Marc’s Lemonade Stand 2017

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This year, I will reprise a blast from the past. Microsoft’s Lemonade stand. Possibly the only place where you will see screenshots of those early versions of Microsoft CRM.

For those unfamiliar with my annual review of Salesforce’s cash flow (here is last year’s), I take their cash flow, scaling all line entries relative to their revenue, which I set to $1 (the price of a glass of lemonade). To make the financials readable, I also convert the line entries to lemonade stand analogies.

Why is this interesting? Because while you can fake revenue and do non-GAAP acrobatics, cash flow never lies. If you want to see how a business runs, look at the cash flow.

The Numbers

2013

2014

2015

2016

2017

Sales of a Cup of Lemonade

$1.00

$1.00

$1.00

$1.00

$1.00

Cost of Ingredients From Corner Store

-$0.22

-$0.24

-$0.24

-$0.25

-$0.27

Taste Testing

-$0.14

-$0.15

-$0.15

-$0.14

-$0.14

Posters

-$0.53

-$0.53

-$0.51

-$0.49

-$0.47

Paying Sister to Make Lemonade and Sit on Stand

-$0.01

$0.00

$0.01

$0.02

$0.01

Bank Account Interest (minus fees)

$0.00

-$0.02

-$0.01

-$0.01

-$0.01

Overcharging/Undercharging

$0.00

$0.00

-$0.01

$0.00

$0.00

Uncle Sam Subsidizing/Taking a Free Lemonade

-$0.05

$0.03

-$0.01

-$0.02

$0.02

Selling sister a share of the business

$0.24

$0.19

$0.16

$0.16

$0.15

Lending Dad Money for Lemonades

-$0.06

-$0.10

-$0.10

-$0.09

-$0.07

Profit Share Paid to Sister

-$0.08

-$0.07

-$0.06

-$0.06

-$0.06

Money Put in Bank

$0.00

$0.03

$0.01

$0.01

$0.00

Money Owed to Corner Store

$0.06

-$0.01

$0.03

$0.04

$0.01

Loyalty Program

$0.16

$0.15

$0.15

$0.15

$0.14

Net Cash From Operating Activities

$0.36

$0.29

$0.27

$0.32

$0.30

Buying Out and Taking Over Other Lemonade Stands

-$0.19

-$0.65

-$0.03

-$0.11

-$0.38

Fixing up the Lemonade Stand

-$0.07

-$0.08

-$0.03

-$0.04

-$0.07

Comic Purchases and Sales

-$0.06

$0.13

-$0.08

-$0.09

$0.12

Net Cash From Investing Activities

-$0.32

-$0.61

-$0.14

-$0.24

-$0.33

Borrowing Money From Mom

$0.00

$0.33

-$0.10

-$0.04

$0.08

Net Cash From Financing Activities

$0.00

$0.33

-$0.10

-$0.04

$0.08

Cash Profit

$0.05

$0.01

$0.02

$0.04

$0.05

Generally I focus on the items which contribute 10c or more to cash flow.

Operating Activities

Traditionally, operating activities are business operations as opposed to investments (putting the money somewhere to make money) and financing (borrowing money) .

Cost of Ingredients From the Corner Store (Subscription and Support Costs)

Costs for the stand are the highest they have ever been at 27c and have been steadily increasing for about eight years. This is the first year that the ingredients (costs) have gone past 25c (25% of revenues).

It is hard to make ends meet when costs keep rising.

Taste Testing (Research and Development)

Taste Testing has been constant for about four years at 15c. In other words, Salesforce spends around 15% of revenues on research and development. This is similar to Microsoft’s 14%.

Posters (Marketing and Sales)

Marc spends a lot on posters. This year, 47% of revenues went to marketing and sales. For the dollar received for selling a lemonade, 47c goes to the printing of posters. However, this spending has reduced over the last five years.

This is where we see how far Salesforce departs from, say, Microsoft. Microsoft, by comparison, spends around 17% on Marketing and Sales. Even with the rate of reduction Salesforce have, they have a long way to go.

Selling Sister a Share of the Business (Expenses related to stock-based awards)

To prop up the sales of the lemonade, Marc selling shares in the business to his sister. His sister sees how much the business is growing and, not worrying about the profits, wants in on the action. Every year Marc prints off some more shares on the home printer and gives them to his sister in exchange for cash.

