When and How to Create a Valuable Marketing Event

Azure CEO Summit
Snapshots from Azure’s 11th Annual CEO Summit

A key marketing tool for companies is to hold an event like a user’s conference or a topical forum to build relationships with their customers and partners, drive additional revenue and/or generate business development opportunities. Azure held its 11th annual CEO Summit last week, and as we’re getting great feedback on the success of the conference, I thought it might be helpful to dig deeply into what makes a conference effective. I will use the Azure event as the example but try to abstract rules and lessons to be learned, as I have been asked for my advice on this topic by other firms and companies.

Step 1. Have a clear set of objectives

For the Azure CEO Summit, our primary objectives are to help our portfolio companies connect with:

  1. Corporate and Business Development executives from relevant companies
  2. Potential investors (VCs and Family Offices)
  3. Investment banks so the companies are on the radar and can get invited to their conferences
  4. Debt providers for those that can use debt as part of their capital structure

A secondary objective of the conference is to build Azure’s brand thereby increasing our deal flow and helping existing and potential investors in Azure understand some of the value we bring to the table.

When I created a Wall Street tech conference in the late 90’s, the objectives were quite different. They still included brand building, but I also wanted our firm to own trading in tech stocks for that week, have our sell side analysts gain reputation and following, help our bankers expand their influence among public companies, and generate a profit for the firm at the same time. We didn’t charge directly for attending but monetized through attendees increasing use of our trading desk and more companies using our firm for investment banking.

When Fortune began creating conferences, their primary objective was to monetize their brand in a new way. This meant charging a hefty price for attending. If people were being asked to pay, the program had to be very strong, which they market quite effectively.

Conferences that have clear objectives, and focus the activities on those objectives, are the most successful.

Step 2. Determine invitees based on who will help achieve those objectives

For our Summit, most of the invitees are a direct fallout from the objectives listed above. If we want to help our portfolio companies connect with the above-mentioned constituencies, we need to invite both our portfolio CEOs and the right players from corporations, VCs, family offices, investment banks and debt providers. To help our brand, inviting our LPs and potential LPs is important. To insure the Summit is at the quality level needed to attract the right attendees we also target getting great speakers.  As suggested by my partners and Andrea Drager, Azure VP (and my collaborator on Soundbytes) we invited several non-Azure Canadian startups. In advance of the summit, we asked Canadian VCs to nominate candidates they thought would be interesting for us and we picked the best 6 to participate in the summit. This led to over 70 interesting companies nominated and added to our deal flow pipeline.

Step 3. Create a program that will attract target attendees to come

This is especially true in the first few years of a conference while you build its reputation. It’s important to realize that your target attendees have many conflicting pulls on their time. You won’t get them to attend just because you want them there! Driving attendance from the right people is a marketing exercise. The first step is understanding what would be attractive to them. In Azure’s case, they might not understand the benefit of meeting our portfolio companies, but they could be very attracted by the right keynotes.

Azure’s 2017 Summit Keynote Speakers: Mark Lavelle, CEO of Magento Commerce & Co-founder of Bill Me Later. Cameron Lester, Managing Director and Co-Head of Global Technology Investment Banking, Jeffries. Nagraj Kashyap, Corporate VP & Global Head, Microsoft Ventures.

Over the years we have had the heads of technology investment banking from Qatalyst, Morgan Stanley, Goldman, JP Morgan and Jeffries as one of our keynote speakers. From the corporate world, we also typically have a CEO, former CEO or chairman of notable companies like Microsoft, Veritas, Citrix, Concur and Audible as a second keynote. Added to these were CEOs of important startups like Stance and Magento and terrific technologists like the head of Microsoft Labs.

Finding the right balance of content, interaction and engagement is challenging, but it should be explicitly tied to meeting the core objectives of the conference.

Step 4. Make sure the program facilitates meeting your objectives

Since Azure’s primary objective is creating connections between our portfolio (and this year, the 6 Canadian companies) with the various other constituencies we invite, we start the day with speed dating one-on-ones of 10 minutes each. Each attendee participating in one-on-ones can be scheduled to meet up to 10 entities between 8:00AM and 9:40. Following that time, we schedule our first keynote.

