Marina Gorbis's Blog, page 1563

Want to Know What Really Makes You Happy? Try Tracking It

Throughout our careers and lives, the big decisions we have to make usually lead back to a single, overriding concern: What really makes me happy? Too often we try to answer these questions without knowing or understanding the real data from our lives. Our self-analysis devolves into speculation or wishful thinking.

Over the past month or so, I've been collaborating with Harvard Business Review to develop a quick self-test to determine individual readiness for understanding your own data through the world of auto-analytics. Auto-analytics is a method of using new self-tracking tools to help answer key professional (and personal) questions: How do I boost my productivity? Am I in the right career? How can I improve my work routines by altering my health habits, like sleep and exercise?

To get a sense of how auto-analytics can be used enrich our decision making, I recommend three distinct approaches:

1. Quantifying reflection is the practice of spending a few moments each evening to rate (or rank) that day on a numerical scale, and also to provide qualitative information on daily activities. This method not only begins to habituate reflection but also creates a repository of personal data to inform decisions on which sorts of behaviors to embrace or avoid.

Author Ashish Mukharji's use of this method shows that we don't have to be a professional philosophers or positive psychologists to think systematically about happiness. For the past three years he's been rating his days on a scale of 1-10, also jotting down some associated thoughts, "a restaurant, movie ... whatever made that day special."

Through this exercise he has learned that his average happiness is a seven and he has uncovered some unexpected sources of happiness. For example, in the experience of accomplishment, "actually getting to a goal" is less apt to make him happy than the process of working toward that goal.

With his personal data in hand, he now resolves his existential puzzles with small, practical interventions — idiosyncratic methods to lift his daily happiness. For instance, no matter how much fun he might be having at night, he retires early to avoid missing sleep, since feeling tired invariably makes him unhappy, according to the data.

2. Theory testing uses auto-analytics tools as a way to quantify happiness in terms of an established model. Take the well-known study on happiness by academic Carol Ryff, which includes a theory of psychological well-being. Ryff posited that well-being could be measured on a model with six factors: self-acceptance, personal growth, purpose, mastery, autonomy, and positive relations with others. Researcher and statistician Konstanin Augemberg decided to test Ryff's theory in this short case study. Using the programmable rTracker app on his mobile phone, Augemberg sampled himself three times a day on sliding scale with a simple question: How happy do you feel right now? He also rated himself at that moment on the six factors in Ryff's model.

After a month, he ran the analysis of his data. "Out of 6 [variables] only 4 turned out to be predictive of happiness; the most influential of those were mastery and autonomy — being in control of the situation and being independent," he found.

A good model like Ryff's may have broad appeal, but as Augemberg's experiment demonstrates, all of its six factors may not be relevant to each individual — an overly complicated model may be likened to a universal remote control with superfluous buttons. Through this experiment, Augemberg was able to remove the extra two components, allowing him to better focus on those factors that, according to his data, directly influenced his happiness. He observes, "n=me, so the model may work differently for others."

3. Experience sampling gently nudges users at random intervals throughout the day to log how they're feeling. Over time, the method creates a detailed happiness dashboard so participants can make fact-based decisions or change their habits based on their numbers.

Auto-analytics tools in this area, like trackyourhappiness, represent a new type of research approach, one that advances both scientific learning and individual progress toward happiness.

An interesting dimension of trackyourhappiness is its measurement of mind-wandering. The tool helps people work out tough questions like this one: As I'm performing a task I consider unpleasant, say collating monthly business travel expenses, is it better to focus on the task at hand or to imagine something more pleasant while mindlessly grinding through it?

To resolve this type of conundrum, users are asked three questions at various points throughout the day: (1) How do you feel now? which they answer on a sliding scale from "very bad" to "very good"; (2) What are you doing?; and (3) Are you thinking about something other than what you're currently doing?, to which they can answer "no," "yes — something unpleasant," "yes — something neutral" or "yes — something pleasant."

After using the tool for a while, most begin to discover through data that they are much more happy when they are focused on the present than when not. As lead researcher Matt Killingsworth's analysis of more than 15,000 users shows, people are measurably less happy when they are mind-wandering, no matter what they are doing. "For example, people don't really like commuting to work very much, it's one of their least enjoyable activities. And yet they are substantially happier when they are only focused on their commute than when their mind is going off to something else," he says in his research presentation.

A possible cause for the negative effects of mind-wandering may be that our minds most often wander to worrisome topics like job stability or declining sales this month. Yet on the flip side, the data also show that even when we are imagining something neutral or pleasant, we are slightly less happy when our mind is diverted from its main task than we are when it is attentive.

