Building a Global/Local Platform with Etsy

In a recent and very informative fireside chat, Linda Kozlowski, COO of Etsy was in conversation with Sarah Moran, CEO of Girl Geek Academy. Key themes of the discussion included the challenges in building a “global/local” platform, making sure you are addressing the right audience needs, and in a two-sided market place, knowing how to balance the interests of sellers and buyers.

etsyOrganised by StartupVic and hosted by inspire9, it was yet another example of how fortunate Melbourne is to attract and host so many leading global figures in the startup world, willing to share their insights (as well as learn more about the local startup scene – which probably does not get as big a rap as it should, especially in mainstream media).

With previous operational roles at both Alibaba and Evernote, Linda brings a strong combination of experience in tech and market places, and describes her current position as covering “CX and revenue from end-to-end”. Her primary focus is on product development, global expansion and addressing sellers’ problems.

At Etsy, the aim is to develop a global product platform that is culturally diverse. There is a natural tension between fully localised customisation (which can be costly to maintain – translation, version control, managing updates), and a “best of breed” model that can serve most users (which can lead to too many compromises). So instead, Etsy pursues a strategy of locally originated products and features, combined with open APIs.

Etsy has also identified sellers as their core audience. This means that so much of the CX is actually determined by sellers’ needs, to whom Etsy then serves up customers to the platform via social media, content marketing and SOE. Etsy sees this as a point of differentiation when considering traditional retailers who often end up squeezing their suppliers on pricing and margins.

In balancing the needs of two-sided markets, again Etsy focuses on the seller first – because buyers want to see depth of inventory and a range of quality products, so get sellers on-board and the buyers will come.

Asked how Etsy avoids buyers going direct to suppliers, Ms Kozlowski commented that it all really depends on where transactions happen: make the CX is so sticky that sellers want to stay on the platform, offer great seller features, and bring in quality buyers. On the other hand, it’s a healthy market place, so there is no mandating or exclusivity – because of course, successful sellers will sell in multiple places.

Etsy believes in investing in the right technology and the right marketing at the same time. For example, although the business was started in 2004, Etsy only began brand marketing in 2016. The types of marketing deployed include storytelling, identifying key differentiators, understanding customer influences, extensive content strategy, plus performance marketing (site traffic, SEO) to see what else customers may be looking for. According to Ms Kozlowski, a retail site should spend about 20-30% of revenue on marketing, otherwise you are buying traffic and customers (red flag to investors!) Alternatively, establish some ROI goals for marketing costs, especially performance marketing, and during the startup phase (up to 1 year) begin with 15-20% of revenue.

At the heart of Etsy’s business model is an evolving technology and e-commerce platform that allows micro-businesses to run at scale. The USP is a community of network effects: 1.7m sellers, 27m buyers, 40m products, 12,000 “teams”, whose “captains” recruit other sellers. (Australia is actually in Etsy’s Top 5 markets.) In addition, Etsy aims to act with integrity in respect to dispute resolution and addressing fraud – they use machine learning to detect rogue sellers (although often, buyer disputes are a reflection of seller inexperience, rather than fraudulent behaviour). Etsy also offers training and support to resolve disputes, and the community is very good at policing itself.

What are some of the unexpected challenges of market places? When it comes to distinguishing between commodity items and unique creative products, technology will under-price and displace commodity goods that are easily made. It’s also important to build human-to-human connections, and to have a global perspective – for reasons of quality and diversity, and not self-limiting your business, especially when it comes to managing different market and economic cycles. Remember to “follow the data”, and anticipate demand and trends. Among some of the technology challenges, dealing with different devices in different countries can be an issue.

In conclusion, Ms Kozlowski offered some advice for anyone thinking of launching a market place:

First, consider why there are very few local e-commerce markets in Australia (from my personal perspective it’s a complex mix of retailers getting burned in the dotcom boom/bust, cosy market duopolies, and perpetual geo-blocking…). But let’s not forget that Alibaba has just opened its Australian & New Zealand HQ in Melbourne, likely to ruffle a few feathers in the retail sector.

