Posts Tagged ‘Data storage marketing’

I’m chairing what may be the first ever marketing-oriented session at the annual Flash Memory Summit in August 2013. A lively panel of experts, editors, and analysts will be discussing product differentiation in a growth market in a session called: Differentiate or Die – Marketing Flash-Based Storage Systems. So as part of a primer on product positioning I thought I’d explain the concept of positioning.

Playing Mind Games

Positioning starts with a product. In this case, products typically include a solid state disk, a Flash-enabled appliance or caching software. However, in marketing, the term “product” can include services, a person, an idea, and a vendor.

I’d be hard pressed to name a service, person or idea that should be included in this specific post, but the 75+ vendors competing for the attention of the enterprise buyer with Flash-enabled storage solutions are definitely relevant.  I’ll narrow the field to those competing for enterprise buyers. In most cases, the solution is a hardware product that uses Flash memory, but not always. Some vendors develop software products that mitigate the need for additional hardware, essentially fulfilling the same customer need. This June 2013 list includes some newborn vendors (not yet shipping) and some undead vendors (they look dead, but still might bite.) In general, I excluded those selling only hard disk drive form-factor SSDs (e.g Seagate, sTec) and Flash chips (e.g. Toshiba, Samsung), but I included PCIe SSD vendors if they claimed to have a product for enterprise servers.

Aberdeen, Amax, Arkologic, Astute Networks, Assurance, Avere Systems, BiTMICRO, BridgeSTOR, Cachebox, Cisco, Condusiv, Coraid, DataDirect Networks (DDN), DataON, DDRdrive, Dell, Dot Hill, Echostreams Innovative Solutions, EMC, Enmotus, Fastor, Foremay, Fusion-io, GreenBytes, Hitachi Data Systems, HP, Huawei Symantec, IBM Systems and Technology Group, IceWEB, Infinio, Imation, Intel, iXsystems, JetStor (AC&NC), JBOD, JDV Solutions, Kaminario, Kove, LSI, Marvell, Micron, NetApp, Nimble Storage, Nimbus Data Systems, OCZ, Oracle, Panzura, PernixData, Pivot3, Proximal Data, Pure Storage, QLogic, Qsan, Radian Memory Systems, Reduxio, Renice Technology, Runcore SSD, SanDisk, Scalable Informatics, SeaChange, Skyera, SolidFire, Soligen, Starboard Storage, sTec, StorageQuest, Super Talent, System Fabric Works, Tegile Systems, Tintri, VeloBit, Violin Memory, Virident Systems, WhipTail, and X-IO.

It’s possible that a majority of enterprise storage products are purchased, not because they are the best, but because they are adequate and have a particular vendor’s brand name on them. The vendor’s reputation is an integral part of what’s purchased.

That said, position is not so much about the product as it is about how the product is perceived in the mind of the prospective purchaser. Your position is whatever an individual prospect thinks it is, not what you think it is. Your position is relative — worst, worse, good, better, best product for the problem the purchaser is trying to solve. Also, your position can change.

“Marketing is Too Important to be Left to the Marketing Department” (David Packard) — Good CEOs and CTOs Step Up

Positioning or repositioning is about trying to influence what others think of you and your product. These tasks usually fall under the purview of the Chief Marketing Officer (CMO). But in reality, positioning is one of the most important responsibilities of the Chief Executive Officer (CEO), whether he or she acknowledges that responsibility or not. It’s the CEO’s responsibility because the engineering department does not report to the CMO.  That’s a key point, because in the IT industry the founding Chief Technology Officer (CTO) has by far the most influence on a product’s positioning. In most cases, the foundation for a product’s position is set long before a marketer is even hired. To succeed in the positioning game, the product needs to be designed to be the best at something — something that buyers care about enough to pay for.

4+1 Must-Have Features of a Strong Product/Position

A successful and sustainable product and/or position:

  1. Is valued by the market. Customers have to want it and be willing to pay for it.
  2. Can be differentiated from similar products. It has to have a unique valued quality that makes it stand out.
  3. Is defensible. Others can’t (credibly) make the same claims.
  4. Is promoted consistently and frequently. People can’t buy what they don’t know about.

There’s one other factor that is almost always critical to a strong position, especially for those selling enterprise IT products. That factor is: Time. It is possible that a product and company can burst onto the scene and immediately establish a strong position, but when this happens it is definitely an exception. Sorry, but that inaugural press release announcing you as “the leader in …” is just the beginning of a long process that usually requires a great product line, as well as consistency and frequency of communication to the right people, at the right time, through the right channels.

In a nutshell: Customers = Innovation x Marketing.™ More realistically, Customers = Innovation x Marketing x Time.

Parameters for Positioning Flash-Based Products

So what product features are valued by enterprise buyers of flash-based storage products? Here’s a high-level list that almost always starts with performance and price:

  • Performance – IOPS, Latency, Cache
  • Price Range – $1K to $100K+, TCO
  • Capacity – TB, Data Reduction (compression, de-dupe)
  • Power – Low Watts, Sleep Mode
  • Persistence (reliability) – Wear leveling, component redundancy, ruggedness
  • Form – PCIe, Rack, Software
  • Interface – PCIe, Infiniband, Fibre Channel, SATA, DIMM
  • Application – Features applicable to Big Data, Cloud, Virtualization, High Frequency Trading, Oracle Databases, etc.
  • Assurances – Vendor, warranty, endorsements

Interestingly, price is not always a key factor for Flash-based products. For some industries, performance trumps everything because high performance is critical to their ability to succeed in their own marketplace. Examples include High Frequency Traders and some online retailers. Persistence, reliability and ruggedness are key for many military and industrial applications. However, as the market grows and matures the percentage of one-feature buyers diminishes. For most, a mixture of performance, price and additional features determines who wins the positioning game. I’ll add more about market stages in a later post.

