The Consumption Chain – Whats That?

Whether you offer a product or a service there is a certain flow of events from procuring the input resources to delivering a solution. While. There has been a lot of progress in analyzing this supply chain and ensuring that efficiencies are achieved . There seems to be little effort in the consumption chain.

The Consumption Chain
So what is a consumption chain? Consumption Chain is broadly the set of events that start from the first sale of your product to the retailer/distributor/consumer to the point of actual consumption and the capture and transmission of the consumption experience back to the organization. This information has to flow to the right teams in operations, product and design so that there is a continuous improvement process built into the system.

Information like

• What happens when your consumers buy your products ?
• How did they like the product ?
• What would they like to see more of and what would they like to avoid?
• When do they need your services again ?
• In what scenarios do they like to get in touch with you ?
• And most importantly how can such information be driven through the organization to the right personnel so it meets its logical end.

So Why Has the Consumption Chain Been Largely ignored
Well a lot of information is still captured. Companies like to capture information of whats selling, whos buying it etc. But the lack of ownership for that data means that this information is hugely under utilized. The data is there but no one bothers. Its just that no one is sure who is responsible
for it and hense its just left there.

Marketing/Operations/Design who owns this anyway
Companies are still unsure who should use this information and how it must be put to use. In most companies customer feedback is still a marketing function than an operational function . Further a problem may have its roots in not just one but several departments. Ensuring that issues meet a logical end has be driven from the top management. I myself have been in so many scenarios at my bank or my favourite restaurant where I wanted to give some feedback but there was just no real way to do so. The ground staff seemed to just not want to accept the feedback as it would effect them directly .  As a result customers get indifferent to the business and there is no form of customer loyalty.

Addressing the Consumption Chain
Closing the feedback loop is a key step. It helps you understand the health of your business. How customers value your business and where you could be doing more. This allows operations to ensure that service levels are kept high and the businesses is healthy.

There is a quit a lot of work yet to be done in the consumption chain. If addressed well, we will have companies that are responsive and progressive.

United Breaks Guitars and an Expensive Lesson in Customer Care

Dave Carroll a musician from Halifax, Nova Scotia , traveled with his band and his guitar on United Airlines in the spring of 2008. The Guitar arrived broken and the airline did not bother to care for Daves complaints. Turns out after over 9months of pillar to post phone calls Dave decided to do what he does best and write and produce a song his experience.

Here is the story in short read the full story at http://www.davecarrollmusic.com/story/united-breaks-guitars/

dave carrol united breaks guitars

“In the spring of 2008, Sons of Maxwell were traveling to Nebraska for a one-week tour and my Taylor guitar was witnessed being thrown by United Airlines baggage handlers in Chicago. I discovered later that the $3500 guitar was severely damaged. They didn’t deny the experience occurred but for nine months the various people I communicated with put the responsibility for dealing with the damage on everyone other than themselves and finally said they would do nothing to compensate me for my loss. So I promised the last person to finally say “no” to compensation (Ms. Irlweg) that I would write and produce three songs about my experience with United Airlines and make videos for each to be viewed online by anyone in the world.”

With over 5.6Million views and 22,372 comments on you tube as of1st october 2009 the video and message have become a really big hit with lots of people relating to their experiences with UA. Many popular websites are carrying the story and the negative PR for United Airline cannot be even estimated.

What Just Happened?
Dave did not make just one phone call to UA. According to his version he tried to get his problem solved for over 9 months. And only when he did not receive any help he turned to the web to share his experience. This just shows how the problem does not lie with a single customer service representative but the process as a whole. How Customer Service can be carried out without a quantifiable way to check whether customers are satisfied or not. How small issues can be dragged on for years without and end. These problems always existed. All of us know that.

So what has changed?
The social media has changed the way information is created, shared, propagated and consumed. Individuals have the power of media that at one time only the biggest media houses could claim. At the same time user generated content is better received than productions. So while the problem always existed it is important to solve it now, because the customer will not sit down quietly. He will share is discontent with the world. And your One unhappy customer can make a huge impact on your business

This is a problem with most large businesses. One that has been ignored as it did not matter untill now. Can you still afford to ignore it?

