Have you heard that daily deal juggernaut Groupon filed for an initial public offering? Of course you have — but what recently came to light is the price. The Chicago-based company filed to raise up to $750 million in its IPO, and documents filed with the SEC show a company with truly impressive growth–$713 million in revenue in 2010, up from $30 million in 2009–but still no profit. READ MORE
Ramon De Leon doesn’t just want you to eat his pizzas. He wants you to feel guilty eating any other pizza. How does the owner of six Dominos Pizza stores in Chicago develop such customer loyalty? Social media. At the BlogWorld & New Media Expo, De Leon gave an animated presentation on the development of his social media strategy, from his AOL Instant Messenger “Pizza Talk with the Boss” ten years ago to his Twitter hashtag #RamonWOW today. Says Ramon, “I want to take one pizza buying experience and have it multiply across networks.” READ MORE
Groupon, one of the key sites that popularized the daily deal, is now leading the charge for real-time deals with a new spinoff service, according to VentureBeat. Groupon has just launched Groupon Now, a new service that offers users to search for real-time deals in their vicinity by the time of day or their location. READ MORE
No one “checked in” when Obama won the presidential election and gave his acceptance speech in Chicago’s Grant Park. That’s because in 2008, Foursquare didn’t exist. The frontrunner of location-based apps wasn’t introduced until 2009 and didn’t gain major recognition for another year. Now, despite the newness of the technology, Mashable‘s Todd Wasserman predicts that location-based apps will change the face of the 2012 election, primarily by inspiring (and peer pressuring) more voters to hit the polls. Whether checking in will actually boost voting numbers is unclear. READ MORE
Since Google’s attempt to buy Groupon in December for a reported $6 billion was spurned by the Chicago-based daily deals site, Google has decided to compete with Groupon instead by joining the daily deals fray. Wired reports that Google is now publicly testing Google Offers, its own service offering incredible deals for local businesses, with the beta version launching in Portland. READ MORE
Credit cards are extremely low tech — they contain simple data to authenticate a transaction. Now, several players, including banks to mobile carriers to financial networks, are looking at a new transaction device: your smartphone. Indeed, financial institutions such as PayPal and MasterCard have issued some customers adhesive chips for their phones. The credit card information is stuck to the phone and can be used at any of the 200,000 contactless readers in stores around the nation. That’s the low-tech version. What’s really a hot topic now, though, is Near Field Communication (NFC), which allows two-way wireless communication between a chip inside a phone and a receiving terminal. This means that soon, if you have a phone that supports NFC, you’ll be able to not only pay for a purchase by waving your phone near a contactless reader, but you can also get instant loyalty points, coupons and rewards. While the idea is intriguing for consumers and merchants alike, the question is whether NFC will work for US merchants — and work well. “Technology is usually only one small component that leads to the success or failure of ventures like this,” said Charles Golvin, principal analyst with Forrester Research, explaining that the technical infrastructure, customer adoption, and low fees must all line up as well. Smarter smartphonesEven though countries like Japan and South Korea have been using mobile phones for payments for a while, paying with a smartphone is off to a slow start here, mostly for financial reasons. “It’s a business model problem,” said Omar Green, the director of strategic mobile initiatives at Intuit, a company highly interested in using NFC with its millions of small business customers, who explained that there is still uncertainty about how merchants will actually be charged to use mobile payments from smartphones. That said, several indicators point to 2011 being the year when mobile payments and NFC reaches a tipping point. First and foremost: Samsung now offers the Nexus S as the first NFC-enabled Android phone. Nokia says its smartphones will support NFC in 2011. Visa’s head of mobile Bill Gajda says the company has been holding pilots with four of its largest issuers. As part of that, all New York City taxis — a whopping 13,000 — now have a contactless readers in the backseat. Chicago and Boston taxis are also being outfitted with about 3,800 readers so far. In fact, transit is a no-brainer for mobile payments. Most people have their phone in hand all the time anyway so waving it past a reader to get through a turnstile seems beautifully efficient. Mobile commerce expert David Eads of Kony Solutions, writing in his blog, says the iPhone 5 is expected to support NFC when it comes out. In the blog post, he points out that, considering the trillions of dollars run through financial networks annually, Apple stands to increase revenue dramatically by getting involved in processing payments for things out in the real world. Conveniently, iTunes already has payment information for its 160 million customers. That’s a match made in Heaven for Apple. Most impressive, though, is an announcement from Verizon, AT&T and T-Mobile. In November, the companies announced that they’re working together with Discover to build a NFC contactless payment network called Isis for the cell phone companies’ 217 million customers. While holding