For every $1 in actual lemonade sales, Marc receives 15c in share income from his sister.

Loyalty Program (Deferred Revenue)

Salesforce receives a lot of money for services yet to be delivered. In short, they receive the subscription money up front, usually as part of an annual contract.  The contribution to the cash flow has been slowly reducing over the years and now sits at 14% of revenue. That is, for every dollar received for an actual lemonade, Marc receives 14c in loyalty coupon purchases.

Net Cash From Operating Activities

All of the above are the big ticket cash flow items for operating activities and the total cash into the business is 30c. One way to look at this is half of the cash coming into the business from business operations comes in from the sales of shares and the other half from the promise of future services with the one dollar handed over for the cup of lemonade covering ingredients, sales and marketing, and research. Salesforce is in the business of selling software but equally in the business of selling shares and selling the promise of future services..

Investing Activities

In the case of the lemonade stand, this covers the purchasing of rival stands (Business Combinations), repairs to the lemonade stands (Land activity and building improvements) and the buying and selling of comics to make some extra cash (Purchases of Marketable Securities).

Buying Out and Taking Over Other Lemonade Stands (Business Combinations)

Marc has been busy acquiring with 38% of this year’s revenue going towards it, literally more than triple the value from last year. In fact the big purchase was Demandware which Salesforce bought for $2.8b in cash; around 87% of the acquisition cash. Demandware is a cloud-based e-commerce platform so it aligns well to Salesforce’s other offerings.

Comic Purchases and Sales (Purchases of Marketable Securities)

Marc sold off some of the comic collection this year bringing in 12c for every dollar of lemonade sold. Marketable securities have taken a lot more money than they have earned Marc over the years. The two years where they have brought money into the business are 2014 and 2017. Every year other than these, since 2003, have taken money out of the business. This either means there are a lot of valuable comics sitting in Marc’s basement or he keeps purchasing because the old ones are junk.

Net Cash From Investing Activities

Overall, investing activities took 33c out of the business, despite the comic sales. So, overall, operating and investing activities meant 3c left the business whenever a lemonade sold. Let us turn to the final source of cash, financing activities.

Financing Activities

Financing activities are the borrowing of money to finance the business (it could be argued that Marc selling shares to his sister is a financing activity but traditionally it is considered an operating activity. In our case, the only line item is borrowing money from mom (Proceeds from borrowing on convertible debt). To cover the 3c shortfall from the other two areas, Marc borrowed 8c for every dollar of sale from mom meaning the cash flow into the business overall was 5c.

If we did bundle the selling of shares, the borrowing of money from mom, and the loyalty program (which is, effectively borrowing from customers) we would have the following:

  • Selling of lemonade (operating activities excluding share selling and loyalty program): 1c per lemonade coming into the business
  • Comics and stall acquisitions (investing activities): 33c per lemonade out of the business
  • Borrowing from mom, sister and customers (financing activities): 37c into the business

For every lemonade sold by Marc for one dollar, he receives 1c back, after all costs are accounted for. Borrowing allows Marc to maintain his stands, buy some comics and additional stands but to finance this he borrows from mom, his sister and the customers themselves. If any one of those sources of financing stopped, Salesforce’s cash flow would be negative. So it is fair to say Salesforce is being sustained through borrowed money and is not self-sustaining with its current activities.

Even if Marc stopped buying comics and stands, maintenance of the existing stands runs at seven cents per lemonade which still requires financing to cover. The obvious way for Marc to make the lemonade stands sustainable is to print less posters and bring marketing and sales into line with the rest of the industry. To date, Marc has been more focussed on market share than sustainability.

Conclusions

Another year and Marc is still borrowing to stay in business. With marketing and sales costs as high as they are, I cannot see this changing in the short/medium term. For me, this is the source of the problem for Salesforce and, even at the current rates of reduction, will not be under control for at least 15 years. This is a long time for his sister (the share market) to hold faith in Marc’s vision. This becomes even harder when Forrester is now suggesting Microsoft’s lemonade is better.

My Favorite Parts of Dynamics 365 v9

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In the old days, mid-year releases for Dynamics CRM were the little ones. A few nice online-only features, perhaps, but little else. The big release came at the end of the year, synchronizing Dynamics CRM Online with On-Premise.