The Hidden Multiplier in SAAS – Software As A Service

Off late I have been researching the SAAS model for a few concepts that I have been working on . The learnings have been quite interesting and there seems to be a “hidden” or overseen aspect that I would like to share today.

So for those who didnt know
SAAS is a delivery model which states that the software is provided ready to use off the internet on a pay as you go model. There have been some big success stories like SalesForce.com with 63,000 customers and about $1Billion USD in revenues and smaller but hugely popular ones like Basecamp from 37Singals with may be $10M USD in [i am guessing here] revenue.

The SaaS Revenue Model
The main source of revenue for a SaaS business is subscription fees [Most popular model]. Subscription fees are usually charged as Revenue = $X/Month. Now thats pretty simple for anyone to understand.

Revenue= Users * Subsription Fee * months

This is where things are a little more tricky than it seems

The “Hidden” Monster
Depending on what your application does. You may have just 1 user per customer or multiple users per customer. Lets take an example. In a CRM application, it is essential that each sales person has his own account so you can track who is doing what and who sold to whom. How ever in a SAAS website analytics tool. Each company needs only one account so even if it has100 people in the analytics team they would be able to use the application without any problem with just one single account. Lets imagine two SAAS Companies TheFlyingPan Co. selling CRM and TheFlyingStick Co. selling analytics.

If you were charging $40 per user for the CRM application, a sales team with 20 people would fetch you

TheFlyingPan Co.: Revenue = 20people*$40*12month = $9600 per/year from this customer.

However with the same monthly fee , if you were the analytics SaaS tool you would make

TheFlyingStick Co.: Revenue = 1 user account *$40*12months = $480 per/year from the same customer.

See the difference. Now presumably your cost of delivering the solution is going to be the same whether you are the CRM guy or the analytics guy. Yet your revenue is going to be vastly different to the point that your business model may just not be viable.

Now lets dig a little deeper

When it comes to selling your solution, wether you do door-to-door sales or online sales. There is always a cost per sale. Getting into a new account is always difficult and the cost of the initial sale is going to be high. Hense the profitability of the first sale is low. Now how does this effect our two companies.

TheFlyingPan Co.: ([Low Profitability ] First Account + [High Profitability] 19 subsequent Accounts) * Customers

TheFlyingStick Co.: ([Low Profitability] First Account ) * Customers

So , apart from making less money you also make less profit .

If you are offering a SAAS solution, review your business model. Does your application lend itself for SaaS. Infact, You may be well off with traditional models depending on what you offer. Review your numbers and make sure that the model you chose works for your business.

Solving the Right Problem

Over the last few days, I have been researching the market for a product that I have been dabbling with .While there is a Market Leader , There are so many products that also serve the space. This got methinking why one product runs ahead of the crowd while the rest with more features and technology still find it hard to take off.

The Right solution
One thing that came out clearly in my research was that the market leader had got his offering right down to one feature that hit the spot . This one feature drew the customers and converted trials into purchases. This one Feature made the difference between the crowd and the leader. Yet when I saw the websites of these products for the first time, it was hard to figure out what this one feature was. In most cases if you asked the founders what this might be I am sure even they would not know either . Yet this one feature made the difference between the right solution and the rest of the pack. In fact even the companies that tried to replicate the market leader were not sure what they had to done get right.

So where is that right Solution.
To find the right solution you need to find the right problem. Here in lie the biggest opportunities .Yet,Today there is so much information around us that we are just unable to see the problem.

For instance , YouTube was not the first video sharing site. Yet they were able to make the process of uploading your video so simple. Just that one solution of a really simple uploading and sharing interface made them popular among the mainstream audience who had no idea what different codecs meant. In hindsight the problem was not that people were unwilling to share videos or bandwidth issues. The problem was that the process was just so complicated before youtube. And they solved the RIGHT problem.

Getting to the Right Problem
Getting to the right problem must be easier said than done if not there would be more youtube’s around. I my research I was just unable to make out the difference by looking at the competition websites. So I started talking to some of the customers of the these products. And after a few interactions the blubs started to glow. I had asked “What feature do you like about the product that makes you use it more”.
The answer wasnt something I had expected at all. In fact it was so simple that it just shook me . All along I had been wondering big concepts and design, technology and process etc etc. Yet the problem solved was so basic that the rest of the crowd had managed to oversee it completely.

