From the category archives:

Entrepreneurship

Blog_06-13-13I recently had the opportunity to chat with Rajat Paharia, founder and chief product officer at Bunchball, about his new book, Loyalty 3.0, pivoting startups, and the differences between the business of games and the gamification of business.

Lilia: You were one of the first to see the potential for gaming methodology in marketing.   What sparked this idea?

Rajat: The company I founded in 2005 was the right idea, but it was 2 to 3 years early to market.  It was a social gaming platform, and in the process of building it, we examined what made gaming sticky. Pogo was one of the best, most used sites at the time, and they had all these statistics that they were able to stitch together into a really engaging experience.  So we started building that idea into our gaming platform – for game results, but also to get people to do other things, like invite friends.  We saw that it worked for motivating more than just behavior within the game itself – and that was the spark.

We realized that combining data with “gaming” concepts can be used in other interactions.  We were still a small company, so we had to make a very tough decision – continue in the social gaming market, or shift to gamification for businesses.  We chose the latter, but we were early to market – again.  Ultimately, though, that turned out to be a good thing – because we had time to develop a strong skill set and effective motivation techniques.

***

Lilia: Bunchball has helped well over 300 companies, including dozens of global brands, leverage big data to drive gaming-inspired loyalty programs. What surprised you most about how those companies have put this technology to use?

Rajat: We started with B2C applications of gamification, but the surprise has been how rapidly the business has transitioned to B2B uses. Companies are using (our solution) to motivate and train employees in sales and service, and to influence partners.  B2B has taken off and is growing incredibly fast. That’s something we didn’t foresee.

It makes sense, of course.  Consider that Facebook, Amazon, etc. know more about your employees than you do.  Yet companies ignore tons of data about employees who spend 8 to 10 hours a day working for them and delivering enormous value. That data lives in Salesforce, Jive, Cornerstone, Successfactors and all manner of enterprise apps and systems.

***

Lilia: Loyalty 3.0 requires Big Data. Does that mean only big companies can really use it for employee and partner loyalty?

Rajat: Our customers range from small companies, as small as 10 to 100 people, to the bigger ones.

What you need is to understand customers’ or employees’ motivation. Then you need data.  And today we are walking data generators – constantly throwing off information that can be used to create loyalty 3.0 programs. Now, when I say Big Data, I’m referring to the large volume of data being generated by each of us as individuals – a lot of it unstructured.   Those individual data streams are available to any business, not just large ones.  Finally, you need Gamification – that is, you need to create data-driven motivational techniques.

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Lilia: In your book you discuss the entry of Gen Y into the worksforce.  Is it that younger generation that’s really the audience for gamification?

Rajat: No. It’s based on fundamental human motivators, so it works for anyone. The demographic of our customers’ customers and employees is across the board.  The thing about Gen Y is that this is the air they breathe. So to motivate them, these methods are indispensable.  Gamification works for everyone, but it’s absolutely critical for the Gen Y.

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Lilia: What do you find is the most common misconception people have about gamification?

Rajat: The word is a double-edged sword.  People think it’s games and entertainment.  And they don’t want their employees playing games. They want them working.  The reason these techniques came out of the gaming industry is because game designers have been living in  data-rich environments for the last 40 years, and have had a chance to learn and develop all these techniques for motivating and driving behavior.  Now the rest of the world has caught up. So gamification is really not about games at all. It’s about business results.

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Lilia: Certainly wearable computing will create a huge opportunity for gamification through increasing the volume of data even more and through the “everywhere with me” aspect of those devices. What are some other emerging trends that you see either enabling or driving the demand for gamification?

Rajat: The notion of sensors everywhere. There’s a company across the street from ours that’s making ingestable sensors, powered by stomach acids.  So you can tell exactly when the medicine was taken, and how the body responds.  That means we can use gamification to motivate healthy behavior like taking your medication on time. More broadly, technology is mediating a lot of what we do – and all those systems are throwing off data that can be used to motivate behavior and inspire loyalty.