On-Premise is not such a big deal any more. Most companies have embraced the cloud in one way or another and the days of companies having an air-conditioned room full of racks of tin are fading away.

As the focus moved away from On-Premise support, so too the release cadence of Dynamics 365 evolved. In fact, the Dynamics Roadmap no longer speaks in terms of Online and On-Premise but rather it speaks almost exclusively about the two online versions of Dynamics CRM: Enterprise and Business.

The idea of an Enterprise and Business edition of Dynamics 365 is a relatively new concept but it is being pushed hard in the upcoming release (v9). In fact a lot of things are being pushed in this release. Microsoft have touted it as the “Biggest Release Ever”. While I dispute it rivals the v2011 release or the v4 release before it, it does come close and, given the product team have had six months since the last release, that is pretty impressive.

While many of my fellow bloggers are tackling v9, I thought I would also lend my voice highlighting some of the parts which exciting and where the product is going.

Business vs Enterprise

Let us tackle the big shift first of all. This shift started in the December Release, arguably before it was fully fleshed out, but it is now the way forward with Dynamics 365. In essence, the Dynamics CRM we all know and love is the Enterprise edition. If you want to code, have sandboxes, create custom security roles, and use modules like Field Service and Project Service Automation, Enterprise is for you.

For businesses with simpler needs (and less than 300 users) there is now the Business edition. This is restricted in terms of what can be changed, and has a simplified form editor, but comes packed with features such as an incredible marketing module to rival ClickDimensions (or to give pause at least). Alas, the Marketing offering will not be released in Australia initially which makes the Business edition less compelling down under.

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In my opinion, most companies will jump straight to Enterprise. While the Business edition is a solid offering, very few companies have completely standard processes. Even though Business does have some configuration wiggle room, Enterprise is the xRM platform we are used to and the platform most partners will continue to recommend.

A Shift in Architecture

Firstly, the Outlook Client for Microsoft Dynamics CRM is officially deprecated. In other words, if you want Outlook to talk to Dynamics 365, the Outlook App is the way to go, not the Outlook client. This decision has me conflicted. On one hand, the features of the Outlook client ran rings around its competitors, such as Salesforce. Moving towards the Outlook App puts the two products roughly on par in terms of Outlook integration. However, being a VSTO add-on for Outlook meant the Outlook client was not the most stable of products. At least a couple of projects I worked on in the past were compromised by the Outlook client and its instability.

The next shift in Dynamics 365 is the move to make it a true xRM platform. Traditionally, Dynamics CRM has shipped with three modules hard-wired into the platform: sales, marketing, and service. Microsoft have started to replace the hard wired functionality with developed code, such as plugins. In doing this they get a lot more flexibility in turning modules on and off in the platform and, as developers, we get a lot more flexibility in modifying the software’s behavior.

Back when he was an MVP, Shan McArthur (owner of ADXStudios, now Microsoft’s CRM Portals) was a vocal advocate for removing hard-coded functionality from the platform. Now that he is working for Microsoft, I suspect he is driving this change from the inside.

Finally, the user interface is changing to one interface to rule them all. Goodbye  Interactive Service Hub and MoCA and hello Unified Interface with offline capabilities. At this stage it appears that the Unified Interface will be for the Business edition but I expect it will become the new standard everywhere in the near future.

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Achieving Adequacy

Historically, Microsoft has been about the ‘wow’ factors in their releases; the things to bring in new customers. While the existing customers may have frustrations, in my opinion, these always came second. However, things may be changing. There are some new features which are little more than long-requested fixes. A good example of this is the new multi-select option set. So often in CRM workshops I face a look of unadulterated shock as I explain Dynamics CRM does not have multi-select option sets and we must fill a form with tick boxes. No more.

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Similarly, the Social Pane, brought in to replace the Activity grid of older versions, has been reworked and now allows for configuration. You can select the fields displayed and which Activity Types are visible. Finally, the email screen now has an actual html editor so proper html emails can be created without the “pasting and praying” of the past.

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My Delights

There are a couple of real delights for me in this release.