An Example of Solid Positioning: Texas Memory Systems

Texas Memory Systems (TMS) is a textbook example of strong product positioning, in any market, not just the the solid state disk market. Before they were bought by IBM, TMS marketed themselves (with the help of my firm, Marketingsage) as “Makers of the World’s Fastest Storage.” Here’s how TMS met the essential features for a strong sustainable position:

“World’s Fastest Storage” — Simple as it may seem, TMS said they made storage products. It’s important to inform people about the type of product you sell. Although I suspect some would disagree with me.

Here’s a positioning statement from another firm: “…a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service.” Can you guess what they sell? It’s a big firm. Who are they? If you don’t work there and haven’t looked it up, leave your answer in the comment box below.

Performance is the most valued feature for many SSD purchasers, especially those in the early phase of the market. Being the fastest is the best possible position. It’s a differentiated position because no one else can be the fastest. Most importantly, TMS took steps to defend its claimed position. First of all they trademarked the “Makers of the World’s Fastest Storage” phrase and successfully prevented competitors from using it. However, it takes more than trademarking a statement to hold a position in a prospect’s mind. TMS consistently backed up their claim by releasing product after product with record-breaking performance specifications. They backed those specifications up with independent benchmarks and customer testimonials. Additionally, it helped that they were selling high performance products for over 30 years. It takes time and consistency for a position to stick.

Although TMS claimed the pole position for those interested in fast storage, it does not mean that everyone was aware of them or accepted their claims. In my biased opinion, TMS punched above its weight but could have done better. Promotional budget aside, a stubborn refusal by the owner to adopt some basic marketing practices left them with a website and trade show booth that made them look out of place alongside the principal suppliers of enterprise IT products. This made it unnecessarily difficult for TMS to convince some of the prospects they reached that they were the success they claimed to be.

The medium matters

Cardboard signs: An illustration that the medium matters to the credibility of the message. In general, the message and its delivery should conform to the expectations of the market.

About this Series on Positioning and The Flash Memory Summit

Join me and a lively panel of experts, editors, and analysts at what may be the first ever marketing-oriented session for CEOs, CTOs, and marketers at the annual Flash Memory Summit in August 2013. We will be discussing product differentiation in a growth market in a session called: Differentiate or Die – Marketing Flash-Based Storage Systems on Wednesday, August 14, 9:50-10:50 am. This is an Open Session so you can register for free up until 8/11/13.

You can follow this blog by signing up in the left sidebar. You can find related posts like these by clicking the Flash Memory Summit 2013 category:

  1. Flash Memory Summit 2013 Session: Differentiate or Die – Marketing Flash-Based Storage Systems
  2. The Positioning Game: 75+ Vendors Promoting an Enterprise Solution that Uses Flash Memory
  3. Market Changes Impacting Flash-based Products – A Positioning Primer for CEOs, CTOs and Marketers
  4. Positioning and Hype for Flash-based Products – A Primer for CEOs, CTOs and Marketers

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

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I’m chairing what may be the first ever marketing-oriented session at the annual Flash Memory Summit in August 2013. A lively panel of experts, editors, and analysts will be discussing product differentiation in a growth market in a session called: Differentiate or Die – Marketing Flash-Based Storage Systems. So, as part of a primer on product positioning, I thought I’d list the players in the game. In this case, I’ll narrow the field to those competing for enterprise buyers. In most cases, the solution is a hardware product that uses Flash memory, but not always. Some vendors develop software products that mitigate the need for additional hardware, essentially fulfilling the same customer need.

As you can see from the list of 75+ (below), there are enough vendors, products, and brands to make any buyer’s head explode. But if they wait, most will be gone by the end of the decade. A handful will be gone because they won the positioning game with the global players and were acquired for big bucks. Most will just be casualties who could not differentiate themselves in a way that attracted enough customers, or who could not defend their position from competitors claiming the same benefits at a lower cost.

Vendors Promoting an Enterprise Solution that Uses Flash

This June 2013 list (with a July update) includes some newborn vendors (not yet shipping) and some undead vendors (they look dead, but still might bite.) In general, I excluded those selling only hard disk drive form-factor SSDs (e.g Seagate) and Flash chips (e.g. Toshiba, Samsung), but I included PCIe SSD vendors if they claimed to have a product for enterprise servers.

  1. Aberdeen
  2. Amax
  3. Arkologic
  4. Astute Networks
  5. Assurance
  6. Avere Systems
  7. BiTMICRO
  8. BridgeSTOR
  9. Cachebox
  10. Cisco
  11. Condusiv
  12. Coraid
  13. DataCore
  14. DataDirect Networks (DDN)
  15. DataON
  16. DDRdrive
  17. Dell
  18. Dot Hill
  19. Echostreams Innovative Solutions
  20. EMC
  21. Enmotus
  22. Fastor
  23. Foremay
  24. Fusion-io
  25. GreenBytes
  26. Hitachi Data Systems
  27. HP
  28. Huawei Symantec
  29. IBM Systems and Technology Group
  30. IceWEB
  31. Infinio
  32. Imation
  33. Intel
  34. iXsystems
  35. JetStor (AC&NC)
  36. JBOD
  37. JDV Solutions
  38. Kaminario
  39. Kove
  40. LSI
  41. Marvell
  42. Micron
  43. NetApp
  44. Nimble Storage
  45. Nimbus Data Systems
  46. OCZ
  47. Oracle
  48. Panzura
  49. PernixData
  50. Pivot3
  51. Proximal Data
  52. Pure Storage
  53. QLogic
  54. Qsan
  55. Radian Memory Systems
  56. Reduxio
  57. Renice Technology
  58. Runcore SSD
  59. SanDisk
  60. Scalable Informatics
  61. SeaChange
  62. Skyera
  63. SolidFire
  64. Soligen
  65. Starboard Storage
  66. sTec
  67. StorageQuest
  68. Super Talent
  69. System Fabric Works
  70. Tegile Systems
  71. Tintri
  72. VeloBit
  73. Violin Memory
  74. Virident Systems
  75. WhipTail
  76. X-IO

If I missed a vendor, please let me know.

