Alternative Payment Methods: Increasing the Consumer’s Willingness to Pay

magine walking into your local supermarket as you normally would. You fill your shopping cart with groceries, and when you get to the checkout line, you see hundreds of abandoned carts loaded with items, strewn haphazardly about, but with no shoppers to be found. Was there a fire? Natural disaster? In a brick-and-mortar supermarket, only a catastrophe could cause such an odd sight, but online it is par for the course. The majority of people who take the time to load a shopping cart never make it through the checkout line; the industry average projects a staggering 60 percent figure of abandoned shopping carts.

Why don’t these people pay? Why would somebody go through the effort and maneuvers of shopping without actually following through? Quite often it comes down to price or, moreover, willingness to pay. There is a lull between loading a shopping cart and actually paying that allows a pajama-clad online shopper plenty of time to pontificate the merits of the would-be purchase, look for a better price or simply get distracted and lose interest.

A Good Place to Start

There are many ways to increase successfully completed checkouts, but perhaps the most important one is to try to augment the consumer’s willingness to pay. Adding alternative payments is a good place to start because it’s not too difficult to see that increasing payment options can potentially rope in more potential shoppers.

If your wallet only contains an American Express card and a US$20 bill, and you stumble across a restaurant that is selling $30 meals and only accepts Visa and MasterCard, chances are you will continue your stumbling until you find an establishment that accepts your money in a form you presently have available. Likewise, the PayPal effect is real; somebody who just sold an antique doll on eBay via PayPal might have $200 sitting in a PayPal account, willing to use that balance on a somewhat cavalier purchase. It’s almost like money found under a couch cushion, subject to less stringent purchasing criteria than money earned from a paycheck, and therefore increases the consumer’s willingness to pay.

There are other ways that alternative payments can help. Sometimes a consumer’s willingness to pay will be diminished by the lack of trust in an unknown merchant, which is something that reputable alternative payments like PayPal and Google Checkout can help offset. BillMeLater, likewise, might attract consumers who are hesitant about placing a large purchase on a debit or credit card. Other payment types simplify the experience and reduce the amount of friction in a checkout — call it the solution to the “my wallet is downstairs and I’m upstairs” effect that brings so many checkouts to a grinding, permanent halt.

Another Problem

Unfortunately, there’s another — much bigger — problem: Sometimes people want an item but they just don’t want to pay for it — or at least what you’re charging for it — no matter what form of payment is accepted, whether it be credit card, cash, check, PayPal, BillMeLater, Google Checkout, gold ingots, etc. Traditional payments and most alternative payments don’t really solve this problem, because they simply shift the tender type around without really overcoming the consumer’s fundamental resistance.

Shoppers are bizarre creatures. The same person who might agonize over whether to buy the $8 or the $9 pair of socks might drop $200 — without so much as an afterthought — on a bottle of wine, spend $120 per month on car insurance without even looking for a lower quote, or cough up anything to get the latest trend in denim. People have different price sensitivities for different products at different times.

It turns out that a terrible customer for one merchant might be a great customer for another merchant. The same person who abandons your shopping cart might be the best customer in the world — come Valentine’s Day — for FTD, or a terrific shopper at Gap, or an ideal Geico policy holder, or a lifelong Blockbuster member. These companies, in turn, will pay a lot of money to acquire a new customer.

Alternative Payments

What if you could offer your customers your products for free if they bought flowers, signed up for a premier wine club or switched insurance carriers — things that they apparently want to do anyway? It turns out that you could get paid as if customers purchased from you directly, fundamentally changing the whole nature and numbers of the conversion game for “bad” customers.

This is where alternative payment companies like TrialPay, Webloyalty and Affinion help. TrialPay is a different kind of alternative payment, a conversion tool for the large numbers of customers who ordinarily would not pay. Just as BillMeLater can help convert a customer who might not have enough cash to make a purchase, TrialPay helps convert customers who wouldn’t normally purchase — period — by allowing those customers to “pay” when they transact with a trusted partner for which they have a high willingness to pay, like Geico, FTD, Blockbuster, etc. The Geicos and Blockbusters pay TrialPay for the customer acquisition, which covers the cost of the product or discount you give away to the customer.

The concept is not too far removed from Amazon’s “Get $30 Off When you Sign Up for an Amazon.com Visa Card” promotion that Amazon shows in every U.S. checkout — the key differences being that not everybody wants a credit card, and offering other services might prove more lucrative to the merchant and compelling to the consumer.

Significant Revenue Possibilities

This concept can be used in so many more places. If a customer closes the browser window on the shopping cart page, you can show them a message offering them a discount funded by a blue-chip advertiser. If a customer is looking up shipping prices, you might be dealing with a frugal customer more likely to abandon their shopping cart.

Customers who haven’t come back to shop with you in months or years are buying other things elsewhere. You can win them back by offering them discounts when they transact with your partners. This yields you — as a merchant — incremental revenue, but also recaptures your customers’ attention.

When you truly increase a consumer’s willingness to pay, the revenue possibilities are significant simply because the vast majority of your visitors probably never engage in a transaction on your site. An intelligent and thorough implementation of relevant alternative payment options can slowly but surely chip away at a consumer’s reluctance to pay you and make a lasting effect on your business.

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Evaluating Tech Startups: The Risks And Rewards

By John Foley

Tech startups are enthusiastic about the prospect of selling to businesses, and rightly so. Opsware, VMware, Salesforce.com–they’re just a few recent examples of startups that hit it huge, whether through buyout, IPO, or organic growth. Venture capital firms are pouring money into promising early-stage tech companies–$1.1 billion went toward 187 software deals in the third quarter, according to PricewaterhouseCoopers and the National Venture Capital Association–and Web 2.0 has everyone thinking again about all the business possibilities on the Internet. The pieces are in place.

[.....]

See more at http://www.unitedbit.com/

On Digital Telepathy

From TechCrunch:

San Diego based Digital Telepathy has changed direction from strategy-public relations to services, with a new model that will appeal to anyone who has ever wanted or needed a hand at getting their startup ideas off the ground.