Second, embrace a local/global mix (for the reasons mentioned above)

Third, don’t price too low (although Australia is notorious for being a “price-sensitive” market…).

Finally, the conversation ended with a tantalising glimpse of “the future consumer” (Gen Z) where makers connect directly with buyers.

Next week: Spaceship launches the future of superannuation

Customer service revisited: Navigating The Last Mile

From time to time, I like to comment on the current state of customer service, because this is still one of the key areas where companies can differentiate themselves. So, based on recent experiences with a bank, an insurer, a telco and an e-commerce site, I’m sharing my thoughts on the Last Mile – where even great products and great companies can fall down due to their inability to truly understand the customer experience they create.

Image sourced from LinkedIn

Image sourced from LinkedIn

1. The Bank

After waiting over 30 minutes in a call-centre queue, I eventually spoke to someone who said she could help me with a query regarding the disparity in the amount and rate of interest earned on one of my savings accounts. But first, I was given a choice: either accept an instant $50 “goodwill” payment now, or wait for the outcome of her investigation. Because the amount I was querying was several times that offer, I requested she look into the matter further.

Leaving aside the fact that she failed to get back to me within her stated timeframe (I only managed to re-engage the bank when I queried the lack of response via their social media account…), it transpires that she gave me incorrect product information. This underscores one of my main complaints about customer service – inadequate product and process training. Her supervisor who picked up the query then offered me a $10 “goodwill” payment for my trouble (overlooking I had already been offered $50!).

It was only when I insisted that the amount I was potentially out-of-pocket was closer to $300, and following a protracted and somewhat terse negotiation did the supervisor choose to exercise her (undefined) discretion and settle for an amount in between $50 and $300. While the outcome was closer to what I had expected, the customer service process and experience were far from satisfactory.

2. The Insurer

My home and contents policy recently came up for renewal. I noticed that, even with a customer loyalty discount, the premium increase was far higher than current CPI. It seemed to me that a previous “special discount” I had been offered when I last updated my policy at a bricks and mortar branch, rather than by phone or online, was now being clawed back (and then some) with the latest premium increase.

So, I shopped around online and found a better deal. When I rang the original insurer to advise them I was cancelling and taking my business elsewhere, they said: “Is there anything we can do to keep your business?”. My response was, “Too late.”

I accept that premiums may have to increase. But rather than simply sending out a renewal notice asking for more money, I think the better strategy would be to provide an explanation for the increase, and demonstrate the additional value I would be getting for renewing my policy. I resent being taken for granted, because the insurer clearly assumed I would simply pay the increase on demand, and only attempted to offer a better deal when I rang up to cancel.

3. The Telco

Late last year, I switched telcos, because the service was increasingly reliable, and I had experienced poor customer service from the start of my contract. In the process of transferring my mobile, fixed line and internet accounts, I notified the telco that I was dissatisfied with their service, and was taking my business elsewhere. I also initiated the return of my telco-supplied modem, to avoid incurring any additional fees or expenses. 

However, the telco continued charging me for certain services, long after I had discontinued using them, and 2-3 months after they had been ported over to my new service provider.* I requested the refund of the overpayments. The telco refused, because they claimed they had not actually been formally notified that I wished to cancel the services. So I lodged a complaint via the TIO, but the telco still denied any liability, and refused to refund my money.

Eventually, a TIO Investigation Officer was assigned to my case, and he agreed that on any reasonable reading of my complaint, the telco should have concluded that I was cancelling the service. The telco continued to resist my request for a refund:

E-mail received May 31: “[We have] reviewed the complaint and have decided that we will not be changing our position on the matter.”

I believe that the Case Officer then suggested that the telco listen again to the calls I had made, and place them in the context of the other contemporaneous events and the full history of my contract. He also advised the telco that he was prepared to initiate a full and formal investigation of the complaint.

