All posts in “Entrepreneurship”

Let Your Data Do the Forecasting

Decision makers in any sales organization know that forecasting correctly is both art and science. To predict the unforeseen successfully, you must use every piece of logic and reasoning available to help you make your predictions reality.

When developing a strategic forecasting approach, your business needs to take a number of items into consideration simultaneously — and that is no easy feat. Call centers, for example, must have a thorough understanding of seasonality and industry market trends to identify anomalies and increase accuracy.

Precise forecasting and scheduling depend on historical data, potential future fluctuations and current market conditions.

Enhancing and refining your forecasts with the help of new technology and techniques is key to minimizing costs and driving more revenue into your organization.

How to Approach Forecasting

Companies are always looking for ways to be more efficient. You want to provide excellent service to your customers, of course, while still cutting down on your operational expenses. Every call center must figure out the right balance: Overstaffing increases overhead, while understaffing leads to missed revenue or a bad customer experience.

At many companies, revenue and call volume forecasting are done in isolation rather than collaboratively. This strategy, unsurprisingly, fails to deliver the expected results when business development or marketing teams are predicting new growth and revenue opportunities, but operations teams are forecasting on historicals.

When forecasts are separated and siloed, the call center often is left playing catch-up — and with competitive labor markets, companies can experience significant opportunity costs.

A better approach is to ensure that company forecasts are made in collaboration. Decision makers from different areas of your organization — from marketing to account management — should come together to be part of the dialogue of forecasting together.

This way, everyone is on the same page and knows where the company is headed. Developing interdepartmental feedback loops and getting cross-functional team members to create collaborative forecasts will improve accuracy and also create a sense of interdependence.

Looking at historical data to determine seasonality is important, but historical data is not enough to develop a robust forecasting strategy in today’s environment. Markets and products are evolving rapidly to keep up with technology, and forecasting today requires analyzing innovation trends. Flexibility is crucial.

Accurate forecasting also has serious implications for the employees handling calls. Underutilized call centers, especially sales centers with commission structures, experience low employee morale and engagement in periods of overstaffing. Agent availability, flexibility, talent and training also need to be taken into consideration when developing your forecasting strategy to ensure that volume volatility doesn’t diminish employee engagement.

Automation Tools in Forecasting

Forecasting always has relied on data. In the past, the majority of companies used manual methods of forecasting (and quite a few still do today). With technology evolving, however, data science teams can analyze different scenarios constantly. These teams can run multiple forecasts at the same time in order to determine which one will produce the most accurate results. Data scientists also have built the framework for machine learning forecasts (or automation tools).

Data science teams provide access to information, reports and data tables that you can use to aid decision-making. When you have access to robust information daily, you can analyze the data in different ways, from different angles, and at different times.

This approach makes it possible to incorporate data outside of call volume, rather than relying on just a few pieces of information and then jumping to (often inaccurate) conclusions. This is especially important in a sales environment with many variables that affect outcomes.

It can be a struggle for any organization to forecast call volume accurately. Some companies may not have the ability (or desire) to analyze and manage all their data in-house in an efficient way. Instead, they may choose to outsource their data science needs, and have automation tools created that can help enhance and fine-tune their forecasting strategies.

Machine learning forecasts used in sync with scheduling platforms can determine when staffing issues might arise. If you know that you are going to be understaffed, the system can push out overtime to agents automatically.

On the other hand, if calls are not coming in as anticipated, the system can offer voluntary time-off as needed. This approach effectively automates processes, instead of requiring manual input from a workforce management team. Automatically predicting call flow and adjusting as needed, without involving a live person, cuts operating expenses and results in better outcomes.

Automation tools can help when you know agents will not be in due to illness, vacation or other leave. An ML-based system can look for suitable alternatives automatically, or throttle call volume based on current staffing availability. It can connect callers with the specific agents best equipped to handle particular situations as well.

Machine learning forecasts constantly are reiterated based on data. Technology has advanced to the point that it’s possible to have forecasts running independently and correcting themselves automatically. This development means managers no longer have to rely solely on algorithms and formulas when developing their forecasts. A call center that utilizes data science appropriately is better equipped to make well-informed decisions.