The Biz in a Box service isn’t for those already in the industry, or those with a lot of experience, although Digital Telepathy also offers services for existing startups looking for advice on taking their business to the next level. I know when I was previously involved in a startup it was difficult to know where to start, and who to get advice from. Even when you do find someone it’s often not a cheap experience either, the consultant I dealt with previously charged 6 figures to basically guide us in the right direction, without providing any development services.

Digital Telepathy’s approach (From Digital Telepathy’s website)

We believe that great ideas must be executed quickly and efficiently. A grand vision requires laser-sharp focus and steady momentum to fuel its drive. That’s why all our products are delivered in 90 days or less. A short timeframe aligns the team with the project and forces out the true essence of your concept.

Our unique process enables us to simultaneously execute the strategy, design, and development each and every day from the start of the project. We understand that a web app is never truly finished. It can always be refined, improved and scaled. So we watch over our apps on a monthly basis, providing innovation management for new features, marketing campaigns and revenue potential.

Online Business Design

Have an idea that you’re itching to get to market? Well, we’re sorry to say that waiting longer won’t make your itch go away. The thing about great ideas is that they are nothing without execution and whether you do or don’t execute on them now, somebody else will. So, don’t test the water before jumping in. Instead, take the leap and turn your idea into a high velocity business opportunity in (almost) no time flat.

Proof of Concept and Idea Innovation: You have a great idea. But before you elope and go get married to it, it’s a good to do a background check and make sure your friends on the web are excited about it. So, we’ll knock your idea around, ask all the right questions, and then make sure we dress it up to stand out on the big day.

User Experience Design Rapid Prototyping:The funny thing about users is that they only use when it’s easy, fun and/or useful to do so. So, if you are going to build something, stop for a second and allow us to listen to your users. We’ll then throw some design ideas on the wall and then prototype and refine those ideas until they are brilliant.

Test Driven Web Application Development: Would you wait until the second story of your house is finished to make sure that the cement in your foundation is dry? Well, we wouldn’t either and we think building web apps that way doesn’t make sense either. Instead we use test driven development built in Ruby on Rails and enable you to see the process every step of the way.

Buzz Creation:Why wait until your app is finished before you start talking about it. Instead, we’ll dress it up sexy and take it out on the town to steal some glances and get people talking about it. That way, when the clothes come off and it’s naked for all the world to see there will already be a long line waiting there to catch a glimpse.

Cultivate Your Business

You had a great idea and you acted on it. But, great ideas need to grow and to do so takes being faster and more innovative than the industry. So hop in and make sure your vehicle is ready for the ride and then put the pedal down with all of the latest technologies and techniques. After all, winning means driving faster than your competitors, not just keeping pace with them.

Allow us to be Honest with You: We take a detailed look into the current state of your business to find your strengths and weaknesses. Through careful evaluation, we discover the key ideas that will deliver the greatest opportunities for your business. What you don’t know will hurt you.

The Cultivate Engine: Each month, dt’s unique process of innovation management will evaluate your business to unlock its full potential. The Cultivate Engine keeps your campaigns on track and generates new ideas that distance you from the competition.

Strategy Not Services: Anyone can offer marketing services, but who offers ideas? Cultivate is real growth for your business. Our philosophy is to provide insight and identify opportunities to help achieve your overall business goals through innovation, not just marketing services.

Growth You Can See: With fresh and innovative strategy, the right implementation partners and the will to improve, there is little that can stop your business from being the best in class.

Comment from TechCrunch:

The Biz in a Box service isn’t for those already in the industry, or those with a lot of experience, although Digital Telepathy also offers services for existing startups looking for advice on taking their business to the next level. I know when I was previously involved in a startup it was difficult to know where to start, and who to get advice from. Even when you do find someone it’s often not a cheap experience either, the consultant I dealt with previously charged 6 figures to basically guide us in the right direction, without providing any development services.

Snapshot of “Biz in a Box”

What is Web 2.0? Design Patterns and Business Models for the Next Generation of Software

by Tim O’Reilly

7 Principles of Web 2.0

1. The Web As Platform



2. Harnessing Collective Intelligence
3. Data is the Next Intel Inside
4. End of the Software Release Cycle
5. Lightweight Programming Models
6. Software Above the Level of a Single Device
7. Rich User Experiences

Core Competencies of Web 2.0 Companies

In exploring the seven principles above, we’ve highlighted some of the principal features of Web 2.0. Each of the examples we’ve explored demonstrates one or more of those key principles, but may miss others. Let’s close, therefore, by summarizing what we believe to be the core competencies of Web 2.0 companies:

• Services, not packaged software, with cost-effective scalability
• Control over unique, hard-to-recreate data sources that get richer as more people use them
• Trusting users as co-developers
• Harnessing collective intelligence
• Leveraging the long tail through customer self-service
• Software above the level of a single device
• Lightweight user interfaces, development models, AND business models

The next time a company claims that it’s “Web 2.0,” test their features against the list above. The more points they score, the more they are worthy of the name. Remember, though, that excellence in one area may be more telling than some small steps in all seven.

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Browsing for new internet experiences

By Richard Waters

Working online is about to get a lot more satisfying. Thanks to a new wave of internet-based technology, using online applications such as word processors or more complex tools will no longer be a slow and off-putting experience.

That, at least, is the view of Eric Schmidt, chief executive of Google, who last month predicted a coming boom in online applications. From one perspective, his enthusiasm is hardly surprising: he has pinpointed this area as Google’s next big market and has plenty of reason to talk up the prospects.

Yet his comments also highlight advances that are bringing rapid changes to many online experiences – even though some internet developers warn that not all the results will be welcomed by workers.

One of these developments is the evolution of the internet browsers themselves. Though their look has changed little, the technical guts of browsers have turned them into more robust platforms capable of supporting better experiences. Mr Schmidt attributes this to the arrival of greater competition for Microsoft’s Internet Explorer in the shape of the Firefox and Safari browsers.

Jason Fried, founder of 37signals, maker of a popular online application called Basecamp, says that as a result, technologies have become “a lot more standardised” among browsers, making it easier to create applications that run on all of them.

Dean Hachamovitch, general manager for Microsoft’s Internet Explorer, disputes that point. The basic technology standards that govern today’s browsers were set a decade ago, he says: if better applications are being built inside browsers, it is simply because developers have had more time to work out how to exploit the technology better.

