What Silicon Valley can learn from UPS
Silicon Valley startups have a strange aversion to meeting customers. Age-old business wisdom from UPS could help them break this bad habit.
By Owen Thomas, Business 2.0 Magazine online editor

SAN FRANCISCO (Business 2.0) - In Silicon Valley, the "build it and they will come" fantasy is alive and well.

Netscape cofounder Marc Andreessen, who's now working on a new company called Ning, captured the attitude of many startups when he said, "Ideally, we'll never meet any of our customers." After a customer located Ning's offices and dropped by for a visit, Andreessen said, the company took down the sign on its door.

And it's not just Andreessen who thinks that way. Admittedly, he's wealthy enough to ignore customers, but it's entirely commonplace for engineers to think that if they just build the best product they can, it will sell itself. After all, it worked for Netscape's browser and Google's (Research) search engine, right?

Technology won't sell itself

Those startup engineers could take a lesson from a 99-year-old company, however. Besides its armies of truck drivers, UPS (Research) has 4,700 IT personnel and spends $1 billion a year on technology. With such extensive offerings, it can't take for granted that its customers will simply stumble upon the new technology that it rolls out.

In the world of software as a service, switching to a new product doesn't require buying new equipment, going through a lengthy installation process, or training staff. All it requires is bookmarking a new website. It's a pure change of habit.

Indeed as UPS's vice president for customer technology marketing, Jordan Colletta's mandate as is to figure out new ways to help people use the technology and data UPS provides.

If you've ever looked up package-tracking information on UPS's website, you've gotten the barest glimmer of this part of UPS's business. UPS also makes software that shows customers all the packages they have getting shipped out and coming in; it connects up with finance and supply-chain software; it's even embedded into popular websites like eBay (Research) and desktop software like Intuit's (Research) QuickBooks.

Think of it this way: besides delivering packages, UPS delivers information about packages—and in many ways, says Colletta, that information might be more valuable than the packages themselves.

"People schedule work shifts against the information we provide them," says Colletta "They know when the goods are going to arrive, so they can put people right to work getting them on shelves."

Show customers what you've got

Figuring out how to turn tracking data into concrete business actions—like rescheduling work shifts around package-delivery times—is a tricky business, however. So UPS has about 520 e-commerce account managers who essentially work as consultants to UPS customers, helping them to figure out how they can use UPS's website, software, and other tech offerings to streamline their operations. (UPS doesn't charge for these services, says Colletta, because they invariably result in customers shipping more packages.)

Of course, UPS could take Marc Andreessen's approach at Ning, which provides online tools for building Web-based applications: Sit back and wait for your customers to come to your website and use your software. But that doesn't work when it comes to asking a customer to change the way he does business.

"You're ultimately talking about a change in habit," says Colletta, whether it's how a company's employees ship out packages, send out invoices, or track a supply chain. And changing a habit is easier to do with someone holding your hand.

Some of today's leading software-as-a-service businesses have already figured this out. Google, long known for its standoffish approach to customers and partners, has been aggressively expanding its advertising sales staff. And Salesforce.com (Research) is hiring dozens of account executives, business analysts, and "customer success managers" to sign up new customers and keep them happy.

While a customer could just as easily buy Google's text ads online with a credit card, or sign up for Salesforce.com's customer-relationship-management software over the Web—and to be sure, many do—Salesforce and Google are making sure that customers who need hand-holding get it.

And even Marc Andreessen might be getting a clue. After he said that he'd just as soon not meet with his customers, a group of Ning users decided to organize an outing to Ning's office. (Naturally, they used Ning's Web-based software to plan the visit.) Andreessen greeted them with cupcakes.

Cupcakes are a start. But some hands-on salespeople who can actually explain the value of your company's software? That would be the icing.


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