the problems common to an early stage start up. Nothing really all that unique. One challenge, however, points to how important it is to address early or it festers like Uncle Fester and can pave the way to a visit with Morticia Addams. The challenge focuses on building a product that customers want.

Back in the mid to late 1990s the concept of “build it and they will come” spread across product innovation. Speaking from the days of the early Internet, I remember talking with companies who received funding based on an online product with the PROMISE that millions of consumers were on their way within a few quarters. WRONG. During my time at eBay, the product team had to take a very pragmatic test and learn approach to innovation for fear of disrupting how consumers buy and sell on the e-commerce platform. New product features would be built and rolled out to a limited amount of select eBay buyers or sellers. The effect of the product rollout on category revenue, GMV, completed listings, etc. was closely measured. Only after the product innovation had proven to achieve a targeted measured increase would the feature be rolled out to the greater eBay community. This test first concept is almost “well, duh” to most of us veterans. However, not every product road map takes this test-and-learn approach.

Screen Shot 2015-08-18 at 8.25.06 PMApparently the founder of the company I’m advising was insistent that scarce product development resources focus on building a specific feature that would be the key product differentiator. The founder was certain that this feature would meet the needs of the perceived target customer and steal customers from the industry leader. Customers were certain to come and revenue would spike after this feature was implemented. No discussion or testing plan was discussed to determine if the feature really met the needs of the customer, if the needs of the RIGHT customer were being met, or if the feature provided enough lift in revenue to warrant significant finite resources.

My contact shared that the feature was rolled out and had consistently abysmal (sub 1%) adoption from the target customer. The target customer did not find value in the feature and significant product adoption did not happen. There was no spike in revenue. Sigh. It became clear that the innovation efforts were focused on the wrong customer and needs. Opportunity was lost.

Meanwhile, the competitor focused on launching new features to help the RIGHT customers, small businesses, who brought supply to the e-commerce platform. These innovations brought more small businesses to the platform, which attracted more consumers, generating more revenue for the competitor. These innovations resulted in a significant A round of investment.

“Yikes, I feel like we missed the boat here,” my contact shared. Hopefully the team is able to quickly pivot and re-align resources before the competitor gets too far ahead. The lesson is very clear, however. Before young companies launch their product, it is important to identify the customer who has the potential to generate the most revenue. Focus on meeting the needs of this customer first through product innovation. As we all know, it’s sometimes not obvious who this customer is and what needs are to be met. However, that’s where product leadership is needed to hold back the “build it and they will come approach” and fan the flames of the “test and learn” approach. The life of the company is dependent on it. The floor of the Silicon Valley is littered with the bones of companies that did not get this right.

The Addams Family. Snap snap.

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Marketing Advice for Start-ups: Know your customer first

An e-commerce start-up asked for my thoughts on how the company should be thinking about marketing and what could be done with almost no marketing budget to drive acquisition and purchasing activity. I had to chuckle when I was asked for this input for yet again it demonstrates where in the priority list most business people perceive marketing to be….at the bottom. Most start-ups build a product, get it up and running and have a rough idea of how it will generate money. Unfortunately, most business leaders look to marketing as the tool to help grow the business…after the product is launched.

4PsGraphicI am using the term “marketing” very loosely here. Marketing is mostly understood as all the tangibles – online, website SEO, paid search, social media, etc. Little regard is given to the core marketing principals of the 4 Ps, for example. When most people hear the words “the 4Ps” they think about the OPP song from the mid 80s and NOT the critical marketing concepts of Product, Price, Place, Promotion. Clearly most people get stuck on the Promotion part….which is putting the cart before the horse.

I encourage all start-ups who approach me for marketing help to stop, take a deep breath and evaluate their business and product through the lens of the 4 Ps within the context of a few additional guiding principals; defining the target customer segment (s), understanding why the customer segment wants to buy the product and defining how the customer evaluates/buys the product.   Now to the start up leadership who feels time pressed, this sounds like a lot of work to do for marketing.