About this Series on Positioning and The Flash Memory Summit

Join me and a lively panel of experts, editors, and analysts at what may be the first ever marketing-oriented session for CEOs, CTOs, and marketers at the annual Flash Memory Summit in August 2013. We will be discussing product differentiation in a growth market in a session called: Differentiate or Die – Marketing Flash-Based Storage Systems on Wednesday, August 14, 9:50-10:50 am. This is an Open Session so you can register for free up until 8/11/13.

You can follow this blog by signing up in the left sidebar. You can find related posts like these by clicking the Flash Memory Summit 2013 category:

  1. Flash Memory Summit 2013 Session: Differentiate or Die – Marketing Flash-Based Storage Systems
  2. Competitive Positioning of Flash-Based Products – A Primer for CEOs, CTOs and Marketers
  3. Market Changes Impacting Flash-based Products – A Positioning Primer for CEOs, CTOs and Marketers
  4. Positioning and Hype for Flash-based Products – A Primer for CEOs, CTOs and Marketers

You can suggest questions and discussion topics using the comment box below or by sending me, David Lamont, an email at blog [at] marketingsage.net. If you’d like to support this topic and enhance your own social media reputation, please click the “Share This” and “Like This” buttons below. Your support is appreciated.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

 

FMS 13 Banner

I am delighted to be chairing what may be the first ever marketing-oriented session at the annual Flash Memory Summit in August 2013. A lively panel of experts, editors, and analysts will be discussing product differentiation in a growth market in a session called: Differentiate or Die – Marketing Flash-Based Storage Systems on Wednesday, August 14, 9:50-10:50 am. This is an Open Session so you can register for free up until 8/11/13.

Product differentiation is a strategically important topic for businesses that develop products using using flash memory. It’s important because there are many ways to position such products, competition is fierce, and the process of positioning (or repositioning) is difficult, costly, and time-consuming. To succeed, these flash-based products must appeal to as many customers as possible. They must also appeal to the press, analysts, and investors.

Are these constituencies looking for the same things? Are they still responding to technology underpinnings such as SLC or MLC, or benchmarks such as latency and IOPS?  Do they focus on features such as on-the-fly de-dupe, reliability and price, or are they more responsive to benefits such as TCO and ROI? Or, are they looking to solve problems with Big Data, cloud, databases, and virtualization?  And in the end, do any of these details matter more than the brand name on the box?

Great Panel of Opinionated Experts

So who can help us answer these questions? It would be great to ask all the buyers directly, but we don’t have that luxury. Besides the logistical challenges, each buyer represents just one viewpoint in a large and diverse marketplace. However, the press and analysts have their fingers on the pulse of the broader market. They communicate with the broader market and they’ve been on the receiving end of almost every vendor pitch. Additionally, the buyers look to these people to help them form their opinions on the best SSDs for their situation. So, we’ve invited some of the most knowledgeable people in the SSD industry to share their opinions on what matters. They include some of the smartest, most experienced editors, analysts and VCs in the industry:

Panel Photos

Rich Castagna, Editorial Director, Storage Media at TechTarget. Rich oversees content for Storage Magazine, SearchSolidStateStorage.com, SearchStorage.com, SearchVirtualStorage.com, SearchCloudStorage.com, SearchDataBackup.com, SearchSMBStorage.com, SearchDisasterRecovery.com, SearchStorage.co.UK, SearchStorageChannel.com and Storage Decisions seminars and conferences. Rich has been involved with high-tech journalism for more than 20 years; previously, he was executive editor of ZDNet Tech Update and Cnet Enterprise; editor in chief of Windows Systems magazine; senior editor for Windows magazine, and senior editor and technical editor for PC Sources. Rich has written more than 600 computer technology articles.

Mark Peters, Senior Analyst at Enterprise Strategy Group. Mark is an ESG senior analyst focused on storage systems. His particular areas of emphasis are block storage; virtualized storage; all types of solid-state storage; and the challenges of power, cooling, and space efficiency in data centers. Mark has more than 25 years of data storage industry experience and has held senior management roles in sales, marketing, product management, business development, and customer intimacy in the U.S. and internationally.

Chris Preimesberger, Editor-in-Chief of Features & Analysis, eWEEK. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager’s Journal and DevX.com and was managing editor of Software Development magazine. Chris has won more than a dozen regional and national awards for his work.

Gaurav Tewari, Director at SAP Ventures. Gaurav is a venture capitalist focused on growth and later-stage investments within Software/SaaS, Internet, Digital Media, Mobile, and Technology-Enabled Services. Prior to joining SAP Ventures he was with Highland Capital Partners and led or was instrumental in their investments in Violin Memory, Criteo, Marin Software (MRIN), , Affine Systems, Beyond the Rack, Cafemom, Coremetrics (IBM), Navic Networks (MSFT), Rent the Runway, StyleFeeder (TWX), and Yipit.  Previously, he was a Corporate Strategy executive at Microsoft, and a management consultant with McKinsey & Company, where he led strategic initiatives for Fortune 500 companies.

Frank Berry, Senior Analyst with IT Brand Pulse, a trusted source of product testing, IT Pro research and industry analysis about data center infrastructure. Prior to founding IT Brand Pulse, Frank was vice president of product marketing for QLogic, and vice president of worldwide marketing for Quantum.

David Lamont, Partner, Marketingsage. I am a marketing professional and strategist with over 25 years of storage experience, including 10 years marketing solid state products. I’ve helped large storage vendors including IBM and Seagate as well as innovative storage and Flash vendors such as Texas Memory Systems, Tegile and GridIron Systems. I share insights on Flash, storage and marketing topics on this blog and on the Words To The Wise section of Marketingsage website. I am a founding partner at Marketingsage, an agency that helps storage marketers with content development, publicity and lead generation.

