All posts in “Entrepreneurship”

Zuora at a Crossroads

Zuora recently held its annual Subscribed user conference in San Francisco. In general, it was a good first outing since the company’s IPO, coming off some impressive first-quarter results. Year-over-year subscription revenues grew 39 percent and total revenue grew an amazing 60 percent, for example.

Zuora at a Crossroads

As good as its present situation is, now that Zuora is a public company, it has to push down the gas pedal to feed the insatiable stock market. It has responded to that need with several interesting introductions that further build out its product line and represent a good attempt at institutionalizing its growth and customer-centricity.

Zuora acknowledged that after 10 years, some of its customers were looking for the next bit of adrenaline to fuel their growth.

“The easy stuff, the low-hanging fruit” had been taken, CEO Tien Tzuo said at one point, and it was time to reach higher.

What he meant was that many successful subscription companies had gotten an initial boost from the fact of their subscription status. However, as with any innovation, commoditization has set in because initial success invited considerable competition.

Hybrid Approach

Because Zuora is a company that collects a great deal of data, Tzuo was able to say with confidence that 70 percent of customer growth was attributable to expanding footprints (upsells, cross-sells, renewals) rather than to the addition of net new customers. Zuora anonymizes customer data to derive such insights, which it publishes as the Subscription Economy Index, or SEI.

Some other interesting information from the SEI is that the more customers change or tweak their subscriptions, the faster they grow — and fewer ultimately churn. Since these numbers are indicators of use and engagement, the results make sense.

If this sounds like customer relationship management, it is — and I think Zuora’s big challenge right now is in getting the CRM-finance/billing ratio right. CRM — or as I think of it, putting the customer in the center of what a business does — might be Zuora’s highest off-label priority at the moment.

It’s easy for the company to demonstrate the value of subscriptions as customer-centricity tools, and it needs to expend more effort doing that.

Consider this: Solving the subscription-billing problem was huge, and it continues to be challenging for businesses adopting the subscription model as an adjunct to their overall business.

However, solving billing is just a way to save money and to make it possible for a business to get on the field. Both are highly important, but they aren’t enough.

CRM and customer-centricity are essential to many subscription companies, so much so that they have a hard time teasing the two apart. To the extent that many companies have been adopting a hybrid approach to customers involving new lines of subscription business side by side with conventional models, Zuora continually needs to remind them that the models are different.

In this instance, neither model is necessarily superior, but each has to be given space and neither should be confused for the other. The idea of rapidly getting through the transition phase to an all-subscription world might be a bridge too far for big vendors delivering complex products and services, so advocating that approach ultimately is self-defeating.

Running two business models in parallel is tougher than dealing with pure subscriptions, and this contributes to the sense of plateauing some customers feel. Adding customer-centricity to a business’ overall approach (where needed) may be the greatest contribution the subscription model’s advocate can offer. Some new product introductions and updates can make all this easier.

New Products

Zuora introduced Zuora Orders and enhancements to Zuora Insights, and it showed, especially with Orders, that it was dealing with the problem of its customers being too successful — a happy problem.

Orders is a product that can be used to file an initial order for renewable and nonrenewable services, like a core offering and training. It also is suitable for maintaining and updating existing customer changes to subscriptions. It thus makes it easier for customers to tweak their instances to get exactly what they need, and the data shows it’s a good approach to customer retention.

There’s also Zuora CPQ, which has suffered somewhat from an imperfect category assignment. Conventional CPQ — configure, price, quote — is a necessity for traditional sales involving a one-time purchase of a product configuration. In that light, CPQ for subscriptions is at first glance a misnomer, since subscriptions can be updated infinitely with the Orders product.

Zuora CPQ could be called “SPQ” — subscription pricing and quotation — which makes a lot more sense, but then there’s the issue of inserting yet another name into the product universe. Definitely above my pay grade.

Finally, Zuora Insights is a continuation of the company’s years-long effort to bring analytics to the subscription base. Appropriately, Insights’ presence is felt in numerous places throughout the product line — from gathering use stats to informing the revenue-recognition process.

Speaking of which, RevRec might be Zuora’s biggest opportunity as companies slowly — and retroactively — adapt the ASC 606 and other regulations. The industry has been slow to do much, according to my sources, and some companies now are spending millions to catch up when they could have spent less before. At any rate, this gives Zuora lots of new opportunities.

My Two Bits

Zuora is off and running and has made great progress in the last decade. This year’s Subscribed event was a summation of its history and a chance to point toward the next horizon.