Working through this process and understanding the customer is CRITICAL to the success of the business. Leaders may find their product does not meet the right customer need or that a different customer segment should be targeted. This can be a tough nut to swallow for it means reworking the product that was just launched. Start up leadership must get these marketing concepts right before any marketing plans or programs can be developed and launched with a successful outcome.

One of my mentors and managers at eBay developed a structured document called a Unified Marketing Brief that helps guide business units and companies through this form of critical thinking. The document requires debate and thinkin around target audience (segmentation), marketing objectives, key success metrics, competitive industry analysis and market research. Once these elements are addressed, discussion is encouraged around brand and how to position and message the product and key benefits. I’ve guided business units in the e-commerce, identity protection and financial technology verticals through this process with very successful outcomes. Yes, it’s a lot of work and it takes time. However, once completed, business leaders now have a road map to guide marketing planning and tactical program development.

Buying Cycle GraphicI found another great example of a structured approach to startup marketing by April Dunford on Rocket Watcher . She provides a great approach to mapping marketing tactics to the buying process of each target segment.

April also takes the concept one step further by discussing the importance of testing, improving and understanding the root cause of the tactical failure. Too often companies don’t get the immediate tactical response rates desired and make the wrong assumptions as to why it happened. Unfortunately these wrong assumptions follow to the next tactical program…that has the same poor results. April makes a great point in encouraging marketers to understand the WHY to improve tactics. Check out April’s recent presentation to learn more at:

Now let’s assume that most of this strategic marketing work is in process and marketing tactics are launched. Is the marketer’s job done? Obviously no. The work has moved into a different phase of continuous improvement based on customer feedback. Start-ups must have a mechanism in place to capture and listen carefully to customer feedback. The mechanisms can be customer support teams accessible by email or online chat, twitter feeds or by call centers.

Listening to customer feedback is critical…but converting the feedback into actionable product improvements is another. This is a topic for another post! Does your start up have these mechanisms in place? I bet your competition does.

 

 


eBay cyber attack highlights value of card on/off tools

eBayEbay is yet another giant consumer brand that has fallen victim to a cyber attack. Like many of us, I raced to change my password when I heard the news break early Wednesday morning. Of course the news media and many eBay users assumed the worst had happened and that personal and financial information had been breached. Fortunately, the attack was limited to a corporate network and only a small amount of employee login credentials were breached. EBay’s PayPal business unit did not show evidence of user personal or financial information being exposed. Few.

Given the frequency of these high profile breaches, it seems like only a matter of time before hackers are able to break into the networks of the most trusted consumer brands and financial institutions. Target experienced a massive breach late last year that many consumers are still dealing with today.   High-end retailer Neiman Marcus experienced a breach as well. Larry Ponemon, chairman and founder of the Ponemon Institute, which specializes in data-security issues, said “It shows that even the best of Internet sites are vulnerable to cyber attacks … you can’t stop this tidal wave.”

Yikes! What are consumers to do?! Even the perceived most secure websites, businesses and financial institutions are vulnerable to cyber attack. I think the best form of protection is to empower consumers to control when, how and where their credit or debit card data is used. If consumers can limit the use of, “turn off” or block the use of a card, they are empowered to protect themselves from any resulting damages from these cyber attacks.

Ondot Systems provides one of the most compelling solutions to help consumers take control of their payment cards.  The Ondot solution lets consumers…

  • Turn a credit card on or off
  • Limit the use of a card to a specific retailer or spend category
  • Limit card use to an area near them or to a specific geographic region

Ondot SolutionsThe eBay cyber attack highlights the consumer value of Ondot solution    Imagine that you were a victim of a data breach and that your credit card information may have been sold on the black market. Sadly, this is the case for millions of US consumers. The Ondot solution empowers you to prevent any fraudulent transactions should a fraudster purchase your data and attempt to buy things on or offline. For example, upon hearing about the breach you could easily turn off the card immediately giving you extra time to determine if it’s necessary to cancel the card. Or, if you limit card use by geo proximity to you, use of the card will be denied to any cyber criminal across the world attempting to purchase items. You are empowered to protect yourself from fraudulent payments BEFORE they even happen. That’s cool.

