Learning from Tech Companies that Grew in Q4 2008

By Bill Freedman

Despite all the gloomy economic news, there are a handful of companies that grew revenue in Q4 2008. Consumers and businesses are spending money, albeit a little more selectively. Below are a few notable tech companies that got more of their fair share of revenue in Q4 2008 (the third quarter in our ongoing worldwide economic recession):

Company
Q4 2008 Growth
Chart
Sybase
3%
SY
9%
Callidus Software
10%
Shoretel
16%
25%

First off, I want to congratulate these companies for their strategies, operating plans and teamwork that resulted in positive outcomes despite uncertain conditions. In addition to revenue growth, many of these companies created new products and avoided mass layoffs in the past period.

Here are a few statements from the corporate executives (emphasis is mine):

Sybase chairman, CEO, and president John Chen: Sybase’s success “…is the result of judiciously investing in our Unwired Enterprise strategy, together with our ongoing efforts to streamline operations and prudently manage company assets. …I am optimistic in our continued ability to execute well.”

Informatica chairman and CEO Sohaib Abbasi: “Our results…demonstrate the operational discipline of the Informatica team to navigate the economic turmoil. We are well prepared to pursue our strategy and continue to focus on operating income in the quarters to come.”

Callidus Software president and CEO Leslie Stretch: “We entered 2008 with just over 20% of total revenues being of a recurring nature, and we exited the year with almost 40% of total revenues coming from the recurring category. I am also proud of the effort we made to streamline the business and bring operating expenses in line with our profitability goals.”

ShoreTel chief executive officer John W. Combs: “ShoreTel continues to build momentum with strong sequential international revenue growth and continued focus on developing innovative solutions that help our customers cut costs without compromising performance.”

VMWare president and chief executive officer Paul Maritz: “We are making solid progress on our three key initiatives to build on our virtualization leadership in the datacenter, the cloud and on the desktop. We are executing on our product roadmap, strengthening our ecosystem of partners, and bolstering our management team – both globally and operationally. VMware is well-prepared for the opportunities and challenges ahead.”

What can we learn from these businesses? A lot. No, I don’t expect these companies to disclose details of any draconian tactics they employed to hit their numbers. But all of the executives are signaling the sources of future success. Some of those signals include my favorite themes: strategic focus, execution excellence and optimism.

What New York Taught Me About Experience

By Bill Freedman

The recent “Miracle on the Hudson” reminds me that in many situations, there is no substitute for experience.

All of the individuals involved in saving lives on Thursday were skilled and experienced professionals. Captain Chesley B. Sullenberger is reported to be a 40 year veteran of the air. While I suspect most of the dispatchers, police, fire, port workers, ferry operators, and health providers, can’t match the Captain for years on the job, their training, experience and retraining resulted in a prompt and coordinated response to the accident. Kudos to all of the first responders for a job well done!

So much that I’ve heard about the accident to date focuses on the decision-making and heroism of Captain Sullenberger. For example, he made multiple split-second calculations and decisions about where and how to land the plane. His agile mind knew that that the chances for survival in a water landing were improved if the landing gear were closed and the wings remained attached to the fuselage after water impact. His commitment to passenger safety included taking proactive steps to ensure that everyone got out before he exited the plane.

Could a rookie pilot have gotten all this right? I don’t know. It is, however, refreshing to see a veteran perform as expected–and get the appropriate credit for his experience.

While I’m not tasked with public safety or life and death decisions, Captain Sullenberger made me reflect on some of my own decisions, especially those where experience was weighed against other criteria such as desire for something new, youthful charm or perceived cost savings from selecting a junior contributor.

All I can say is experience is on a strong uptick…

Listening to Linkbait

By Bill Freedman

Good ideas come in many shapes and sizes. The ideas that matter, however, are those that are actively evaluated and employed.

Linkbaiting, despite its unseemly name, is an idea that matters. It combines the economics of information on the Internet with the best practice of exceptional customer service. It’s Seth Godin meets Peter Drucker. It drives customers to your website with no variable cost. It quickly connects consumers with information.

Linkbaiting is the umbrella term for the range of techniques that attracts links to your Web site.  And while links of all kinds are the medium of the Web, linkbaiting draws a disproportionately large number of links without cash payment.  Linkbaiting matters because, when done effectively, it drives improvement in search engine ranking, web traffic and visitors.