The market has changed significantly, though, and some of that change has been due to Zuora’s successes. The big challenge now in subscriptions is rationalizing the hybrid model and giving space to it, as well as to the conventional model, throughout the industry.

That’s not a hard thing to do, but it will require rethinking customer-centricity and CRM generally. Great companies rise to such challenges.

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.

Breach Litigation: A Growing Risk for E-Commerce Businesses

By John K. Higgins
Jun 15, 2018 9:45 AM PT

The expanding world of Internet commerce likely will generate a corresponding expansion of data breaches, with the result that e-commerce businesses increasingly will become the targets of consumer class action lawsuits.

Breach litigation has become more prevalent as a result of a perceptible legal trend favoring consumers. Various federal appeals courts have allowed consumers to launch class action suits even though the alleged injury from a breach was small, or even nonexistent, in terms of a current and tangible financial loss.

Decisions in two back-to-back cases earlier this year appeared to solidify greater legal leverage for consumers. The cases involved online retailer, and bookseller Barnes & Noble.

Generally speaking, consumers need to achieve legal standing, addressed in Article III of the U.S. Constitution, in order to file a class action suit stemming from a data breach. Standing depends upon proving that some type of significant injury has occurred. That’s an easy call if the members of a class have had their bank accounts drained by hackers who invaded the data base of a retailer or restaurant chain.

However, in a spate of recent cases, courts have tended to allow lawsuits based on a lower threshold for establishing injury. Minor actual costs, subjective opportunity costs, and the threat of future impacts — even though no current theft or fraud has occurred — have become viable reasons for class action suits.

Consumers Prevail on Injury Issue

For example, the U.S. Court of Appeals for the Ninth Circuit in March reversed a lower court decision and allowed consumers to participate in a class action suit against Zappos, triggered by a breach reported in 2012. A district court had denied standing, ruling that the alleged harm was not significant enough.

However, the appeals court ruled that although the plaintiffs could not prove they had suffered any actual financial loss, their exposure to undetermined potential danger was enough to meet the legal standard for injury. The court said those consumers had “sufficiently alleged an ‘injury in fact’ based on a substantial risk that the Zappos’ hackers would commit identify fraud or identity theft” in the future.

The Barnes & Noble case followed a similar path. The U.S. Court of Appeals for the Seventh Circuit in April overruled a district court that had rejected a consumer class action suit for lack of sufficient injury. The litigation resulted from a breach of consumer records due to the hacking of some of the company’s PIN pad machines.

The district court five years earlier had ruled that the alleged injuries to the value of the consumers’ personally identifiable information, time spent with bank and police officials, and emotional distress were not enough to establish injury.

Also, the inability to use bank accounts for several days was “not a monetary injury in itself,” the court had said. The court also had ruled that the cost of resuming a credit monitoring service was only partly the result of the breach, and did not qualify as an injury.

In reversing the district court, the Seventh Circuit ruled that the plaintiffs met the legal test for injury “because the data theft may have led them to pay money for credit monitoring services,” and “because unauthorized withdrawals from their accounts caused a loss (the time value of money), even when banks later restored the principal.”

Additionally, “the value of one’s own time needed to set things straight is a loss from an opportunity-cost perspective,” the appeals court ruled.

This pattern of decisions in favor of consumers has been evident in an increasing number of courts. The Seventh U.S. appeals court “remains the friendliest circuit for data breach class action plaintiffs — but its company is quickly growing,” noted Edward McAndrew, a partner at Ballard Spahr.

“The D.C. Circuit, plus the third, eighth, and ninth, have all issued decisions that have allowed consumer data breach class actions to progress past initial motions to dismiss asserting pleading deficiencies,” he told the E-Commerce Times.

The sixth and eleventh circuits were added to the group of U.S. appellate courts that “have found allegations of data theft with the attendant risk of future harm sufficient to confer Article III standing” in a commentary by law firm Cleary Gottlieb.

“I think it’s fair to say that more of these payment card class action data breach cases appear to be surviving challenges related to the Article III standing of the named plaintiffs,” Joshua Jessen, a partner at Gibson Dunn, told the E-Commerce Times.

Damage Claims Could Be Affected

The injury concept affects not only standing, but also another element consumers need to be successful. That is, proving to a court that there is sufficient injury to qualify for making damage claims. While related, the standing and damage arguments usually are treated separately in the pleading stage of litigation, when motions to dismiss are considered.