About this Series on Positioning and The Flash Memory Summit

You can follow this blog by signing up in the left sidebar. You can find related posts like these by clicking the Flash Memory Summit 2013 category:

  1. The Positioning Game: 75+ Vendors Promoting an Enterprise Solution that Uses Flash Memory
  2. Competitive Positioning of Flash-Based Products – A Primer for CEOs, CTOs and Marketers
  3. Market Changes Impacting Flash-based Products – A Positioning Primer for CEOs, CTOs and Marketers
  4. Positioning and Hype for Flash-based Products – A Primer for CEOs, CTOs and Marketers

You can suggest questions and discussion topics using the comment box below or by sending me, David Lamont, an email at blog [at] marketingsage.net. If you’d like to support this topic and enhance your own social media reputation, please click the “Share This” and “Like This” buttons below.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

You never know what lurks in those piles of paper in the office. Today, I excavated an old Gartner report entitled “Cool Vendors in Data Protection, 2006.” To refresh your memory, this was the heyday of disk-based backup and nothing was cooler than Continuous Data Protection (CDP). Overcome with nostalgia for heated debates about “true CDP” and recovery granularity held in bars at SNIA conferences during that era, I just had to read this old gem.

Seven years after the coronation of the six cool vendors, only one remains. The other five must have made big bucks, right? After all, Gartner knows best and cool surely pays…..

  • Asempra Technologies sold its assets to Bakbone (acquired by Quest, in turn acquired by Dell) for a reported $2M in 2009.
  • Mendocino Software faded away quietly in 2008.
  • Mimosa Systems was acquired by Iron Mountain in a deal valued at $211M in 2010. Since then, it has been passed through to Autonomy and thence to HP.
  • Revivio’s IP was picked up by Symantec in 2006.
  • XOsoft was purchased by CA in 2006 and rumor at the time suggested that the return was good.
  • Asigra remains as the lone standing vendor of the group, having adapted its offering and message to grasp the opportunities presented by Cloud. Closing the circle, CRN thinks Asigra is still cool, naming them one of the 20 Coolest Cloud Storage Vendors for 2013.

Check back in another 7 years!

 About the Author

Agnes Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, security, and enterprise software products. She can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join her network on LinkedIn and to subscribe to this blog (see sidebar).

It’s very unwise to pick just one promotional strategy and exclude all others, but it happens a lot among start-ups in the IT industry. Typically, the underlying problem is money. The firm has a very limited promotional budget so they bet it all on a single promotional strategy.

More often than not, inexperienced marketers at these cash-strapped start-ups purchase a list of prospects to email and call. After all, the list is affordable, email is almost free, and the sales team can start dialing on day one. From that same perspective, online advertising is ruled out because it is obviously expensive, it takes more time, and the number of callable contacts is expected to be relatively low.

However, choosing a purchased list over online advertising is invariably a bad bet.

Let’s look at some numbers:

  • Advertising: The more expensive pay-per-lead adverts average $60 per lead. However, while the cost-per-lead (CPL) is expensive, these contacts are leads insofar as they have requested one of your resources (e.g. a white paper). Such leads result in a “warm” contact list.
  • Purchased Lists: A contact on a list costs more or less $5, depending on the criteria chosen. The cost per contact is relatively low, but they haven’t taken any action to demonstrate even a passing interest in your offering. A purchased list is a “cold” list.
  • The cost of email is almost free. It’s usually not a material factor.

A typical click-through (action) rate for cold list is 0.05%. A click might result in a white paper download, a webinar registration, request for quote, or other action that the sales team considers actionable. However, a click-through rate of 0.05% means you need to send 200,000 emails to generate 100 clicks. Those 100 clicks cost $1-million at $5 per contact (of course the cost is lower when you amortize it over many campaigns, but to make the point we’ll leave it as is.)

A low click-through (action) rate for warm list is 1.5%. It can be much higher. Again, a click might result in a white paper download, a webinar registration, request for quote, or other action that the sales team considers actionable. A click-through rate of 1.5% means you need to send 6,667 emails to generate 100 clicks. Those 100 clicks cost ~$490,000 at $60 per contact (again, the cost is lower when you amortize it over many campaigns.)

The net result: Generating a desirable action from the $60 online advertising leads costs ~50% less than generating the same action from $5 purchased contacts because the response rates are significantly higher for warm lists.

Email clicks are easy to measure, but the lesson can be logically applied to other factors. While the cost of promoting using email may be close to free, the cost of promotion using a sales team is not. Because of the significant productivity difference, cost of a sales team employed to call a cold list will be higher than the cost of a sales team calling a warm list.

You can easily test this for yourself and generate numbers for your own business. Your numbers may be higher or lower, but you will inevitably learn that a warm list is considerably more valuable than a cold one.

This analysis assumes your firm has no ethical issues with emailing people who have not subscribed for your messages. Such unsolicited emails may not be SPAM from the legal sense, but they are usually considered SPAM by the recipients. It’s certainly possible that a portion of the 99.95% of email recipients who do not respond to your unsolicited emails will in fact remember your brand and make a decision to avoid it at all costs. As a result, every campaign has the potential to diminish your brand among the carefully chosen audience you wish to sell to.

How CEOs, CFOs and VCs Might Mitigate the Underlying Budget Problem

I get it. The marketing budget of many early-round start-ups won’t support much online advertising. However, that budget crisis is usually the result of an earlier decision to invest other things. Typically, CEOs at these firms invest 90% of their sales and marketing budget in staff alone. They usually start by adding salespeople, but don’t reserve enough cash for the marketing programs necessary to feed that team.

Soloed VPs can’t address this issue because the parameters of their world have already been set by the CEO and board. The result is a failure by marketing to deliver enough high quality leads to satisfy the needs of a relatively large sales team. However, the sales team also fails because they don’t have those leads. The CEO, CFO and VCs fail because of the lost time (multiplied by the company’s cash burn rate) and the destructive interdepartmental politics spawned by the imbalance between objectives and resources.

