2. first Google pages, then first, identify what is great about By moving a software company from desktop-based
your company and start telling that story. Second, if you software development to a Web 2.0 “light, small, fast,
do have problems, FIX THEM — and then tell that story and cheap” development methodology, there will be
to your customers as well. It isn’t bad products that peo- more opportunity to get feedback from your customers,
ple hate. It’s companies that make bad products and learn from it, and adapt the product, leading to more
don’t learn the lessons and then create better products.2 rapid product innovation. Finally, blogs, wikis, RSS
[Really Simple Syndication] readers, blog editing tools,
Product and Service Innovation and RSS aggregators could be deployed as a lightweight
knowledge management system [4] through which to
There are many routes to product and service innova-
share innovation best practices, learning, and content.
tion that can drive new customer acquisition. Among
By opening this system up to a broad set of employees,
many other options, you can:
partners, customers, and even competitors, innovation
Broaden your offerings to appeal to more segments ideas can come from anywhere, not just from the core
(by rapidly modifying existing offerings to better suit design team or business leaders. As an example of this,
customers or adding new ones) IBM recently launched an Innovation World Jam [2],
in which it asks its entire “ecosystem” to help the
Increase the quantity and quality of new offerings
company innovate in public.
being launched3
Another significant opportunity lies in creating Web
Improve time to market, the product design process,
services that access your systems, processes, and infor-
or the innovation skills of your people
mation. No matter what kind of business you are, there
Following are a few suggestions for how to achieve is probably some sort of opportunity to expand the
some of the above with Web 2.0. By employing Long number and type of customers that you serve by offer-
Tail theory, there is the option of creating more offer- ing access to your data, services, and systems such that
ings that would appeal to the tail. You might: it makes it easy for a customer to interoperate without
having to go down the outmoded and expensive EDI
Move from providing mass-market hits to providing
path. Lightweight Web services are quickly replacing
access to a much more “niche” product
expensive traditional EDI links. For example, Amazon
Drive down the cost of connecting your supply to rearchitected its entire operation around Web services,
the external demand which allowed the company to build an e-commerce
platform with over a million active retail partners [3].
Increase the number and variety of products
Look at your operations. Think about how you could
you offer
open them up to the world and make it easier for peo-
Understand and build “filters” that can weed out
ple and companies to do business with you.
the mismatches and provide just the most relevant
offerings to each user
CUSTOMER RETENTION AND REVENUE EXPANSION
Consider the possibility of your customers creating
FROM THE INSTALLED BASE
the product you sell
Next, let’s look at customer retention and revenue
Potentially become an “aggregator” of your type of
expansion. There are four levers that can be modified
product (including those from other vendors)
to increase customer retention and volume of business:
Move from an “atom-based” model to either a
1. Product and service innovation
hybrid model (Web sales with shipped goods) or
a fully digital model (in which you can have unlim- 2. Account management
ited “shelf space”)
3. Cross-selling and up-selling
4. General retention practices
There are many books and Web articles written on corporate blogging. Two of the better books are Naked Conversations by Robert Scoble
2
and Shel Israel (a good high-level overview of why companies should blog) [5] and Blog Marketing by Jeremy Wright (a detailed look at
how to “do” corporate blogging well) [7].
3
For example, Zeiss, the German optics manufacturer, came close to bankruptcy in the 1990s. Then it started launching new, innovative
products, and by 2004 the company was able to state that it generated 43% of its revenue with products launched in the prior three
years. This can be a significant route to growth.
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4. If there are any Web-based aspects to this business, then “Marketing and Sales” section, but it bears repeating.
ABC must immediately begin to instrument its Web Chris Anderson said it best: “For a generation of cus-
applications so that it can watch every single action that tomers used to doing their buying research via search
users take. There are nuggets of gold buried in that engine, a company’s brand is not what the company
mountain of “usage pattern data.” By watching its users says it is, but what Google says it is” [1]. If ABC wants
use the Web-based systems and applications that inter- to retain its current customers and sell them more, then
face with ABC’s toys and games, it is possible to deduce it needs to react to what its customers are saying. If its
needs that the users themselves cannot even articulate products stink, then the company should admit it, fix
but that are obvious from the patterns. There are many them, and then move forward in collaboration with its
more things that ABC could do, but that is a first sam- (remaining) customers.
pling of ideas for supporting better account manage-
ment practices.
The entire concept of creating barriers to
Cross-Selling and Up-Selling
fence your customers in is wrong-headed
This leads us to the improvement of cross-selling and and disrespectful.
up-selling. Now it will become apparent that when we
apply Web 2.0 tools and thinking in one area, it often
has positive spillover effects in other areas. For exam-
Retention Practices
ple, when we look at our sales and advertising channels
to identify opportunities to cross-sell/up-sell to existing
Traditional retention policies use a fairly heavy-handed
customers, we now know to be aware of the entire tail.
approach whenever they can get away with it. This
We can use low-cost models where appropriate to move
includes setting up barriers to switching. The telephone
further down the tail into potentially more profitable
companies used to rest easy in the knowledge that peo-
territory.
ple wouldn’t leave, no matter how awful the service
Back at ABC Widgets, there are a few things the com- was, because they didn’t want to give up their phone
pany could do that seem pretty straightforward. It numbers. Once local number portability passed as a
could examine its total customer experience and make law in the US, people defected in droves (often, unfortu-
sure that those experience touchpoints are fast and nately, from one frying pan into another fire). The entire
functional. People are getting used to Amazon.com, concept of creating barriers to fence your customers in
eBay, and Google, where the window between thinking is wrong-headed and disrespectful.
of what they want and receiving what they want has
Here are some ways the management at ABC could
shrunk, and the quality of that interaction has gone up
improve retention. They could start by trying to get a
compared to dealing with other companies. Revising
grasp on what is causing their customers to defect in
heavy ERP systems doesn’t count as Web 2.0 thinking,
the first place. This is a lot easier to do if you are deliv-
but there might be some places that ABC could apply
ering some sort of hosted service. It has been suggested
some lightweight application development to solve
that the salespeople at Salesforce.com and Jot (hosted
some particularly knotty issues, build out moderated
software companies that specialize in CRM and wikis,
forums for its users to improve support, and/or move
respectively) know within 24 hours if a new customer
CD-based software applications online where it can
will become a real paying customer. They also know
build, learn, and adapt them to the users quickly. This
if an existing customer is declining in his or her usage
would give ABC a faster order-to-delivery cycle time, as
and likely to stop paying for the service. They have
the customer could search for the software/game, click
achieved these insights by measuring everything and
a button, pay for it, and play it immediately.
then looking in the usage data for patterns that predict
One big area of weakness and opportunity involves buy signals as well as defection signals.
brand strength and goodwill. With Web 2.0, there is
Because they lack the frequent touchpoints found in
no longer any place to hide. Companies that used to
an online environment, most companies cannot take
bury their customer horror stories in their online
advantage of this approach. But for those who have fre-
forums (or worse, delete them from the forums, as
quent online interactions with their customers, this is a
Apple Computer has done many times in the past) are
must. They can measure, recognize patterns, and then
now faced with the ugly truth every day when they
intervene before things go too far wrong and it’s too
search for their name. I discussed this above in the
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