hands with the competition might raise eyebrows, it’s actually a brilliant idea. According to Jaymee Johnson, the director of strategic development at T-Mobile who is also the Isis spokesperson, the joint venture has worked to provide a single unified platform to consumers, merchants, and banks that will streamline adoption of NFC. They realize that mobile payments using NFC aren’t going to work if the merchant is seeing a different interface for every customer that walks through the door, says Johnson. Intuit’s Green says they’re also trying to figure out how to deal with transaction fees. Once they are low enough, a smartphone will be an ideal transaction device. About those fees, Forrester’s Golvin said, “There is a going rate that is established for transaction fees on payment. I would be extremely surprised to see a merchant fee schedule for these payments that was radically different from what currently exists from the existing acquiring banks and payment networks.” Using a smartphone for transactions makes sense, especially for merchants who can capture new information about a customer, such as buying habits and preferences. According to Jeff Miles, the director of mobile transactions at NXP Semiconductors (www.nxp.com), the company that invented NFC with Sony in 2002, NFC tags in stores are another tool that will benefit merchants and their customers. ”Think of a small hardware store,” says Miles. “I walk in and I’m looking at a new drill and Bosch has a promotion, so they put a smart tag in the store. I tap the tag and it gives me some product information and potentially could give me a coupon.” Consumer concernsThere are concerns with using a phone to pay for goods. For example, some wonder: what if your phone is stolen? “[It would be] probably no worse than someone stealing a credit card and perhaps somewhat better because you can password protect a phone,” said Rob Enderle, principal analyst with Enderle Group, adding that the Web service a consumer would be using with a NFC-enabled phone would likely contain financial information and it would not be on the phone itself. Whether people will be eager to adopt NFC is another question. “Consumers are used to using existing methods of payment and as a race we are not very fond of change,” Enderle said. Golvin agrees. “The engrained behavior that people have for paying is pretty deep and it takes a lot to change that,” he said. The coupons and loyalty rewards that would come along with NFC phone payments will help, he said. “Those things do make a big difference. If you can do all of that in the transaction, now you’ve given the customer a real incentive to change their behavior and use this alternate payment method.” Experts aren’t sure at what point the average consumer will be paying for things with a wave of a smartphone. Regardless of when, it stands to chance that while today our phones rule much of our lives, tomorrow they just might control our money as well.
Until recently, evaluating her business technology needs didn’t seem like a priority for Kendra M. Coleman. “As a small business owner in consulting with a do-it-yourself IT department, I spend most of my time traveling and working hands-on with clients,” explains Coleman, who runs Chicago-based Kindred Organizational Consulting, Inc. “The last thing I have time for is a proactive technology review.” But then Coleman started thinking about “how much time, money and space I am wasting relying on old technology systems and applications, including landlines, fax machines and laptops.” Coleman decided to block out time to analyze her use of technology. As a new year begins, it’s a good time for all small to mid-sized businesses to do the same. Emerging technology today offers you powerful tools to compete against bigger players in the marketplace. But managing those tools can be difficult, unwieldy and time-consuming, and many small business owners, like Coleman, are still trying to handle the tech side of the business on their own. It’s time to make new resolutions about how you’ll handle your tech needs. IT and cloud computing experts and consultants say you should target these five areas in 2011: 1. Consider hiring outside IT help If you’re spending more time on tech needs and woes than on your business mission or if your tech systems are hampering your business mission, it’s probably time to find help, say the experts. “For businesses smaller than 100 employees, it typically makes no sense to hire an in-house IT guy,” says Bobby Kuzma, who works with small businesses as president of Orlando-based Central Florida Technology Solutions, Inc. “Most business professionals aren’t technology professionals. They don’t live and breathe this stuff.” You’ll also need to evaluate how much of your IT operations you want to outsource. “We can be their entire IT department or we can work with an organization where we augment their internal IT,” notes Jim Lippie, president of Thrive Networks, the IT network service business of Staples Advantage. 2. Evaluate the cloud Cloud computing will continue to dominate headlines in 2011. “The advent of inexpensive cloud-based solutions mean that owners have access to enterprise-class, robust and reliable services on a small-business scale basis,” says John Baschab, senior vice president at Technisource, which provides IT solutions for business. You’ll find your best opportunities to maximize the cloud in e-mail solutions, back office help, sales force automation, remote backup and file-sharing, advises Baschab. Look for ways you can replicate “Fortune 500″ functionality, says Scott Albro, CEO of Focus, which offers free business advice and consulting. Take a look at what the big players in your industry are doing and see if you can find cloud solutions that help you compete. Pull together a plan that considers potential security and backup exposures or gaps, and have a professional review that plan. “Make sure you’re completely educated before making any drastic decisions,” cautions Lippie. “The cloud movement is still maturing.” 