He adds that “Ajax”, the package of technologies used to add elements to a Web page without having to reload the whole page, has been in browsers for years. Ajax is the source of some of the biggest recent advances in browser-based applications.

A second force behind change has been the rapid development of “plug-ins” to extend the capabilities of browsers, particularly when it comes to so-called “rich media” applications that use video. Like Adobe’s Flash player, which was first used to render text and graphics but has since become a common tool for viewing video over the Web, these pieces of software are advancing far faster than browsers themselves, which are held back by a need to work with all websites.

Microsoft recently jumped into this game with Silverlight, its new presentation technology that runs in any browser – a break from Microsoft tradition.

The plug-ins are set to become the vehicles for many other new capabilities to be added to Web-based applications. Adobe, for instance, is using the Flash player to distribute its new Air software, which makes it possible to view some parts of applications while not connected to the internet. According to David Wadhwani, an engineer at Adobe, future additions will include a voice-over-internet service component, making it possible to add voice calling to applications.

This race to create new Web-based experiences through plug-ins is not universally welcomed among developers. The software tools that developers use to build these experiences are still relatively new, says Mr Fried. That leads to applications that launch slowly and are of variable quality, he claims.

The third element driving the evolution of online applications is a blurring of the differences between online and offline experiences. This is partly prompted by an attempt to let people use elements of their internet-based applications when not connected to the internet. Google, for instance, is testing a browser extension called Gears that adds this capability.

Over the next year, browsers themselves will come with support for Web-based applications when offline, says Brendan Eich of Mozilla, the open-source organisation that created Firefox.

A parallel effort is under way to create desktop applications that can be fed by real-time data from the internet. An Ebay application, for instance, lets frequent sellers organise their inventory when offline, then uploads the information and feeds in the latest auction results when connected to the internet.

Some argue these developments are moving faster than users really want. Mr Fried at 37signals says they are a product of the competitive race among technology companies, not a response to customers’ needs. “I think that to say you should work everywhere is a sad notion,” he says. “You should work at the office, or at home.”

Eventually, internet access will extend everywhere, turning all applications into “live” services – but for now, he says, enjoy the freedom while you still can.

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On Facebook’s open to advertisers

Information Week

On Tuesday, Facebook announced Facebook Ads, an ad system for businesses to present Facebook users with targeted ads in a social context that encourages customers to share marketing messages with friends.

According to the company’s statement, Facebook Ads is

“an ad system for businesses to connect with users and target advertising to the exact audiences they want. And “through Facebook Ads, these users can now learn about new businesses, brands and products through the trusted referrals of their friends.”

“Facebook Ads represent a completely new way of advertising online,” Zuckerberg, Facebook’s CEO, told an audience of more than 250 marketing and advertising executives in New York. “For the last hundred years media has been pushed out to people, but now marketers are going to be a part of the conversation. And they’re going to do this by using the social graph in the same way our users do.”

Facebook Ads consists of three parts: a way for businesses to build pages on Facebook to connect with their audiences; an ad system that facilitates the spread of brand messages virally through Facebook Social Ads™; and an interface to gather insights into people’s activity on Facebook that marketers care about.

Just like a Facebook user, businesses can start with a blank canvas and add all the information and content they want, including photos, videos, music and Facebook Platform applications. Outside developers have created a range of applications to enhance Facebook Pages, such as booking reservations or providing reviews of restaurant pages, buying tickets on a movie page or creating a custom t-shirt. Companies launching applications for Pages include Fandango, iLike, Musictoday LLC, OpenTable, SeamlessWeb, Zagat Survey LLC and Zazzle.

Twelve major advertisers plan to use the system initially, including Blockbuster, CBS, Chase, The Coca-Cola Co., Saturn, Sony Pictures, The New York Times Co., andVerizon.

“With Facebook Ads, our brands can become a part of the way users communicate and interact on Facebook,” said Carol Kruse, VP of global interactive marketing at Coca-Cola, in a statement. Coca-Cola plans to invite Facebook users to add an application to their Facebook pages called “Sprite Sips,” which will let them modify and interact with an animated Sprite Sips character. U.S. consumers will be able to access additional features of the advertising application by entering a PIN code found under the caps of 20-ounce Sprite bottles.

In addition, Facebook also announced today that 44 websites are using Facebook Beacon, a tool that allows users to share information
from other websites for distribution to their friends on Facebook. Beacon is a part of the Facebook Ads system.Web sites participating in Beacon can allow users to sell an item, buy an item or view video. When users who are logged into Facebook visit a site in the Ads network, they receive a prompt asking whether to they want to share those activities with their friends on Facebook. Friends may view those actions through the Facebook News Feed or Mini-Feed stories.

Online auctioneer eBay, for example, plans next year to use Beacon to let sellers include their eBay listings in their Facebook News Feeds. This will allow them to share information about the items they are selling with their network of friends.

On Nov. 7, Blockbuster launched MovieClique, an application that allows Facebook users to create lists of movies they want to see, or movies they’ve already seen, along with ratings and reviews, to share with their friends.

With Beacon, Web sites offer Facebook users the most relevant parts of their sites for distribution on the social site. When a logged in Facebook user visits a participating site, he or she is asked whether they want to share activities with friends.

eWeek

Fandango and Zagat have created applications to buy tickets on a movie page and book reservations, respectively, while Blockbuster is letting fans compose lists and reviews of films.

IDC analyst Rachel Happe said Facebook Ads has the ability to do for brand advertising what Google’s AdWords keywords platform did for
direct marketing: making ads available to small and midsize businesses. This strategy helped Google, of Mountain View, Calif., grow to its
roughly $200 billion valuation.

But Facebook users could also decide that they really have no interest in associating themselves with products or companies. Moreover, the process is not without its drawbacks. Happe said she tried setting up a Facebook Page but can’t invite people to it without buying an ad.

“The only way around it was to first make myself a fan and then get people in my network to go to my profile and sign up for the Page from there … so it’s not really smooth yet but they are obviously trying to influence companies to use their advertising,” Happe told eWEEK Nov.
7.

Still, Facebook Ads delivers us a new model. While many businesses buy their way into online advertising through spending, Facebook users may influence the reputations of the businesses by their ability to share information about them to friends.