Only then (and in a remarkably speedy U-turn, worthy of a politician) did the telco respond:

E-mail received June 7: “Thank you for your time and patience throughout this case, it is really appreciated (sic). We apologise for the poor level of service you’ve received that led you to escalate to this point. This is not the kind of service we want our customers to experience and it’s very unfortunate that you have to go through this, especially after you cancelled as a result of the poor service.
 
We will be crediting the account with $XX for the period from the XXth December 2015 to the XXth February 2016 when the service was active after it should have been terminated.”

I’m clearly grateful to the TIO for their assistance, but frankly, it shouldn’t have to get to that point. For an organisation that prides itself on superior customer service, the telco in question clearly does not understand customer experience.

4. E-commerce

There are several reasons why I prefer to order online, rather than buy from local shops: convenience, choice, availability, service and often price as well. Speed of delivery is usually not a factor, especially when ordering from overseas (although in many cases, ordering from overseas can be quicker than buying from a local online store).

However, I’ve recently experienced some delays in overseas deliveries, and upon investigating the matter, discovered that, quite apart from a lack of knowledge on the part of some customer service reps (that old chestnut), the multiple links in the supply chain can result in mis-communication and mis-alignment of their respective operating systems.

For example, if the online retailer does not actually fulfill the order, or if they or their nominated carrier outsources customs clearance and/or the final delivery, there may be as many as 6 or 7 hand-off stages in the process. Unless all the back-end platforms talk to each other (and in the same language), the risk of stuff falling between the cracks is very high.  (The notion of same-day delivery by drone is probably some way off…)

What is particularly frustrating is when one part of the vendor’s website has the (overdue) ETA as one date, but another part of the same website shows a much later ETA – even within a single platform! Perhaps if retailers got their upstream systems in order, the Last Mile would be more likely to take care of itself?

*Footnote: My original provider is merely a re-seller, and therefore is subject to wholesale access provisions. According to some information I received from my new provider, it is illegal for a telco to charge for services over which they no longer have any control or access.

Next week: Field report from Melbourne #Startup Week

#AngelCube favours B2B #startups…

The latest intake to AngelCube‘s accelerator program presented at the recent Startup Victoria meetup event. It was interesting to see that all 6 pitches were aimed at B2B audiences, since I have heard several angel investors and startup advisers express a strong preference for end-consumer products (or those with 2-sided markets). Perhaps there is more appetite for enterprise solutions, despite the longer lead times for sales, and the challenge of strategies required to displace incumbant products.

Screen Shot 2015-08-31 at 5.18.46 pmWhether there is a new interest in B2B startups, or whether more founders are identifying B2B opportunities, there’s probably some further analysis to be done. Meanwhile, here are the 6 fledgling startups in the order they pitched on the night:

Screen Shot 2015-08-31 at 5.45.53 pm1. Peer Academy

Peer Academy aims to “change the way professionals learn”. It does this by offering students access to open enrollment classes via an online market place. The classes are conducted by facilitators and experts (“hosts”) who have been “screened” for quality by Peer Academy, with a focus on “soft” management and leadership skills.

Peer Academy hopes that students will act as “warm leads” for corporate sales, by taking their classroom experience back into their organisations, and acting as champions or brand advocates. With follow-up introductions to training and HR managers, Peer Academy then curates programs for corporate clients, by matching training needs to individual users.

I like the notion of “peer-to-peer” learning (although I presume that the hosts are expected to have more advanced and developed skills than their students), and there is certainly a trend for alternative learning platforms. At least one major bank has expressed interest in sourcing corporate training via Peer Academy, who take a 30% commission on course sales.

A huge challenge will be to engage corporate clients who already have established relationships with trusted training providers, or who have existing panels of approved organisations, or who outsource training procurement to third parties.

Screen Shot 2015-08-31 at 6.04.05 pm2. Jack

Workplace wellbeing is becoming big business ($5bn and counting?), and in the process, sedentary workers are in the firing line. According to Apple CEO TIM Cook, “Sitting is the new cancer”, and hence the recent fad/trend/fashion for sit-stand desks which is driving market interest in ergonomic solutions. The team at Jack have built a device that can monitor how much time people are sitting or standing, and even provide some feedback on user posture.

