“A year from now you will wish you had started today.” Karen Lamb
Are you thinking about starting your own company? Blog? Learning something new? Start today. That is why I updated Enma.nl’s styling today after reading about UX design and the influence of colors on brands.
Would you give up access to your Google Fit account if a health insurance company would give you 20% discount? Today a Dutch drivers association and insurance company, ANWB, announced a new method of getting discounts. Members can order a stick which will be placed in their car that will measure the drivers performance. How do they steer? Do they brake a lot? Etc. etc. etc. If someone scores 80-100 on driving safety they will get a discount of 30%, the lower you score on driving safety, the lower your discount.
So this made me think… Would I give up access to my Google Fit account if my insurance company would make me such an offer on life style?
At this moment, probably not. I work full-time & study on saturdays, so my average sit-ratio is about 16 hours a day. Luckily, I also walk to the water tap, fridge and my car, making my movement around the 7 hours a week -yikes-. I can’t imagine earning a discount with this sitting live style of mine.
The wonderful effect of working at home (and having a flu)
But what if they would give me a discount of 20%? Would this motivate me to move e.g. one hour a week extra?
I don’t know yet. But I think it is time to have a good thought about this, as I can imagine that this will probably be introduced in the coming year.
From technical, to emotional; learn to speak their language
Business leaders (CEOs) are responsible for buying 75% of cloud products, and are in most cases technically illiterate (Osborne, 2015). This means that IT-solution providers are dealing with a new decision maker. Over the past years I have spoken to hundreds of IT-solution providers and I noticed a difference between the successful companies and the companies who might not be there in a couple of years.
The biggest difference is the way sales teams communicate. The successful companies focus their communication on the humans who have to work with it, as opposed to only speaking about technologies. The companies which are struggling to keep up often talk to customers in technical terms. As the decision unit is changing and there is more pressure from software vendors it is important for the sales force to learn more about their new target audience.
How to communicate with non-techies?
It will be important for the IT-providers sales team to change their game and communication style to level with the (technically illiterate) business leaders. The figure below shows the biggest differences between business leaders (e.g. CEOs) and technical leaders (e.g. IT managers or CTOs). Their interests differ and this is something to keep in mind during the entire sales process.
An advantage can be create when demonstrating cloud products to CEOs, as they tend to focus on productivity and innovation power for the short term. Demonstrating the solution while highlighting the short term benefits can influence their opinion. Whereas the technial leader is process driven and focuses on the technical aspects of the implementation and security of the solution. While demonstrating the cloud solution to technical leaders, they are more likely to discover pitfalls and raise questions about implementation and security. Therefore, you should be able to answer those questions as well. The key lesson is to focus on the end-users, which are humans who want to work easier.
Advantages of IT-providers compared to software vendors
In most cases business leaders can easily order cloud products at the software vendor or via an IT-provider. A good example is Office 365, which can be bought directly at Microsoft or via Microsoft’s cloud service partners, the IT-providers. So, why would a business leader order their solutions at an IT-provider instead of directly from Microsoft? According to Gartner’s Tiffani Bova, it is key to add value to the cloud products (Lee, 2012).
Many IT-providers claim to be the safest or offer the best service on Office 365
From my perspective, there are multiple ways to add value to cloud products. While many companies claim to be the safest Office 365 reseller or they offer the best customer support, their claim doesn’t really add value to the solution itself. To add value to a cloud product, it is important to show the customer that you know why, how and what cloud product is suitable to their business.
Ask yourself, why would you choose a particular IT-provider?
A cloud solution is often exactly the same at each IT-provider or vendor. So, when an IT-provider sends a sales person telling that they are safer or offer better customer support than competitors that does not differentiate them. That is why it is about adding value. So, as an IT-provider, it is highly important to use the Golden Circle of Simon Sinek (2009) to show why the customers should choose your company instead of the vendor.
|Figure 2 – Simon Sinek’s Golden Circle (2009)
Illustration of the ‘Why, How, What’ sales principle.
This example shows how the principles could be used to determine the communication strategy for sales representatives in case of selling a cloud product to a health care organisation.
Why: We are an IT-provider specialized in health care because we want to make health care workers focus on their patients, without having to deal with frustrations with IT and the limited accessibility.
How: Since most care takers poses a mobile device, we can bring all the software directly to them, instead of having them to leave their patients to administrate their day on a desktop or laptop.