“Advertising comes from people, who imbue a company with value by loyalty,” Forrester Research analyst Charlene Li told eWEEK Nov. 7. This means advertisers will want to redouble their efforts and have the most interesting advertisements so they can attract the most influential people with friends to endorse their brands. When Facebook makes it a two-way street those lists and review content will strengthen its partnerships and spread its brand even more, she said.

Of course, by creating a socially driven ad platform, Facebook is inviting, (or re-inviting if you prefer), another elephant into the room: privacy concern. While the Federal Trade Commission on Nov. 1 bemoaned the fact that advertisers cull too much data from people’s Web actions, Facebook promised to only use information that members share, and won’t give it to advertisers.

Forrester’s Li, who has one business and one personal Facebook account, said the privacy concerns over social networking sites are overblown because of the very nature of the site: people intend to get found by other people on such sites.

In addition, Facebook wouldn’t bite the people that feed the machine by giving out their information. Would it?

Facebook Ads may alienate some users, who will have to decide if the site is still the right place for them. But most of the fans seem fiercely loyal, so they are likely to take the new features in stride.

If the ad system doesn’t drive more folks to The Coca-Cola Company and other advertisers, they may well pull out. That would just put Facebook back to square one, which, at a $15 billion valuation and Microsoft as a prime supporter, is not such a bad place right now.

Just remember that no one expected Google to do as well as it has with its ad programs. If Facebook Ads takes off, the sky is the limit.

AdAge

Sharing in the brand engagement

Tactically, it’s not an easy concept to explain. The first part involves user-initiated recommendations of a brand: When people visit a business’ Facebook page, they can choose to share their engagement with the brand (by becoming a “fan” or writing on the brand’s “wall”) with their peer network using a newsfeed or mini-feed. Facebook users can also share their interaction on a brand’s own website through a program coined Beacon. For example, users can share with their network when they post an item for sale on eBay, rent a movie on Blockbuster.com or rate a book on Amazon.com.

The idea is that communication moves not from the brand to the consumer but from the consumer to his or her friends and family.

Then there’s the actual paid-advertising part: Facebook will permit advertisers to attach an ad message to those user notifications. To do so, marketers make a Facebook ad buy targeting users by any number of traits users volunteer on their profiles, such as age, political leanings or interests and activities. Facebook will then serve up those ads — fairly simple text-plus-graphic creative — either without the social element or, if a friend has sent notification of a brand engagement, within that.

“We are putting advertising back in the hands of people,” said Chamath Palihapitiya, VP-product marketing and operations, Facebook. He said it would create a system for user recommendations “so ads are less like ads and more like information and content.”

Facebook is offering the Beacon placement and branded pages for free. In return, the social-networking site gains access to potentially valuable targeting data about what kinds of brands users interact with.

A Trojan Horse

“It’s a brilliant Trojan Horse,” said Mark Kingdon, CEO of Organic. Overall, he called the platform “a natural evolution, both advertiser-friendly and user-friendly.”

Marketer reaction ranged from modest skepticism to major enthusiasm.

Jeffrey Glueck, chief marketing officer at Travelocity, which was a launch partner of Facebook’s Social Ads platform, said he was excited about the opportunities, but he admitted his brand has an inherent social aspect to it.

“Travel is very social, people like to talk about travel, invite their friends … and Facebook users like to share information with friends,” he said.

James Warner, exec VP-Avenue A/Razorfish East Region, said he liked the ability to linking a user action into an ad. “It’s unique,” he said, reservedly.

John Harrobin, senior VP-marketing and digital media at Verizon, was perhaps the most effusive, calling it exciting in the same way Google’s launch of AdWords was exciting. The difference, he said, is Facebook’s plan not only drives ads to those people who are in the bottom of the sales funnel but also the overall marketing effort.

“This lets us tap into the Facebook community’s potential to drive results,” he said.

But will consumers share?

Still, the service hinges on several things, not the least of which is users wanting to share their purchase behavior with friends. The targeting aspect assumes people honestly share their profile info. It also doesn’t take into account what is happening in the offline world.

Rob Norman, CEO of Group M Interaction, blogged about the announcement and said it was encouraging concept but also posed a “massive challenge in reputation management and just one more destination to deal with in terms of driving the traffic with messaging that shapes opinion.” He cautioned that clutter could become impenetrable, that people who share information about brands with friends might not actually like that being co-opted by advertisers; an easy slip up could, of course, broadcast something like a porn purchase to an entire social network.

While Facebook executives said that the ads would feel more like content because they would be yoked to a friend’s comments, some analysts said the approach could backfire.

“Just because you like Reebok doesn’t mean I am going to like Reebok,” said Jeremiah Owyang, a senior analyst at Forrester Research.

Facebook has 60 advertisers already signed up as partners, and last night 100,000 new profiles were added to the site to promote products, bands and other interests. Condé Nast will ask visitors to its Flip.com and Epicurious.com sites if they would like to send information back to Facebook, and will later expand the option to its other sites.

Adage

One day after Facebook unveiled a number of ad innovations, media outlets are setting up shop on the site. CBS plans to promote the recent return of longstanding reality program “The Amazing Race.” CondeNet’s Epicurious.com has a site offering a recipe for “beef stroganov” from the pages of Gourmet magazine as well as wallpaper downloads featuring cranberries or “salmon roe.” The New York Times Co. has also created a Facebook page that allows users access to features such as top news, most e-mailed articles, video and The New York Times
News Quiz. The newspaper company has also set up pages for The Boston Globe’s Boston.com and its regional media group.

Coke has spot too

And at least one marketer was ready to jump in as soon as it was able. A new page featuring Coca-Cola went live at 4:21 a.m. today, according to a news feed at Coke’s new Facebook roost.

Facebook is in many ways going down a path used by MySpace, opening its collection of user-generated profile pages to marketers, who can now populate the social net with “personifications” of individual products and services. Facebook also unveiled a system that lets marketers spread promotional messages virally and what it called an “interface” that lets advertisers analyze relevant activity by Facebook users.

For its part, CBS is using the site to develop an online community of “Amazing Race” fans. The show’s page will include interactive content tied to the program, which had its season premiere Sunday — filling the slot that was to be occupied by “Viva Laughlin,” a hybrid musical comedy program that was widely drubbed by critics.