So here is my take. Solve the right problem. If you havent got it right spend some more time go back to the drawing board. Talk to customers, potential customers and customers of competitors products. The solutions lie in the problems. Getting to them is the trick.

“I’m sorry. My responses are limited. You must ask the right questions” -Dr. Alfred Lanning’s Hologram in IRobot
Are you asking the right questions?

Story Boarding for Product Development

Why Story Boarding ?
I have often felt that building product/applications is not the really difficult task as development and test come easy.
The difficult part is when you start building stuff and then half way through try to figure out what is really needed.
Story boarding is often used in cartoon and media projects and is a great tool for product developement too.


Source: http://www.animakers.info/category/gallery/story-board/

How Story Boarding Helps Make a Better Product ?
Most often we thing about usability and user needs last. Yest though it sounds strange, most people get off to building the product
first and think of the rest later. A story board helps you think of the user and his/her need first. Which screens need to be built ?
How the user interacts with each screen ? and why you products is better than the rest ?. Story boarding is also the most difficult part
of the product development process because it makes you ask the tough questions. What , why , where and when . But once you
are done, you are on the path to building a better product.

How to make a story board ?
You can make story boards with just a pen and paper, or PowerPoint or other tools. I prefer to user Paint.Net. Yes Paint.Net it
is a open source imaging utility, The reason is if you are closer to the real product the more successful you are and paint.net allows you
to visualize the end product in great detail . It may to be the most ideal product or suited for this sort of use but works great for me.

Things to Consider while Story Boarding

1. Ensure that you are as close to the final product as possible in look and feel
2. Cover all aspects of screen elements, and features
3. Review -> Refine -> Review -> Refine
4. Make it quick, take feedback, finalize
5. Product development is iterative so dont spend too much time.
6. Once you have a finalized version get to building it , there will always be some change later

How to Start a Company in under 50 Dollars

Activity	Time	Cost
1. Figure out what you want yo do	-	$0
2. Figure out if it is worth doing it: How many other companies are already doing something Similar Who will pay for it How soon can you make some money Is the money good enough. If it takes 1millions users and 2 Million page views a day to make enough for a coffe then think twise	1 Week	$0
3. Write a 2 Page Business Plan What u are going to do Why is it required How much you will spend on it And How much can you make in a few weeks	1 Week	$0
4. After all this are you still ready to go ahead ?    If yes now you can work on the idea	-	$0
5. Design, Build, Test    Open Source Software/Free Versions CVSNT+SmartCVS (Version Control) Open Office Bugzilla (Bug Tracking)	3-4 Weeks	$0.00
6. Host    Domain Name – $8/- (Get discount coupons, like Godaddy Coupons google it) Shared Hosting – $10-$30 Backup Hosting – $5/- (the cheapest shared hosting prefably on a different provider)	1Day	$30.00
7. Other Free Stuff    Refer to Previous Post on Startup Essentials	-	$0.00
8. Market It    Word Of Mouth Review Sites SEO Talk About it in Forums	-	$0.00
Please note many of these activities are free but involve time. Now time equates to money considering that you have to pay yourself . So factor that into the plan

Startup Essentials

Planning

1. Business plan : A Business plan will help you think and focus on your strengths. Take the help of some one who has done this a couple of times and fellow entrepreneurs seasoned at this. Let them ask you the tough questions. You could use the MIT Business plan Template. http://www.mit100k.org/business-plan-contest/resources/
2. Advisors: Get really smart people in the field you are launching as advisors. Have at least 2 so you are not biased by the suggestions.