A more prudent approach is to recognize the fact that sales and marketing are interdependent, not independent. You must invest proportionally in both. You must also recognize that marketing takes time and money and it often precedes the success of the sales team.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

Summary: A look at the love, launch and lapse phenomenon encountered by many start-ups, what underlies the lapse, and how to mitigate it happening to your firm.

Over the past 20 years I’ve followed the successes and failures of firms in the data storage and data management arena. I’ve noticed a phenomenon that impacts those who sell enterprise software and systems based on new, or potentially disruptive, technology. In today’s market such technology would include systems based on solid state disks (SSD) as well as some cloud enablers, virtualization/VDI solutions and Big Data solutions

The phenomenon is the love, launch, and lapse phases many start-ups experience. In other words, most tech firms experience a honeymoon period that eventually ends. Here’s what happens:

Love at First Sight: The executives and board members are working their Rolodex to sign up beta customers and these initial customers love you. Additionally, analysts and journalists are calling you and you haven’t even come out of stealth mode. If you are out of stealth you may even have been recognized with a “most promising” or “company to watch” award.

Launch Like a Rocket: You hire a PR agency and announce your venture funding and your new product. You get lots of press coverage, especially in the storage media that you read every day. Additionally, your sales team has a bunch of prospective customers. You may even have some noteworthy customers.

Under these circumstances the typical CEO adds salespeople and minimizes the budget for paid promotions like advertising. After all, the prospects in the pipeline were relatively easy to get and PR is driving the funnel. Given everyone’s enthusiasm the plan presented to the board will likely be high on the revenue forecast and low on marketing expenses.

Lamentable Lapse: However, as the quarters pass the vast majority of “hot” prospects turn cold and the press coverage is no longer generating many leads. Other firms now dominate the editorials. The resellers are signed-up, but not selling. There’s little discretionary budget available for promotional campaigns and the few that are tried don’t produce enough results. The marketers are sent on the fruitless quest to find the “magic well” — a single source for high volume, low-cost, purchase-ready leads. The blame game is heating up so office politics between sales and marketing are becoming a drain on productivity. The PR agency is fired. The VP of sales is replaced. The VP of marketing is replaced. Eventually, the CEO is replaced.

What happened?

The analysts and press are always interested in new technology, new products, and new firms. It’s their job to know what is going on in the market. They trade in that knowledge as well as sell their own services to storage vendors. Almost every technology start-up can get their “15 minutes of fame.”

PR agencies know that, so a few storage specialist PR-only firms have built their entire business on the “launch and leverage” model. I prefer to call it the “launch and lapse” model. It’s a great model for PR agencies. News about new technology, products and VC funded companies is in demand so the agency can usually show great initial results to the client (and to the client’s competitors — the PR agency’s new prospects). However, when the launch is done the “heavy lifting” starts. At that point, the PR agency executive that sold the service turns the start-up over to a less influential account manager and moves on to new business (often the client’s competitors.)

Most new publicity (PR or advertising) will release a pent-up demand for information about what’s being promoted. It’s that pent-up demand for certain information that results in an initial surge of leads, followed by diminishing returns. These diminishing returns are easiest to see with some online adverts. The early placements generate more results than later placements (I know, it’s the opposite of print and what the advertising sales rep tells you.) The initial demand is satisfied so when the publication’s audience is not growing at a sufficient rate, the volume of sales leads falls for the same advert. It’s normal!

Of the leads that come in, it’s not uncommon for a technology firm to see a high number of “false positives.” These look like good leads, but don’t close quickly (or at all) so the close rate is very low. False positives result when the hype surrounding a new technology piques peoples’ curiosity. They want to learn about it so they end up downloading the white papers and otherwise flagging themselves as a lead. However, if the new technology has multiple applications (e.g. SSD in consumer and enterprise applications), is complex (e.g. integrates into larger systems and requires buy-in from many people) or is expensive (e.g. beyond the budget authority of the purchase champion) you should expect a long and difficult sales process that can take months, or even years, of nurturing and selling.

What about the happy customers? Beta customers are not the same as real customers, even if they are big names. Many large enterprises are willing to try new technology. The real test is whether they deploy it widely as a result. Additionally, the start-up probably sold the beta product at a big discount (or gave it away) and the tech support people are the best engineers who’ll drop everything to deal with an issue. Lastly, as good as the executives and board may be at at leveraging their executive-level contacts, that sales model is not scalable or repeatable by ordinary salespeople.

STEC stock value after announcing that OEM customers may choose other SSDsUnfortunately, big OEM deals can also result in an eventual lapse. The big OEMs – HP, Dell, IBM, etc. – have annual design cycles for their server and storage products so the components suppliers chosen this year may not be the same as those chosen next year. Big suppliers like Seagate and Western Digital can keep up with the design cycles, but a start-up is typically so overwhelmed with the initial design-in business that they fail to secure the second and subsequent supply contracts. An established vendor that loses a design-in contract will turn to other customers (often through an established distribution channel), but a start-up often goes out of business (or gets acquired at a low valuation). Others, like STEC, may just lose half their stock value.

In fact, it’s often the lucky start-ups that are overwhelmed with fulfilling the demand of a large customer. They are generating revenue and have proven the end-user demand for their innovation. Others sign promising deals with big OEMs (with all kinds of hooks and exclusivity requirements), but the OEM does not sell nearly as many as forecast.

All of these factors assume that a market exists and therefore the sales issues can be overcome. That’s not a given, but I can accept that it is for most data storage products. There is a growing need for capacity, speed, protection and management of data. However, a market is made up of different types of buyers who require different things.

Enterprise SSD is in the Early Adoper Phase

SSD Market 2011

A new market segment is made up of “Innovators.” These buyers are technology enthusiasts willing to try new ideas at some risk. They like to test new things and don’t need complete solutions. They just need access to new technology. These Innovators may buy the product based on its technological capabilities. However, the larger number of “Early Adopters” have different needs.

