Book – Matchmakers: The New Economics of Multisided Platforms

matchmakers.pngYes, it is completely correct, I do not remember anything related to multi-sided platforms in business school curriculum several years ago. The book gives an excellent explanation of business principles behind the phenomenon.

Though the discussion of platform externalities and negative network effects are common, and the Book – Platform Revolution has an Glossary.pngexcellent description, Matchmakers emphasizes the economic reality of the multi-sided platforms.  Book site includes a convenient glossary of industry terms.

Interesting: a platform relaying on advertisement has three sides (producers, consumers, and advertisers).  Microsoft Windows is a platform that connects computer manufacturers, app creators, and app users, where Microsoft Office is the most popular apps.  However, when Microsoft tried to find producers for X-box console, the search was unsuccessful as game console is the subsidy side of the platform.

subsidy.png

opentable.PNGOpen Table initially tried to attract “eye balls” in general, and the strategy was unsuccessful.  The company signed up many restaurants, but not enough in one market to become attractive for the consumer.  The company changed its approach, and concentrated on specific markets to generate enough restaurants to be attractive for the potential diners.

BrightCove was conceived as a platform, but the approach was unsuccessful, and company changed its strategy.

Multi-sided platforms need to be designed to encourage participation from different sides.  For example, money-sending platform would charge more for sending money to a person who was not signed up than to a person who was signed up.

Advertisements

BMA -Customer Relationship Intelligence (CRI)

CRI.pngCustomer Relationship Intelligence (CRI) – an approach that is trying to quantify and organize customer understanding and apply this understanding to improve business results.  The objective is to build customer insight into product/process/service improvement (avoid pursuing improvements that won’t be valuable for customers, and concentrate on the improvements that will be).

“Your most valuable customers want a relationship with you…”  because it matters for their company (their infrastructure, etc.)

CMO Council observed a shift from traditional metrics to “customer efforts” measurement.  (Customer efforts include all activities related to purchasing, installing and using the product).

CMO.png

Example: a group of engineers went to the customer location to install the product.  After they came back, a new requirement was added for product development to limit time required for installation.

“Customers do not quite care about being delighted,”  but they will be happy if you “fix staff” and it will be easier to work with you.

book.PNGBook to read – Customer Relationship Intelligence: A Breakthrough Way to Measure and Manage Sales and Marketing

“Customer Relationship Intelligence brings a fresh, new perspective to sales and marketing: new relationship metrics and a breakthrough, actionable framework for real-time management, tied to profit. It is about teamwork and collaboration. It is about executing strategy. It is about retention, profit, and competitive advantage.

customer.png

84 Percent of Website Visitors Convert on the First Visit

conversion.png

Yes!!  The data is available, thanks to https://www.straightnorth.com/  and my “confirmation bias” could not be happier 🙂

No, we do not need to wait until the initial site visitor will become “ready,” site visitors are ready now, and we, marketers, should take advantage of it.  The report 10 Ways to Make Your Lead Generation Website Convert on the First Visit gives recommendations on how to use the data to benefit our companies.

Lead generation websites: If you do not make a great first impression, you will not earn a conversion, and you will only get a second chance 15 percent of the time.

Companies that want a full pipeline of sales leads MUST pull all the stops and make their websites first visit conversion machines.

Another popular confusion is clarified in the report:  only 23 percent of online leads come from mobile devices (data source is 70 percent B2B and 30 percent B2C).

Based on my personal experience in B2B and B2C, the number is even too high for B2B; the 30% of B2C in the sample might have received the most of mobile attention.  Each company should probably evaluate its own opportunity cost of heavy investment in mobile.

Yes, we, B2B marketers, can be in love with our long sales cycle and sophisticated buyers journeys, but we can increase effectiveness of our marketing efforts if we think about first visit more.  And – there is nothing to loose 🙂

HBR’s 10 Must Reads 2017

hbr.pngThe excellent collection overall has two interesting articles related to automation of knowledge work.  One of the articles emphasizes imperfections of algorithms and another one suggests strategies for humans when AI is able to perform some of their tasks.

(Based on my experience in marketing, marketing automation did not reduce the demand for knowledge workers, but rather expanded the “knowledge” required to be a marketer.  Though companies thought initially that they will need less marketers with the advent of automation, this assumption was incorrect.  The automation allowed more knowledgeable people to achieve better results, but the minimum number of people  and minimum amount of knowledge to realize any ROI on automation actually increased.)

Algorithms Need Managers, Too

The article suggests that however sophisticated, algorithms are literal, require very precise instruction and understanding of their limitations.  The typical example is giving the instruction to an AI to “save the Earth,” which will proceed with an attempt on elimination of humans as the most reasonable method of achieving the objective.

Example: a predictive algorithm was selecting products that can be purchased in China and re-sold in US.  The program worked well until customers started to return the products.  Long-term product satisfaction was not built into the process.

Example: algorithm can predict clicking on an add, but the required result is a sale; optimization on the click will generate more activity, but may not generate revenue.

Example: Netflix predictive algorithm for DVD rentals did not apply to video streaming.

Also remember that correlation still doesn’t mean causation. Suppose that an algorithm predicts that short tweets will get re-tweeted more often than longer ones.  This does not in any way suggests that you should shorten your tweets.  This is a prediction, not advice.  It works as a prediction because there are many other factors that correlate with sort tweets that make them effective.  This is also why it fails as advice: shortening your tweets will not necessarily change those other factors.

Beyond Automation

The article ponders the future of AI replacing some of the knowledge worker’s tasks, and what knowledge workers could do:

  • Step up (strategy)
  • Step aside (area that requires human interaction)
  • Step in (work with algorithms – what might be a default “augmentation” approach)
  • Step narrowly (area within profession that is unlikely to be automated)
  • Step forward (create next generation of AI)

ai.png

How Indra Nooyi Turned Design Thinking into Strategy (Pepsi)

The article explains very well “design thinking” on easily understandable examples of Pepsi.

Interesting: Pepsi also uses a variation of “reverse innovation” – launching a product in smaller market (outside of its home US market), where cost of failure is acceptable.

Interesting: Pepsi calls healthy products “good for you,” and products that do not fall into this category “fun for you.”

pepsi.PNG

Every morning you’ve got to wake up with a healthy fear that the wold is changing, and a convection that, to win, you have to change faster and be more agile than anyone else.

People Before Strategy

Discussion of people should come before discussion of strategy.  What are employees’ capabilities, what help might they need, and are they the very best?

Interesting… 🙂