“Word-of-mouth has always been very important in entertainment marketing, but now because digital media has fractionalized the audience so much, we see this Facebook [move] as kind of tying it back together,” said George Schweitzer, president of CBS Marketing Group. He likened Facebook as a replacement for the office water cooler, where people often discuss what happened the previous night on their favorite programs. CBS may even use its “Amazing Race” site to seek out people who are predisposed to the show’s premise because they enjoy travel, hiking or are from the same hometown as a contestant, Mr. Schweitzer said.

Broader range of ads

Facebook’s move seems to be aimed at opening its users to a broader range of ads and promotional techniques. But it’s not as if the site hasn’t let marketers in before. In August 2006, for example, the company struck a partnership with J.P. Morgan Chase’s Chase credit-card division to be the site’s exclusive credit-card sponsor. Chase created a social network within Facebook of people interested in learning about or signing up for credit-card services.

Now, however, the site is open for many different kinds of ad placements. A new program called Facebook Beacon provides a way for users to choose to share their activities with their friends on the social network. People who surf Blockbuster.com, for example, might send the titles of the movies they add to their queue on Blockbuster’s website back to their friends on the Facebook website. In another example, Coca-Cola will let participating users create, configure and interact with an animated “Sprite Sips” character aligned with its Sprite soda.

Marketing observers have some concerns that Facebook users could be a little rattled when they find their activities on some applications, such as Facebook Beacon, communicated to a broad array of friends. But Sarah Chubb, president of CondeNet, the Condé Nast internet unit, said people are generally interested in talking about hobbies and passions, and so long as advertisers appeal to that dimension of consumer behavior, the ads and promotions could be more welcome.

That said, there has to be some sense of when to approach and when to hold back, she suggested. “I think Facebook is being very careful to limit the number of things you’ll see in any given day, a pretty conservative limit. We are being pretty conservative about the kinds of messaging that we’re doing. It’s not going to look like an ad. It’s going to look like an invitation to try it yourself.”

Internet Evolution

Three Flaws With Facebook’s Social Ads

1. Where’s my money? Since the Paleolithic era, celebrities and regular cats alike have been endorsing products and getting compensated for it through money and lifetime supplies of triple-quilted paper towels. Fast-forward to Web 2.0: Everything gets interactive, everyone is a celebrity, and we find the best endorsements come from our friends. Facebook’s plan to mooch off our endorsements is all well and good — for Facebook — but where are my paper towels? Why should I scratch your back if you’re throwing itching powder on mine? As we get turned into marketing monkeys, we should get compensated somehow. And
   if there is little demand for this from our side, well, then we’re just falling into a trap of stupidity.
2. If it’s optional, why should I? This system’s success relies on user compliance. For those of us who are neurotic and insecure (I am not referring to myself, per se… I have this friend, see?), a product endorsement with our picture on it could mean subjection to judgment by our peers. “Umm… Did you see that Nicole bought the ‘Shari Lewis Memoirs’ on Amazon.com? What an incredible weirdo!” If I’m not making any cash money off of the deal, and I’m risking becoming socially shunned by the anti-Shari Lewis congregation, why would I comply?
3. I don’t have to take this! I can go somewhere else!
   As Facebook becomes a storefront for marketing activity, will it lose its appeal and, in turn, its network of users? Maybe not. Facebook has promised (Scout’s honor) that this new system will not produce any more ads than usual. And all successful social networking sites will, at some point, have to sell advertisements or succumb to homelessness. So, the spiteful shift to a new network may be pointless.

Read more here:

HR Software Face-Off Reveals Latest Trends

By Ed Frauenheim

A highly anticipated “battle” at this year’s HR Technology Conference & Exposition revealed that social networking and “Web 2.0” features are key weapons for HR software vendors today.

Oracle, Lawson and Workday presented elements of social networking and the kind of consumer-friendly Internet interactivity that people have come to expect of software during the October 11 head-to-head-to-head showdown, held at the annual Chicago conference put on by Human Resource Executive magazine.

Lawson, for example, demonstrated how its new set of HR software tools can allow employees to post jobs from their firm’s career Web page directly onto their page at the popular social networking site Facebook. And companies can arrange to have employees earn a referral bonus if a job is filled by someone who applied through their Facebook page.

Such features let companies “put the job postings where the future talent lives and breathes,” says Larry Dunivan, Lawson’s vice president of global human capital management.

There’s a push to build greater interactivity and social networking capabilities into HR software. The applications are being used by a wider variety of employees as well as younger ones who grew up with the Internet and who frequent sites like MySpace.

Partly because of potential talent wars, HR applications are now the hottest area of business software. And the “battle” among vendors at this year’s HR tech show promised to be intriguing.

Unlike other HR Technology Conference showdowns among vendors, audience members were not asked to cast votes at the Oracle-Lawson-Workday event.

Organizers says a new format would make apples-to-apples comparisons impossible. The lack of a clear victor may have lowered the excitement level some, but drama was provided by having legendary PeopleSoft leader Dave Duffield pit his Workday product against Oracle. Duffield founded Workday in 2005, not long after losing a bid to keep PeopleSoft from being snapped up by Oracle.

At the “battle,” Duffield didn’t fail to entertain an audience that probably topped 1,500 people. Surveying the crowd, he made light of the legions of lawyers brought to bear during Oracle’s initially unwelcome acquisition attempt.

“I haven’t seen as many people in one room since our attorneys during the hostile takeover,” he says, drawing laughter and applause.

Duffield’s new firm stood out from Lawson and Oracle with its Google-like search field. That search box can be used to scan the Workday application using terms like “bonus.” The results from the searches are links that allow users to take actions such as creating a new compensation bonus program.

Oracle demonstrated that it is up on the latest trends of collaboration and social networking. Gretchen Alarcon, Oracle’s vice president for human capital management strategy, showed how an Oracle technology could allow employees to establish informal networks devoted to a particular topic and help workers further their careers by learning about job openings from colleagues. Alarcon called this embrace of peer-to-peer networks and sharing “Enterprise 2.0 for human capital management.”

A version of the collaboration technology, called WebCenter, is available now, but Oracle’s demo used a version of the product that is still in development.