Enhancing Your Forecasting Approach

Forecasting for your company does not mean creating one general overall plan. Instead, strategic plans are broken down into short-, mid- and long-term forecasts that evolve continuously over time. Unforeseeable situations can develop very rapidly, so the best scheduling plans leave room for flexibility.

Smart forecasters always assume forecast variances are inevitable. You have to create levers to pull when forecasts do not come in as expected, because very rarely does everything happen exactly how you think it’s going to happen. Examples of levers can include overtime for agents when call volumes are higher than normal, reprioritizing calls so that the most cost-effective calls are at the top of the queue, or changing the call to action on a site to increase chat, email or lead forms, and decrease calls.

The ability to control call volume and quality through ML is unique. Automation tools consider how many calls are anticipated, how many agents are available, and how many calls are actually in the queue. These tools then are able to make decisions based on that information — for example, turning off the least-profitable paid search campaign to maximize opportunity, while eliminating sunk marketing spend.

Another way to become more flexible is through alternative calls to action, which increase the ways for customers to make contact if their calls can’t be handled quickly. One idea being considered is showing the customer a chat option instead of a phone number when agents are busy. This way they can still get the assistance they need without the frustration of sitting in a queue for a long time. Through automation, you can customize machine learning to enhance your customers’ experiences by offering more consumer choice.

Automation tools help balance ever-changing priorities. Automation can help conserve resources when you unexpectedly are understaffed, and help prioritize the calls that have the greatest potential to convert. That can improve your bottom line. The customer experience also improves when you are able to move customers through the queue more effectively.

Your clients also can save money by not paying for inefficient campaigns. Even though there are always ways to improve, data automation can make your forecasting more accurate than ever.

The Future of Forecasting

It is impossible to forecast the future based only on what has happened in the past. You also need to forecast based on the potential of what could have happened, and data science and machine learning (automation tools) can help with that.

You will be better positioned to serve your customers and increase your partners’ profitability if you utilize available technical tools to their full capacities, connecting all your systems, data and teams.

Nichelle Dekeyzer is VP of Sales at
Clearlink. She has more than a decade of experience in forecasting, recruiting, workforce management, and operational efficiency management. She currently is pursuing a doctorate in organizational change and leadership at the University of Southern California.

Netflix Raises Subscriber Rates to Wall Street’s Delight

Netflix has decided to hike prices by US$1 to $2 for all 58 million of its subscribers in the United States, as well as customers in about 40 Latin American countries who are billed in U.S currency.

Netflix Raises Subscriber Rates to Wall Street's Delight

Customers in key international markets such as Mexico and Brazil reportedly will be exempt from the increases.

Netflix had nearly 79 million subscribers overseas at the end of September.

The basic plan will go from $9 to $10; standard plan from $11 to $13; and the premium plan from $14 to $16. Basic plan subscribers previously had not been affected by rate hikes.

New subscribers will pay the higher rates immediately. Netflix will roll out the increases to existing customers over the next three months.

This is the fourth time that Netflix has raised prices for its U.S. subscribers.

Wall Street responded positively, as it did when Netflix imposed rate hikes in 2017 and 2018. Netflix share prices rose 5 percent in early trading after news of the increases broke, and closed about 6.5 percent up, at $354.64.

“Wall Street will cheer anything that improves, or [it] thinks will improve, Netflix’s profit margin,” said Michael Goodman, director, TV and media strategies, at Strategy Analytics.

Screaming Demand for Content

On average, North American TV households subscribed to 1.95 TV and video services in 2017, Strategy Analytics found. By 2023, that figure is expected to rise to 2.5 TV and video services per household.

There will be more than 1 billion subscriptions for streaming video on demand worldwide by 2023, almost double the 576 million racked up in 2018, Strategy Analytics predicted.

All those subscribers demand content, content, and more fresh content.

“If you saw the numbers on [the Netflix movie] Bird Box, 45.4 million viewers streamed the movie in the first week,” noted Ray Wang, principal analyst at Constellation Research.

“That’s bigger than most box office blockbusters,” he told the E-Commerce Times.