However, it’s noteworthy that the appeals court in the Barnes & Noble case suggested that the injury basis for successful standing could be applied equally to the damage claim burden. That would relieve consumers from having to meet a separate and likely more stringent injury test for damages.

Importantly for defendants, however, the full context of the court’s ruling tells a somewhat different story, according to Gibson Dunn’s Jessen.

“At first blush, the Seventh Circuit’s holding in Barnes & Noble appears to be favorable to consumers in payment card data breach class actions at the pleadings stage, but a closer inspection of the opinion illustrates that the court limited the application of the ruling to situations where plaintiffs are able to allege an actual ‘present’ loss,” he explained.

“At least as to consumer data breach class actions, plaintiffs will continue to have a tough road ahead to meet their burden of proving actual damages caused by one particular data breach,” said Ballard Spahr’s McAndrew.

“This is due, in part, to the sheer number of breaches of the same individual information, and the fact that most plaintiffs do not appear to have suffered any economic harm traceable to a particular breach for which they haven’t already been made whole by banks or other third parties,” he pointed out.

That won’t stop advocates from using the Seventh Circuit’s language as a possible additional legal tool favorable to consumers, and as a result become a troublesome factor for companies targeted in lawsuits.

A Warning for E-Commerce Defendants

“Still, it’s likely that the plaintiffs’ class action bar will attempt to seize on the Barnes & Noble ruling when their claims are challenged at the pleading stage for failure to allege cognizable damages,” Jessen said.

“It will be up to the defense attorneys to explain why the decision does not mean that pleading Article III injury is tantamount to pleading damages or cognizable harm under state law claims,” he added.

“I agree that the Seventh Circuit’s equating injury for standing and damages at the pleadings stage increases the leverage that plaintiffs will have at the early stages of a class action,” said McAndrew.

“In the Seventh Circuit, at least, data breach class action plaintiffs will have a better chance of surviving these motions to dismiss, and the parties will head into discovery and additional motions practice,” he observed.

“Data breach defendants therefore will have to value early settlement options differently than in past cases in which courts were more receptive to motions to dismiss based on standing or lack of damages,” McAndrew noted.

Not all federal appeals courts have issued such favorable rulings to consumers in breach cases, and the split among jurisdictions may have to be resolved by the U.S. Supreme Court. However, the bottom line is that defending against class action breach suits likely will be much more challenging for e-commerce businesses in the future.

John K. Higgins has been an ECT News Network reporter since 2009. His main areas of focus are U.S. government technology issues such as IT contracting, cybersecurity, privacy, cloud technology, big data and e-commerce regulation. As a freelance journalist and career business writer, he has written for numerous publications, including
The Corps Report and Business Week.
Email John.

Salesforce Adds Google Analytics Capabilities to Marketing Cloud

Salesforce on Wednesday announced integrations between its Marketing Cloud and Google Analytics 360 that equip marketers with a broad range of new capabilities, including the following:

  • View consumer insights from both Marketing Cloud and Analytics 360 in a single journey analytics dashboard to better analyze cross-channel engagement. For example, if marketers see a high rate of browse abandons — customers who click through an email offering but don’t buy — they can create a tailored journey to re-engage them.
  • Create audiences in Google Analytics 360 based on their interactions with Marketing Cloud campaigns and deliver Web pages with customized content to those audiences when they click on a link in an email offer.
  • Gain a better understanding of how their content influences transactions, through the availability of Marketing Cloud data in Analytics 360. This lets them unearth macro trends in customer journeys and make strategy tweaks to maximize conversions.
  • Quickly authenticate to Analytics 360 from the Marketing Cloud, and tag each email with the Analytics 360 campaign parameters without having to seek help from IT.

Google Analytics 360 and Salesforce Marketing Cloud

Visualize Google Analytics 360 Web interaction data directly in your Salesforce Marketing Cloud dashboard.

In Q3, a beta rollout will let marketers create audiences in Analytics 360 — such as category buyers, loyalty members and abandoned browsers — and activate them for engagement within Marketing Cloud by, for example, adding a specific audience to a re-engagement journey.

“This is about deeper integrations,” noted Ray Wang, principal analyst of Constellation Research.

“As Adobe has gotten closer to Microsoft, Salesforce has done the same with Google,” he told CRM Buyer. “Adobe does a great job with their analytics and machine learning portfolio.”

What Worked and Why

The integrations are part of a strategic alliance between Salesforce and Google. Salesforce has named G Suite as its preferred email and productivity provider, and plans to use the Google Cloud Platform for its core services in connection with its international infrastructure expansion.