Source:Workforce.com

Talent Management Keeping Score With HR Analytics Software

By Ed Frauenheim

Today’s cutting-edge technology for managing talent has much in common with car dashboards and baseball cards. Makers of software to help firms recruit, assess, develop and retain employees are trying to present key data in ways as simple to understand as a speedometer or fuel gauge. And just as baseball cards combine player photos with important statistics, companies can view snapshots of their team members that include a range of key information, such as salary level and performance rating.

Software firm Authoria, for example, allows managers to see an organizational chart on the computer screen with images of their direct reports presented almost like baseball cards. Below the photo of Joe Smith is his job title, performance rating, the amount of time Joe has worked at the company and how long he’s been in his current position.

This way of organizing information not only is easy on the eye, it eliminates much of the grunt work associated with trying to analyze data stored in paper records, spreadsheets or Microsoft Word documents, says Jeff Cooper, senior business consultant at Authoria. In effect, workforce analysis and presentation tools like those from Authoria raise the game of human resources managers and other company leaders, Cooper says. “Now that person can focus more strategically,” he says.

Workforce analytics applications refer to software products that help a company draw conclusions from its human resources data. These tools are considered particularly vital for the most strategic talent management tasks, which include recruiting the right employees, measuring their performance, helping them develop and compensating them effectively. To make smart decisions around hiring, promotion and pay, firms ideally need to sift quickly through data such as performance reviews, salary levels and even store revenue.

Partly because organizations are eager to make wiser talent management calls, there is growing interest in workforce analysis applications and related “dashboards” or “scorecards.” The momentum also stems from the way such software has become both more sophisticated and simpler to use during the past five years or so.

Still, some skepticism surrounds the analytics field. Vendors of analytics tools have not always provided effective software or guidance to customers, experts say. It remains difficult for large companies to gather basic employee data such as headcount—which makes scouring the information for trends difficult. And it’s not clear that organizations know what information they should be looking for.

Jodi Starkman, a talent management specialist with consulting firm ORC Worldwide, says diving into workforce analytics applications can just result in making a bad pro¬cess—such as recruiting from poor sources of candidates —more efficient.

“HR is collecting a lot of data,” Starkman says. “But people are still confused about what kinds of business questions they should be answering.”

Firms showing interest
A recent study from the International Association for Human Resource Information Management professional group and consulting firm Knowledge Infusion suggests many companies are not doing heavy analysis of their workforce data. In the survey, which polled IHRIM members and Knowledge Infusion customers, 52 percent of respondents with 2,500 employees or more cited very light to moderate assessment of the impact of HR initiatives on business results through standard reports and spreadsheets. Twenty-four percent of such organizations indicated they are not doing this type of measurement at all. Just a quarter of companies with 2,500 employees or more had implemented workforce analytics software.

On the other hand, the study found growing interest in workforce analytics. Thirty-five percent of companies with 2,500 employees or more are in the process of implementing analytics software, making it the top category among 12 types of HR-related applications. And, the study found, 30 percent of companies with 2,500 employees or more indicated they will make significant investments in analytics software during the next three years.

One firm dipping its toe into workforce analytics applications is Dallas-based software company Intervoice, which employs about 800 people worldwide and whose products include software for contact centers. Intervoice recently began using a dashboard within SAP’s E-Recruiting software. Among the tools available to the Intervoice staffing team are a summary of job applications waiting to be processed and links for recruiters to schedule interviews, says Don Brown, senior vice president of human resources at Intervoice.

Brown has higher aspirations still. He’d like to configure his SAP software to create an improved dashboard for line managers. Already, his manager self-service portal includes open job requisitions, employee birthdays and service anniversary dates. He wants to add such information as year-to-date turnover, talent development goals and progress toward them, and performance reviews ranked by score and linked to summaries. “We can justify the funding,” he says, “but we can’t do everything at once.”

Product categories
Analyzing workforce data may be as complex as finding the most important factors in store profitability or as simple as generating a companywide breakdown of employees by age. Firms sometimes rely on their existing spreadsheet software to tackle the easiest of these tasks. More sophisticated application tools, though, can cost large organizations hundreds of thousands of dollars.

Analysis results can be presented in reports sent by e-mail or posted on a Web page. In some cases, the conclusions also can be seen on computer-screen dashboards that quickly signal whether a particular figure exceeds an acceptable level—say, annual turnover above 10 percent. Dashboards and scorecards, which differ slightly from dashboards by measuring progress toward a particular goal, often broadcast the status of a particular metric with a green light for “OK,” a yellow for “caution” and a red for “trouble.”

Besides slicing and dicing workforce data and presenting the information back to users, analytics tools can fire off e-mail alerts to employees when danger levels are reached.

Sellers of workforce analytics products divide roughly into three categories. The first is comprehensive business software providers such as Oracle and SAP. The second is talent management specialists including Taleo or Authoria. Then there are stand-alone analysis applications from vendors such as Cognos and Infohrm.

Lawson Software is an example of the first group. Like SAP and Oracle, Lawson makes software to automate various business areas including human resources, finance and manufacturing. Lawson, which is based in based in St. Paul, Minnesota, says its Lawson Business Intelligence software allows companies to peer across multiple areas of the business to come up with useful information.

Cecile Alper-Leroux, Lawson’s director for human capital management product strategy, cites hiring metrics as an example. She says Lawson Business Intelligence goes beyond simply measuring the time it takes to hire someone to consider the effectiveness of the hire—seen through figures such as total cost of the employee, how quickly the person became productive and how successful they were in performance reviews. “That’s a much more complex view,” she says.

Oracle also boasts of workforce analytics software that spans the typical “silos” of information in a company. It sells analytics tools for both its Oracle E-Business Suite and PeopleSoft Enterprise product lines, and is working to “embed” analytics in individual product modules. For example, its Oracle iRecruitment application is set up so managers who are asked to approve an offer letter to a new hire automatically see the range of salaries given to employees with similar jobs, says Gretchen Alarcon, Oracle vice president for human capital management product strategy.