In addition to participating in the one-on-ones, which start the day, 26 of our portfolio companies had speaking slots at the Summit, intermixed with three compelling keynote speakers. Company slots are scheduled between keynotes to maximize continued participation. This schedule takes us to about 5:00pm. We then invite the participants and additional VCs, lawyers and other important network connections to join us for dinner. The dinner increases everyone’s networking opportunity in a very relaxed environment.

These diverse types of interaction phases throughout the conference (one-on-ones, presentations, discussions, and networking) all facilitate a different type of connection between attendees, focused on maximizing the opportunity for our portfolio companies to build strong connections.

Azure Company Presentations
Azure Portfolio Company CEO Presentations: Chairish, Megabots & Atacama

Step 5. Market the program you create to the target attendees

I get invited to about 30 conferences each year plus another 20-30 events. It’s safe to assume that most of the invitees to the Azure conference get a similar (or greater) number of invitations. What this means is that it’s unlikely that people will attend if you send an invitation but then don’t effectively market the event (especially in the first few years). It is important to make sure every key invitee gets a personal call, email, or other message from an executive walking them through the agenda and highlighting the value to them (link to fortune could also go here). For the Azure event, we highlight the great speakers but also the value of meeting selected portfolio companies. Additionally, one of my partners or I connect with every attendee we want to do one-on-ones with portfolio companies to stress why this benefits them and to give them the chance to alter their one-on-one schedule. This year we managed over 320 such meetings.

When I created the first “Quattrone team” conference on Wall Street, we marketed it as an exclusive event to portfolio managers. While the information exchanged was all public, the portfolio managers still felt they would have an investment edge by being at a smaller event (and we knew the first year’s attendance would be relatively small) where all the important tech companies spoke and did one-on-one meetings. For user conferences, it can help to land a great speaker from one of your customers or from the industry. For example, if General Electric, Google, Microsoft or some similar important entity is a customer, getting them to speak will likely increase attendance. It also may help to have an industry guru as a speaker. If you have the budget, adding an entertainer or other star personality can also add to the attraction, as long as the core agenda is relevant to attendees.

Step 6. Decide on the metrics you will use to measure success

It is important to set targets for what you want to accomplish and then to measure whether you’ve achieved those targets. For Azure, the number of entities that attend (besides our portfolio), the number of one-on-one meetings and the number of follow-ups post the conference that emanate from one-on-one are three of the metrics we measure. One week after the conference, I already know that we had over 320 one-on-ones which, so far, has led to about 50 follow ups that we are aware of including three investments in our portfolio. We expect to learn of additional follow up meetings but this has already exceeded our targets.

Step 7. Make sure the value obtained from the conference exceeds its cost

It is easy to spend money but harder to make sure the benefit of that spend exceeds its cost. On one end of the spectrum, some conferences have profits as one of the objectives. But in many cases, the determination of success is not based on profits, but rather on meeting objectives at a reasonable cost. I’ve already discussed Azure’s objectives but most of you are not VCs. For those of you dealing with customers, your objectives can include:

  1. Signing new customers
  2. Reducing churn of existing customers
  3. Developing a better understanding of how to evolve your product
  4. Strong press pickup / PR opportunity

Spending money on a conference should always be compared to other uses of those marketing dollars. To the degree you can be efficient in managing it, the conference can become a solid way to utilize marketing dollars. Some of the things we do for the Azure conference to control cost which may apply to you include:

  1. Partnering with a technology company to host our conference instead of holding it at a hotel. This only works if there is value to your partner. Cost savings is about 60-70%.
  2. Making sure our keynotes are very relevant but are at no cost. You can succeed at this with keynotes from your customers and/or the industry. Cost savings is whatever you might have paid someone.
  3. Having the dinner for 150 people at my house. This has two benefits: it is a much better experience for those attending and the cost is about 70% less than having it at a venue.

Summary

I have focused on using the Azure CEO Summit as the primary example but the rules laid out apply in general. They not only will help you create a successful conference but following them means only holding it if its value to you exceeds its cost.

 

SoundBytes

The warriors…

Last June I wrote about why Kevin Durant should join the Warriors

If you look at that post, you’ll see that my logic appears to have been born out, as my main reason was that Durant was likely to win a championship and this would be very instrumental in helping his reputation/legacy.