Buttons in Business Process Flow

We can now add buttons to the Flow Bar and trigger workflows and actions. This seems like a small thing but allows for even more flexibility in Process Flows. In many cases, the best way to manage a business process in CRM is through the Business Process Flow. Adding buttons for actions means even more processes fall within its scope.

Virtual Entities

For me, this is a huge innovation. In short, using a query to another data source, like an ODBC query, this data source can be surfaced in CRM as if it was a real entity with real records. When CRM needs to integrate with third party data, this offers a way to present the third party data within CRM without data transfers and keeping data up to date.

I have worked on a couple of projects where very large amounts of data needed to come into CRM and be regularly updated. The limitations of the data pipe into CRM made the requirement impossible at the time. Virtual entities resolves this.

Conclusions

There is a lot in this release and the direction of Dynamics 365 is changing, in my opinion, for the better. There is no official release date yet for v9 but when it does come out I truly believe it will be the biggest release since v2011.

Note: Thank you to Jukka Niiranen’s excellent three days of briefing posts on LinkedIn for the pictures.

Salesforce: The Empire Strikes Back

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EmpireBenioff

Well that is probably overstating it but the Salesforce is out of balance and seeking to change their fate (yes, this blog will be full of dodgy Star Wars references and feel free to play a drinking game of taking a shot for every reference you recognise). Last month I reviewed the end of year results for Salesforce and suggested it was the end of hope. But, perhaps, there is A New Hope (see what I did there?) for Salesforce.

We have not entered a world off of our existing star maps, Salesforce is still selling 10 credit notes for 9 credits but the financial signals are mixed. Let us begin the process of gathering intelligence on The Empire.

Intercepting Quarterly Transmissions

Why LinkedIn Could Help Microsoft Beat Salesforce in the CRM Space

An interesting piece speaking at the CRM industry as a whole and the relative market share of the players within it.

Using Salesforce to access SAP? Pour yourself a stiff drink

An grey area which, in truth, affects most enterprise software architectures where integration between systems is required. The results of these cases have the potential for big impacts in the industry. Ironically, in raising the licence cost of integration, SAP have effectively lowered the barrier of exit for their product, giving incentive for companies to switch to a more integration-friendly system.

Salesforce Goes Net Zero Decades Early, Strives for 100% Renewable Energy

Reading the article there seems to be a bit of double-speak about how this was achieved, or is being achieved, but with data centers being as energy intensive as they are, Salesforce’s focus on doing the right thing is admirable.

The (Stock) Power of the Dark Side

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Salesforce’s stock price for the three months up until the end of May. Nothing too interesting here with the price increasing from the low eighties to the high eighties. The quarterly announcement came out on May 18 with the peak at the end of the graph reflecting a positive response from the stock market.

The Manipulations of the Emperor (Insider Trades)

2017 Q1

2017 Q2

2017 Q3

2017 Q4

2018 Q1

Insider Sales

4.80%

4.80%

4.70%

4.70%

4.60%

Institutional Sales

5.75%

5.68%

5.58%

5.49%

5.45%

Clearly the percentage of sales is decreasing slowly over time but, to be clear, there are zero purchases by the insiders. In the last six months, executives at Salesforce have sold over two million shares but have purchased zero. Why would executives who talk endlessly about how their business is going from strength to strength be systematically selling out?

If you are considering buying Salesforce shares on the back of Benioff’s moon-sized personality, while he is charming to the last, ask yourself, who’s the more foolish? The fool or the fool who follows him?

The Progress of The Empire (Numbers of Note)

The Mixed Signals of Revenue and Cost

Let us look at the quarterly growth of revenues and costs. This is the imbalance I referred to at the start of this Lucas love-in.

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In any business we want revenue growth to outpace cost growth, so our margins improve. This quarter this has happened. Revenue growth is at 4% (although the lowest in two years) while cost growth is at 3%. Sure enough margins have improved going from –2.2% to –0.3% margin (yes, Salesforce continues to make a loss).

There is another pattern here which is difficult to explain. For the most recent three years (12 quarters in total), cost growth alternates between increasing and decreasing every quarter. In other words, cost growth slows in the first and third quarters and accelerates in the second and fourth, up, down, up, down etc. Revenue fluctuations are not correlated, which also surprises me.

Now let us consider the year on year graph.