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Lilia: Where should a company start when considering gamification?

Rajat:  Always start by determining what you are trying to accomplish. What’s your goal?  For example, “We want our channel partner sales team to contribute 10% more to the pipeline.” Gamification starts with a business mission statement.    Then you decide how you will measure that.  Then, understand what are the behaviors that I need to affect.   Next look at users and understand what motivates them.

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Lilia: That sounds straightforward, but how would a company actually know what motivates customers or employees?

Rajat: The best way to do that is by talking to a few of them.  Ask them lots of open-ended questions.  You only need to talk to a few to get really smart. We break it down in the book – how to craft an experience that fits, and create automated, scalable, repeatable motivation and intervention that you can use to motivate employees or kids.

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Rajat’s book, Loyalty 3.0, launches June 18th through all the usual channels.  In the meantime, you can pre-order at http://loyalty30.com/  and get extra gifts with your pre-order.

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Watching some of the new ventures getting funded over the last several months, there’s an interesting trend that’s turning user-generated content into real value for companies and their customers.

One example is Driveway Software, which develops applications that insurance companies offer to their customers.  The apps track driving behavior, and enable the insurer to offer discounts based on good driving habits.  In the healthcare sector, companies like AFrame Digital and Lark are creating devices and apps that enable doctors, care-givers, and individuals to track patient health and provide better, more personalized care.  FlixMaster collects information about how we watch interactive on-line videos so that media companies and advertisers can create more engaging content.

While the content in these instances is “user-generated,” all the work is being done within machine-to-machine interfaces. User devices or apps collect information and communicate with data collection and analytics engines to produce both individual and aggregated intelligence. That intelligence enables companies to offer new and unique products and services.

For each company that collects and uses customer-generated data intelligently, there are scores who collect data but never use it.  That’s not only a waste, but also an unjustified risk – keeping customer information without carefully managing it can have legal ramifications and expose the company to liability.

Bottom Line:   There are countless ways to collect data about your customers.  Before you start, decide exactly why you’re collecting it, how you’ll manage it, and what intelligence and action the data will drive.

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Earlier this week I had the pleasure of presenting, together with my friend and colleague Ken Goldberg, to a group of technology entrepreneurs brought together by CRDF and TEC.  We talked about establishing alliances with much larger companies – a topic that’s often daunting for new ventures. Its a subject that’s near and dear to our hearts because we’ve spent lots of time on both sides of those relationships.  Some do’s and dont’s that Ken and I discussed:

Do

  1. Have a Plan – Develop an approach, time line and road-map. It will focus your efforts and help you assess progress.
  2. Be Relevant – Understand what’s in it for the partner and the partner’s customers
  3. Be Aggressive – Attack top down and bottom up, be creative, be persistent.
  4. Behave Like a Mature Company – Have policies, approval processes, multi-level teams.  Don’t send in your CEO until you have a meeting with a key decision maker.
  5. Be Unique – Articulate what you can offer that others in your category can’t.
  6. Think Big Dollars – Demonstrate that you can have a big impact on revenue and help the partner win big deals.
  7. Prove It – Be ready to show integration, value add, or joint customers.
  8. Find a Sponsor – Use your network to find an internal cheerleader (or 2)
  9. Negotiate Smart – Share the risk and get mutual commitments
Don’t
  1. Bet on one partner -We’ve seen multi-million dollar companies disappear because the one big partner changed course.
  2. Be vague – Vague, unsupportable claims about your products or capabilities create doubt, not progress.
  3. Lie – Exaggerating the number of people on your team? Claiming a few extra deployments?   Savvy bus dev professionals will notice, and likely drop you from consideration.
  4. Over-promise – Either you’ll fail and lose the one opportunity at a critical alliance, or you’ll be forced to commit too many resources, distracting from your company’s other important priorities, and risking too much on a single relationship.  (see #1)
  5. Expect or make 1-sided investments – Expect some skin in the game from the partner.  It shows you have confidence in the value of your own investment.
  6. Forget it’s a relationship – Focusing too much on the deal and ignoring that you’re building a long-term relationship is a mistake.  Signing the agreement is when the real work starts.  Even if you never sign an agreement, the people you worked with may change their minds next year, or next month when they switch jobs.
  7. Give up – If not today, tomorrow. If not this decision maker, call another one. If not this company, talk to all their competitors.
Have a few of your own? Please share.
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On Recessions and Forest Fires

