Monthly Archives: March 2012

March E-commerce Digest

March 28, 2012 by Elan Sherbill.

This March, Building Keystones researched and published blog posts on our favorite e-commerce Twitter accounts, reducing churn with proper dunning techniques and the state of downloaded software vis-a-vis SaaS and apps.

We also kept an eye on the latest developments and insights in how software is sold and delivered online. The links below highlight some of the best articles that we’ve read this month. Use the Comments section below to share your favorite e-commerce articles and videos.

Alex Payne — How Not To Sell Software in 2012: Alex Payne, one of the original employees at Twitter, writes that in our day and age, software vendors need to simplify overly complicated sales processes so that purchasing software is as easy downloading an app.

This quote sums up his position, “Basically, if a given software package or service isn’t free/open, it should be as easy as humanly possible to try it, pay for it, and start using it in production. If it isn’t easy to get started with your product, I’m going to find another vendor.”

The post continues with a list of eight “Don’ts,” those companies that are getting it right, and those companies that are doing it wrong.

Internet Retailer – Amazon steps up competition in cloud services: Amazon is the acknowledged gold standard of online retailing. According to Internet Retailer, this e-commerce behemoth wants to occupy that same position in cloud based service offerings.

The important point here for vendors of electronically delivered software is something we have pointed out time and again here at Building Keystones. Namely, cloud computing, PaaS and SaaS are on the rise and companies need to understand how they can leverage this growing technology.

Amazon is so certain of this fact, it is cutting prices for its web services up to 42% in some instances; another example of a strategy Amazon employed with both the Kindle and the Kindle Fire: selling products or services at a loss in order to corner a specific market.

Order Management Hub

Source: Brian Walker, Forrester Research

Forrester Blogs – Order Management Has Become A Strategic Commerce Capability: Forrester analyst Brian Walker examines the ways in which the ordering and delivery of software are changing.

While a good chunk of the post deals with fulfillment strategies for physical goods (which is highly relevant to those of you who cross sell OEMs with your software), of special interest to purveyors of digital goods is the necessity of incorporating a variety of payment types, tiered fraud screening and managing common customer service situations.

E-Commerce Times – Shepherding Content to a New E-Commerce Platform: We’ve written in the past about the various elements upon which to focus during a re-platforming project. This post from E-commerce Times advises that companies considering a migration project abide by the 3R principle: retain, rewrite and retire.

FutureNow – 3x WhichTestWon Winner! “Conversion optimization” is a highly competitive keyword in Google AdWords, which speaks to the general (and quite understandable) desire of e-commerce companies to improve the performance of their online shopping carts. This enlightening post shares some actual test cases that encourage some practical ideas you can use to increase conversions in your checkout process, search results and landing pages.

Let us know which blogs you’ve learned from this month in your quest toward e-commerce excellence.

E-commerce Eye Candy – Going Global [Infographic]

March 26, 2012 by Elan Sherbill.

In this week’s installment of E-commerce Eye Candy we have an infographic from Dribble by Kyle Anthony Miller highlighting the $572 billion that accompanied world wide e-commerce sales in 2010.

While that statistic, combined with J.P. Morgan predicting $963 billion in online sales by 2013, is encouraging for anyone in the e-commerce market, the more relevant piece of information here is the breakdown of sales into region, along with each region’s estimated growth.

We consider it a truism that localized sites are appealing to international visitors, and that localized prices reduce abandonment.

So take your time, look over the valuable information below, and reflect on how you can better your business by decreasing abandonment and increasing your share of this growing online market.

 

Global E-commerce

 

Who Killed Download Software?

March 21, 2012 by Craig Vodnik.

The eulogies have been written: downloaded software is dead with the advent of tablets and smartphones. Apps are the future and we don’t need desktop computers anymore.

Well, let the naysayers howl because downloaded software is alive and kicking, and smartphones and tablets are actually adding to the software industry. So if you are a software developer pay attention to changes in the market. Take advantage of these changes in order to disrupt your own business before someone else does!