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While the graph is smoother and the periods of margin improvement and erosion can be easily seen (margin growth up to 2011 Q1, deterioration between 2011 Q1 and 2015 Q1, growth until 2017 Q1 and now deterioration again), the counter signal comes from where the graph ends. While the quarter on quarter growth has revenue above costs, not only does the yearly graph have it the other way around, but the gap is widening. In fact it is the widest it has been in three years, since the last period of ‘dark times’.

Does this mean the long term margin prospect is poor but the short term good? What will happen to bring balance to the Salesforce? Let us look elsewhere for clues.

“Your Eyes Can Deceive You; Don’t Trust Them” (GAAP vs Non-GAAP)

Moving to the transcript, it is still all about Non-GAAP results with seven Non-GAAP mentions and zero GAAP results.

SevenSith

Interestingly, the quarterly results from the Salesforce page has this quote from our favorite middle-aged white guy in a black suit, Marc Benioff.

“With our outstanding first quarter results, we are thrilled to be raising our fiscal 2018 revenue guidance by $100 million and raising our GAAP and non-GAAP earnings per share expectations for the year”

Why is he mentioning “GAAP”? Well, it was a long time ago in a quarterly report far, far away that Salesforce could predict an actual yearly profit (six years, actually). However, for the next financial year, Marc is predicting earnings per share of between 6c and 8c GAAP!

What this means is, in the next few quarters, we should see an increase in GAAP mentions and the usual “As a reminder, our commentary today will primarily be in non-GAAP terms.” which precedes every quarterly transcript, will slowly fade like a dying Yoda.

“IT’S A (word) TRAP.” (Buzz-word Bingo)

OK, I admit it. I was struggling with the title on that one.

2017 Q1

2017 Q2

2017 Q3

2017 Q4

2018 Q1

Number of words

1997

2511

2505

3317

3278

Customers/Customer

27

17

20

26

28

Revenue

10

19

18

31

28

Cloud

6

16

12

14

22

Growth

7

9

10

15

16

Operating

8

6

3

18

11

Salesforce/Salesforce’s

20

18

40

crm

15

An insane amount of mentions of Salesforce (double the last couple of transcripts) and we have the usual mentions of Customers, Revenue, and Cloud. The interesting new addition is ‘crm’ with 15 mentions. Salesforce has been trying to shake off the CRM tag for years, given their ever expanding offering, so it is unusual that we have a Return of the Acronym.

There is a decrease in the mention of the word ‘Operating’, usually in the context of ‘Operating Cash Flow’ (where we see a significant part of the business of Salesforce is selling shares to its employees) or ‘Non-GAAP Operating Margin’. This could be part of the transition of moving to GAAP accounting for the transcripts but this will be more evident as time goes on.

Visions of the Future

Last month, as I was late in writing my report, I did not bring my Jedi powers to bare on the fortunes of Salesforce. However, my vision for the next quarter is a revenue of $2.5b and a break even/small loss for the profit. Beyond that, impossible to see, the future is.

Conclusions

Salesforce appear to be at a turning point in their fortunes and signalling this is a new day, a new beginning. If they stay on target, they will start turning a real profit. Unfortunately, I have seen this optimism before. Salesforce need to stop printing money through shares and get their house in order in regards to revenues and costs. They need to stop dealing with the vague and unconvincing Non-GAAP numbers and embrace a different path, otherwise they may choke on their aspirations.

In my experience, there is no such thing as luck and it is your focus that determines your reality. Others may find my lack of faith disturbing and suggest I should let go of my hate because a fear of (financial) loss is a path to the dark side.

I welcome the next episode in this saga and thank you for playing.

CRM Crime Files: Etsy

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If you are subscribed to my Twitter feed (@leontribe) you will have seen a bit of dialogue with @EtsyHelp over the last week. While a little off-topic from my usual Tweets, it is related to CRM and Customer Experience as it is a great example of how NOT to set up your customer service function.

Etsy_Crime_File

My Etsy Shop

About a month ago I set up an Etsy shop (https://www.etsy.com/shop/PocketWatchPillBox) to sell pillboxes which I make by converting pocket watches. Doing this to an antique pocket watch would be a crime against nostalgia so I purchase new pocket watches and convert these instead. Embracing the way of the Etsy, I also let the buyer choose the color of the felt which lines the inside of the pill box (40 colors to choose from).