That 45.4 million figure came from Netflix — but the actual count might be even higher, as multiple people could have watched the movie simultaneously using the same account.

Netflix has been spending heavily to create content.

“According to a Forbes article, Netflix spent between $12 billion and $13 billion on content in 2018, of which 85 percent went to original movies and TV series,” Strategy Analytics’ Goodman told the E-Commerce Times. “The majority of this spend was financed through debt.”

Netflix is about $14 billion in debt, a concern that caused its share price to fall by 21 percent from its peak of $423.21 in June to $332.94 at Tuesday’s opening.

Fighting Off the Competition

Netflix’s frantic spending on content is essential to stave off competition. Although Netflix is still the No. 1 SVOD service, Amazon and Hulu have been gaining ground.

Amazon includes SVOD with Prime membership; Hulu charges $8 a month for SVOD with ads, and $12 monthly for an ad-free service.

HBO Now and Starz round out the top five.

WarnerMedia will launch a beta three-tier SVOD service by year end; Disney will launch its Disney+ SVOD in September; and Apple is expected to launch its own SVOD in or around March.

“To date, consumers have had a limited number of streaming video on demand options to choose from, which has somewhat insulated Netflix, but, with new services coming from Disney and WarnerMedia, the competition is increasing,” Goodman pointed out.

Globally, Netflix’s main competition consists of “HBO, Amazon, and to a lesser degree, Starz,” Goodman noted. Netflix “has dozens of competitors on a regional basis, such as Maxdome in Germany, Stan in Australia, and influx in Southeast Asia.”

Netflix “should worry the most about Apple, Disney and Amazon,” Constellation’s Wang suggested. All three “are aggressively going after the trifecta required to win: content, network (distribution) and technology.”

Netflix has all three, while the others “have acquired or built two out of the three,” Wang said. “Most are struggling with the technology or the investment in content.”

HBO “is likely to be in … trouble as it tries to build its on-demand audience without cannibalizing its cable subscriber base,” observed Rebecca Wettemann, VP of research at Nucleus Research.

Another reason Netflix has to pump up spending on content is that movie studios have been pulling their shows.

Gotta Have the Cash

Increased revenue will help Netflix remain competitive.

“As Netflix faces increasing competition, as not just a content distributor but also a content creator, a price increase is not only reasonable but necessary for it to be sustainable,” Wettemann , told the E-Commerce times.

An increase of $1 to $2 is “unlikely to be a deal breaker for subscription renewals,” she said. “If we consider the cost of traditional services, [such as] cable TV, Netflix is a steal.”

Content is key, “so price shopping is a lesser concern than the ability to continue to deliver original content,” Wettemann maintained.

The Virtuous Cycle of Spend and Rate Hikes

Netflix will continue its cycle of increased spending on content and rate hikes for the foreseeable future, Chief Product Officer Greg Peters has said, in effect.

The company has earned the right to increase prices because it has been creating new features, he said in an earnings call last fall, noting that the money raised has been invested back into content and product.

That said, “there is a limit to the increases Netflix, or any premium channel, can pass on to consumers,” warned Strategy Analytics’ Goodman.

“At some point, if Netflix continues to raise prices, [its] cost will outweigh the value it provides,” he said. “Every product or service has to face this reality.”

Further, competitors will seize on its rate hikes as an opportunity to differentiate themselves on price, Goodman suggested. “This is a lot easier to do than to try to match Netflix spend on original content.”

In the short term, Netflix is still transitioning from a library composed primarily of third-party titles to one consisting primarily of original movies and TV series, Goodman noted. This will let it “generate licensing revenue over time to offset [content creation] costs, similar to HBO.”

Netflix will do “very well” for the next three years, Constellation’s Wang predicted. However, “adding more subscribers is the longer-term answer.”

Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus include cybersecurity, mobile technologies, CRM, databases, software development, mainframe and mid-range computing, and application development. He has written and edited for numerous publications, including Information Week and Computerworld. He is the author of two books on client/server technology.
Email Richard.

5 Practical Ways Etailers Can Earn Customer Loyalty

This story was originally published on Oct. 4, 2018, and is brought to you today as part of our Best of ECT News series.