Ondot Systems does not provide a direct to consumer solution. They are actively pursuing relationships with the major payment processors and financial institutions to white label the technology. I’m wondering though if this technology is relevant enough that consumers could actually ask their bank card providers for it….or be willing to switch to a card provider who has this technology deployed already. The Ondot solution could prove to be a strong differentiator that may attract many new customers to a bank’s credit card offering.   With the increase in data breaches, I’m hoping my bank will provide this functionality soon. If not, I am open to learning more about who does offer this technology.

Ondot has the wind at its back now. However, this technology is not new and competitors have built similar solutions. From what I understand from my patent attorney friends, this technology is not particularly defensible for there are many ways to skin that technology cat.  Meow.  Ondot must build strategic partnerships with the largest payment processors first to grow market share…and do it quickly.  These processors will pave the way to deploying to small and mid tier banks.  Ondot’s big hurdle will be in how easily the solution is deployed at the bank.  As we know, these smaller banks get heartburn if a solution integration requires a big internal commitment.  However, it appears they have addressed this hurdle with seamless integration into the universally accepted payment standard and with deployment support. Once deployed, Ondot’s next challenge will be in how well they engage these banks in co-marketing the solution to the consumer.  Many mid and lower tier banks run lean on marketing so the key here will be how to take advantage of current marketing channels to drive adoption.  However, I have a feeling consumer word of mouth may be the most effective channel.

Ondot is a formidable competitor and is well positioned to be the market leader.  Now it’s about how well they execute.


Can Apple Benefit from a Strategic Partnership with PayPal?

The fact that Tim Cook hinted that Apple might be getting into payments is no surprise.  It’s more of a “duh.” Apple has the user accounts, consumer credit cards on file, and millions of iPads and iPhones in market.  The launch of Touch ID and the iBeacon sensor only connect the dots even further.

Apple’s Passbook paves the way for expanding the wallet beyond loyalty cards and into the ability to make online and offline payments. The launch of the Touch ID addresses security concerns and helps prevent unauthorized payments should the phone, or “wallet”, be lost.

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In the online world, it’s not a far stretch to imagine a consumer using their Apple ID to authorize a charge to their credit card for a purchase made on an e-commerce site.  However, competitive pressures from Visa, MasterCard, and PayPal may make convincing e-commerce sites to accept Apple payments that much harder.  One recent article points to Apple making payments as part of the iOS developer kit…which would easily provide code needed for a developer to add a payment feature to their mobile commerce app.

However, the opportunity for Apple gets more challenging in the offline retail world.  Yes, iBeacon creates a network to enable mobile payments through detecting and authenticating a mobile device.  Cool. However, Apple faces the challenge of convincing merchants to adopt the payment processing hardware, dongles, etc.  Google, Stripe, Square, and Dwolla also face this problem, among others. Even with its big brand recognition and marketing strength, Google was not able to grow offline retail adoption of its wallet.

So what are the opportunities for Apple moving forward?  Apple could build its payments business through acquisitions, or strategic partnerships.  Square has been a leading innovator in the payments space, is building merchant adoption and has a strong focus on UI/design given their recent hardware release.  While a Square acquisition may be expensive, Apple would quickly acquire payments processing technology, a growing user base of merchants and a design focused group of developers.  Bloggers have also identified Stripe as a potential, less expensive acquisition.

I think Apple can benefit the most, however, from a strategic partnership with PayPal.  Recently a LOT has been written about PayPal feeling the heat from Apple and pitching to help build out their payment network.  Some people see this as a signal PayPal is feeling threatened.  Yes, the competitive threat is there.  However, PayPal has many elements that Apple needs to be a leader in this category.  I think together, PayPal and Apple can create a break through wallet that defines the mobile wallet.

First of all, PayPal has addressed many of the cross-boarder (currency) trade challenges that Apple will eventually face.  Remember, Apple products are ubiquitous and they face hurdles in every new market they enter. We all know that Apple will not want to limit payments to the US market.

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Secondly, PayPal has a merchant program in place and is regularly improving the product feature set. This in market learning will only improve PayPal’s ability to deliver a solution merchants actually want and can easily adopt.  PayPal is also co-marketing with merchants to drive consumer adoption.