Killingsworth sums up: "If mind-wandering were a slot machine it would be like having a chance to lose $50, $20, or $1. You'd never want to play."

Each of the three approaches is really about adding a dose of science, gathering, and acting on data to inform personal change. Whether you're interested in addressing your happiness, your work productivity, or something else important, you can begin this data-gathering process by taking this short assessment.

The Perils of Being a Social Media Holdout

There are conversations taking place about your company or brand 24 hours a day, seven days a week in social media. Are you a part of these conversations? Or are you hoping that if you don't hear them, they don't exist?

Social media offers a variety of opportunities for brands to understand and participate in those conversations. While participating in social media is not without risk, not participating might prove to be the greater risk — especially to reputations.

Here are three risks of not being in social media for big companies or major brands, small business owners, and service providers:

Having your reputation defined by others: People are talking about you, your company and your brand, and your stakeholders expect you to be paying attention in real time, especially when they have a customer service complaint or positive feedback to give. You decide whether to participate in this conversation or not, but at least you are aware of what is being said. This is the new frontier for reputation risk management. If you don't tell your story, others will tell it for you.

Being invisible and less credible: The social Web is changing how people communicate and access information. With a smartphone or tablet in hand, you can search for and find almost any information you seek, within seconds, whenever and wherever you are. People are looking you up. Not having a presence means you are not easily "findable" and perhaps leads people to question whether yours is a credible business. People are increasingly turning to social networks as the easiest way to get their questions answered. Potential buyers are going online to research products or services before they purchase them, or new contacts before they meet them. On average, buyers progress nearly 60% of the way through their purchase decision-making process before engaging with a sales representative, according to Corporate Executive Board (link is PDF). If people are looking for information about you or your business, what are they finding? A social page or profile at its most basic level enables you to provide accurate and helpful information about what you or your company does to your intended audience. Additionally, social media pages typically appear with prominence in search results — without these online presences, relationship managers and organizations risk not being present in the search results when an interested prospect goes looking.

Being perceived as behind the curve: As consumers embrace new technologies, they expect businesses to do the same. Companies (and their representatives) that aren't using social networks will not be perceived as forward-thinking and, in the long term, will risk losing customers who want business partners who speak their language. Would you create a new personal checking account with a bank that doesn't have an online portal? Today, we depend upon online access to data, including our finances, so that seems unthinkable. Soon customers will feel this way about having a social connection with businesses.

Social media is perhaps best thought of as a set of new and innovative ways for businesses and customers to do what they have always done: build relationships, exchange information, read and write reviews, and leverage trusted networks of friends and experts.

As you contemplate the risks and rewards of social media, we would suggest that the key ingredient for evaluation is simply to experience it for yourself. There are many low risk ways to do this, even if you work in a regulated industry. One of the best suggestions we have is to take on a "reverse mentor," a more junior colleague who has grown up with social media, and have them share their knowledge with you.

Today's always on, social-mobile world is challenging all businesses, brands, and professionals to adapt — or at least make an informed decision not to. As you consider the full set of risks associated with being or not being in social media, it is important not to overlook the rewards and opportunities.

How E-Mail Marketers Can Survive Gmail's Tabbed Inbox

Last week, I got an e-mail from one of my favorite e-list masters, Chris Brogan, imploring me to "shake [his] newsletter free from the clutches of the [Gmail's new] Promotions tab."

Why did Brogan have to ask me to take charge of my Gmail? It was in response to Google's newly formatted, tabbed inbox. For those who have not yet switched over to the new format, Gmail's new inbox automatically triages incoming e-mails into five categories: primary, social, promotional, updates, and forums. Instead of a single inbox with all incoming mail, the new inbox is separated into these five tabs (or fewer, if you choose). Though users will be able to manually move messages between the categories, Gmail will automatically filter them as they come in. The onus is on the user to keep an eye on each inbox area.

Of course, users can set up filters within the service already, giving them control over what lands directly in their inboxes and which messages get shuffled into various folders (per Brogan's plea). But the system isn't perfect and takes an initial investment of time to set up.

So is this trouble for marketers?

When I got the new Gmail inbox, I panicked a little. I run a blogger network that connects online influencers with nonprofits and socially responsible businesses. We depend heavily on e-mail marketing to keep in contact with our bloggers, and we're pretty good at it — our e-mails are regularly opened by a relatively large percentage of our network members. But now these messages are being shuffled off into the shadows of a separate "forums" or "updates" inbox. Will our messages ever see the light of day? How will users interact with the new inbox and how should marketers react?