Given today’s data and technological advancements, coupled with an abundance of choices for consumers, the importance of loyalty has never been greater. The marketing landscape has shifted as power has moved from sellers to buyers, and businesses have realized a heightened need for customer loyalty.

Market fragmentation has dramatically increased competition, magnifying the need for loyalty. Traditionally, loyalty has been achieved through a series of rational benefits delivered to members in exchange for their business.

Although rational benefits are still critical, emotional benefits are needed as well. Loyalty marketing should focus on retention, since this method focuses on and rewards your best customers.

Due to seemingly endless options available to consumers, and their access to technology tools, retention is crucial in The Age of the Customer.

1. Listen and Learn

This seems simple enough, but it stands as the most important strategic exercise that loyalty marketers can employ. Effective listening allows brand officials to identify customers’ likes, dislikes and pain points.

Part of this process involves finding out what would make their lives better or easier.

While consumers are cost-conscious, they ultimately decide to buy products from brands based on various factors. These can include style or aesthetics, brand values and mission, recommendations from family and friends, and endorsements by celebrities and influencers associated with a brand.

When you have customers who have so much love and passion for your brand that they are willing to pay to receive more value, they have identified themselves as customers you want to understand better.

An absolute imperative in creating strong customer relationships is understanding the why behind those transactions.

What triggered their most recent purchases? Why have your customers chosen your brand to represent them? What is it about your brand that they love above and beyond your competitors? Most importantly, how does your brand make them feel?

There is no better example of a brand listening to its customers than Amazon. Prime, Amazon’s very successful premium loyalty program, eclipsed 100 million global members earlier this year.

Since 2005, when Prime launched, Amazon officials have kept the program fresh and attractive by adding appealing and relevant benefits over the years. Included are unlimited video streaming, limited music streaming, unlimited photo storage, one free e-book per month, free audio books and free games.

2. Make It Personal

Once you truly listen to and hear your customers, you provide them with attractive benefits.

Personalization is a big driver of loyalty. Brands yearn for one-to-one relationships with customers that heighten the personalization impact.

Brands have to deepen and expand their digital relationships by using a variety of customer experiences and program tactics to keep them fresh.

When a brand understands why a consumer made a purchase, you know what emotions are motivating your most loyal customers to shop your brand.

If your brand caters to consumers with busy lifestyles, you may consider a dedicated customer service line or concierge benefit that provides expedited or specialized service. Customers are willing to offer personal information in exchange for some type of benefit.

Giving your customers confidence that you’ll quickly resolve any issues they experience makes them feel special. However, it also appeals to the emotion of stress that results from a pile-on of time-consuming and inconvenient tasks.

Mass marketing can be a turnoff to many consumers. Traditional promotions have trained consumers to wait for discounts, and they’re going to go wherever the discount is. That’s not loyalty. That’s why a premium loyalty program that provides members with incredible benefits available anytime they desire is so appealing.

When you give your customers benefits they can use anytime, they’ll engage with your brand more often. The key is making sure the program and benefits really connect with your customers.

Consumers want brands to know them and to feel valued. When brands achieve this, it is a surefire way to boost customer loyalty.

3. Make Emotional Connections

Given the unlimited choices that consumers have, with a little effort they always can find the best product at the lowest price.

This reality translates to retailers no longer being able to compete on price, and that’s where differentiation enters the picture.

Creating emotional connections that lead to memorable experiences is the ultimate goal for any brand.

Consider how TOMS weaves social impact directly into its business model. Through its “One for One” program, TOMS provides one pair of shoes to a child in need for every pair that is purchased by a customer.

When consumers can identify with a brand because of a social message that supports a great cause, it creates a deep and enduring bond. Consumers will engage more and commit to a brand because of an emotional connection.

Engagement is as important a loyalty metric as any. Another vital metric is trust.

Differentiation leads to increased engagement, heightened trust and deeper customer loyalty.

Officials at TOMS have a deep understanding of their customers, which allows them to develop impactful strategies around engagement.

4. Offer Targeted Perks

Everyone wants to feel special. In the retail world, some brands deliver on this aspiration better than others.