Viewing consumer insights from Marketing Cloud and Analytics 360 in one dashboard is important because “marketers want to know what campaigns worked and why,” Wang said. “They want to know what their customers need and how to predict demand or interest.”

Being able to leverage information about responses in a campaign to deliver tailored Web content “helps in reducing useless interactions and understanding if you have enough context to be relevant,” he pointed out. “The goal is to leverage as many channels as you can at the right time in the right manner.”

All About Personalization

The new integrations between Google and Salesforce Marketiong Cloud “will streamline the process for marketers and make it easier to provide real personalization at scale in customer engagement,” said Rebecca Wettemann, VP of research at Nucleus Research.

“Marketers have been talking about personalization for a long time, but this is really about bringing the data at scale so they can truly execute on it,” she told CRM Buyer.

Adobe earlier this year enhanced its Adobe Target personalization tools. Last month, it announced plans to open up its data science and algorithmic optimization capabilities in Adobe Target, along with other new capabilities.

PegaSystems last week rolled out Pega Infinity, its next-generation digital transformation platform.

Pega Infinity builds on “the continued innovation of our AI-driven marketing capabilities,” remarked Jeff Nicholson, VP of CRM product marketing at Pegasystems, giving clients “the clearest path … to make the long-discussed vision of one-to-one engagement a reality.”

Marketing tech has gone far beyond “simple measurement of campaign effectiveness,” Nicholson told CRM Buyer. “The key to the new generation of tools is not to provide just information to the marketer, but actual AI-powered real-time insight and guidance.”

The aim is for companies to convert “nuggets of insights into actual action and improve their customers’ experience, along with their bottom line,” he observed.

“By improving contextual relevancy, customers and clients will more than likely engage,” said Constellation’s Wang. “If they engage more, you’ll more likely convert. That’s the whole point here.”

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.

What Ever Happened to Google Fiber?

A couple of years ago, one of the hottest new technologies was Google Fiber. Everyone was talking about it. Everyone wanted access to it. Every city wanted to be the next on the list to get it, because it would attract new citizens and encourage existing residents to stay.

What Ever Happened to Google Fiber?

It was thought there would be an advantage to early cities — Atlanta was one of them. I live in the Atlanta area, so I can speak to the current state of Google Fiber in my home town.

Google Fiber is an ultra-fast Internet service. Upon its launch, the expectation was that the first cities to get it were going to have an advantage in the marketplace. However, two years have passed, and it seems that no one is talking about Google Fiber any more.

What happened? Is Google Fiber really coming or not?

Google Fiber first appeared when there was not enough high-speed Internet. I wrote at the time that I didn’t think they Google really intended to do anything other than shake up the industry. I believed the company’s goal was to get the current players to up their game and roll out ultra-fast Internet services sooner.

AT&T and Comcast Took the Hint

That is exactly what happened. In the Atlanta market, for example, both AT&T and Comcast have been rolling out ultra-fast, gigabit speed Internet in a rapidly growing footprint.

I believe AT&T is rolling out gigabit-speed Internet service in more markets around the country than any other provider.

In that case, is there really a need for Google Fiber? Perhaps not. However, it has not closed up shop. It did what I thought it was supposed to do. It nudged the marketplace, and the top competitors rose to the challenge and have been rolling out gigabit speed Internet service across the U.S. at a rapid clip.

The Strange Silence Around Google Fiber

Since its launch, we have not heard much about Google Fiber. It seems to be fading into the sunset. So, what is its current state?

Google Fiber was introduced in Kansas City and its 20 suburban areas. The next cities and metro areas to receive the service would be Atlanta; Austin and San Antonio, Texas; Provo and Salt Lake City, Utah; Charlotte and the Triangle, North Carolina; and Nashville, Tennessee.

The excitement level was super high, and other cities wanted to be next on the list. It was very similar to what’s been happening in recent months with Amazon’s search for its HQ2 city. The companies dangle their prizes and watch cities try to run faster and jump higher to win.

While contests like this make great media coverage, is there really a there there? Will Google Fiber really roll out across the U.S. or not?

Is Google Fiber in It for the Duration?

I want to believe. I want Google Fiber to move in, compete and offer services. I know it is available in a very few other cities to one extent or another. It’s just that with all the hoopla, I expected a lot more a lot faster. After several years of patiently waiting, I still see nothing.

