Sunday, September 20, 2015

Is there a recipe for Slack's enterprise success without a traditional sales team?


Image Courtesy Ron Mader of Flickr under Creative Commons

Peruse the job listings page of a Series B enterprise start-up and you will see that a majority of the listings are ear-marked towards building out the direct sales team. And why not? The conventional and classic thinking such as in the timeless "Crossing the Chasm" advocates for a direct sales model as there is a need to explain the benefits of the new technology to customers.

Recently, the success of enterprise customer acquisition at Slack without an apparently traditional direct salesforce has caused jaws to drop and has fueled much discussion. Is this a new low cost pathway to market for a new technology company selling to the enterprise? Atlassian is another company called out as another proof point for enterprise traction without a direct sales team. Certainly, even for Slack, there is a deal size and complexity of deployment where an enterprise specific offering and sales team is necessary. But can this base level of low cost customer acquisition success be replicated? What are the ingredients of Slack's success?


Established User Preference There needs to be a support base of users familiar with the technology already present in the target customer base. These are usually in Line of Business or individual users rather than Central IT.  Preference can be achieved through two experiential mechanisms. One, through free trials and freemium versions of the product. Another way to establish this user preference is through consumerization - Where users can experience a version of the product in their personal lives as consumers. From there, this familiarity with the consumer version is translated into preference for the enterprise version or for bringing the consumer product into the workplace for its proven utility. These users inside the target customer base are a powerful influencer to the Central IT function through their word-of-mouth activity. In effect, the familiar users are acting as 'internal' sales and thus deferring the need for sales until the product is needed for more complex needs.

Pricing The price point needs to be low enough to be 'under the radar' as larger deals invoke budgetary commitments, approval cycles and multiple stakeholder involvement. The pricing should also have a level of assurance around being able to detach from the product if the value is not perceived by the customer. Slack has taken this one level further by offering pricing relief for inactive users which removes a barrier to adoption - yet another incentive to get started. Last, pricing should also be easy to find and understand. Too often, enterprise sales pricing requires a custom and high touch engagement with sales.

Ease of product acquisition and usage The product should be easy to acquire such as through a web channel and it should fit the buyer's process needs for vendor qualification, IP protection, security reviews etc. The product should be easy to use. No manuals, no on-boarding steps, no detailed training.

Marketing In the absence of a direct sales team calling on the customer, how will customers find you and how will they learn about your product? Content marketing, inbound marketing are some manifestations of this important need.

Usage Insights Without a direct sales team engaging with the customer to gather insights on usage, the product should have the capability to gather usage insights through instrumentation, call-home, self-healing, telemetry and other similar methods.

Time pattern of customer acquisition Without a direct sales team to pull in end of quarter sales, the time pattern of customer acquisition won't allow for easily meeting the pressures of quarterly revenue targets and the rigors of quarterly reporting that public companies go through. Promotions and other approaches can help but this model is more ideal for private companies.

It is not the case that a sales team is redundant in the context of this new 'Slack' model. Rather, the efforts of an enterprise sales team are being shared by a number of other entities such as users who take on the role of advocacy, marketing that drives an increasing amount of education, customer service advocates who drive absorption and resolution of customer issues.

Putting these ingredients together - especially the established user base - is a tall order. Few companies can replicate this model. However, given the impressive gains Slack has demonstrated, it is well worth the effort to re-create the magic.

Monday, August 17, 2015

The Four Constants in Storage - What will not change in the next ten years



I very frequently get the question: 'What's going to change in the next 10 years? ' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that second question is actually the more important of the two - because you can build a business strategy around the things that are stable in time...." Jeff Bezos, President, CEO and Chairman of the Board, Amazon.com

Some keen insights from Jeff Bezos around the constant around e-commerce; actually applicable to all commerce. In this post by Bill Gurley of Benchmark Capital, there are quotes from Jeff Bezos who goes on to describe three constants or what's not going to change in the next 10 years.

(1) We know that customers want low prices
(2) They want fast delivery
(3) They want vast selection

Sounds over-simplified, right? But, it is profound in its simplicity and high degree of empathy for the customer. Looking at the Amazon press releases and third party writings about their new features and products, I can almost correlate everything to the above three constants.



Inspired by Jeff's insights, I looked towards the current disruptions underway in the data storage industry where I spent some of my formative years. I realized that there are constants that will be true in the next 10 years. Indeed, they have been true for the previous ten years. Ironically, it is these constants that will drive change. Upstarts will disrupt incumbents by solving for one or more of these constants better.

In data storage, the constants are:

(1) Customers want flexible storage implementations.
(2) Customers want cheaper storage implementations.
(3) Customers want scalable storage implementations.
(4) Customers want available storage implementations.

Data Storage Constant 1 - Flexible - Customers want flexible storage implementations.

Also frequently termed business agility, users always wants to know if they can build apps faster, respond to un-anticipated web scale traffic surges, provision storage fast enough to support changing business needs in lines of business and so on. This constant is reflected in the rapid rise of the cloud computing (for storage in this case) model over the past few years, The pay-as-you-go and scale-on-demand elements of the cloud model is a disruption along the vector of flexibility. The financials of the cloud computing bellwether Amazon Web Services  and the growth of Amazon S3 speak for themselves. 

Data Storage Constant 2 - Cheaper - Customers want cheaper storage implementations. 

Storage cost reduction technologies has been a critical driver in the creation of new business models such as photo sharing apps, enterprise file serving and in fostering customer-friendly price wars in the cloud storage industry. Looking ahead, the volume, variety, growth rate of data will demand continued innovation for cost-effective storage implementations. Companies that respond in this vector will prosper - whether it is by reducing 

  • management costs
  • purchase price
  • deployment costs such as reducing data center footprint
  • integration costs through emerging hyper-converged solutions etc. 

In storage, "Do More with Less" is always a popular message that resonates with customers.

Data Storage Constant 3 - Scalable - Customers want scalable storage implementations.

The amount of data and the sources of data (machine logs, sensors, click streams etc.) are growing exponentially. Data stores must grow without service disruptions. Any growth related restrictions such as larger scale-up machines that hit limits or systems that require service interruptions will not meet this critical need. In response to this need, witness the rapid rise of distributed systems built on top of clusters of commodity servers and disk drives such as Hadoop and NoSQL databases.

Data Storage Constant 4 - Available - Customers want available storage implementations.

Users expect data to be available anywhere, anytime, any device. Cloud Storage provides that availability and access. In the distributed systems described above, data protection is implemented across multiple nodes thus preparing for the loss of a single disk or even an entire node. Current disruptions around cloud storage, distributed computing incorporate this storage constant.

So, what does this all mean? For marketing professionals, resist the urge for new and complex terminology. Instead, incorporate these constants in your messaging. This is the language of the customer. These constants will stand the test of time. For product strategy professionals? Jeff Bezos said it best " you can build a business strategy around the things that are stable in time ".