Not mentioned in that post was the fact that he would also increase his enjoyment of playing, because playing with Curry, Thompson, Green and the rest of the Warriors is optimizing how the game should be played

Now it’s up to both Durant and Curry to agree to less than cap salaries so the core of the team can be kept intact for many years. If they do, and win multiple championships, they’ll probably increase endorsement revenue. But even without that offset my question is “How much is enough?” I believe one can survive nicely on $30-$32 million a year (Why not both agree to identical deals for 4 years, not two?). Trying for the maximum is an illusion that can be self-defeating. The difference will have zero impact on their lives, but will keep players like Iguodala and Livingston with the Warriors, which could have a very positive impact. I’m hoping they can also keep West, Pachulia and McGee as well.

It would also be nice if Durant and Curry got Thompson and Green to provide a handshake agreement that they would follow the Durant/Curry lead on this and sign for the same amount per year when their contracts came up. Or, if Thompson and Green can extend now, to do the extension at equal pay to what Curry and Durant make in the extension years. By having all four at the same salary at the end of the period, the Warriors would be making a powerful statement of how they feel about each other.

Amazon & Whole Foods…

Amazon’s announced acquisition of Whole Foods is very interesting. In a previous post, we predicted that Amazon would open physical stores. Our reasoning was that over 90% of retail revenue still occurs offline and Amazon would want to attack that. I had expected these to be Guide Stores (not carrying inventory but having samples of products). Clearly this acquisition shows that, at least in food, Amazon wants to go even further. I will discuss this in more detail in a future post.

Lessons Learned from Anti-Consumer Practices/Technologies in Tech and eCommerce

One example of the anti-consumer practices by airline loyalty programs.

As more and more of our life consists of interacting with technology, it is easier and easier to have our time on an iPhone, computer or game device become all consuming. The good news is that it is so easy for each of us to interact with colleagues, friends and relatives; to shop from anywhere; to access transportation on demand; and to find information on just about anything anytime. The bad news is that anyone can interact with us: marketers can more easily bombard us, scammers can find new and better ways to defraud us, and identity thieves can access our financials and more. When friends email us or post something on Facebook, there is an expectation that we will respond.  This leads to one of the less obvious negatives: marketers and friends may not consider whether what they send is relevant to us and can make us inefficient.

In this post, I want to focus on lessons entrepreneurs can learn from products and technologies that many of us use regularly but that have glaring inefficiencies in their design, or those that employ business practices that are anti-consumer. One of the overriding themes is that companies should try to adjust to each consumer’s preferences rather than force customers to do unwanted things. Some of our examples may sound like minor quibbles but customers have such high expectations that even small offenses can result in lost customers.

Lesson 1: Getting email marketing right

Frequency of email 

The question: “How often should I be emailing existing and prospective customers?” has an easy answer. It is: “As often as they want you to.”  If you email them too frequently the recipients may be turned off. If you send too few, you may be leaving money on the table. Today’s email marketing is still in a rudimentary stage but there are many products that will automatically adjust the frequency of emails based on open rates. Every company should use these. I have several companies that send me too many emails and I have either opted out of receiving them or only open them on rare occasions. In either case the marketer has not optimized their sales opportunity.

Relevance of email

Given the amount of data that companies have on each of us one would think that emails would be highly personalized around a customer’s preferences and product applicability. One thing to realize is that part of product applicability is understanding frequency of purchase of certain products and not sending a marketing email too soon for a product that your customer would be unlikely to be ready to buy. One Azure portfolio company, Filter Easy, offers a service for providing air filters. Filter Easy gives each customer a recommended replacement time from the manufacturer of their air conditioner. They then let the customer decide replacement frequency and the company only attempts to sell units based on this time table. Because of this attention to detail, Filter Easy has one of the lowest customer churn rates of any B to C company. In contrast to this, I receive marketing emails from the company I purchase my running shoes from within a week of buying new ones even though they should know my replacement cycle is about every 6 months unless there is a good sale (where I may buy ahead). I rarely open their emails now, but would open more and be a candidate for other products from them if they sent me fewer emails and thought more about which of their products was most relevant to me given what I buy and my purchase frequency. Even the vaunted Amazon has sent me emails to purchase a new Kindle within a week or so of my buying one, when the replacement cycle of a Kindle is about 3 years.

