NetSuite showcased a number of customers at its user conference last week. What was interesting about these firms is that virtually all of them were experiencing a lot of growth in spite of the pandemic. Dig a little deeper and you would learn that the growth was attributable to a few common factors:
- Ability of the company to shift more of their business online (one company switched to 100% online commerce)
- Use of web analytic data, big data and other information (i.e., digital exhaust) that could inform the seller about the customers, competitors, supply chain and more
Before all of this was evident to the audience, NetSuite first had Shark Tank investor, Kevin O’Leary, on stage. O’Leary began his remarks by reviewing his investment portfolio pre- and post-pandemic. Several companies are no longer part of his portfolio today. The remaining firms were either web-based businesses to begin with or quickly shifted that way during the pandemic. Many of these firms not only succeeded in the pandemic and in the transition to online or omni-channel businesses but some blew past even O’Leary’s expectations.
O’Leary went on to show examples of these firms. One of these was Blueland, a home cleaning product solution that reduces customers reliance on plastics. That company shifted its from its original retail strategy to a direct-to-consumer model during the pandemic and has apparently grown quite well. Another investment was LovePop, a greeting card maker whose products all feature popup components and are available online. It, too, has enjoyed great success.
NetSuite showcased a number of its own customers with a similar case history. For example, I spoke with was Tom Altman of Clickstop. Clickstop has grown into a multi-entity holding company of sorts. It’s growth is materially due to its use of online marketing tools and data. The company started on NetSuite in 2009 when there were only 20 people in the firm and just a couple of million dollars in revenue. Now, the company employs 180 people and revenues have increased approximately 17X.
What most of these firms have in common is that they:
- Used data from Google Analytics and other sources to learn who bought what and how they got to this website (i.e., what referrals worked, what search terms were used, etc.)
- Married web, operational and financial data to determine where there were unexpected costs (or time delays) in raw materials, packaging, manufacturing, shipping or customer acquisition activities (e.g., found some overly large freight charges on some products)
- Mined analytic data across other similar customers and sales to determine what other products they should recommend for sale to customers
- Used data to recommend ancillary products and to learn what customers really want/like
- Studied big data to learn why and where competitors were succeeding online
- Used pricing algorithms and the shopping behavior of prospects to determine product pricing and which promotions to offer to entice (or grow) a sale
Getting back to O’Leary
I’ll give Kevin O’Leary a hat tip in that he let his investments do most of the talking. His keynote used video vignettes to tell most of the story with Kevin providing context. As he neared the end of his time, he mentioned several characteristics of the winners in his portfolio and in modern business today. He really likes firms and their leaders if they:
- Have answers to all kinds of omni-channel questions. He wasn’t kind as to the long-term prospects of firms who aren’t using the big data/the web-commerce driven data that is available (and available to competitors). From an investment perspective, he doesn’t seem to like companies that are stuck in old (think non-web) business models.
- Are able to switch business models. Just because a company started as a business-to-business or other business model doesn’t mean it must stay that way. Kevin likes investing in entrepreneurs who look to multiple business models (e.g., direct to consumer via online sales and web marketing, use of partner or retail channels, distributorships) including using the full-effect of a Shark Tank investor like himself.
- Really, really know their numbers. It’s clear that Kevin has no patience (or desire to invest in) firms whose founders don’t know their current revenues, revenue mix, planned revenues, margins, margins by channel/product, etc. I’d agree. Why fly blind when your competitors are seriously better prepared and way more knowledgeable?
More than CRM integration and business model change
Some of you might be thinking, “Brian, this sounds just like what CRM vendors have been pitching for years”. And you’d be right, to an extent. Beyond the tired 360-degree view of the customer mantra we all have been hearing, there are actually a lot of other changes in the NetSuite products that make firms more credible, nimble, etc. These include:
- a large-scale data warehouse to help store, analyze, etc. their massive amounts of data, especially data that originates outside of the usual boundaries of an ERP system
- new low-code/no code tools
- sophisticated but simple/fast integration technologies to help incorporate different kinds of data (e.g., images, non-structured data, etc.)
- a growing number of new, smart, pre-supplied analytics and dashboards (with more to come)
What’s really different is that:
- A lot of the integration work customers used to do to connect third-party tools, apps and data stores to their CRM has been simplified and is now part of single ERP solution
- NetSuite can integrate more kinds of data (and support more kinds of analytics) by integrating HR, operational, financial, external, dark and other big data into a single, suite-wide solution
This show (my first in almost two years) was quite interesting. There was a great choice of customers to hear from and these people may represent one of NetSuite’s greatest sales assets.
The growth stories and the all-new value opportunities from radically reimagined processes (and ERP) will be something I will cover in the next piece. But, as this piece indicates, big changes are already afoot and these drive a chasm in SMB/mid-market businesses.
There’s no reason that mid-sized firms shouldn’t have access to the kinds of tools and data that larger firms possess. The key stumbling block used to be the cost needed to acquire this technology and the complexity of the tools that powered such technologies. NetSuite’s solution appears to be a lower-cost and simpler capability set that should serve all manner of businesses. What mid-market firms needed were:
- easy to use and train AI/ML and RPA tools that don’t require an army of data scientists to setup and keep tuned
- low/no-code integration tools that eliminate the need for a large, expensive IT group
- access to non-ERP data to garner insights from unstructured, big and other data
- superb omni-channel capabilities that offer numerous business model options
And, with this, companies could operate across multiple business models and geographies.
Going forward, NetSuite will need to retool its marketing collateral, sales practices and more as this new technology will trigger new value propositions and new business opportunities for its customers. Future sales need to be about the all-new analytics, business insights and radically reimagined business processes and their new efficiencies.
That retooling will also affect NetSuite’s partners, too. If a partner is used to selling last decade’s functions and features, that partner needs some serious education asap. If that partner’s sales collateral is out of date, it will need care and feeding, too. But the biggest cost to an implementation partner may come from retooling their bench of service providers. In the future, these people will spend more time in ideating new processes, quantifying all new kinds of value and utilizing all manner of advanced technologies to produce client-specific insights. That is quite a different set of tasks for people who’ve been used to configuring tables and mapping data into slightly newer systems.
Bottom line: NetSuite is now providing a toolset for growth for its customers and partners. Will they run with it?