Early Adopters are looking for a breakthrough advantage in their business and require complete solutions. A solution is not a just box full of Flash or some other technology. Solutions include expertise in the customer’s environment. Therefore, successful firms sell an augmented product that includes more than their raw technology. For example, Texas Memory Systems, a 30+ year old solid state disk supplier, speaks fluent Oracle. They employ an “Oracle Guru” who works with the DBAs that initially identifies the performance problem that’s ultimately solved by the product being sold.

The challenge for the start-up in new market segments is to solve both a technical problem and a business problem. Solving the technical problem can generate a few sales to the Innovators. However, a business problem must be solved to sell to the Early Adopters and many technology start-ups don’t invest enough to market and sell in this environment.

What Really Happened?

The lapse is a result of the executives doing something reasonable. They believed their own eyes and planned accordingly. Unfortunately, they did not recognize that they could be in a honeymoon period so the number of prospects in the pipeline was significantly smaller than it needed to be and the infrastructure to generate leads was lagging.

The initial good news made everyone optimistic when they would have been better served by hoping for the best, but planning for the worst.

Hoping for the best, but planning for the worst

Technology start-ups often establish just one of the 4-Ps necessary for sales success. They establish the product, but do not establish a working promotion, pricing, or channel (place-of-sale) model. In a nutshell, they do not build a working sales and marketing system before the clock runs out. A working system allows you to execute a process and get reasonably predictable results.

Sales leads are at the core of the system. Since people can’t buy what they don’t know about, promotions are used to create market awareness, build brand recognition, and generate sales leads. These promotion-driven sales leads not only have the potential to drive revenue, they are also critical to optimizing your overall marketing. They are the equivalent of an early warning system.

For example, if you know what you are doing and what to expect (as my firm, Marketingsage, does) and it turns out to be difficult and excessively expensive to generate sales leads then you’ve learned something. Your message is not working for the audience you promote to. If the audience includes your customer prospects and your message talks about your product, you may have a positioning issue or need to rethink the offering.

On the other hand, if you are generating leads at a reasonable price it’s fair to conclude that your message is resonating. Therefore if there is a sales issue, you save time and considerable money by investigating product, pricing or channel expectations first. Without a reliable flow of leads, you have to ask if you’ve generated enough awareness for your offering. The only way to answer that question quickly is run many simultaneous promotions. That’s expensive and a big risk for resource- and time-constrained start-ups.

There’s another benefit to building a lead generation system. If you do enough lead generation you’ll end up with a fairly reliable cost-per-lead (CPL) number and a close rate percentage. Those numbers allow you to plan and budget effectively.

For example, if you pay the industry average of $60 CPL and close 0.5% of leads, you can calculate that you need 200 leads per sale and those leads will cost $12,000. If this year’s revenue target is $10-million and the average customer generates $100,000, you need 100 customers. The 20,000 leads you need for 100 customers will cost $1.2-million in promotions. If the sales lead time is 6 months you need all your leads by the end of June. That means the promotions had to ramp up last year. Of course, that’s a little simplistic, but hopefully you get the idea.

Your numbers may be different, but the scenario presented is typical enough. The good news is: When you have data, you can start to drive down the CPL and drive up the close rate to optimize your system. Additionally, happy customers can be expected to purchase more. Therefore, their 3- or 5-year value is often substantially higher than the value of the first year’s sales and the cost of incremental sales is far lower.

There are many ways to generate sales leads (see The Most Effective Sales Lead Generation Methods for Storage and Enterprise Software) – too many to discuss here. However, the difference between a mature lead generation system and ad hoc promotion is typically the inclusion of online advertising.

Done properly, online advertising is effective, cost-effective and relatively predictable. Unlike other promotional methods you can control the placement, timing, message and call-to-action. This control allows you to adjust and optimize in a relatively short period of time. Additionally, it’s scalable!

Bogging, tweeting, cold calling, trade shows, seminars, etc. all require human resources. Consequently, they can be considerably more expensive for the results achieved than just spending a few well placed dollars on advertising.

Bottom Line for CEO’s, VPs and VCs

Recognize that your firm is likely to experience a honeymoon period. Set realistic expectations so you have a chance of success and can justify the necessary up-front investment in lead generating promotions, not just product development.

Realize that the sales cycle for enterprise storage products can be very long. Think 6+ months for today’s enterprise SSD systems and other new technologies in emerging markets. Add months to get promotional campaigns producing. Add quarters if you need to staff-up, build infrastructure as well as get the campaigns producing.

From day-one, build a scalable lead generation and lead nurturing system so you know that you can generate more/less leads as required from various sources.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

As a marketer of data storage and data management products, including those for the emerging “Big Data” market, I was immediately attracted to a a new report called “Marketing ROI in the Era of Big Data.”

This 2012 report by David Rogers and Don Sexton of the Columbia Business School and New York American Marketing Association is not about how to market Big Data products (a topic my firm, Marketingsage, is happy to address). The report is about using Big Data analytics to drive marketing decisions. As the report notes, Big Data analytics is different from “the quarterly omnibus survey panels of traditional market research” that rely on periodically analyzing structured data such as a surveys, click data or sales.

Big Data analytics is “predicated on access to frequent and recent data” from many sources. For many this means analyzing data at near-real-time speeds. It also means the combining of data from various digital media — page views, time-on-site, revisits, clicks, opt-ins, opt-outs, purchases, shopping cart abandonment,  search engine page ranks, keyword usage, link-backs, demographics, perceptions, tweets, likes, shares, etc. It means combining data from traditional marketing tools such as event sponsorships, print advertising, direct mail, TV and radio adverts with digital tools such as email, social network accounts and mobile adverts/apps.