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The fronts have fun designs and there are literally hundreds of designs I can source.

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Things were going well with sales in the USA and here in Australia.

Nico Closes Down My Shop

Imagine my surprise when I received an email on Tuesday morning from Nico from Etsy Integrity telling me my shop had been closed.

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This was the first email I had received regarding the matter. From a customer relationship perspective it is not great. I am not addressed by name, the specific issue which had my shop closed is not mentioned and the end of the email is basically a threat.

There was no mention of a process for appeal and, given I considered my shop as a poster child for Etsy, I replied to Nico explaining how I upcycle pocket watches and convert them to pill boxes.

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This was sent Tuesday morning and I thought the matter would be settled relatively quickly. Unfortunately I heard nothing until 2am that night.

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Nico had identified the supplier of my pocket watches and, as the outside was untouched by the conversion process, I was using the supplier’s stock photo because they looked great. For the interiors I shot my own pictures.

Again, Nico had failed to address me by name and had completely ignored my reply explaining what I actually do. The handmade policy for Etsy does allow for upcycling, which is what I do, so I was very confused. I replied to Nico with some before and after photos and provided my phone number but felt the conversation was going nowhere slowly and, given he responded once every 24 hours, I needed an alternative approach. In fact, this was the last I heard from Nico.

My theory is Nico is, in fact, not a human but an automated service to weed out commercial resellers by using a Google Image-like service to match Etsy pictures to supplier stock images. This explains the impersonal tone, template structure, and lack of engagement.

Calling Etsy

The obvious option was to call Etsy and sort it out. Googling Etsy yielded a phone number but calling it led to a recorded message saying they do not take incoming calls and to request a call online. Armed with this knowledge, I found the KB article for requesting a call (https://www.etsy.com/au/help/article/4872). According to the article, the process is:

1.) Sign in to your account and go to Etsy’s contact page.

2.) Choose What can we help you with? and any other topics that are relevant to your issue.

3.) Click Request a Phone Call to get to the request form. 

4.) Provide your name, phone number, and a brief description of your issue.

The problem is, the “Request a Phone Call” option/button does not exist. There is no way for request a phone call through their page. Etsy provide no way to talk to an actual person whether you are a seller or buyer.

Other Social Channels

I thought the Etsy Facebook page may be the way to go but, unfortunately I was unable to initiate a request or post to their wall. Finally I thought I would tweet @EtsyHelp to see if they could assist.

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To their credit, @EtsyHelp replied within minutes.

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I sent a couple of direct messages to Ann and waited. Eventually, 12 hours later, Cale replied.

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Fantastic! It had been a bit slow in coming but someone would be in contact ‘soon’. I replied, thanking him and providing my home and mobile number in the hope someone would call. It was 10:30pm on a school night but I was determined to stay up so I could have an email conversation with the Specialist and put the matter to bed.

Charlie to the Rescue

At midnight I got an email from Charlie telling me precisely what I needed to do to get my shop back online. Again, Charlie failed to address me by name in the email, and the content was templated but I did not care. Charlie ended the email with:

“Once I hear back from you with this information, I’ll review it and promptly get back to you. I understand that your Etsy shop is your business, and I intend to make this process as quick and smooth as possible.

Please let me know if you have any questions or concerns about this process. I look forward to learning more about your creative business.”

In short I needed to document my creation process in words and pictures so Etsy could assess I was not simply reselling.

I leapt into action taking photos and documenting the process for converting a timepiece into a medicine cabinet. An hour and a half later (1:30am on Thursday morning) I had compiled all the information requested and sent it through.

Again, I stayed up in case Charlie needed any more information. At around 5am I gave up on Charlie replying and went to bed. I waited up the next night and still nothing. At around 5am on Friday morning (27 hours on from when I sent the email) I was coming to the conclusion Charlie was another bot like Nico.

Etsy Gets a Kick Up the Bum

Knowing the weekend was fast approaching I figured I needed to try and get things moving. So I launched a multi-channel blast. I replied to Charlie via email, Tweeted @EtsyHelp.

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and I also sent the documentation via the Etsy online support form.

My thinking was if Etsy had any sort of case management system my requests would hit the system as individual cases and one of them would get picked up for processing.