At this point, I wish Google Fiber simply would make its plans public. Does it intend to be a real competitor in the high-speed Internet space, or is its plan simply to nudge existing providers to move faster?

The uncertainty is getting frustrating. Going forward, if Google remains quiet, I believe it will only hurt its own brand value. It needs to be crystal clear about its intentions and its progress. Is it going to be a player in this space or not? And if it is, where is it in the process? Many think it should have arrived already. What’s the holdup?

Google Fiber has been moving very slowly. As far as I can see, Google has made no effort to issue updates on its process. The question persists, and it has been getting louder and more urgent. So, Google Fiber, will you be a real competitor, or will you quietly fade away? That’s the simple question many would like the company to answer.

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

Jeff Kagan has been an ECT News Network columnist since 2010. His focus is on the wireless and telecom industries. He is an independent
analyst, consultant and speaker.
Email Jeff.

Digitization of Paper-Based Processes

Decades after computers were supposed to end paper-based business, we’re still at it, using documents to send and receive information and act as proxies in business processes. It’s hard to say if paper consumption slowed thanks to digitization, because good historical use statistics are hard to find. However, it doesn’t really matter, because business is drowning in paper — and, more importantly, the expenses associated with it.

U.S. offices use 12.1 trillion sheets of paper per year, according to The World Counts, an insightful site. Other types of paper use — such as in packaging, publications and newspapers — add to that number.

At the same time, there’s an environmental aspect that’s becoming increasingly important. It takes 75,000 trees worth of paper just to print the Sunday edition of The New York Times, the same site notes, and it points out that half of the waste of businesses is composed of paper.

Smarter Approaches

It’s not just that we use a lot of paper — it’s also that the use is very temporary compared to the time it takes to grow a tree. So suffice it to say that the dream of the paperless office has not materialized, but that there is still an urgent need to use less paper, and for more reasons than ecology or conservation alone.

Printed paper is a surrogate for cost and inefficiency. It requires printers and ink as well as human labor to use it, move it, record it and eventually to discard it. Too often, we view such facts as threats to the status quo.

I can almost hear people saying, “What are we supposed to do, close the office?” No, definitely not. Situations like this are challenges to invent better approaches; they are the stimuli to invent smarter ways to do business.

Nitro’s Tools

I’ve been impressed by the tactics of document management company Nitro (sometimes a client of mine) to deal with the problem. This week it introduced products aimed at improving the efficiency of paper-based business processes, which is different from simply digitizing paper.

Efficient processes can drive down the need for paper in the first place, thus enabling businesses to carry on while still saving paper, printers, ink and labor.

After so many years, you might think that document management would be further along. Frankly, other vendors offer many of the same functions as Nitro but typically at higher prices, which has the perverse impact of limiting the use of good technologies.

For example, signature capture can be done electronically, eliminating the need to print a form, sign and return it, and other vendors do the job too. However, Nitro has taken on the challenge of being the low-cost producer in a market that’s stabilized around higher-priced products. So Nitro’s effort is the classic one of democratizing a technology to get it into the hands of all of the people who can use it and thus reap the benefits for their organizations.

Like other document management vendors, Nitro has a suite of document manipulation tools to support basic processes. Also, in this AI age, when it’s so important to dig into use data, Nitro applies analytics to identify areas where more finely tuned implementation can eliminate paper use. That’s why paper is such an important surrogate, and why tracking how it is used can shed light on processes that can seem rather murky.

As a challenger in the document management market, Nitro has understood the importance of services and change management. After decades, the document management market is well covered, and it’s impossible to expect to succeed at carving out a niche if it means ripping and replacing what’s already there.

My Two Bits

Nitro represents a real world example of “the Innovator’s Dilemma” from the side of the challenger. Incumbents historically have had a hard time dealing with a grass roots challenger with a better idea simply because their cash cow still makes money. When the revenue stream for the cash cow begins to falter, it’s often too late — but not always.

We’ve seen numerous examples of legacy providers that maintain their positions in the market despite effective challenges. Nevertheless, markets adjust either through price or license concessions, or through outright commoditization.

Cloud computing, which has been percolating in IT for nearly two decades, is a prime example of commoditization that has gained significant traction, even though the larger IT market maintained its dominant position.

However, the slow conversion from on-premises to cloud largely can be traced to the big need to build infrastructure. Now that infrastructure building has accelerated, we’re seeing more rapid turnover, and I see Nitro in an analogous situation. Document management plateaued with the digitization of paper, and the next move is digitization of process.

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.