What: We can use our experience with CareInc, HealthCorp and Hospital Center, to set up Office 365 especially tailored to meet the needs of your care workers.
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‘Pay for software? Only if I can’t download it. Pay for a movie? Never. Pay for music? You must be from before 1998 (a.k.a. pre-Napster, explanation will follow).’
This would be the answers you’d get a few years ago. But thanks to the creativity (and urgency) these industries developed new business models, allowing them to generate revenue again. But before jumping to the actors that influence business models, I would like to show the effects of Free products on the behaviour of consumers.
Music labels collapse
‘All my classmates in high school spoke about the new Eminem album which wasn’t even released yet in the Netherlands –the country in which I grew up- . I couldn’t wait to get home. As soon as I got home I would open Napster, search Eminem and after thirty minutes it was there, I could finally hear what my classmates spoke of, and I loved it.”
From 1998 music labels started to “collapse”. The arrival of illegal downloads hit the CD sales drastically (O’Dell, 2011). The music industry decided to invest millions of dollars in court cases to stop the file sharing service which spread their music; Napster (Pequeno, 2010). But consumers didn’t care, even when the governments implemented laws making downloading music illegal, people would still download music.
Why does everyone violate these laws?
Downloading music is illegal in most countries for a while now, but why do people still do this? Are people not willing to pay for music, or is it the ease and the habit which was created over the years?
One of the four biggest record labels, EMI presenting Robbie Williams, Radio Head and Coldplay, stated in 2006 that illegal downloading caused so much damage, that they had to sell all their shares. But according to music journalist Pegueno (2010) one of the most important reasons that EMI had troubles was because the company was to slow to adjust their business model to the developments surrounding downloading.
My assumption is that consumers are consistent in their behaviour. They were used to getting music for free and most importantly, they got it within minutes after they felt that they wanted it. And although many court cases tried to stop this, consumers would keep downloading massively. They had already created routine behaviour. Furthermore, people use reference groups. When we think of people doing drugs we can come up with a lot of bad stories. But when music labels tried to convince everyone that downloading was bad, people would look to their reference groups. Their families, friends, neighbours, everyone surrounding them downloaded music. If everyone does this, then it doesn’t fit the criminal image which the music labels tried to give to downloading music.
Next to this, downloading was the easiest way to access music. It is the simplest way to stimulate recognition and self-development from the pyramid of Maslow. And everyone wants to reach those highest steps. Because when people identify themselves with music, they get recognition by other people who love that music. And by accessing an endless bowl of music you can develop your own music taste and stimulate your brains even further. (Maslow, 1943).
A million court cases wouldn’t stop downloading. This was “the reason” that multiple music labels went broke, but also the reason for other companies to profit from the newly created behaviour of consumers; needing music as soon as they wanted it. This allowed new services and products to enter the music industry and allowed them to compete with big existing companies. I believe services like Spotify show that people are willing to pay a ‘fair’ price for music, or more importantly the easiest way to access music.
New products in the music industry
An iPod allowed you to store 100.000 songs. Imagine the success of the iPod if you’d had to buy all these songs…Let’s say an average album costs 20 dollar and contains 30 songs. To fill your iPod you’d have to buy 3.333 albums, costing you $66.666,-.
So imagine the use of an iPod if you weren’t able to download music. Some people even dare to say that Apple wouldn’t be as big as it is now without the iPoad. Myslewski (2011) stated that this product helped Apple to gain market share and familiarity on Microsoft again.
Deezer, Pandora, SoundCloud, Spotify and a lot of other legal streaming services have risen from the wish to on-demand music consumption. In 2014 a journalist from the Guardian, Dredge, concluded that Spotify had a revenue of 746,9 milion euros in 2013. Spotify offers two options, the free version allows you to play music with commercials between the songs and limited features. When you pay 10 euros a month it allows you to listen music on any device, without commercials and even when you’re offline. 91% of the companies revenues existed of paying member in 2013 (Dredge, 2014). How big would Spotify be if the labels would have set up a streaming service themselves? And would Apple be as big as they are now or would Sony, now mainly known for electronic devices but also a record label, been first in entering the smart device market combined with their own streaming service?
My conclusion is that it is important to be creative. When a company innovates they can adapt their company to the market. Don’t force laws upon music-consumers but use all the tools available to spread your product around the globe.