Though the full impact of the new inbox remains to be seen, the e-mail marketing company MailChimp posted to its blog last week stating they had seen a decrease in open rates across their service since the new inbox's rollout. Looking at open rates of 1.5 billion e-mails sent over six weeks since the rollout, MailChimp found a small but marked decrease in open rates of e-mails received in Gmail. Though they're "not willing to declare an emergency just yet," this trend shows that it is important for marketers to think more strategically about what they're sending and why. As MailChimp notes, any e-mail with markers such as headers, footers, and "unsubscribe" buttons will be filtered into the updates or promotions tabs; there's no way to escape the tabs if you're sending mass e-mails.

But before assuming we're all doomed, let's remember Priority Inbox.

In 2010, when Gmail's Priority Inbox was introduced, marketers were similarly worried. Priority Inbox pushed what it believed would be users' most important e-mails to the top of their inboxes. Marketers feared that their e-mails would be pushed to the bottom of the inbox, never to be seen. However, this worry turned out to be largely unfounded. If a user made a habit of opening an organization's e-mails, those e-mails were deemed important by the algorithm and pushed to the top of the inbox. Gmail's new inbox is somewhat similar, though blast e-mails still get pushed to a non-primary tab, regardless of how much a user loves the content, until the user filters the message to be sent to the primary inbox.

The key takeaway for marketers is not new or groundbreaking, though it is more important than ever before. E-mail content must be engaging, relevant, and interesting to users. I love the community I find in my listservs. If those messages don't appear in my primary inbox, I'm going to go hunting for them in the other tabs.

To the extent that Gmail's tabbed inbox does interfere with e-mail marketing, it will render social media more crucial than ever, as curated content on users' social feeds constitutes a new inbox of sorts.

As Beth Becker, Partner & Lead Digital Strategist, Indigo Strategies, put it to me, "Long term, this is going to make true engagement and community building on social platforms all the more important. If [your audience] is invested in you in some way, they will read your e-mail no matter where it is because they WANT to." Marketers who are seeing a dip in their open rates may want to take a page out of Brogan's book and instruct their community members on how to alter their filters. But even more important is to craft e-mails your subscribers want to open.

Well-Being Rebounds 1 Year After a Rise in Gasoline Prices

Why don't today's gasoline prices bother Americans as much as they did when prices were just as high, but on the ascent, in 2008? Research by Casey Boyd-Swan and Chris M. Herbst of Arizona State University shows that subjective well-being deteriorates when gasoline prices rise, but almost fully rebounds 1 year later and changes very little in each additional year subsequent to an increase. The effect of rising gasoline prices on well-being, which applies even to nondrivers, may stem from people's tendency to interpret movements in gasoline prices as indicative of macroeconomic conditions, the researchers suggest.

If You Want to Raise Prices, Tell a Better Story

Ask a CEO if they want to spend a pile of money on an analysis of their company's story, and they'll probably throw you out of their office. But if you tell them that you have a powerful insight that can help them raise the prices on all of their products, they might ask you over to their house for dinner. Money talks, in other words. Unfortunately, in most companies, the power of story to affect pricing still remains unknown, or at least it's vastly under-utilized.

Pricing strategy usually follows one of four tracks. Bottom up: calculate the cost of everything that goes into making the product, and add a fair margin on top. Sideways in: analyze and adopt the price of competitors' products. Top down: target a demographic or economic segment, and engineer the product to meet that price. Or dynamic: use a complex, real-time calculation to gauge supply and demand, usually with the help of an algorithm.

What you almost never hear about is a fifth track, which I call story analysis: an analysis of a product's capabilities to fulfill a profound human need, to tell a story that gives your customers' lives richer meaning. In a world of abundance, what your product does for your customers is important, but not nearly as important as what your product means to them. And this second part — the story of your product — is what yields the greatest pricing power of all.

Not convinced? Consider this story.

Back in the summer of 2006, New York Times Magazine columnist Rob Walker was mulling the question of what makes one object more valuable than another. What makes one pair of shoes more valuable than another pair if they both deliver on the functional basics of comfort, durability, and protection? Why does one piece of art cost $8,000,000 and another, $100? What makes one toaster worth $20 and another worth nearly $400 if they both make toast? As Walker turned these questions over in his mind he concluded that it is not the objects themselves, but the context, the provenance of the objects, that generates value. In other words, the value isn't contained in the objects themselves, but in the story or the meaning that the objects represent to the owner.