Development

1. User FREE Only: The last thing you want to do is pay for software tools where there are so many available for free. Use a platform that you are good with , user their free tools.
2. Code Control: Use a code control tool ( CVSNT + SmartCVS ). Its a little tricky to get it working at first but once set it up, it works like magic. It can be a life saver. http://www.syntevo.com/smartcvs/index.html

Hosting You Web Startup

1. Shared Hosting/ Virtual Shared Hosting: Its going to take a while before people know that you exist and use your service. So a shared/virtual shared hosting should do. Do the math a shared deluxe plan comes at under $10. A dedicated server costs about $100 plus. So you get a years hosting with a shared service for the price of a single months dedicated plan.
2. Backups: Automate backups. Get another really cheap shared hosting plan with a different host and make sure all your files are backed-up often. Automate this , otherwise you are going to forget.

Performance and Analytics

1. Google Analytics: Get it integrated into your product on day 1 , Take the help of someone aware of web applications to figure out what you should be tracking .http://www.google.com/analytics/
2. Woopra: Real time Analytics. Good to analyze what your users are doing in real time http://www.woopra.com/

Marketing and Communication:

1. SEO: Whetherr you twitter or blog or do the Cha Cha, you need to learn some SEO. Its the language of the Internet and just says how to write stuff in away that more people will find it .So Whether you are an SEO guy or not. Learn SEO . and Follow the steps in blogging, content writing, etc http://google.com/support/webmasters/bin/answer.py?answer=35769

1. WordPress Blog : WordPress is a free to use blogging platform. If you have your own server you can download wordpress from wordpress.com and set it up for your corporate blog. Start blogging much before you launch. Talk about the problem space and what the current tools are lacking. Talk about interesting facts and reports that will lead people to your blog. Become the go-to person in your domain . http://wordpress.com/

1. Twitter: Twitter has become a popular way of communicating. If I have to say one line , or shout out some information a blog is not suited . Blog posts are expected to be long and informative. Twitter serves this need and helps you share our impulsive view/comments. Also, Twitter has distribution built in. e.i if you have 1000 followers they all get to see what your just twittered. http://twitter.com/

Customer Support

1. Get Satisfaction or User Voice: Both are good tools for customer support. They help capture, respond and compile user feedback , comments and suggestions. http://www.getsatisfaction.com/
2. Skype In: If you would like to support customers in far off countries. A country specific account will cost about $5 per month and comes with a free local number. So your customers can call you locally and you can answer the call sitting a few thousand miles away .http://www.skype.com

Startup Lessons – So you have an Idea now What?

So you have and Idea. You think you can do something that can make a difference while creating value for your self and other. 
Questions to ask Yourself:
A. Is this Idea a business or a Social Cause?
If your idea has no way of making money at least for the next 5 years then its not a business. It may be a good cause and you
can get a couple of volunteers to get excited and work on it in their spare time. But ITS NOT A BUSINESS IF IT CANNOT MAKE
MONEY. yes all caps were required. Its ok to work on a cause. But dont tell yourself that you are running a business if your arent.
Examples: 
1. A nice widget that will help you post to any networking site great cause. No way to make money from it ? not a business,
2. Selling exotic pancakes for a buck more. Makes people happy but its not for free. You make money from it ? could be a business

B. Can your Idea Grow. Or is is destined to be a dwarf
So you may still be in your room with nothing more than a vague idea. But fast  forward a few years. How will this idea evolve. Some
ideas are so specific in nature that they may not be able to grow big. Example: A Pet Store could be a good lifestyle business. But unless
you have something really unique that other pet stores dont,  the idea may not grow very big. So speak to there people , and discuss them why
your idea can grow. Discussions help you identify opportunities and pitfalls that you overlook yourself. 

C. Are you in love with the Idea enough to take the Plunge.
Lets face it Rome was not built in a day and niether will your startup. You will have to stick with it over the next few years through the thick and thin.
You will face a thousand people you think it will not work . And some time you will question yourself if its going to work or not. Do you love it enough?

D. It all seems right but Wait.  Lets do the numbers 
A business plan is your next step. The business plan is essential for helping you think through the idea . It is more required for your understanding 
than for anyone else. Before you begin the business evaluation set your objective. The purpose of evaluation is to figure out if the idea can become
a good business . Your job is to get enough data to help you evaluate. If you idea is not a good business then try to make it a good business by 
rethinking the idea. If it still does not work then it can still be done as a hobby right? . So be very objective . Dont get emotional.