Best Buy Software Shipping Example

Best Buy: Check for Shipping

Ten years ago, people talked about the death of software in retail stores due to the emergence of affordable high speed internet access at home. TechCrunch even published a story on the death of packaged software (and inherently the rise of the digital download) as recently as November 2008. Although we can agree that retail boxed software is a declining market in 2012, it still isn’t dead as evidenced by Best Buy’s online store selling software where you can “Check Shipping and Availability.”

So if you don’t believe me that digital downloads are going to be around for a while, here’s my case for you:

Tablets Adding to Market Size

Forrester released a research report last year titled “The Products That Lose When Tablets Win” which included a section on how different age brackets use their iPad/tablet devices in situations when a consumer has both a tablet and a desktop/laptop computer. The graph below indicates that although a healthy percentage (30%) of people are using their tablet more than their laptop when both are available, only a relatively small percentage of users bought their iPad/Tablet as a replacement for their laptop or eReader.

Tablet and Laptop Use Comparison

Tablet and Laptop Use Comparison

This trend may accelerate over time as tablets increase in sophistication and function through innovation, as pointed out in this article from Fast Company. But I doubt that within the next five years businesses will replace a meaningful percentage of laptops or desktops for their employees. For any readers that have worked at organizations with an IT department, think about how rapidly new technology gets adopted.

On the consumer side, I would argue that this trend is a more likely phenomenon. In the next few years there will be a greater number of people that never owned a laptop or desktop for personal use, but they will own tablets and smartphones. If the total number of hardware devices in the market is increasing, then software programs, whether digital download or app or SaaS are also going to increase.

App Sales Adding to Software Market

Forrester also estimated the growth of the app sales market from 2010 through 2015 in a report titled “Mobile App Internet Recasts The Software And Services Landscape.”

Tablet and Phone App Revenues 2010-2015

Tablet and Phone App Revenues 2010-2015

Apps have received lots of media attention the last few years. Apple and Android may each have over 500,000 apps in their marketplaces with more and more people buying apps at $0.99 up to $9.99.

But can a $5 app on your tablet or phone really do the same thing as that $199 PDF creator on your laptop?  Unlikely.

Sure there will be some products that are unnecessary on a tablet, but there’s also going to be a new market of software apps that are not relevant to a laptop and desktop crowd.

Apps like Tripit and Dropbox are not true apps in that those products exist on non-tablet and phone devices. These programs are really SaaS services, but does anyone doubt that there will be innovation in apps where someone will find a product to attract 5 million paid users?  I don’t. Note that Forrester predicts this market will be valued at $19 billion by 2013.

SaaS Products Adding to Software Market

Sales force No Software LogoMany people are touting the virtues of companies like Salesforce.com (CRM) and Zendesk (Support) as the death knell for software. Salesforce’s website even has the cute “No Software” icon to indicate that people shouldn’t be downloading software anymore – only use cloud based software. Unfortunately for Salesforce, while cloud hosted software does have many virtues, it is not right for every single organization in every situation.

Software Market Estimate

Software Market Estimate

Forrester’s report “Which Software Markets Will SaaS Disrupt,” beautifully outlines the markets that SaaS has disrupted, likely will disrupt, may disrupt and won’t disrupt both in 2010 and by 2013.

Digging into the data a bit, SaaS has already disrupted some software categories (webconferencing, talent management and recruitment management), will likely disrupt other software categories by 2013 (content security, time and attendance, and expense reporting) and will leave still other categories virtually untouched by 2013 (core business intelligence, office productivity software and electronic design automation).

Furthermore, as you can see from the graphic, while SaaS is not only growing as a percentage of the software market, the software market itself is growing by almost 35 percent. So SaaS may be taking a bigger piece of the pie, it’s still only 17 percent and the overall pie is growing fast.

Conclusion

Take a $350+ billion perpetual license market, add $35+ billion SaaS market and $19 billion App market and what do you have? A growing diversity in the software market that is tied to the perpetual license model for a long time to come. Does that mean that you should ignore a SaaS business model for your products or explore debundling your product for the Apps market? I wouldn’t!