Lastly, PayPal is seen as the “most trusted” mobile wallet brand as defined by a 2013 Javelin study. Why is this important?  In light of the recent data breaches, mobile security will be a big factor for not only consumers, but for merchants.  Yes, Apple’s fingerprint ID is fantastic to access the device and authorize transactions.  However, there is a lot happening in the payment processing back-end that PayPal has focused on securing for almost 20 years. A partnership with PayPal will enable Apple to address this hurdle and avoid a dreaded data breach.  Should the unthinkable actually happen, culpability would most likely NOT fall squarely on the shoulders of the world’s number one brand.


Know your customer first to find the right strategic partnerships

This week I had a conversation with an executive at a mobile banking company. We spent a majority of our time discussing the strategy of using strategic partnerships to build a customer base, deliver products that meet customer needs and generate revenue. This executive shared an unfortunate experience where his team was pushed into a partnership where they provided most of the product development resources and had to commit to the lion share of the marketing spend to promote.  Unfortunately, the double barrel commitment yielded little return in helping the company achieve its goals. The partnership was more of a distraction and had high opportunity costs. Frustrating.

Strategic partnerships are an important lever to pull to grow revenue, drive acquisition, build out technology, and increase product functionality.  However, it’s mission critical that the right strategic partnerships be established or the relationships will be a distraction and take critical focus off of what is important.

One of the most important exercises a company must go through is to understand who their customer is and how the company will meet customer needs.  Without this understanding, it will be impossible to find the right strategic partnerships. Once the customer is understood, companies need to evaluate potential partners across 4 factors.

The first factor is access to the right customer.  Will the partner enable a company to market their product to a customer segment that will generate revenue and have high life time value?  If not, the partnership will yield access to consumers whose needs are not met.  As a result, little value will be provided to the company.  Unfortunately this happens far to often as young companies rush to find ways to acquire new users and monetize as quickly as possible.  As we all know, this is a symptom of a short-term focus and a need to show growth to current and would be investors.

The second factor is to understand the required investment needed to realize the value of the strategic partnership.  For example, eBay entered into a strategic partnership with PayPal to meet the needs of its users to pay for things securely online.  Yes, eBay had to invest product resources to integrate the PayPal technology into its listings.  However, the investment had a very positive ROI for it brought huge value to eBay buyers and sellers. The product partnership proved to be very successful, as we know, and eventually resulted in eBay acquiring PayPal.

The third factor is the company’s internal resources and willingness to support the partnership.  I’ve seen many companies stumble on this factor. I was part of an organization that needed to partner to quickly provide product features to remain competitive.  It was one of those standard “make vs buy” debates that resulted in the executive team deciding to move forward with a partnerships strategy.  Unfortunately, employees outside of the executive committee did not feel they had the resources needed to support any technology partnerships and quickly dug their heals in and resisted any discussions. Needless to say, any partnership agreements quickly stalled in the implementation process.

The last factor is both parties’ shared interest in a successful outcome.  The partnership must be of equal or greater strategic importance to both partners.  While at Excite@Home I managed a strategic partnership with Paramount Pictures that was designed to increase awareness that Excite was a destination to learn more about the latest blockbuster movies. I managed a team of developers, designers and marketers to build solutions to promote Paramount’s movies across the Excite@Home network.   We busted our butts to get things done.  Unfortunately, Paramount didn’t have much interest in promoting us as defined in our partnership agreement.  We were lucky to get an Excite@Home logo placement on the front page of the Paramount website…but were nowhere close to receiving any offline placements.  Paramount reminded us of this too frequently.  Such is life in the big city. It will always be Silicon Valley vs Hollywood.

So blah.  What is the conclusion to my bloviation? Before company executives start frothing at the mouth to strike strategic partnerships, it’s important to do the introspective work first.  Who is your customer?  What customer needs are being met with the product?  What needs are not being addressed by the product?  Only with this sense of corporate self-awareness can companies enter into fruitful strategic partnerships.  Without doing the upfront work first, it’s like searching for a spouse without knowing what qualities one is looking for in a mate.


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