Walker decided to test this conclusion in a simple and direct way. With the help of a friend, he began buying random, worthless, or low-value objects at tag sales and thrift shops. The cost of the objects ranged from one to four dollars. An old wooden mallet. A lost hotel room key. A plastic banana. These were true castoffs with little or no intrinsic worth.

Next, Walker asked some unknown writers to each write a short story that contained one of the objects. The stories weren't about the objects, per se; but they helped to place them in a human context, to give them new meaning.

When Walker put the objects, along with their accompanying stories, up for sale on eBay, the results were astonishing. On average, the value of the objects rose 2,700%. That's not a typo: 2,700%. A miniature jar of mayonnaise he had purchased for less than a dollar sold for $51.00. A cracked ceramic horse head purchased for $1.29 sold for $46.00. The value of these formerly abandoned or forsaken objects suddenly and mysteriously skyrocketed when they were accompanied by a story.

The project was so successful (and so interesting) that they have now repeated it 5 times and put all the results up on the web. It is also a book.

Walker's experiment reminds us in a clear and extremely tangible way how the concept of value works in the human brain: a can opener is a can opener is a can opener until it is a can opener designed by Michael Graves and a part of the permanent collection of the Museum of Modern Art. A shoe is a shoe is a shoe until it is a pair of TOMS shoes. For every pair that I buy a child who has never been able to afford shoes gets a free pair as well. Suddenly, these objects are part of an inspiring narrative — one that I can use to reveal something meaningful about myself to others. That's something I am willing to pay for.

That's where real pricing power comes from.

And as the number of products and brands in the world proliferate at an ever-accelerating pace, the power is only increasing. In 1997, there were 2.5 million brands in the world. Today? The number is approaching 10 million. So the trend is toward rapid commoditization of just about everything. In a world of almost overwhelming abundance, an authentic, meaning-rich story becomes the most important ingredient to drive a company's margins up.

Dinner anyone?

Four Methods for Corporate Innovators

Matt Kingdon, cofounder of ?What If!, explains how to make your new idea stick. For more, read his book, The Science of Serendipity .

Five Ways to Innovate Faster

One of the most common complaints senior executives have about disruptive innovation is its seemingly snail-like pace. How is it, they wonder, that it takes us forever to pursue ideas that promise to create new markets when the world seems to be innovating at a dizzying pace?

This frustration is compounded by the fact that the usual levers senior executives use to get things to go faster — creating tight deadlines, flooding the project with resources, checking in more frequently — don't seem to work, and in many cases cause teams working on disruptive ideas to actually go slower.

Why is that? Tight deadlines, frequent check-ins, and additional resources indeed help to accelerate execution of a strategic plan. But succeeding with disruption first requires developing a strategic plan that can be executed. As innovation thought leader Steve Blank notes, a startup is a temporary organization searching for a scalable business model. Accelerating the search for a strategy is a very different challange than executing that strategy.

There are five ways to accelerate the search for a viable new-growth model:

Form small, focused teams. Small teams almost always move faster than large teams. One of Jeff Bezos's rules of thumb inside Amazon.com is that teams should be able to be fed by no more than two pizzas. The mistake many large companies make is that they think a new venture is like a mini-version of the core business, one that needs to be staffed with representatives from corporate functions like legal, quality assurance, and so on. Bloated teams are ill-equipped to rapidly search for a compelling model; small, nimble teams maximize flexibility and the speed of learning. Ideally the entire team should be fully dedicated and located together so they can make real-time decisions, but at the very least the project leader should be full time to minimize time-sucking distractions.
Push to learn in market. The epigraph in Blank's latest book (with Bob Dorf), The Startup Owner's Manual, says it all: "Get out of the building!" Large companies are used to relying on desk research and consultants to size markets and sharpen strategy, but the search for tomorrow's business has to be conducted in or close to the market. Remember, markets that don't yet exist are notoriously difficult to measure and analyze, so the team should spend as much time as possible with prospective customers, partners, and suppliers. Even richer lessons come when a team goes beyond talking, to actually attempting to produce, sell, and support its offering, even if it is that offering has some limitations.
Measure learning, not results. It's hard to set precise operational milestones when you don't know what the business model is going to be. And in search mode financial forecasts are unreliable. When IBM is working on uncertain new growth efforts, by contrast, it measures things like the number of customers a team interacts with, or the speed with which a team creates prototype (see the recent Harvard Business Review article "Six Ways to Sink a Growth Initiative" for more). Executives should pepper teams with questions like, "What did you learn? What do you still not know?" The innovator should be able to spin a conceivable story about how the idea could have material impact, but leaders should focus on the plausibility of the assumptions behind the story, not the output of a spreadsheet based on specious assumptions.
Tie funding to risk reduction, not the calendar. Most venture capitalists don't hand out funds on a quarterly or yearly basis, as most corporations do when they fund ongoing operations. Rather, they provide sufficient capital for the entrepreneurs to address critical uncertainties like whether they can overcome key technical challenges, hire the right team, or convince customers to pay for a given solution. If the founders remove that uncertainty, they get another round of funding. If they do not, well, the VC moves on to the next company in its portfolio. Companies need to remember that not every idea is destined to turn into a compelling business. Better to pull the plug early than to unnecessarily waste time and resources.
Ensure decision makers have the right experience to guide the team before the data are clear. Important new growth initiatives are typically overseen by a company's top management. But if the intent is to search for a new business model, the company's top team almost by definition lacks experience with it. Perhaps some members of the executive committee who have nurtured a new venture in the past should be involved. Augment them with outsiders who have spent enough time with start-ups to know how to grapple with uncertainty or with subject-matter experts who have spent enough time in a market to understand its nuances. Otherwise the need to invest in educating management will slow the team's progress even more.