If you are a hands-on marketer, your brain may have just melted down when you thought about what it would actually take to make sense of all that diverse data…even if you had it available to you in real-time. If so, you won’t be surprised to learn that while 91% of senior corporate marketers (at large firms) believe that successful brands use customer data to drive marketing decisions, it’s not happening near as often as some might think. And, if it isn’t happening in the large B2C firms surveyed, it sure isn’t happening in smaller B2B firms with small marketing teams.

Here are some statistics form the report:

  • 65% of marketers said that comparing the effectiveness of marketing across different digital media is “a major challenge” for their business
  • 39% say their own company’s data is collected too infrequently or not real-time enough
  • Large firms are much less likely to collect new forms of digital data like mobile data (19%), than they are to collect traditional customer survey data such as on demographics (74%) and attitude (54%)
  • 22% are using brand awareness as their sole measure to evaluate their marketing spend
  • 42% of marketers report that they are not able to link data at the level of an individual customer
  • 45% of marketers are not using data to personalize their marketing communications
  • 57% are not basing their marketing budgets on any ROI analysis
  • 37% of respondents did not include any mention of financial outcomes when asked to define what “marketing ROI” meant for their own organization

Not surprisingly, the report notes that marketers who are satisfied with measuring marketing ROI tend to use more metrics than organizations that are less satisfied. Additionally, their leaders set measurable objectives for marketing actions.

Accordingly, the authors go on to recommend that marketers should get started with the basics of determining marketing ROI and then move on to ROI best practices.

A Personal View

Although it’s a long way in the future (maybe a decade), I’m looking forward to the day when a marketer can look at a dashboard that reveals what’s going on everywhere, in real-time, especially if coupled with artificial intelligence that  offers some insights into the data. However, lets not forget that such a dashboard is no different from the one in your car. You still have to do the driving. Even with a navigation system that gives you step-by-step instructions you still need to decide where you want to go and avoid all the obstacles along the way.

In reality, the data is only helpful if you define it appropriately, understand where it’s coming from, know what’s driving it and how to act upon it to meet your goals. That’s not a given. I’ve seen many instances where firms analyze marketing data only to draw poor and very costly conclusions because they lack perspective and experience.

For me, the “Marketing ROI in the Era of Big Data” conclusion rings true. It states: “Chief Marketing Officers face a dynamic and challenging environment for marketing today. They will find no simple answers to effectively measuring marketing ROI amidst the growth of big data and new digital marketing tools. Innovative marketing and effective measurement will both be works in progress that require leadership, agility, and constant learning.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

I go to Oracle OpenWorld (OOW) in San Francisco every year because my PR and lead gen. firm, Marketingsage, helps data storage and data management firms market to the large enterprises that use Oracle.  Wednesday Oct. 5 was my day to visit the 2011 expo and this post takes a marketer’s look at the exhibits of some of the most innovative firms who were showing off their high performance storage hardware at the show.

This was the last day of the expo so you might expect it to be somewhat quiet. In my opinion is was far too quiet at any booth that was not front and center in the main hall or giving way a car, iPad, iPhone 5 4S. While that may be bad for exhibitors, it was good me because I got to see most of the high performance storage players. Besides the big guys like Oracle, EMC, HP and Dell, there were more start-up firms this year. Most of them paid big bucks for big booths.

I’ll give the award for biggest-bang-for-the-buck to our friends at GridIron Systems. They did not have a booth. They used a high traffic station in the highly visible Intel booth to show off their TurboCharger caching appliance. This device fit right in with Oracle’s “Big Data” theme because it accelerates (in real-time) the “hot data” that’s in-demand. Users do not have to put their Oracle database, or even the tables, onto expensive solid state disk (SSD) to get SSD performance. That makes the GridIron hardware somewhat special in the value-for-money department. I know all that because Marketingsage just started helping GridIron with its PR 🙂

Start-up, Pure Storage had a big bright booth and lots of people wearing their distinctive shirts. They also scored a visible spot in the Samsung booth. Their solid state disk is special because it uses real-time deduplication and compression to reduce the amount of data that’s actually stored on more expensive SSD. Therefore, they claim the cost of their system (when available) will be lower than purchasing hard disk drive-based systems for the same volume of data.

Fusion-io had the most visually impressive information walls backed by a mini data center. They also had some pro-active salespeople willing to grab passersby. I can respect that. Fusion was touting “a tier on a PCIe card” and they are getting some impressive Flash capacities on relatively small cards. The other vendors went out of their way to point out that this PCIe-based storage is not shareable.

STEC had a front row booth in the corner of the main hall. They had a small theater where they did a good job introducing their rather large Kronos PCIe card. They subsequently gave out t-shirts to those who filled in their sales lead survey. Customers can use a single STEC Flash drive to replace a hard drive in a server or they can array them for rack mounted enterprise environments.

Violin Memory also stumped for a big front row booth. Interestingly they only used half of the booth for meeting attendees. The other half was hidden and off-limits. Violin prefers to call its SAN-attached SSDs “memory arrays” and they see them as primary storage to be used in an “all silicon data center” without hard disk drives. Meanwhile, Quantum was at the back of the same hall proving that tape is still an important part of today’s data centers. I was impressed  by Quantum’s high performance StorNext system. It’s used to quickly ingest and provide shared access to REALLY BIG files, like satellite and geology images, and manages all of the storage complexity of  managing and archiving to hard disk or tape.

Our friends at TMS exhibited their SSDs at OOW years before some of the other SSD firms even existed. They had their usual spot in the middle of the main hall. And as usual, you could be standing next to the booth and not notice it. However, Oracle users seek them out. TMS had a small theater where their genuine Oracle Guru talked to Oracle users and developers about how to accelerate Oracle. TMS does not confuse OOW with SNW (Storage Networking World) and their no frill SSDs are always fast.