Alarcon concedes that vendors specializing in talent management applications such as recruiting or compensation software may allow users to drill more deeply into the information presented in reports or alert e-mails. But she argues that the specialists’ products often lack the ability to compare data from different areas, which is a priority for customers. “Rather than getting into super-detail in any one type of product, they want to see how their learning management, performance management and recruiting data tie together to meet their business goals,” Alarcon says.

Adam Miller, chief executive of talent management software firm Cornerstone OnDemand, agrees that vendors need to provide a range of applications in order for analytics tools to result in the most useful information. But Miller, whose firm offers software for performance management, succession planning, compliance management and compensation planning, takes issue with the idea that the big business software players have an edge in analytics and dashboard tools. “In virtually every case, it’s much easier to configure, navigate and report in our system,” he says.

Also in the mix are companies that focus on analytics tools alone. These include “business intelligence” software makers Cognos and Business Objects, both of which make tools for analyzing a range of business information, including workforce data. Another analysis specialist is Infohrm, which focuses on HR and talent management matters.

Brian Kelly, vice president of sales and marketing at Infohrm, says his product will gather data from a variety of sources in an organization. But a key part of Infohrm’s pitch is its willingness to consult with customers about how to use metrics effectively in their management style. “It’s not a technology issue at companies,” Kelly says. “It’s a change management issue.”

Companies have been banging on Infohrm’s door. The firm has seen revenue grow more than 35 percent annually over the past three years, and clients include such big names as Starbucks, Nokia and Time Warner. Other vendors of workforce analytics software report growing interest in their products as well. “It gets talked about a lot,” says David Ludlow, SAP’s vice president of product management for human capital management applications.

On the other hand, Ludlow says relatively few organizations have actually put analytics tools and dashboards into place to glean wisdom about their talent. Among the challenges to greater use of analytics is that many companies still make decisions about things like succession planning and performance management on paper or in spreadsheets, where data is hard to retrieve, he says. “You can’t have analysis unless you automate these processes,” he says.

Another obstacle to the adoption of workforce analysis software is that the tools aren’t always easy to use. Authoria, for example, offers clients a variety of “pre-baked” reports designed to be simple to access and comprehend. One such report, intended to aid in succession planning, plots out employees on a grid showing both performance rating and potential. But using Authoria’s software to ask more complex questions takes sophistication, such as understanding how to construct a multi-variable search.

An example of such a search would be an attempt to find, for a given job family, all the employees and external candidates who meet criteria around current location, willingness to relocate, length of service and performance record. Cooper says HR “super users” and other champions of the tool are the ones likely to do such ad-hoc digging, which can lead to important insights. “Yes, it requires some understanding to create a complex, multi-variable search from scratch,” Cooper says. “And rightfully so.”

Vendors of analytics tools also must overcome some residual distrust, says Jim Holincheck, analyst with research firm Gartner. He says vendors haven’t always done enough to help organizations get the right data in front of the right people, whether they are the HR director, CFO or chief executive. “Different stakeholders need different metrics,” Holincheck says. “The vendors haven’t really delivered on that.”

Along these lines, Lawson is working on specific role-based dashboards, such as ones for compensation analysts or recruiting managers. But the company’s Alper-Leroux says there is a limit to the effectiveness of “canned” reports and dashboards. She says Lawson delivers about 275 preconfigured reports, but the nuances of every business mean clients almost invariably want to build their own metrics. “More than 50 percent of our customers use 25 or fewer of those reports out of the box,” she says.

Some analysts, though, question the wisdom of HR departments in choosing how to analyze their talent management data. “If HR leaders don’t know what to do as a result of the metrics, then having them doesn’t matter,” says Naomi Bloom, managing partner at Bloom & Wallace, a consulting firm in Fort Myers, Florida. “The missing piece is the business savvy.

Early results
Infohrm’s Kelly says clients thus far have focused on very basic data chores. “You’d be amazed how many companies struggle to get an accurate headcount figure,” he says.

There was a flurry of activity around workforce analytics about five years ago, followed by a lull and now growing attention to the topic, Kelly says. He expects that attention to continue, in part because case studies of early adopters are persuasive.

In one example, a large retail client of Infohrm analyzed its data to determine that the greatest factor in store revenue and profitability was manager tenure. That sort of insight allowed the firm to do more to hold on to its store managers, Kelly says. “They know which levers to move,” he says.

Holincheck says interest in analytics will follow the course of companies’ now-common adoption of recruiting, performance management, learning management and compensation management software. “We’re where talent management was three to four years ago,” he says. “It’s going to be a mainstream thing that people are interested in.”

In other words, it soon may be as normal to have a dashboard in front of you at work as it is to have one in front of you while driving there.

Source: Workforce.com

Hospital CRM: New Revenue Frontier?

By Thomas Young

Over the past 30 years, CRM has been pitched to hospitals and health systems by consulting firms, software vendors and healthcare publications as a means to address nearly every financial and operational challenge. The proposed CRM success formula appears simple: collect and integrate customer data, apply that information to make customers feel appreciated, and reap the economic benefits of long-term customer relationships.

1. Reasons to Reconsider
2. Understanding CRM’s Economic Potential
3. Challenges of Hospital CRM
4. The Tangible Benefits of CRM

Read more at http://www.unitedBIT.com

Software for Rent

By GARY RIVLIN

Marc Benioff has never been modest in his dreams for Salesforce.com, the business software company he founded in 1999.

Mr. Benioff, whose appetite for brash publicity and business growth matches his bulk, declared several years ago that Salesforce would be “the Microsoft of the 21st century.” Never mind that his company brought in over a year what Microsoft garners in a few days. Or that another company, Google, seems more likely to wear that label.

Salesforce promised to revolutionize the way businesses buy software, and to a large extent it has accomplished that in one market niche: customer tracking. Its innovation was in turning software into a service that is leased over the Internet, instead of something bought and installed on company computers.

And yet for Mr. Benioff, the company’s chief executive, that is not enough. He wants to turn Salesforce into a platform like Microsoft’s Windows operating system, a product so popular that it is the foundation for a veritable ecosystem of software developers.

“In our industry,” he said, “the only companies that really make it big move from being a killer app to being a platform.”

But whether he can pull off that strategic leap is unclear. Salesforce has started to look less revolutionary as larger, more established companies have adopted its leasing model. And as Mr. Benioff himself notes, few software companies successfully make the move to platform status.