Here is one litmus test to gauge the degree to which you are following the approach I've just described. Ask the team the ratio of time spent preparing materials for management (or conducting desk research to feed into materials for management) versus time spent with customers, developing products, or talking to potential partners. If the ratio is higher than 1:3, you have a problem.

These five pointers won't guarantee success. But following them will enable a team to discover as quickly as possible if there appears to be a viable path forward. If there is, then all the disciplines companies use to scale businesses typically prove helpful (unless the model that emerges has stark differences with the core business — but that's a different post). If there isn't, then at least the company learned that quickly and can move on to the next idea.

Today's CIO Needs to Be the Chief Innovation Officer

Enterprise IT as we have known it is rapidly becoming obsolete, and the traditional role of the CIO is increasingly irrelevant. As game-changing technologies transform every business process, they also give us the ability to create new products and services that were impossible just a few years ago. Therefore, the CIO's role must shift from protecting and defending the status quo to embracing and extending new innovative capabilities.

The old way was about technology-centricity; the new way is about technology-empowered business strategies. The old way was information management; the new way is information intelligence. The old way was IT systems management; the new way is platforms that enable new value chains and integrated ecosystems. The old way was cost management; the new way is driving business transformation and accelerating growth.

Today's world of business is not just changing — it's transforming. What's the difference? Change is doing something in an incrementally different way. Transformation is doing something so drastically different that it becomes a qualitative shift, not just quantitative. The move from wax cylinders, to acetate discs, to LPs, to CDs — these were all change. CDs to MP3s? Suddenly I can carry my entire music library in my shirt pocket, and my digital music player (which also happens to be my smart phone containing GPS, videos, and so much more) has no moving parts, unless you count electrons. That's a transformation.

In the early 1990s, Barnes & Noble superstores changed how we shop for books. By the mid-1990s, Amazon was transforming how we shop for books, which then transformed how we shop for everything. As we all know, technology made this transformation possible.

Transformation Drivers

Today, technology-driven transformation is happening all around us. A few weeks ago, I was a keynote speaker at a large international technology conference and one of the demonstrations to illustrate game-changing technology involved using an iPad and a high-speed connection to fully control three of the most powerful workstations engineers have access to. All were located in different parts of the country, yet with only the iPad wirelessly streaming to a large screen, thousands of people could see what the engineers were seeing and the user could control each workstation as if he was there. Doing all of this from an iPad was impossible just a few months ago.

I was in China two months ago consulting with CIOs who were not only using software as a service (SaaS), but several were also in the process of implementing hardware as a service, connectivity as a service, collaboration as a service, and security as a service. And the real excitement was around implementing everything as a service (XaaS). Clearly, IT is quickly becoming an integrated collection of intelligent services that are on demand, on the move, and on any device.

The visual, social, virtual, and mobile transformations that are already happening are creating a new golden era of technology-enabled innovation, and the CIO needs to be leading the charge.

So what has enabled the business environment to go from merely changing to transforming? It's all thanks to three change accelerators: the exponential advances in processing power, bandwidth, and storage. I have been tracking their trajectory for the past thirty years and they have now entered a predictable new phase due to their exponential growth — a phase that will transform every business process. Think of it this way: Based on the technology-enabled hard trends that are already in place, over the next five short years we will transform how we sell, market, communicate, collaborate, innovate, train, and educate. And if you don't do it, someone else will. In fact, with all the business processes technology is transforming, nothing is transforming more than the role of the CIO.