3. Focus on business first “Don’t focus on the technology,” advises Connie Certusi, General Manager for Sage Business Solutions’ Small Business Accounting Solutions. “Know what your business needs and then consider the supporting technology to answer those needs.” Businesses can become enamored of the latest tech gizmos, says Certusi, without thinking about how the technology will fit with their tech needs. “Know what you need, then look for the solution — not the other way around.” 4. Have a back-up plan “I’ll often ask new clients, ‘What was the result the last time you tested your disaster recovery plan?’ knowing that the answer will usually be ‘What plan?’” says Kuzma. “Seventy-five percent of small businesses that I see in disaster-prone Florida have no concrete disaster recovery plan, and half of those don’t even have a good working backup.” Without a disaster recovery plan and a backup solution, your business’s existence is on the line. Consider automating your back process, advises Lippie. The cost is dropping for data backup appliances, and the cloud also offers back up alternatives. 5. Invest in sales and marketing tech The ongoing challenging economic climate means weak demand, says Albro. So it makes sense to target tech investments that help you improve sales and marketing. “Understand the key moments of truth where customers make decisions about doing business with you,” says Certusi. “Analyze where your processes fail to meet customer expectations and target technology that can create tangible improvements.” Once Coleman committed the time to evaluating her usage of technology, she made what she considers another wise decision. “I leveraged my network,” she says. “I’m pretty decent technology-wise, but I don’t have time to stay on top of market trends. To supplement my own knowledge, I reach out to others to find out what works for them. I also know a few key IT experts who provide me advice.”
One of the biggest challenges for entrepreneurs is to scale up their business, and to manage the growth by hiring more people in every function. But what if you could achieve growth by just letting your community of users do most of the work? Several creative companies have used social media tools to get their customers involved in core aspects of their business, all the way from marketing to product design, product testing, and customer service. Here are some great examples of organizations that are using social media to drive sales and efficiencies, while still connecting with customers: Effective marketing using social media By now, most people know that social media provides many tools for creating brand awareness, as well as for generating sales leads. Fiskars, a Finland-based manufacturer of scissors realized that scissors are very popular among scrapbookers, and set out to reach this community. After identifying four Fiskars users who were extremely passionate about the brand, the company set them up with a website and a blog, and made them consumer evangelists. The “Fiskateers” program has since then grown to more than 5,000 Fiskateers across 70 countries, each actively blogging and evangelizing the brand. Having so many “marketers” on its payroll would certainly have been unsustainable for the company, but by leveraging the power of its community, and using online tools like blogging, Fiskars has created a strong brand identity among its target audience. Blogging isn’t for you? Try Twitter to connect with your audience. Naked Pizza of New Orleans, which prides itself on making the “world’s healthiest pizza,” has latched onto Twitter as a means of promoting its fresh ingredients and offering promotional deals. Twitter has been so effective that they’re now using billboards to drive more people to the Twitter account. More and more restaurants are finding Twitter to be an effective way to boost their sales. Finally, no discussion of social media marketing is complete without talking about viral videos. Blendtec, a division of the Utah-based K-TEC, manufactures high powered, durable, commercial blenders. In 2006, Marketing Director George Wright had the unenviable task of creating a brand campaign with a budget of $50. When Wright saw CEO Tom Dickson and some engineers testing the blenders with heavy duty chunks of wood, he hit upon an idea and used the $50 to buy the domain http://www.willitblend.com. Since then, the “Will it Blend” series of videos has seen more than 80 million views on YouTube and increased Blendtec’s sales by more than 700 percent. Involve customers in product design How can you add value and create customer loyalty if you don’t even control your product design process? Threadless, an online T-shirt store operated by the Chicago-based skinnyCorp, has found the secret to that, selling more than a million T-shirts a year, none of which were designed by the staff. All the designs are submitted and evaluated by the community of users on its website. Hundreds of artists submit their designs, and users vote on them. Every week, the best designs are selected for printing, and the winning designers get $2,000 in cash, $500 in gift certificates, and another $500 for every reprint. According to