Here are a few linkbaiting techniques that work (with examples and links to effective linkbait content):

One caution to linkbaiting novices: use linkbaiting for the long run. Getting someone to come to your site once, visit one page and leave disappointed does little for your business. Trick me once, shame on you. Trick me twice, shame on me.

What Optimists Do in 2009

By Bill Freedman

As an enterprise software entrepreneur, American, father, husband and optimist, here is where I’m directing my personal energies in 2009:

Innovate. There is no recession on innovation. Things like economic uncertainty, instability in our financial markets and the housing crisis are widely reported. These developments are clearly depressing but not under our immediate control. That is why I’m continuing to process the depressing information, but focusing my personal creativity, enthusiasm and industry on producing innovative products, services and solutions.

Participate in global and local communities. Web 2.0 has made the world smaller, which is great. Technology has made it easier to communicate, collaborate and transact business around the globe. We are all richer for these new connections. One of the unfortunate by-products of globalization is a “crowding out” of local activities, institutions and businesses. Global is good, but so is local. I’m participating in both spheres.

Contribute your abundance generously. The lessons of early economists remain true today. Specialize. Create value within your specialization. Trade your created value with others for personal and communal enrichment. What do you have in abundance today: time, skill, finances, ideas or something else. Figure out how to get your abundance into circulation.

Manage scarce resources carefully. Optimism isn’t blind. It’s pragmatic. In a recent San Francisco Chronicle interview Benchmark Capital partner Bill Gurley wisely stated, “in market downturns, frugality is not only a virtue, but also it could be the difference between survival and failure.” Understand what’s scarce. Cash savings, fossil fuels and the environment are under scrutiny in our household.

Improve education. Education is America’s greatest industry. Our universities are coveted around the world and our commitment to providing K-12 education to all residents is one of the greatest public policy practices in human history. Sadly, public education is in need of a strategic overhaul, increased funding, better public relations and increased participation from parents and communities. Every investment I’ve made in education has provided a spectacular economic return and has made me happy. I want the same for my children and everyone’s children.

Comments and contributions to this discussion on optimism are encouraged!

Back to Blogging

By Bill Freedman

Hello 2009. I’m welcoming in the new year by restarting my blogging here at Bill Freedman’s Soon To Be A Major Trend.

My heavy writing, mentoring and community building activities in other venues resulted in a bit of silence here. That’s changed now. You can once again look forward to reading about novel ideas on persuasion, business-to-business marketing, bootstrapping, and growing sustainable businesses right here.

I invite you to take a moment right now to add my RSS feed (https://www.showcasemarketing.com/ideablog/?feed=rss2) to your favorite personal start page, portal or news reader.

Would Your Recommend This Product to a Friend?

By Bill Freedman

Business consulting firms and academics are actively working to quantify the degree to which word of mouth advocacy drives revenue growth in industries ranging from mobile phone networks to automobiles to enterprise software.

Advocacy correlating with revenue growth seems like a reasonable assertion. Word of mouth recommendations should improve sales productivity and reduce the length of sales cycles, both of which improve revenue growth. Alternatively, “bad buzz” will drive potential buyers to seek alternatives. Bain & Company, Fred Reichheld and Satmetrix have jointly copyrighted the term “net promoter score” and formalized the statistical calculations of customer answers to the question “would you recommend this product/brand/company/stock to a friend.”

One recent study published in Brand Strategy confirmed the validity of the Net Promoter Score. Using large sample sizes across multiple industries in the UK, this study confirmed that the “Net Promoter Score” accurately predicts revenue growth (correlation coefficient of 0.484 and significance less than 0.01), and negative word of mouth correlates with reduced revenue growth (correlation coefficient of -0.524 and significance less than 0.01). Wow, that is good evidence…and it’s only one of many studies.

With repeated studies confirming the value behind the Net Promoter Score, it is worth thinking about monitoring this statistic and implementing programs that improve customer referral behavior. A few such programs include:

  • Referral rewards, ranging from service credits to hard cash for customer referrals
  • Free product trials, making it easy to progress from receiving a recommendation to experiencing the product
  • Anointing customers as brand ambassadors, this creates an emotional bond between the customer and your product. The savviest tech brands have made industries out of ambassador programs: Novel CNE and Microsoft MSCE are examples
  • And my personal favorite: having sales ask the question directly of their customers. If the answer is anything less than a yes, the reason needs to be tracked and managed.

Before you can manage your net promoter score, you need to establish a base line. So start asking your customers: would you recommend this product to a friend?