The New Role

The CIO's traditional role, which is one of managing information, IT systems, and cost, has itself transformed to creating new competitive advantage, new products, and new services. Traditionally, the CEO was the innovator, but many of today's CEOs — as well as the rest of the C-suite — are unaware of what is technologically possible now or in the future. However, the CIO does have interest, access, and the understanding of that type of information and knowledge, which is why the CIO position needs to transform into the Chief Innovation Officer.

Of course, not all CIOs will embrace their new role. As our environment transforms, human nature is to hunker down because we want to find comfort. Many will be far too busy doing what they have always done. Many will spend a lot of time protecting and defending the status quo. Why? Quite simply, because we're familiar with it. We know how it works. We have an investment in it. It has made a lot of money for us. It got us to where we are today. Therefore, the mindset is that we have to protect and defend it any way we can.

An additional burden the CIO has is the nature of their work itself. They have to maintain the existing system to make sure it's working, that there are no breaches, that it's being upgraded, etc. After all, you have to keep the organization running smoothly during the transforming time. But if that's all you're doing — maintaining what's already there — then your role is tied to the past and your relevance is decreasing every day. So while you do have to maintain your current and past systems, your new most important role is to drive internal and external innovation. And because innovation is increasingly technology-driven, the CIO is in a perfect position to lead this evolutionary revolution.

The fact is that the ability to innovate has never been more possible and has never happened faster. In transformational game changing times such as what we're experiencing now, the key rule is this: If it can be done it will be done ... and if you don't do it, someone else will. Likewise, if you don't change the focus of your CIO role, someone else will.

Reinventing Corporate IT
An HBR Insight Center





The Real Power of Enterprise Social Media Platforms
Are We Asking Too Much of Our CIOs?
Is Your Organization Ready for Total Digitization?
Why Can't a CIO Be More Like a CFO?

You Found Your Product-Market Fit. Now What?

In every start-up, finding initial product-market fit is a magical moment. Before this occurs, the sales process is a craft or an art, custom-made by the founder or evangelist sales VP. You dive deep into a customer development process, working closely with a few customers who feed you requirements and are willing to trial an imperfect product that is evolving quickly.

But once you achieve initial product-market fit and are down the Sales Learning Curve (PDF), suddenly you are faced with a new challenge: how do I scale up the sales efforts? How do I build a repeatable, scalable sales process that is like an industrial machine, not a crafts project?

Across our portfolio and in my own entrepreneurial experience, I have seen three main sales models work successfully in scaling B2B sales:

1) Enterprise;

2) Telephone;

3) Developer-driven.

B2C sales and customer acquisition efforts are a different matter (and one I'll perhaps address in a future blog), but for B2B, those three models are the most common pattern. I'll discuss each one below.

1) Enterprise Sales

The enterprise sales model is a pretty simple one and was the predominant model ten to twenty years ago in the IT industry. If you want to scale sales, you hire more sales reps. Find a new sales rep with industry experience, a rolodex and a strong track record. You assign an annual quota to each rep, train them, feed them some sales tools and assign them a sales engineer (particularly for more technically complex products) and coach them along the way. After 3-6 months, they work their way down the learning curve, close their first deal and are off to the races.

The typical quota for a sales rep varies by type of business model (SaaS vs. perpetual), product gross margin (e.g., 80-90% software products vs. 40-50% advertising products) and company maturity (e.g., a "jungle" stage company would have a lower quota than a "highway" company). Typically you want to see a 3x ratio between the contribution margin per rep (factoring in the lifetime value of the customer, or LTV) and the cost per rep to acquire that customer, fully loaded (i.e., customer acquisition cost or CAC).

For example if you have a 90% gross margin SaaS software product and assign a $1.1M in quota for a rep (i.e., $1m in contribution margin) that makes $250K at target and assume another $50k in benefits and travel costs and $30k in marketing and support costs for a total of $330K, then you have a 3x LTV:CAC ratio in year one. Another rule of thumb for SaaS companies, some focus on "the Magic Number", which is the ratio of new sales to sales and marketing expenses.

If the customer is a recurring customer, then they are more valuable and a lower quota might be tolerated, although a separate group of account reps are often accountable and paid commissions for the renewal revenue. If the marketing support is greater and the product is more mature, than a higher quota might be assigned. In my former company, Open Market, we had rising quotas each year as we got more mature, from (if memory serves me) $1.1M to $1.3M to $1.5M to $1.7M to, finally, $2M in annual quota.

Advertising sales reps, with a 40-50% gross margin, might have $3-5M in annual quota.