by Lilia Shirman on April 27, 2009

in Economy,Entrepreneurship

Photo by a brilliant photographer on Picasa (TJ7779)

Several weeks ago, I was driving through the mountains around Tahoe, returning from a weekend of skiing.   As we passed an area that had been devastated by a forest fire, I saw hope in the destruction.

I realized that this recession is very much like a forest fire.  Giants that had been standing for decades are suddenly gone.  Others are still standing, but have been badly singed.  The devastation seems all-encompassing and permanent.

But a closer look at the barren hillside told another story.   Forest fires have another effect that is easy to forget in times like these:   They create the space for new growth.  They are nature’s mechanism for renewal.

The recession, as painful as it is for all of us, is creating room for growth as well.    If we allow it, the difficult times will provide the space and light that are needed for new ventures to get visibility, new ideas to take root, and new ways of doing things to get tried and adopted.

How has the downturn inspired you or your company to get creative and start anew?

(Photo generously provided via Picasa by TJ from Davis, Ca)

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What advice would you give small companies trying to prioritize target industries?   Robbie Baxter of Peninsula Strategies, an expert in on-line, recurring revenue streams, asked me a this very interesting question!

At companies with a sales history, industry-specific activity and resources are focused in two kinds of areas:  Where most revenue is coming from already (this is by far the more common focus area), and where there is greatest opportunity for growth in the future.    There can be lots of complex analysis, but in reality few big companies do much proactive planning.  That’s a whole other blog, though.

With a smaller company, the first part of that equation is missing. They don’t have the sales history, references, and channels to naturally leverage into an already-active vertical market.

So, here is a try at some things I’d look at as a small business deciding where to focus.

1. What industry will value what you do most? Where will you impact mission-critical results?

2.  Over time, what group of customers are going to be needing you more and more (and feeling increasing pain you can solve) due to external pressures and trends in their industry?

3. Where are you best able to access the financial decision-makers? (This is a combination of your company’s existing connections and lists, and the target industry’s propensity for doing business with small companies.)

Note that its easier to find ways to reach financial decision-makers than to change the core value of what you do or convince an industry to focus on non-critical issues.  Unfortunately, many small companies start with #3 as the first, not last criteria for selecting target markets.

Please comment with your own thoughts on selecting target industries at small companies.

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I came across a great summary of an all-too-common problem on the MarketCulture blog.  The article   recommends that companies focus “on a demand that needs to be met (rather) than a tech that needs to be sold.”  Well said!

Apple is a great example of what happens when a company switches from product to market focus.  Apple started as a product-focused company.  And almost disappeared, despite its loyal following among creative types.   Its computers were easier to use and better designed, but the mass market who needed easy-to-use computers wasn’t there until later, by which time MS had introduced Windows, washing away Apple’s design superiority.    While Apple was still focused on cool product design, MS wooed a broad community of application developers to meet the growing demand for specialized applications.  The need was for a broad range of software functionality, and Apple missed that completely.

But Apple learned.  When music sharing came along, launching wars between record labels and music enthusiasts, Apple  saw the need, and designed around it.  This time, Apple focused on the demand side, with savvy marketing and even more savvy ecosystem creation. Significantly, Apple didn’t give up its leading-edge product design competency in order to become market focused.

To all the entrepreneurs with great ideas, and the larger vendors touting product features: Spend time with customers to find out where they really will spend money.  Then DO make “products so good they don’t need sales and marketing.”   Then market and sell like crazy.

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