As Mark Twain once said, “The reports of my death have been greatly exaggerated.” Well, ten years after the obituaries where written for packaged retail software it is still hanging on. So don’t count out the downloaded perpetual license market anytime soon.

Keystone: The software market, despite cries from many directions, is growing larger and larger. If you don’t adapt your software business to the technological changes, your business can be readily disrupted even with the overall market growing for years to come.

P.S. Gartner predicts that worldwide PC shipments will grow 4.4 percent in 2012. Here’s a link to the article that explains emerging markets are the near future of PC growth due to an existing lack of penetration, but that’s an article for another time.

The Dunning Process In E-commerce

March 14, 2012 by Elan Sherbill.

The beauty of a subscription business model lies in the way it turns a single payment into many payments. Subscription renewals expand revenue streams and signify brand loyalty. But as customers approach renewal dates, software vendors should view this time as an opportunity to reaffirm the value of their product or service.

Which leads us to the dunning process. Let’s begin with definitions: The dunning process consists of identifying subscriptions that have already expired or are on the verge of expiring and sending the owner of the expiring account a notification with the goal of collecting payment.

This post focuses on the second step, sending a dunning notification, and how to do it properly in the digital age. Simply put, whether you are dealing with an online service, a SaaS product or traditional on-premise software, if you want customers to renew their subscriptions, you better inform them of what they’re missing if they don’t renew.

Benefits of Renewing

Ancestry.com is a cloud-based service that allows its subscribers to access its proprietary Web-based services to search through the company’s eight billion historical records.

Users who have spent many hours online building their family trees, or are just in the beginning stages of doing so, will be reluctant to lose access to all this data that Ancestry is hosting and keeping.

So one month prior to renewal, Ancestry begins the dunning process by identifying which accounts must be notified and sending a relatively lengthy email highlighting the value the service provides.

The lesson here is that Ancestry doesn’t settle with simply telling the customer, “Pay up.” They introduce that notification with an explanation of the benefits they provide alongside a hint at the upcoming renewal.

Dunning Notification - Ancestry.com

Dunning Notification – Fig. 1

Only later in this email is the issue of payment fully addressed.

Dunning Notification - Ancestry.com

Dunning Notification – Fig. 2

When handling an account with an expired card on file, the dunning process requires a company to inform the account holder of this situation. About two weeks after Ancestry attempted to charge an expired account, they sent the following email which is a little more direct in its message.

Dunning Notification - Ancestry.com

Dunning Notification – Fig. 3

Notice how this time, after the renewal date has come and gone, the dunning notification primarily focuses its message on persuading the customer to update their payment information.

At this late date, two dunning emails regarding the wonderful services Ancestry provides have already been sent. While the information about the value Ancestry’s service provides is still present in this third notification, it is clearly not the primary focus.

Consequences of Not Renewing

Carbonite is a hybrid of SaaS and traditional on-premise licenses. Users must download a software program onto their machines, but on the other hand, users are also sending their data to a cloud hosted service. In the Carbonite dunning process, a single email is sent two weeks prior to renewal with the following message:

Carbonite Dunning Email

Dunning Notification – Fig. 4

It’s interesting to note that Carbonite uses a discount to entice subscribers to get off the fence and renew their payment. Due to the downloaded component of Carbonite’s service, it has an advantage over Ancestry in the dunning process, namely in its ability to dun customers through pop-ups on their desktop, laptop, or even mobile device as the case may be.

Carbonite Popup

Dunning Notification – Fig. 5

Carbonite Popup 2

Dunning Notification – Fig. 6

As you can tell, there is a sense of urgency with this dunning notification. Because the subscription is overdue, Carbonite wants to warn you of the value you may be missing by focusing on the consequences of not renewing.

The topic of managing customer loyalty is broad. With subscription models questions like “Will the customer renew?” will be your first big concern. If the customer does not renew the question becomes, “Why didn’t they?”