Yet that jump is critical to Salesforce’s long-term success. Its share price has tripled in three years, showing that investors are counting on success beyond the market for customer-tracking software.

“It’s been very impressive what Salesforce has pulled off,” said J. Bruce Daley, editor of The Enterprise Software Observer, an industry newsletter. “But I think this is a company about to hit a wall.”

Like others, Mr. Daley declared it “logical” that Mr. Benioff would try to use its beachhead in managing customer information to establish itself as a platform, a kind of holy grail of the software world. The plan is to persuade outside programmers to do what Salesforce cannot afford to do on its own: round out the company’s offering of products so that customers can lease a greater range of business tools, like payroll and accounting software.

“But the jury is still out on whether ultimately it will be successful,” Mr. Daley said.

It does not help Mr. Benioff’s cause that the subscription model’s success has inspired software firms, including Microsoft and SAP, the German business software giant, to offer subscription-based versions of their own products for customer relations management, known as C.R.M. That means Salesforce faces increased competition in its core market at a time when it is focusing on selling itself as a platform.

And then there is the competition from smaller companies like NetSuite, which uses the same leasing model to offer a full suite of applications it has built, including billing, accounting and other critical business tools.

Peter Goldmacher, an investment analyst for Cowen & Company, is among those arguing that Mr. Benioff should — at least for the time being — throttle back his wider ambitions and stick to his primary business. Mr. Goldmacher was once among Salesforce’s most prominent Wall Street boosters, but he has tempered that enthusiasm.

“My concern is that this is a company letting itself get distracted,” Mr. Goldmacher said.

In the late 1990s, Salesforce was one of a group of start-ups exploring ways to capture a share of the lucrative business software market using the leasing model, also called “software as a service” and “on-demand computing.”

The leasing model, its supporters say, permits companies to avoid the expense and headache of installing complex software packages that typically require huge outlays of cash for hardware and software upgrades.

“It’s all about letting our customers pay attention to innovation and not infrastructure,” Mr. Benioff said. “Software as a service is about freeing them from having to hook up another computer in another data center to another database to another application server to another security server.”

In the battle for a share of business software dollars, Mr. Benioff chose to focus on customer relationship management tools, a relatively small corner of the market. Such software would help sales representatives track customers and potential customers.

“C.R.M. seemed a perfect place to start and prove our concept,” he said.

By contrast, NetSuite focused on creating an on-demand financial product that handles tasks like billing and accounting precisely because they are so central to a business.

“Our strategy has always been to be the application you run your business on,” said Zachary A. Nelson, chief executive of NetSuite. “Salesforce chose an easier route.”

Though the two companies were started within weeks of each other, Salesforce has 35,000 customers, compared with NetSuite’s 5,300. But Mr. Nelson said he sees a strength in those numbers. “The same reason companies are slow to come makes them slower to leave,” Mr. Nelson said.

In response, Mr. Benioff described NetSuite as “not worth talking about,” given its relatively small size. Instead, he was eager to discuss larger companies like Microsoft and SAP, and he said their moves to on-demand software are a testament to Salesforce’s success.

In September, Microsoft started selling Dynamics CRM Live, an on-demand version of Dynamics CRM, the shrink-wrapped software package the company has been selling for four years. At around the same time, SAP unveiled Business ByDesign, an online version of the company’s array of business software, aimed at medium-size businesses.

At a news conference to promote that product, Henning Kagermann, SAP’s chief executive, declared ByDesign “the most important announcement I’ve made in my career.” But those who follow the business software market are generally skeptical that SAP, a company whose sales staff has thrived on selling multimillion-dollar software packages, will be as aggressive offering a cheaper version of its own product line.

These same analysts, though, tend to be more bullish about Microsoft’s chances against Salesforce.

Mr. Benioff dismissed Microsoft’s offering as “an inferior product,” but analysts said that Microsoft needed only a strong offering, not a superior one.

“If you know how to use any of Microsoft’s desktop tools, you know how to use Microsoft’s C.R.M. product,” said Bruce Richardson, the vice president for research at AMR Research, a technology consulting firm. Microsoft is a minor player in the C.R.M. market, but its Office software suite is installed on hundreds of millions of computers. And the company has priced the on-demand version of its C.R.M. software to be significantly cheaper than Salesforce’s offering.

“That’s classic Microsoft: to aggressively attack from a position of weakness to gain market share,” said Mr. Goldmacher of Cowen & Company.

Mr. Goldmacher had high hopes for Salesforce when the company went public in 2004. But he has cooled on the company since then; he said that over the last 18 months, Salesforce has lost its focus.

“More and more, I see them chasing bigger opportunities that won’t necessarily pay off,” said Mr. Goldmacher, who now has a neutral rating on Salesforce’s stock.

“What they’re telling the Street is, ‘We don’t care about profitability,’” Mr. Goldmacher said. “Their story now is that C.R.M. is just the bait, and the platform the real hook.”

Despite $497 million in sales, Salesforce posted a loss of $3.6 million last year.

Mr. Benioff counters critics by noting that although the platform project is less than two years old, the company is selling more than 700 add-ons, most of them written by third parties. Salesforce, working with a pair of venture firms in Silicon Valley, has created a $25 million fund that will provide seed money to companies seeking to build applications for the Salesforce platform.

Salesforce has also entered into a series of partnerships with Google, hoping to ride whatever success that company has in social networking and office applications, a field now dominated by Microsoft.

Many of the add-ons require customers to download additional software, which waters down Mr. Benioff’s simplicity message but also could make customers more loyal.

“The more our users customize, the more they are tied to our service,” said Steve Fisher, the Salesforce executive overseeing the platform project.

Another issue is that Salesforce is mainly used by sales staff needing to keep track of leads and customer lists. To AMR’s Bruce Richardson, that is not a very large step toward empire building.

“Marc wants to be the Facebook of the enterprise, but he’s missing a key piece,” Mr. Richardson said — a core product so popular that it naturally grows into an environment that attracts hundreds of third-party software vendors.

That is where the company’s partnerships with Google might prove critical.

“Marc is waiting for Google applications to mature,” said one former Salesforce executive, who asked not to be identified. “If it can link with Google applications, then maybe Salesforce can develop into a platform.”

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