Premium loyalty programs that have an abundance of exclusive benefits are extremely attractive to customers. Customers love discounts, but they want to feel like they’re getting special treatment that no one else is getting.

Retailers that think differently and challenge the legacy way of thinking are the ones that are earning the loyalty of their customers now and in the future.

Amazon, Restoration Hardware and Sephora are building loyal customer bases during a time that’s never been tougher for retailers.

Amazon Prime is the best and biggest example of this type of program, which targets your most loyal customers.

Prime keeps its highly successful program fresh because it doesn’t rest on its laurels. Instead, it continues to scale new heights by listening to its customers and providing relevant and value-based benefits they desire.

Sephora listens to its customers and aligns those desires with its Beauty Insider loyalty program, which offers a tiered benefit system to its 10 million members based on spend.

While basing rewards on transactions is typical of more traditional loyalty programs, the experiential benefits that come with it are different from those of other retailers. For example, members get access to experiences like makeovers, a private hotline, and invites to exclusive events depending on where they fall on the purchase spectrum.

Sephora’s audience is largely mobile-first, so offering a platform like this to members in the manner that they want it makes integration into their lives seamless.

One of its most interesting benefits is its members-only Beauty Insider Community, which is a social platform that allows members to create a profile, upload photos, and chat about products and fashion.

Beauty Insider launched in 2007 as a way of thanking clients with special products, exclusive events, and an all-access pass to personalized beauty. In 2009, Sephora launched V.I.B. (Very Important Beauty Insider), a premium level for Beauty Insiders giving clients access to exclusive gifts, event invitations, and early access to select products.

Sephora followed that up in 2013 when it launched V.I.B. Rouge status. All of these moves were a way for Sephora officials to reimagine their loyalty program as a key strategy.

That VIP-type status is very important to Sephora customers, and they take advantage of phenomenal benefits through the loyalty program.

5. Engage Your Besties With a Premium Tier

A free loyalty program is a good way to attract and build as many members as possible.

However, if you want magnified engagement and spend from your best customers, a one-size-fits-all free loyalty program may not do the trick.

That’s where premium loyalty programs come in. By charging a membership fee, you’ll get your best and most loyal customers involved, and you’ll be able to offer them the best and most engaging experiences from your brand.

Traditional programs require members to spend over time for rewards that come later. Premium loyalty programs work the opposite way.

In a premium loyalty program, members pay a recurring fee to stay in the program in exchange for valuable brand- and product-specific benefits that they can use anytime. This means that members can engage with the program 24 hours a day, 365 days a year.

Free and premium loyalty programs complement one another. For brands, overlaying a paid tier program is a great strategy. It provides them with an opportunity for a test and learn approach.

Marketers with premium loyalty programs subscribe to the 80/20 rule — 80 percent of a brand’s sales come from 20 percent of its customers.

Target your best and most loyal 20 percent of customers with a premium (or paid) loyalty program. These are the customers who most likely will raise their hands to participate in a premium loyalty program that offers expanded and immediate benefits for an annual fee.

5 Easy Pieces

There is no substitute for listening to your customers, identifying their pain points, and addressing them.

You can address their pain points by showing your customers that you know them.

Differentiation is the key to standing out from your competitors. Customers want to align with a brand that instills emotion in them.

Always make your customers feel special. If you don’t, you risk losing them at any time.

Enhancing your free loyalty program with a premium tier covers your customer bases and makes your best customers much more valuable. Premium loyalty can work for any brand, but targets your best and most engaged customers. As a result, those customers become exponentially more valuable based on spend and spreading the word about your brand.

Successful marketers create engaging loyalty programs that are seamlessly aligned with the brand’s character and message. Catering to your most valuable and loyal customers is the best way to earn sustainable brand advocacy.

Tom Caporaso is CEO of
Clarus Commerce

Salesforce and the Machine

There’s been way too much obsessing about how artificial intelligence and machine learning will eliminate jobs. For example, 60 Minutes ran a feature on Sunday about AI venture capitalist Kai-Fu Lee, one of many stories predicting the elimination of jobs and a dystopian takeover of the world (it seems) by machines.