In digital e-commerce the dunning process should include elements of teaching the value of your service or product. Instead of simply playing debt collector, play the part of teacher. Focus your dunning process on providing customers with an explanation of the benefits they’re missing by losing the service.

Keystone: For your subscription business model, recapture expired or expiring customers by speaking to the benefits of your software.

What do you think is the proper amount of dunning notifications to send and when should they be sent? How should the message be framed? Let us know in the comments about your experiences in dunning your subscribers.

Our 10 Favorite E-commerce Twitter Accounts

March 7, 2012 by Elan Sherbill.

Adlai E. Stevenson, an American politician, once observed that, “The first principle of a free society is an untrammeled flow of words in an open forum.” A “free society” implies a place where all individuals have an equal opportunity to raise their voices and be heard.

If this observation is true, then the existence of social networks like Twitter must represent a special foundation of freedom. But merely raising your voice does not necessarily mean others gain value by listening to it.

What follows is a list of ten individuals and companies who raised a voice we found worth listening to.

@peter_sheldon – Peter Sheldon is a Senior Analyst at Forrester who covers the digital landscape. This man loves talking mobile commerce and channel strategy. His tweets have an impressive knack for using both positive and negative personal experiences to illustrate relevant e-commerce strategies.

@arstechnica – Not exactly unknown, Ars Technica is a valuable alternative to @TechCrunch and @Mashable. Though their tweets may venture into intellectual explorations of tech culture, they also showcase a broad view of it, making Ars Technica a valuable source of news, reviews, analysis and expert advice on all things related to technology, including e-commerce topics.

@ePrussakov - Geno Prussakov is an affiliate marketing expert, the founder of an affiliate marketing conference called AM Days, and the brain behind AM Navigator, a blog for affiliate management. If you’re interested in affiliate marketing, this is the Twitter account to follow.

@SAI – SAI is the digital business branch of @businessinsider, and as such, the SAI Twitter account is a good resource to keep abreast on the goings on of major e-commerce players, as well as the latest e-commerce tips and tricks. If you’re uninterested in intellectual explorations of culture, don’t worry, SAI tends to focus strictly on business related news with the occasional dip into social media information.

@tabtimes – If you couldn’t guess from the name, this Twitter account focuses on the tablet industry. Tablet news, tablet trends and tablet solutions are all covered as well as their intersection with various e-commerce companies.

@Jtrondeau – Justin Rondeau is a self-described “renegade philosopher turned marketer” and also the Chief Evangelist for Anne Holland’s Which Test Won. Follow his Twitter account if you’re looking for helpful information on A/B testing, social marketing, SEO and improving brand awareness.

@internetlaw - This account is run by Professor Michael Scott of Southwestern Law School and is frequently updated with useful information about Internet law. Topics of conversation revolve around copyright protection, privacy issues, as well as general government regulation. These discussions on government Internet regulation aren’t limited to US law, but extend to Canadian, European, and other international legal codes.

@QAQN – QAQN is a Twitter account run by Daniel M. Clark who bills himself as a “big fan of sanity,” and professionally works as a podcaster and podcast production consultant. While many of his tweets are personal in nature, they include a good deal of useful information on affiliate marketing.

@pymnts – Though it’s not the biggest name we’ve highlighted, this Twitter account from PYMNTS features the latest news about payment methods. From online payments to offline ones, from credit cards to mobile wallets, PYMNTS is a veritable goldmine of information about the payments industry.

@lonelybrand – lonelybrand is a Chicago based digital marketing firm. This Twitter account focuses on brand management and issues related to advertising brand awareness. It is an excellent source of inspirational examples of social media marketing.

Keystone: It’s good to be proud of your own tweets, but you can always learn from others. Make sure that you’re in tune with the entire e-commerce industry by listening and interacting with those companies and individuals on the front line.

Use the comment section below to tell us which Twitter accounts you use to stay current on the e-commerce industry!

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