some reports, the company generates more than $30 million in revenue and $10 million in profits. Muji, a Japanese retailer, has latched onto a similar concept through its website muji.net, where it invites submissions for innovative furniture designs. Muji, which means “without brand,” has a community of half a million people who submit and evaluate designs. Shortlisted designs are then sent to professional designers, who polish them before sending them off for production. Web companies often launch products in a “beta” state and invite selected users to test the product. Joffrey’s Coffee & Tea Company took this idea and applied it to coffee. It invited bloggers to beta-test its coffee by sending them free samples. More than 1,500 bloggers participated, and generated enormous buzz for Joffrey’s on the Web. Based on feedback from these bloggers, Joffrey’s launched Coffee 2.0 with many “bug fixes and improvements.” Even the name Coffee 2.0 came from one of the beta testing bloggers. Not only did Joffrey’s use social media effectively to do product testing and improvements, but it also created enormous buzz around the product. Get customers to help with customer support Customer support is one of the most difficult things to scale as the business grows. Consumers are increasingly logging on to social media sites to express their frustration with poor service. For example, the consumer complaint video “United Breaks Guitars ” has had close to 5 million views on YouTube. Innovative companies are using social media in a couple of different ways to provide customer support. eBay has outsourced almost its entire customer support function to its users from its very beginnings. In his book The Perfect Store, Adam Cohen writes about eBay in 1996: “Omidyar did not have time to explain to each individual user how to write a listing in HTML, or to give advice on bidding strategy.” The solution was to launch a Bulletin Board where users could “gather, share information and ask for help.” Later, eBay ended up hiring some of the people who were the most active and helpful on the forums to work for it, answering customer emails and providing additional support. A different model of support treats social media as another channel for the in-house customer support team. Frank Eliason, Comcast director of digital care, has a following of more than 25,000 people on his “Comcast Cares” Twitter account, where he answers user questions. The real-time nature of Twitter and its search functionality allow Eliason to even reach out to Comcast users who haven’t actively sought help. By applying a bit of imagination to social media tools like blogs, Twitter, Facebook, and YouTube, these forward-thinking companies have grown their businesses by leaps and bounds. Take cues from these examples of the power of community, and you’ll avoid some of the growth pains that arise from controlling and managing all of your business functions in-house. Vijay Chittoor is the director of product management at Kosmix, an exploration engine that offers a 360 degree view of any topic on the Web. A former McKinsey consultant, Vijay is a graduate of Harvard Business School and the Indian Institute of Technology, Bombay. He shares his thoughts on technology at his blog.
Homeworks, the upscale furniture chain that does business as Arhaus, is based on the outskirts of Cleveland and has expanded into 12 states with 30 stores. During this period of growth, the dispatch staff shrunk from six to three full-time employees and the company was able to more accurately provide customers with delivery times due to the use of software to help manage delivery trucks and staff in the field, John Roddy, Arhaus’ vice president of logistics, tells IncTechnology.com. Elizabeth Wasserman: What was the logistics operation like when you started at Arhaus? John Roddy: I started as the chief logistics officer 10 years ago. We had about 12 stores in four states. We had six full-time employees in dispatch routing about 12 drivers to deliver our furniture. Wasserman: How has technology helped you manage growth? Roddy: We invested in TOA Technologies’ mobile workforce management software a few years ago, and that has done quite a few things for us. It’s helped us reduce staffing in the dispatch office — we currently have 2.5 full-time dispatchers and one router. And we’ve gotten better at providing service. We communicate with the customer quicker. We make about 4,000 deliveries per month. That’s a lot of phone calls we have to make to set up deliveries. On a nightly basis, our software makes an automated two-minute phone call per customer informing then of the expected delivery time. It also gives them the option to speak with a human if they would like to. Externally, on the road with our drivers, it lets us keep track of them without using a GPS solution. The drivers punch into a phone the start time with the customer and punch in the finish time. We started adding more delivery times to the drivers. We went from 10 to 12 stops per delivery truck up to 14 to 16 per day. This gives us a significant advantage in the industry. It’s helped us reduce costs. It can help us provide better information to our clients — for example: if a driver is running late we can let customers know. And we make sure our drivers are doing what they’re supposed to be doing. Wasserman: How does the software work? Roddy: It’s primarily a Web-based system. My IT department’s involvement has been very minimal, from four to eight hours total and that involved building a communication bridge from out system to the TOA system. The software makes automated