Although it is an excellent fit for complex enterprise-class solution selling, many people think classic enterprise sales, as a standalone go to market model, is broken. When you analyze it carefully, unless you can support large quotas due to very large deal sizes, it can simply be too expensive to hire senior sales representatives, distribute them around the country, set up offices and support them. Many are therefore proponents of a sales model that relies more on telephone-based selling, as described below.

2. Telephone Sales

The telephone sales model is based on a group of lower-paid, typically younger sales representatives that sit in cubicles next to each other and make call after call. To implement this sales model effectively, there needs to be a tight coordination between sales and marketing to generate qualified leads and to feed these leads to the sales organization. There also needs to be a large target universe of potential customers to justify the volume of calls - the model simply doesn't work if your target market pool is in the hundreds or even thousands.

Sales reps in this model may be closers or simply openers who qualify leads carefully and then hand them off to the closers (in this scenario, the telephone-based representatives are often called business or sales development representatives — BDRs or SDRs). Many organizations will have two separate groups - a group of SDRs that are nurturing leads and conducting product demonstrations and a group of telesales reps who are closers. It is not uncommon for the SDRs to be right out of college or, at most, have only 2-4 years of experience and be earning base salaries as low as $30-40K. Their quotas may be as low as $400-500K, but their salary at target might be only $80-100K. With no travel budget and no field offices, the numbers pencil out nicely. The telesales team can also be a nice training ground for enterprise sales reps - a path that can be cheaper and less risky than hiring someone externally.

Generating a high volume of leads for the telephone sales rep is the key to making this model work. It is all about (highly qualified) leads, leads, leads. Leads may be through inbound marketing techniques (such as webinars, blogging, white papers or other forms of content marketing) or outbound marketing techniques ("smile and dial" against a list of prospects). The Hubspot folks (who are terrific in this area) estimate that each SDR in their mid-market group needs 150 leads per month to be productive and busy while for the small business team, they target feeding 2000 leads per sales rep per month. This is an appropriate number to figure out and model to help guide whether you need to ramp up marketing (demand generation) or sales (closing) as you scale.

To that point, a well-run telesales operation will be super metrics-driven. You can measure EVERYTHING - how many calls per day per rep, how many connects per call, how many positive conversations lead to follow-up, how many demonstrations, how many proposals, etc. These measurements help with the "machine-building" process as you can more predictably assess how you are doing at any given time and where you need to focus your resources - more leads, more SDRs, more closers, etc. The best sales VPs of telesales operations are more like accountants than charismatic salespeople. If you hire a charismatic leader as your head of sales, make sure you hire a director of sales operations to support them. I never fully appreciated the value of this role until I saw it in action myself at Open Market where the director of sales operations managed all the numbers and operational details, freeing up the charismatic sales VP to hire, lead and close the big deals.

Alignment between sales and marketing is critical in any sales model, but under the telesales model it is even more critical. Organizationally, SDRs may even work under the marketing organization while the closers work for sales. Whatever the organizational configuration, the definition of a lead, clarity on the quantity of leads being targeted, and alignment on the quality of a lead required before handing off from marketing to sales are all key elements to work through. Marketing automation platforms are particularly helpful here so that you can track someone from website visit all the way down the funnel through close.

Again, there are many who believe even the telesales model is flawed and outdated. Hiring armies of young, inexperienced professionals and training them to become sales reps and operate in a "boiler room" style environment can be expensive. To achieve friction-free revenue (and who doesn't want friction-free revenue?), a third sales model has emerged which I'll call "Developer Driven".

3) Developer Driven Sales

My partner, Chip Hazard, wrote a terrific blog post on the power of developer-driven adoption, something we have seen play out very successfully at a few of our portfolio companies, but most notably 10gen (maker of MongoDB). As Chip points out, if you can architect your product as a platform (build APIs that are accessible to 3rd party developers) and get bottoms-up adoption from the development community, you can drive adoption without investing heavily in sales. Chip's examples are mainly from technical products (his main area of expertise), but this approach can be employed for any product where customers can trial, see value quickly and begin adoption without taxing your sales resources.

To do this effectively, you often need to employ a freemium business model - making it easy for a developer or customer to try your product for free, get set up and quickly self-provision (ideally within 5 minutes) without ever speaking to anyone at the company. This provides the ultimate inbound marketing model - customers contact you when they have tried your product and are convinced it provides them with value. Once value is established and the product usage ramps up, you can hear the cash register ringing.