In an idea world, each customer or potential customer would receive emails uniquely crafted for them. An offer to a customer would be ranked by likely value based on the customer profile and item profile. For example, customers who only buy when items are on sale should be profiled that way and only sent emails when there is a sale. Open Road, another Azure company, has created a daily email of deeply discounted e-books and gets a very high open rate due to the relevance of their emails (but cuts frequency for subscribers whose open rates start declining).

Lesson 2: Learning from Best Practices of Others

I find it surprising when a company launches a new version of a software application without attempting to incorporate best practices of existing products. Remember Lotus 123? They refused to create a Windows version of their spreadsheet for a few years and instead developed one for OS/2 despite seeing Excel’s considerable functionality and ease of use sparking rapid adoption. By the time they created a Windows version, it was too late and they eventually saw their market share erode from a dominant position to a minimal level.  In more modern times, Apple helped Blackberry survive well past it’s expected funeral by failing to incorporate many of Blackberry’s strong email features into the iPhone. Even today, after many updates to mail, Apple still is missing such simple features like being able to hit a “B” to go to the bottom of my email stack on the iPhone. Instead, one needs to scroll down through hundreds of emails to get to the bottom if you want to process older emails first. This wastes lots of time. But Microsoft Outlook in some ways is even worse as it has failed to incorporate lookup technology from Blackberry (and now from Apple) that always allows finding an email address from a person’s name. When one has not received a recent email from a person in your contact list, and the person’s email address is not their name, outlook requires an exact email address. When this happens, I wind up looking it the person’s contact information on my phone!

Best practices extends beyond software products to marketing, packaging, upselling and more. For example, every ecommerce company should study Apple packaging to understand how a best in class branding company packages its products. Companies also have learned that in many cases they need to replicate Amazon by providing free shipping.

Lesson 3: The Customer is Usually Right

Make sure customer loyalty programs are positive for customers but affordable for the company

With few exceptions, companies should adopt a philosophy that is very customer-centric. Failing to do so has negative consequences. For example, the airline industry has moved towards giving customers little consideration and this results in many customers no longer having a preferred airline, instead looking for best price and/or most convenient scheduling. Whereas the mileage programs from airlines were once a very attractive way of retaining customers, the value of miles has eroded to such a degree that travelers have lost much of the benefit. This may have been necessary for the airlines as the liability associated with outstanding points reached billions of dollars. But, in addition, airlines began using points as a profit center by selling miles to credit cards at 1.5 cents per mile. Then, to make this a profitable sale, moved average redemption value to what I estimate to be about 1 cent per point. This leads to a concern of mine for consumers. Airlines are selling points at Kiosks and online for 3 cents per point, in effect charging 3 times their cash redemption value.

The lesson here is that if you decide to initiate a loyalty points program, make sure the benefits to the customer increase retention, driving additional revenue. But also make sure that the cost of the program does not exceed the additional revenue. (This may not have been the case for airlines when their mileage points were worth 3-4 cents per mile).  It is important to recognize the future cost associated with loyalty points at the time they are given out (based on their exchange value) as this lowers the gross margin of the transaction. We know of a company that failed to understand that the value of points awarded for a transaction so severely reduced the associated gross margin that it was nearly impossible for them to be profitable.

Make sure that customer service is very customer centric

During the Thanksgiving weekend I was buying a gift online and found that Best Buy had what I was looking for on sale. I filled out all the information to purchase the item, but when I went to the last step in the process, my order didn’t seem to be confirmed. I repeated the process and again had the same experience. So, I waited a few days to try again, but by then the sale was no longer valid. My assistant engaged in a chat session with their customer service to try to get them to honor the sale price, and this was refused (we think she was dealing with a bot but we’re not positive). After multiple chats, she was told that I could try going to one of their physical stores to see if they had it on sale (extremely unlikely). Instead I went to Amazon and bought a similar product at full price and decided to never buy from Best Buy’s online store again. I know from experience that Amazon would not behave that way and Azure tries to make sure none of our portfolio companies would either. Turning down what would still have been a profitable transaction and in the process losing a customer is not a formula for success! While there may be some lost revenue in satisfying a reasonable customer request the long term consequence of failing to do so usually will far outweigh this cost.

 

Soundbytes

My friend, Adam Lashinsky, from Fortune has just reported that an insurance company is now offering lower rates for drivers of Teslas who deploy Autopilot driver-assistance. Recall that Tesla was one of our stock picks for 2017 and this only reinforces our belief that the stock will continue to outperform.