NetworkIP Blog

Every time I walk into Starbucks I’m hit in the face with a new sales promotion. Howard Shultz & crew are doing all that they can to turn Starbucks around. If successful, their current promotion will have consumers visiting a Starbucks twice a day. The approach with this promotion is that if the consumer returns with their morning receipt after 2:00 PM, they will be offered any grande (that is a ‘medium’ for you folks that have yet to pick up on the Starbucks lingo) iced drink for $2.00 instead of the usual $3.50 & above price tag.

I can’t help but look at a promotion like this & imagine the benefits that Starbucks could achieve if they would simply use communication & transaction based technologies to market & manage this promotion. The problem is that too many companies perceive such an integration to either be impossible, or if possible then too expensive.

My morning coffee was paid for using my Starbucks credit card. Talk about a loyal Starbucks’ customer… I earn Starbucks points with all of my purchases instead of miles or cash back. Since Starbucks has already “signed me up” why not alert me of this promotion via text message or better yet with a phone call rather than catching me only after I’ve walked through their doors? It wasn’t until I purchased my coffee & then asked for my receipt that the clerk even notified me about the promotion. What if I wouldn’t have asked for my receipt? Would the clerk even have told me about the promotion?

Even if I do decide to return later today it is now my responsibility to remember the promotion & I’m also forced to keep track of my receipt for the rest of the day. With the use of communication & transaction based technologies I wouldn’t have to do either. Since I’m already a loyal customer & I’m using a Starbucks card I shouldn’t need to hang on to my receipt. My purchases could be tracked on-line & when I return later in the day my Starbucks card could be scanned to validate that I made a purchase earlier that morning. As for forcing me to remember the promotion, since Starbucks already has my mobile phone number I could be sent a text message or recieve a voice call around 1PM to remind me about the promotion. Both of these solutions could easily be enabled through the use of Jaduka’s Voice & Transaction Services APIs.

Again, it’s obvious that too many companies do not realize how easy & inexpensive it is to add these types of technologies to their applications & promotions. This is especially true for companies wishing to add voice.

The Public Switch Telephone Network (PSTN) for too long now has been inaccessible to companies that do not have huge telephony equipment or deep pockets. With Jaduka’s Voice API we have removed these barriers & we have made it easy & inexpensive to plug in to that telephony network. With our APIs you can make your applications & promotions heard.

I commented last week on how many businesses are turning to innovative telephony services such as conferencing to avoid the high costs associated with employee travel. Today while reading about Netflix’s second-quarter net income, which climbed 3.8%, I thought to myself “How did they do it?”

In the middle of googling for other reports about Netflix it hit me - technology is saving their business!

As the price of gas continues to rise, so do the cost of going to the movies. As a result, more consumers are staying at home to watch movies & many of them are renting those movies through Netflix. Unfortunately for Netflix, higher fuel prices are also driving up the costs to deliver movies to the consumer’s mailbox. Netflix’s margin is already pretty thin & those margins can be completely eaten up if you have a consumer base that is exchanging movies almost as fast as they get them. Netflix’s subscritpion model allows their users to exchange as many movies as he/she wants per month & their subscription fee stays the same. This model works very well for the consumer & until recently worked for Netflix too.

Rather than drastically changer their model & risk loosing existing subscribers, Netflix responded with an innovative solution using technology to their advantage. This new solution actually provides more to the consumer & cleverly works in Netflix’s advantage too!

First Netflix began offering a “Watch Instantly” option from their website. Users were allowed a certain amount of hours per month to watch streaming movies to their PC for free. Netflix realized very quickly that this feature resulted in the shipment of less movies to their consumers because they were watching more movies on-line. The costs for Netflix to offer live streaming videos versus mailing movies was significantly less & they quickly removed any maximum on the amount of viewing hours they offered to their users in hopes that the number of shipments required would continue to drop while usership would continue to rise.

Netflix also just announced a deal with Microsoft to stream movies directly to a user’s Xbox 360 game console. It obvious that Netflix is looking to offer their consumers as many options as possible to view movies as long as it doesn’t involve shipping that movie to the consumer. Again, the rationale being that as more users view their movies on-line, the less likely they are to order their movies through the mail & the net result is higher margins & ultimately more profits for Netflix.

Each day I imagine more things that companies can do with technologies to save their company time, money, & resources. One of my greatest pleasures at work is seeing so many companies actively taking advantages of the technologies that we & Jaduka have developed to save money & improve their business processes with communications.

A recent Cardbeat report from Auriemma Consulting Group reported that “contactless credit cards that allow cardholders to wave-&-pay at checkout terminals fitted with contactless technology sensors is not yet the smash-hit that industry leaders had expected.” The report also suggested that “consumers have indicated that contactless technology is not an easy sell. In light of the credit crunch, and increasing insecurity about the risk of identity theft, consumers need additional encouragement to acquire a new card – even if it features a compelling new technology.”

Other highlights from the report included that only 3% of the population is familiar with contactless technology & that 23% of consumers interviewed would not use contactless cards due to concerns with identity theft.