As you would expect, Jack uses cloud connectivity to monitor user activity, and to relay data via cross-platform apps and dashboards. It also uses elements of social media engagement and gamification, and has already launched a pilot scheme with several desk suppliers, as well as a paid beta at a well-known payments provider.

Customers will buy the device plus pay for a monthly subscription service. There is a direct competitor, but Jack claim their device can be retrofitted to any sit-stand desk. The unit price is much higher than, say a Fitbit, but since this is not a consumer product, Jack is confident it can sustain current pricing.

Finally, with the data it aims to collect, Jack reckons it may even be able to help reduce insurance premiums, although this will no doubt be subject to actuarial scrutiny, Work Cover and OH&S requirements, as well as data privacy issues.

Screen Shot 2015-08-31 at 6.24.11 pm3. Coin-Craft

In the professional services and consulting sectors, tracking project costs and resourcing have become highly demanding activities – witness the plethora of project management, costing, billing, ERP and time-tracking solutions on the market. Based on personal experience, the founders of Coin-Craft have identified a specific need among architects, and have built an all-in-one tool for Project Management, Cashflow Analysis and Resource Planning. Built “for architects by architects”, Coin-Craft is designed to help clients stay optimal, by managing staff over/under utilisation, and tracking cashflow projections.

The system also claims to integrate with third-party accounting software, and has around a dozen firms using the service, with another 30 in the pipeline. Although Coin-Craft have chosen a niche client base to protect their market entry, they claim the solution can also be adopted by engineering practices, graphic art studios and project management firms.

However, feedback from the audience suggested there are already similar, mature products that are tracking individual billable hours against specific projects, so Coin-Craft may need to work on their value proposition and differentiation.

Screen Shot 2015-08-31 at 6.38.22 pm4. CurveUp!

As social media and content marketing become more ubiquitous (if not more sophisticated), companies need to understand the value of their direct marketing spend. Mostly, they can do this via web analytics, e-commerce tracking, campaign conversions, and cost of customer acquisition. According to CurveUp! however, measuring the ROI of your PR activity is not so easy using “conventional” social media monitoring tools. For example, CurveUp! claim they can deliver tailored reports to show which blog post or article converted to a ticket sale for a concert or event.

Currently using web and online sources only, CurveUp! track mentions and link this to customer data. Some platforms, such as Instagram, are harder to track, and even via a possible API solution, it will only be possible to monitor the number of views and shares, but otherwise little or no data will be available.

However, at least one online market place has expressed interest, and CurveUp! has the potential to integrate with Facebook and Google, so that clients could possibly use campaign codes to track referral activity from mention to firm sale. Overall, the service will need to align itself with the ROI outcomes linked to PR campaign goals – which will vary between clients and markets, depending on organisational KPIs around brand advocacy, share of wallet, products per customer and customer satisfaction.

Screen Shot 2015-08-31 at 6.56.07 pm5. TribeGrowth

In a similar vein, the team at TribeGrowth claim to have built “artificial intelligence for social media marketing“. Their goal is to help clients build an audience and get customers, via the use of “intelligent engagement” to generate conversions.

Initially targeting startups, professional service providers and the hospitality sector, TribeGrowth offers a tiered monthly subscription service, and claims to be a (cheaper) alternative to agencies or even Twitter ads.

Currently in private beta (and so far, only designed for Twitter and Instagram), TribeGrowth focuses on audience growth by careful selection of connections and influencers. According to the founders, this is not “pay & spray”, but uses machine learning to refine audience outreach and engagement.

Screen Shot 2015-08-31 at 6.59.11 pm6. SweetHawk

Finally, and in what was probably the most technical presentation of the evening, came SweetHawk, which is building “voice for e-commerce”. I have to confess that, although I had previously heard about this product, I’m still not totally clear how it works.

In essence, it’s an outbound platform that enables companies to have more focused/targeted real-time conversations with warm sales prospects, namely people who are visiting their websites. Personally, I would find that a bit spooky, if I was browsing a site and suddenly a widget popped up asking me if I wanted to receive a call right there and then. Isn’t it a bit like stalking?