Instead of hiring telesales people, you hire "Community Managers" who arrange hackathons and meetups, actively engage the community on the forums, and shares relevant content through various social channels. When things are really working well in a developer driven model, developers are embedding your platform in their products and each developer becomes a marketing agent for the company. In effect, your developer support team becomes your marketing team.

Summary

The magic in developing a go to market strategy is that there is no "one size fits all" approach. Many companies will design their sales and marketing machine as a blend of each of these approaches. Use a developer-driven model to drive trial and inbound activity. Telesales to close high-volume, smaller deals. And then enterprise sales for the select strategic deals with average sales price (ASP) > $100K.

Different phases of your business will see more emphasis on one area than another. For example, many companies embark on a freemium model initially, then depend on inbound upsell, later hire a telesales team to ramp up the upsell process by adding outbound activities, then hire an enterprise team to close the big deals. Dropbox is an example of a company that has followed this path with tremendous results.

The main point is that you need to be as strategic and thoughtful in designing your go to market model as you are in your product or company strategy. Only then can you evolve from a crafts model to a machine.

This post was adapted from "Seeing Both Sides"

Bad-Luck Numbers that Scare Off Customers

If you live in the West, chances are that you've visited a building without a 13th floor or boarded a plane without a row #13. In fact, you probably rarely think twice about the fact that these numbers are so frequently skipped in your home culture, but you might be surprised to see the numbers 4, 9, or 17 omitted when you are traveling abroad.

Superstitions exist in many parts of the world, but the numbers associated with bad luck — or good — tend to vary from one place to another. While this kind of information is generally known to natives within a given market, it isn't intuitive to foreigners. As a result, companies often make unintentional numerical and cultural blunders when launching their presence in a new market.

At Smartling, we compiled a research roundup on superstitions regarding numbers around the world, which we vetted with translators in our global network. We found that knowing about numerical superstitions is important for any business that seeks to expand internationally — especially in the realm of international marketing. Here are some common places we found where numbers can get your company into trouble:

Pricing. Customers in the West might raise eyebrows at a product priced at $6.66, but people in many parts of the world would not. In Chinese, the pronunciation of 666 sounds like the phrase, "things going smoothly" and is considered to be very lucky. Many businesses even hang the number above their door. However, in Japan specifically, the number 9 is a bad-luck number that sounds like "suffering" when spoken aloud; so a price of $9.99, while common in the West, would be viewed negatively.

Phone numbers. You would never ask a customer to dial 1-800-death-death-death, death-death, death-death in order to reach you. However, this is what you'd be requesting if you choose a toll-free number ending in 444-4444. In some Asian languages, like Chinese and Japanese, the number 4 is actually a homonym for the word "death." As a result, most Asian companies avoid using these numbers entirely.

Addresses. When scoping out a new office location in another country, if you spot that the price is inexpensive relative to surrounding properties, you might want to take a closer look at the street number, building number, or unit number. In Mandarin, 7456 (qī sì wǔ liù) sounds like "to make me angry" (qì-sǐ wǒ -le), and 250 can mean "imbecile" and is sometimes used as an insult. Many customers do not want to visit an address that conveys something negative, and some might even consider it bad luck to send correspondence or make deliveries to such a location.

Product names. It's common for companies to release products in a numbered series. However, many companies remove the number 4 or the number 13 due to their bad luck connotations in the East and West, respectively. Japanese camera maker Fuji skips the series 4 and jumps directly from series 3 to series 5 for this reason. Likewise, Canon introduced its Powershot G15, skipping both G13 and G14.

Images. Be mindful of the numbers your images may convey. Often, numbers that are visible in the background of an image might be innocent in one country but provoke fear in another. For example, a photo of a soccer player with a big number 17 on his jersey might look fine to audiences in most parts of the world, but in Italy this number is considered very unlucky. In fact, at the winter Olympics in Turin, the 17th curve on the bobsled track was referred to as "Senza Nome" (without name) instead of referring to it with the unlucky number 17. Also, make sure to check the number of people or items you are displaying in a given picture — the number can be viewed as unlucky in some markets. For some Vietnamese, it's considered . The person in the middle will supposedly die.

Whether you're dealing with launching a mobile app, crafting an advertising campaign, or simply naming a product that will be sold in another country, there are two surefire ways to avoid exposing your brand to numerical faux pas. First, train your staff to watch out for the most widely known and high-risk unlucky numbers. Second, make sure that your non-native employees always work with people in the local market when making important decisions about numbers, especially ones that will be front and center for your brand. Doing some preliminary research and involving your company's in-country human resources — partners, distributors, agencies, and even customers — will help you ensure that when it comes to effectively communicating with your target market, you've got their number.