Like any new technology that is introduced, education about that technology is needed. Granted we do live in a digital age & IT gadgets are popping up everywhere; however, you can’t expect consumers to gravitate to your product if they don’t understand how to use it & more importantly if they are scared to use it.

Contactless payments offer a significant convenience factor for the consumer. Not only are they able to process their payments quicker, they are also able to reduce the amount of “stuff” that they have to carry with them on a daily basis. As this contactless payment solution finds its way to mobile phones — trust me, it’s coming — such a product will be even more attractive to the consumer.

I was in a big box office supply store a couple of weeks ago when I spotted a contactless payment setup at the check-out counter. I asked the clerk behind the counter how often customers use the contactless payment service. She said that in the 6-months that she worked at the store she has only had 2 to 3 customers use it & every time it’s been used something went wrong & she ended up manually typing in credit card information.

I know a bit about the solution that was deployed in this store & I doubt that the system wasn’t working. I believe it was the clerk (the retailer) that didn’t know what she was doing that was causing the problem. This example makes matters even worse. The consumer obviously had the education about the product & decided to adopt that product, but when clerks at stores for example don’t know anything about the product or how to support your product it does the consumer no good to use it. So not only is consumer education important, but education to those that are providing & servicing new products need to be educated.

Regardless of how great your product is & even if it does provide a solution to a problem, do *not* expect overnight success unless your market & the market distributing your product is well educated on the product you are offering.

In less than one month I’ve watched both Mozilla & Apple have record setting launch days while still experiencing all types of technical problems & causing end-users much frustration & hassle. It’s obvious from the amount & types of problems that were reported on each company’s launch day that neither company was prepared to handle the volume & capacity for that single day. I’m confident that both companies can handle a normal day’s volume just fine. However, both companies appear to have decided that it’s not worth the investment to ensure things work on high traffic volume days such as launch day.

In a previous post I commented on capacity planning & made reference to the failures that Mozilla experienced during “Download Day” for their Firefox 3 browser. As reported by GigaOm, Mozilla’s download site was down early that morning (June 17th) due to the high volume of traffic the website was experiencing. Despite Mozilla’s site being down, they actually did set the new Guinness World Record for the most downloaded software in a 24 hour period. In fact, 8,002,503 users downloaded Firefox 3 that day.

More recently Apple had a record setting launch day/weekend even though they too experienced significant outages & interruption of end-user services. This past Friday, July 11th, Apple released both its new 3G iPhone & its iPhone 2.0 software to existing iPhone owners. Throughout launch day customers across the world were unable to activate their new devices after the Apple servers could not cope with demand & did not allow users to download a new version of iTunes to support the phone activation. For those existing iPhone owners who were planning to update their iPhone software to the 2.0 version, they too experienced problems. NetworkIP’s very own PR guru Neil Vineberg was affected when he tried updating his iPhone software. He was so disappointed that he commented about it on his blog. Neil said, “My phone is dead. A brick. And you’d think that Apple would have had their act together after promoting this launch date for a month.” Despite all the frustrations, complications, & inconveniences that iPhone users experienced, Apple too had a record setting weekend. Apple sold one million 3G iPhones in just three days.

While some may agree with Mozilla & Apple’s approach of architecting for a normal day’s traffic volume it is something that as an organization that we do *not* allow for at NetworkIP. We plan & architect all of our solutions for the busiest days (our version of launch day) of the year; ours being Mother’s Day, Father’s Day, & New Year’s Day. We attribute much of our success to the fact that we *do* plan for the busiest days of the year — it’s one of the many things that separates us from our competition & has propelled us to the top spot in our industry.
 
As companies such as Mozilla & Apple are able to still have record setting launch days despite so many technical difficulties what’s to stop them & other companies from continuing to architect their platforms for only a normal day’s traffic volume? It’s obviously not fair to the consumer that these companies plan & architect in this fashion that they do, but if we continue to provide them record numbers why would they plan any other way?

It was almost eight months ago in Las Vegas at IBM’s Information On Demand global conference that we were awarded IBM’s 2007 Innovation Award for Best Informix Dynamic Solution (IDS). This award highlighted one of the key attributes of our ICS8 platform which is our ability to effectively process millions of database transactions daily. Prior to receiving this acknowledgement from IBM & being so highly recognized by the database community we didn’t fully understand what a powerful transaction processing solution we had developed. For us it was just part of the philosophy that we’ve been following since day one which has been to develop a solution that is highly efficient & scalable for whatever business need presents itself. Simply stated, we develop for the future today.

When we realized how many other companies had a need for such a highly effective & scalable transaction processing engine we decided to make this engine available for other companies to access through a simple web services API which we tailor to each company’s processing needs.

Companies that are developing new solutions, especially mobile & web based solutions don’t want to be responsible for managing the abundance of data attributes associated with their user accounts & the associated amount of data kept for each user’s transactions. Nor do these companies have the time, dollars, or knowledge to develop a transaction processing solution that can support millions of transactions without delay. These companies want to & need to focus on their products & deploying those products to market as quickly as possible. With us providing the Transaction Processing Engine, these businesses are now able to deploy their solutions in record times.