calls. It sounds like a real human being and they go over the exact address and exact product that is being delivered. For our drivers, they use a cell phone to enter their information about where they are and when they have finished with a customer. Wasserman: What have the results been? Roddy: We’ve had some significant savings and our customer service has been enhanced. In the furniture industry, on time is measured if you ordered from us and we said we would deliver sometime between 12 and 2 p.m. We were running in the low 80 percentage of on-time deliveries. We currently average 96-98 percent of actually delivering to the customer at the right time. We’ve actually been able to reduce the number of days we deliver each week from six down to four or five days per week. Even when sales go through the roof, we’re now typically on a four-day delivery schedule. Wasserman: One of the most annoying things about ordering furniture is having to wait all day for a delivery. How has the software impacted your ability to give customers a window of time for delivery? Roddy: Just before I started here, my wife had ordered some furniture and they ran about seven and a half hours late. She wound up spending the entire day at home. So I know how annoying that can be. At Arhaus, they had a four-hour window when I first stared. But in today’s environment, when both parents are often working, it was crazy to offer a four-hour delivery window. Our window is now two hours and I’m getting even more aggressive with it in certain markets, much to the chagrin of my fleet manager. We’ve been playing with a one-hour window in the Cleveland market. In Washington, D.C. we have two hours. In Chicago we have two hours. In Boston we have two hours. In the furniture industry, I don’t think anyone else is offering that in those markets.
KaBloom is a Massachusetts-based online florist in business since 1998 that has a patented technique for shipping fresh-cut flowers in water overnight. The company found that sales increased dramatically after switching to a new online payment platform that allowed the firm to better communicate with customers and allowed customers to more easily process payments, CEO David Hartstein tells IncTechnology.com. Elizabeth Wasserman: You have a patented system for sending fresh flowers in water to customers over night. How did that impact your technology decisions? David Hartstein: We’ve been in business since 1998 and our business has gone through different cycles. Today we have over 30 stores but our business model right now is focused on mainly selling online at KaBloom.com. The majority of our stores are in Massachusetts. We also have stores in Chicago and Florida. But we deliver nationally. Fresh cut flowers that are delivered over night are usually delivered by FedEx without water. When you go through the rigorous distribution and logistics within FedEx, you can not pack flowers in water. Think about taking a bottle of water and putting stems inside. If this ends up on its side or upside down, the water will be all over the place. We have a patented technique where we are the only one in the world that can ship fresh flowers in water via FedEx. Our flowers can be in any position, upside down and sideways, and no water will spill. When we started offering this to customers, we needed a new platform, a new way to communicate with our customer and tell them about what we do, what we have, and why we are different. Wasserman: What did you decide to do? Hartstein: We decided to implement a new payment platform called whizPay mainly because it provides reliability and ease of use. It provides a very easy customer checkout process. The back office that we have with it has very rich functions. It assists us with product description, with the content, with our stores and our stores managing platforms. Each store has the ability to manage their orders. It’s a central platform that they can access from different locations. They get a notification when an order comes in for them. They have the ability to log in to the main platform, communicate with the customer, change the order, change the address. Without having to have an administrator do it for them. Wasserman: At the same time, does it protect your data? Hartstein: It’s all secure. There is information that can only be managed by the administration and not by each store. They can not delete a customer’s information. There are other benefits, too. For example, say we have a store in Virginia. That store knows their customer base and knows what the customer likes. They have the ability to display the designs that their customer likes so that when the customer orders a certain design, the system knows to go to that store to deliver that product. We have the ability to say that product X can only be delivered from Y location. Wasserman: What it easy to implement? Hartstein: It was easy — as far as anything in technology is easy. We launched Sept. 1, 2008 and we never had to during that process shut our site down and bring other alternatives online. There are always hiccups but we’ve never had issues. Wasserman: What results have you seen? Hartstein: Since February of this year, we have seen an increase of about 50 percent in orders through the new platform. That is quite astonishing in this market. There are two reasons for this. First, we have a product we sell that no one else sells and that is that we are the only one can deliver flowers in water from coast to coast over night. Second, our management function within our platform allows us to communicate with our customers in a much easier way.