Salesforce and the Machine

Lee is a persuasive voice. Having been educated in the U.S., he now resides and works in China. He is the author of AI Superpowers: China, Silicon Valley and the New World Order, among other titles.

In his 60 Minutes interview, Lee said that in 15 to 20 years, 40 percent of our jobs will be “displaceable.” Apparently, diplomatic tact and unwillingness to buck Chinese policies kept him from going all the way to saying the jobs would evaporate.

However, how AI and machine learning affect modern life, currently and in the future, is complicated, and it deserves much more than a Chicken Little reaction like, “The machines are coming!” To get the subtlety, you might not be able to do better than check out Salesforce’s Commerce Cloud announcements from the National Retail Federation show in Manhattan this week.

New Capabilities, Low Overhead

What will surprise you is not that AI and ML definitely have been making inroads into retail, but that in doing so they haven’t been taking jobs away from humans. In retail, at least, machines are creating niches that only they can fill.

Here’s what I mean. There are lots of jobs in retail that could exist, but they might add so much overhead that they’d eat up profits. Also, they could not be done in a timely way — i.e., in a few seconds — within a transaction with a capricious customer.

These functions form a niche that AI and ML fit into nicely. Back at the dawn of retail, vendors were product-light, meaning there weren’t many choices. You bought in bulk or you bought cloth and not clothing, and, of course many product categories simply didn’t exist. Henry Ford’s famous dictum that customers could have a car in any color they wanted, “as long as it’s black” typified retail for many decades.

Today the situation is reversed. Amazon pioneered the infinite store shelf, making it possible to carry ridiculous assortments. Many retailers, even traditional brick-and-mortar ones, see no alternative but to follow. Their models have hybridized, with options like “buy online but pick up and return in store” — a software mediated work of art, if you ask me.

CX on Steroids

Retail has gone through at least three iterations that can be summarized as 1) being assisted by a clerk, 2) self-service, and now 3) being assisted by a machine.

For example, the Einstein Recommendations API that Salesforce announced at NRF enables merchants to embed product recommendations into their e-commerce apps. Yes, the recommendations are based on what the machine knows about what customers have bought — sizes and the like.

Also, Einstein Visual Search enables users to send a picture through a merchant site to identify their product needs. In this, the machine “sees” a picture and finds things that correlate. Who doesn’t want that?

Both of these services are human-ish jobs that improve the customer experience and ought to increase sales, but that retailers can’t afford to supply. Nevertheless, tools like Einstein easily can provide such services in a timely way and at low cost. If you’re new to all this, Einstein is Salesforce’s AI functionality.

To my way of thinking, this is all confused with terms like “customer experience,” but that’s what merchants are delivering with these AI- and ML-driven tools — an experience, and a good one. Imagine how seductive it is to want to purchase something and have the very item provided without the hassle of wrong size, wrong color or wrong location.

Wait a minute — let’s also consider a situation in which an item that is in stock, but at another location, can be sent to you overnight. That would be thanks to the new Salesforce High-scale Inventory Availability Service. This platform service enables companies to see in-store and fulfillment center inventory as one, to facilitate sales.

My Two Bits

These and other products announced at NRF are either in beta or pilot, meaning they have no prices yet. Still, it’s reasonable to expect that in nine months or so — in time for Dreamforce, that is — these products will have their own place in price lists and cool demos on the main stage.

So, to all the critics who worry about the decline of work for the masses and fret that we’ll need some form of universal basic income — wait a moment. AI either will take on jobs that no one will want in the future or provide machine-generated services that never were considered for humans to begin with.

A century ago, ocean-going passenger liners and cargo ships ran on steam power. Humans in the bowels of the ship literally shoveled coal into furnaces that made the steam. Less than 50 years later, the laborers were gone. Ships still ran on steam, but the furnaces were fired by oil that was fed to the burners mechanically. No one minded.

If Kai-Fu Lee is right and 40 percent of jobs could vanish in a couple decades, let’s not fret. My research shows that similar shifts have occurred six times since the Industrial Revolution, and we’re at the end of No. 6. Disruptive innovation, what Schumpeter called “creative destruction,” has a way of backfilling.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.

Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can’t Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there.
Email Denis.

Sex Tech Maker Cries Foul After CES Retracts Innovation Award

At last week’s International CES, the CEO of Lora DiCarlo, a
woman-run sex tech startup, called out the Consumer
Technology Association for rescinding its CES
Innovation Award. The company received the award for its first-ever product, the Osé personal massager, only to have the CTA backpedal and retract it. Furthermore, the company was not even allowed to exhibit at CES 2019.

Sex Tech Maker Cries Foul After CES Retracts Innovation Award

CTA CEO Gary Shapiro and CTA EVP Karen Chupka sent the company a letter stating that the product was ineligible for the Robotics and Drone category, according to Lora DiCarlo. That was in spite of the fact that the Osé was designed in partnership with
Oregon State University’s robotics engineering laboratory.

“The product referenced does not fit into any of our existing product
categories and should not have been accepted for the Innovation Awards
Program,” the CTA said in a statement provided to the E-Commerce Times by company rep Samantha Doherty.

“CES does not have a category for sex toys,” the CTA’s statement
continues. “CTA had communicated this position to Lora DiCarlo nearly
two months ago and we have apologized to them for our mistake.”

Lora DiCarlo Fires Back

Lora DiCarlo responded to the revocation of the CES Innovation Award in an open letter to the CTA last week, claiming that its decision amounted to gender-bias, because the Osé is designed to be a woman’s sexual aid.

CES in the past has featured virtual reality pornography and a sex robot with unrealistic proportions, the company pointed out, suggesting that a double standard was in effect.

Like many trade shows, CES has a longstanding tradition of exhibitors employing so-called “booth babes” — attractive young females who act as brand ambassadors — to occupy prominent positions on the show floor, a fact noted by Lora DiCarlo.

“Really the bias at CES/CTA is a symptom of a larger issue in tech,”
said Lora Haddock, CEO of Lora DiCarlo.

“We’ve seen, and continue to see, massive strides in technology develop
inside of — and because of — the adult industry, whether it’s pleasure
products or porn,” she told the E-Commerce Times.

“Ignoring and dismissing the contributions of such a huge part of the
tech industry development story again just crushed innovation, in much
the same way that blocking anyone other than white CIS-males stagnates
innovation,” Haddock added.

Innovation Facts

Competition for CES Innovation Awards has become ever more complicated
as the show has grown beyond traditional consumer electronics.

This year more than 6,000 companies applied for an innovation award,
and fewer than 300 even made it to the honoree bracket. This year, as
opposed to past years, the CES jury opted to give each product no
more than a single innovation award. Some 270 honorees out of the 300
were awarded one of the CES Innovation Awards.

In total there were 29 product categories, and industry leaders had a
combined 17 award-winning products — but there were notable misses, as
longtime winners, including HP, failed to earn an award.

CES and Adult Entertainment

Back when it was still known as the “Consumer Electronics Show” — especially when there was a Winter CES and a Summer CES — the adult entertainment industry had a
regular presence at the event.

“The adult entertainment industry used to run their conference
alongside the tech industry,” recalled Roger Kay, principal analyst
at Endpoint Technologies Associates.

“I remember seeing the stars — lots of silicone, not much fabric — and
their escorts — lots of tattoos, a fair amount of leather — in the
area between the hotel and conference facilities,” he told
the E-Commerce Times.

However, the big split came in 1998 when the Adult Entertainment Expo
branched off to sponsor its own trade show, run by Adult Video News.
That show, which now is known as “AVN” rather than “AEE,” at first was held concurrently with CES — usually at the Sands Expo Center. In 2012, it changed dates, and the shows now are held weeks apart.

The change was due in part to the fact that CES was not held over a
weekend, days when AVN would open to the public. The other factor was
that CES, which has expanded beyond consumer
electronics, has become the world’s largest trade show and almost
literally takes over Las Vegas.

Simply put, there wasn’t enough room for both shows — yet the links between consumer electronics and adult entertainment remained.

How Adult Content Helped Consumer Electronics

The largely untold story of consumer electronics does include have a seedy
side that some in the industry would like to forget. Home video, first
with the VCR and later with DVD, was built in no small part due to
adult entertainment. The VCR also revolutionized the way people
were able to view the content.