I went all the way across the road to see Kaminario in the lower traffic West hall. They had a small 10×10 pop-up booth, but they were getting their share of visitors. They probably deserve the runner-up prize for the biggest-bang-for-the-buck booth among SSD vendors. Kaminaro’s SAN-attached SSD lets customers choose DRAM and/or Fision-io’s Flash memory.

Nimbus Data Systems was at the show as well, but their small booth looked like a parking space. It was 80% sports car, 20% SSD. No, you could not win the car. I was laughingly told by another vendor you could win the privilege of sitting in it for a while.

We would have liked to seen WhipTail, SolidFire, Nimble Storage  and some of the other serious vendors of high performance enterprise storage systems. Alas, they were not at this particular show.

Other SSD Posts

If you like to read about the marketing of SSDs you can join the mail list for this blog (top left sidebar). You’ll get an email when a new post comes on line. Here are some recent SSD related posts:

Storage start-ups: What CEOs, VPs and VCs should know about the honeymoon period

A Strategic Marketing View of Flash Memory Products

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

Of all the horrible jobs to have, it seems that marketing and IT are the worst.  CareerBliss recently surveyed thousands of people and identified the 10 jobs with the highest levels of employee unhappiness. I expected to see yucky and dangerous jobs on the list: rodent abatement; sewer maintenance; oil rig diving and the like. So imagine my surprise when I saw the list populated with many of the roles I’ve played and been close to in my own clean and happy little world! Here’s the list:

1. Director of Information Technology (“nepotism, cronyism, disrespect for workers”)

2. Director of Sales and Marketing (“lack of direction from upper management and an absence of room for growth”)

3. Product Manager (“the work is boring and there’s a lot of clerical work”)

4. Senior Web Developer (“employers are unable to communicate coherently, and lack an understanding of the technology”)

5. Technical Specialist (“treated with a palpable level of disrespect, lack of communication from upper management, and input was not taken seriously)

6. Electronics Technician (“too little control, work schedule, lack of accomplishment, no real opportunity for growth, peers have no motivation to work hard, no say in how things are done, hostility from peers towards other employees”)

7. Law Clerk (“hours are long and grueling, and the clerk is subject to the whims of sometimes mercurial personalities, a median salary of $39,780)

8. Technical Support Analyst (“may be required to travel at a moment’s notice, sometimes on holidays or weekends”, and “You can do better, really.”)

9. CNC Machinist (“no room for advancement”)

10. Marketing Manager (“lack of direction”, “tolerable,” “It’s a job.”)

Life as a marketing agency partner is great and I love it. Admittedly I work in a non-political environment with smart and funny people who have the grace to always refill the coffee pot. But I’ve also held jobs and roles equivalent to numbers 1, 2, 3, and 10 on the list and worked very closely with 4, 5, 6, and 8 in the corporate world for more years than I care to admit. Honestly, I was happy and I thought my colleagues were too (except for the disgruntled guy with the guns in tech support who shall remain nameless).

"I Don't Like Mondays" track by the Boomtown Rats

“I Don’t Like Mondays” YouTube track by the Boomtown Rats

I’ve always been excited by technology, software innovation, the magic that makes the internet and my printers work (I’m not a complete geek). The scar where I cut myself pulling cables under the data center floor healed, so the IT part was good. As a product manager I treated my products as children – nurturing them, advocating for them, trying to get them out the door on time with enough features to form a covering fabric of modesty. Practicing marketing is a passion and I have always been as happy as Larry the Cable Guy to “Git ‘r done” – default direction is to find folks and sell stuff.

Truly I am baffled that, of all the things that can make human beings unhappy, my career path accounts for so much of it in the workplace. The article by Daniel Burkszpan at CNBC is definitely worth a read and I’d love to hear your views on what makes a great and lousy job in technology marketing. By the way, chocolate makes everything seem better!

http://finance.yahoo.com/career-work/article/113308/10-most-hated-jobs-cnbc

http://www.cnbc.com/id/44038159?slide=1

About the Author

Agnes Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. She can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join her network on LinkedIn and to subscribe to this blog (see sidebar).

IDC has just released its Worldwide Disk Storage Systems Quarterly Tracker for Q2 2011. The shipment of 5,353 petabytes in total disk storage systems capacity for the quarter represents a 10.2% increase in Q2 revenues compared to Q2 2010. Only Dell and the many hundreds of “Others” saw a decline in revenue.

It’s cheering to see some tangible evidence of prosperity and an uptick in IT spending. However, it behooves not only Dell and Oracle (Sun), but the smaller, emerging companies in the storage arena to pause and think strategically about how they can compete against EMC, IBM, NetApp, HP and Hitachi who jointly won 74% of the market in 2Q11.

Technical innovation is only a partial answer. When considering access to market, the conundrum is whether to try to beat them or join them.

Top 5 Vendors, Worldwide External Disk Storage Systems Factory Revenue, Second Quarter of 2011 (Revenues are in Millions)

Vendor

2Q11 Revenue

2Q11 Market Share

2Q10 Revenue

2Q10 Market Share

2Q11/2Q10 Revenue Growth

1. EMC

$1,621

28.7%

$1,287

25.6%

26.0%

T2. IBM

$771

13.7%

$680

13.5%

13.4%

T2. NetApp

$720

12.8%

$572

11.4%

25.7%

4. HP

$619

11.0%

$567

11.3%

9.1%

T5. Hitachi

$459

8.1%

$372

7.4%

23.3%

T5. Dell

$444

7.9%

$472

9.4%

-5.9%

Others

$1,009

17.9%

$1,080

21.5%

-6.6%

All Vendors

$5,643

100.0%

$5,031

100.0%

12.2%

Source: IDC Worldwide Disk Storage Systems Quarterly Tracker, September 2, 2011

Press release: http://www.idc.com/getdoc.jsp?containerId=prUS23012911

Report: http://www.idc.com/getdoc.jsp?containerId=IDC_P4435

About the Author

Agnes Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. She can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join her network on LinkedIn and to subscribe to this blog (see sidebar).