The business model is designed to offer tiered services in return for monthly subscription fees – depending on call volumes and functionality, such as workflow tools. I would see it as sitting somewhere between an outbound sales call centre and a SaaS-style inbound helpdesk solution.

On the plus side, I do see the opportunity to deliver superior and more responsive customer service, except that SweetHawk appears to be a sales and prospecting platform, not an after-sales or support solution. I’m also used to live chat tools that pop up on various software and other service sites I use, so I would probably engage with a similar offering if I was browsing to purchase.

Final Thoughts

While none of these pitches has so far demonstrated anything truly disruptive (but let’s not criticise them for that), they all seem reasonably sensible and logical solutions using a mix of digitally-driven technologies (cloud, mobile, social, peer-to-peer, data analytics) that we are all increasingly familiar with. So, rather than major game changers, I see each of them building on established platforms. By refining the potential that new technologies and business models are creating, they are tapping into better-defined client needs rather than taking a “build it and they will come” approach.

In conclusion, I was generally impressed by the 6 pitches on offer, although some of the presentations will no doubt be reworked in light of the audience feedback and Q&A, and before the plucky founders hit the investor road show organised by AngelCube.

The event was hosted by inspire9, and sponsored by BlueChilli and PwC.

Next week: More on FinTech – another look at data and disintermediation

 

 

Understanding the sales people you need…. and when!

SalesSales people come in all shapes and sizes. Some sales people are really adept at only one style of selling; others can adapt according to circumstances.

Based on my experiences there are four main types, organised along two axes: Transactional to Relationship-based client conversations; and  Tactical or Strategic sales techniques.

The Ambulance Chasers take their cue from personal injury lawyers who literally follow the stretcher into the emergency room. These sales people are almost entirely reactive, and only ever think about the next “chase”. They are less interested in building client relationships, and more focused on how much they can get from a single sale. Such sales people can often be relied upon to achieve short-term sales targets, but they don’t necessarily generate a lot of repeat business. If they develop a good nose for where more opportunities may be found, and if they can engage in more systematic sales planning, they may be able to transition into the Tree Shaker.

Tree Shakers are skilled in tapping into existing networks and markets, and uncovering latent opportunities – at times it’s simply a question of knowing how to harvest the low hanging fruit, at others it’s knowing when to dig deeper into an established client account. These sales people can usually find an extra sale or two when their colleagues might have given up – but beware of Tree Shakers who are really sand baggers, holding back those deals for when they really need them.

A skilled Tree Shaker or even an experienced Ambulance Chaser will know that leveraging industry contacts can help them get to more opportunities – but in order to cultivate deep client relationships that yield returns time after time, or to build long-term pipeline potential, you really need strong Networkers. These sales people play the long game (not always helpful when short-term sales goal need to be met….) because they know that having a strong strategic plan and resilient relationship skills will pay off in the end. Networkers are great at leading by example when it comes to account management and updating the CRM system – but they can infuriate if they become too reliant on too few contacts. (Tip: check their expense reports to see if they are having coffee with the same people every month…)

However, the type of sales people who can leave all others in their wake are the Rainmakers – those that can literally conjure something up out of nothing. At times, the Rainmaker may appear to be totally opportunistic – pulling a rabbit from a hat just when it was needed (again, beware the sand bagger) – but their forte is going into uncharted waters and coming back with the catch of the season; and while their colleagues may resent their skills (or question their methods?), secretly they admire the Rainmaker because they show what can be done in seemingly difficult or untested markets. The downside is that Rainmakers might only have one big deal in them, unless they can build sales momentum and sustain interest in the market – otherwise, they quickly move on.

In reality, every sales person probably needs to demonstrate each of these styles at different times; and like any balanced team, a sales organisation needs to have all four styles on their bench. The real insights are knowing where and when to deploy these different skills, and understanding what the results mean when doing a breakdown of the sales reports.

NEXT WEEK: Revisiting geo-blocking in light of the Competition Policy Review Draft Report