Adult movies moved from sleazy theaters to a section at the video
store, which helped sell VCRs and then DVD players.

The adult entertainment industry is worth
nearly US$100 billion, according to recent studies. While Hollywood releases about 600 movies a year, the adult film industry releases more than 13,000 films — and by
some accounts makes more money than Major League Baseball, the NFL and
the NBA combined!

Adult Content Returns to CES

Even as AVN’s Adult Entertainment Expo ran concurrently with CES, some
companies saw their products fitting more with tech than at the so-called porn

“A couple of years ago, IoT-style sex toys began to show up at actual
CES, creating a lot of giggling and innuendo among the prudish
horndog techies,” remarked Endpoint Technologies Associates’ Kay.

One notable example was OhMiBod, a toy company run by a husband and
wife team, which sought a platform for its iPod-connected sex device.
The company and its products initially were denied a presence at the show,
but after appealing the decision did make it to the show floor.

More recently, with the growing virtual reality trend, some
companies have started to see CES as the place to be and not the
AVN/AEE. One of them, Naughty America, returned to CES last
year with its VR offerings.

There have been restrictions, such as a prohibition of the showing of
films, photos, games or other software that could be deemed
objectionable. This prohibition applied to nudity as well as generally explicit
material, but Lora DiCarlo’s Osé isn’t exactly explicit.

“Clearly, the CTA didn’t handle this situation very well,” said Josh
Crandall, principal analyst at Netpop Research.

“If the Osé didn’t conform to the official rules of the competition,
the product should not have been accepted into the competition in the
first place. Case closed,” he told the E-Commerce Times.

“The CTA has the right to set the official rules of their competition,
which they have, but they didn’t seem to have a problem with the
submission originally,” Crandall added.

“This new angle, accusations of gender bias, is unfortunate, but I
suppose a sign of our times,” suggested Kay.

“The whole hypocritical, puritanical culture in the United States can
get really irritating, with things like this at the amusing end, and
the ongoing Catholic priest sex scandal at the harmful end,” noted
Kay. “Just imagine this story playing in, say, Holland.”

Victory in Defeat

Despite the fact that Lora DiCarlo had its CES Innovation Award pulled,
the company has scored big, not only with the publicity the brouhaha has
generated, but also through support garnered from others the adult entertainment world.

Online adult video sharing service YouPorn last week offered Lora DiCarlo $50,000 worth of free advertising on its website for one month.

“We are excited about the launch of Lora DiCarlo’s Osé, and we would
love to support a wonderful product, as we always take into
consideration ALL of our users’ wants and needs,” said Charles Hughes,
vice president at YouPorn.

“It’s unfortunate, as our industry already faces so many challenges,”
he told the E-Commerce Times.

“Not being able to represent the advancement of sex tech at shows like
CES can have detrimental side-effects to companies like Lora DiCarlo,
as they already have little options when it comes to advertising to
mainstream consumers,” Hughes added.

“It’s a shame that businesses
and organizations are distancing themselves from adult content, and the
intersection of sex and technology cannot be celebrated at major
events such as CES,” he said.

“While it’s a shame that the award has been revoked, it looks like
Lora DiCarlo is still the winner,” suggested Netpop Research’s

Lora DiCarlo management has reacted not only by amplifying and
embracing the CTA’s decision to retract the award, but also by encouraging
people to share their thoughts on social media, he noted.

“The adage that any coverage is good coverage is going to go a long
way to increasing awareness and interest in the Osé,” Crandall said.

“It’s fair to venture that the Lora DiCarlo team is having a field day
with it,” said Kay. “They are getting far more publicity this
way than via any booth activity or even actual prize-winning. Of
course, they have to deplore the discrimination because that’s their
role, but behind closed doors, I’m sure they love it.”

Peter Suciu has been an ECT News Network reporter since 2012. His areas of focus include cybersecurity, mobile phones, displays, streaming media, pay TV and autonomous vehicles. He has written and edited for numerous publications and websites, including Newsweek, Wired and
Email Peter.