Again, the responsive @EtsyHelp responded about an hour later (I received no response from Charlie and only the auto-acknowledgement from the online web form).

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Armed with this knowledge I went to bed for a couple of hours and went to work knowing I would be pulling a late one again the following night.

Etsy Gets Another Kick Up the Bum

It was now very early Saturday morning. At 2am, over 48 hours later, I again blasted all channels, resending my documentation.

Again, it was Ann from @EtsyHelp who responded about an hour later.

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Seeing if I should go to bed or not, I asked if I should wait up.

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Et tu, @EtsyHelp? The 48 hours had already passed and I knew the call request option was a dud. With sleep deprivation kicking in, I concluded it was time to add another channel to the blast, trust@etsy.com. I was not exactly sure what the difference between integrity@etsy.com, support@etsy.com, and trust@etsy.com was but I figured another ticket in the system could not hurt.

Charlie Comes Online

15 minutes later, at 4:44am on Saturday morning, Charlie got back to me. Whether it was the email to Trust, the escalations by Ann or simply that Charlie had been away the day before I will never know.

“Hello,

Thanks for taking the time to send me this information about your Handmade process. I was happy to learn more about how your items are made. I am approving you to sell your customized pocket watches. 

Your account privileges have been restored, and I’m updating your account internally with the information that you provided. Below, I have outlined some changes that we will require that you make to your listings. Please take the next 5 days to make these updates, failure to do so within this timeframe may result in the suspension of your account.”

Again, Charlie had failed to address me by name but he had restored my shop so, as far as I was concerned he could call me pretty much whatever he wanted to. I responded, expressing my thanks.

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The changes were the use of my supplier’s stock photographs (which, I assume had triggered Nico the Wonder Bot). Charlie gave me a link to an Etsy policy which states stock photography cannot be used, a policy I was unaware of. Within 24 hours all stock photographs were removed. An hour later I received a new order for a pill box.

My shop had been down for five days but, after a lot of work,and little sleep, it was back up.

Advice to People Seeking Support From Etsy

There are a few things I have learned from this process:

  • Etsy’s heart is in the right place. Etsy take the quality of their shops seriously and really dislike commercial resellers
  • Etsy, unfortunately, is more focussed on customer service cost than on customer service excellence and the points they gain from maintaining shop quality are lost in frustrated customers seeking support
  • Etsy employ automated/semi-automated processes to remove resellers from their site so it pays to ask for help across multiple channels to ensure you are not being ignored by a robot

If you are trying to get a response out of Etsy Support, understand that everywhere except the USA is serviced out of Ireland and it is not a 24 hour call center. There was a five hour window when Support sent me emails (midnight to 5am local time) and usually it was one email per night. Outside of this pattern they were as silent as the grave.

If you want someone to reply to you, your next best option is Twitter’s @EtsyHelp. As Cale admitted, they cannot action a request but they can push it through to Support. Also, through other communication with them during this saga, they also confirmed they can see the responses Support issue regarding active cases.

There is NO phone channel for Etsy, inbound or outbound (certainly not for Australia) so forget it. @EtsyHelp will keep you sane while you wait for Support/Integrity to get back to you but you will NEVER hear the human voice of Etsy.

Finally, never get angry. There were plenty of times when Etsy messed me about but, they held all the cards. They had all the power and being rude would not give them any additional motivation to assist me. Also, many of the people we interact with in call centers are acutely aware of our frustrations but are powerless to change it.  Be respectful and if they do not escalate, take it upon yourself to escalate for them by reaching out to different channels.

As an extreme example, towards the end, I was doing internet searches for the email addresses of Etsy’s board executives (which would be pretty easy to guess) so I could email them as an escalation point. Another option would be using one’s LinkedIn network to pull in a favor. Thankfully I did not need to in the end.

Advice to Etsy

It is admirable that you are passionate about the quality of your shops but your customer service processes are woeful. Consider embracing channels customers actually want to use, rather than the ones which cost the least and provide the minimum viable support.

Telephone support would be useful and I genuinely believe a problem that took five days to resolve could have been resolved in less than 24 hours. Also, while other channels may cost less on paper, as is evidenced by this blog, when you have Ann, Nico, Charlie and Cale all working on one case, things get expensive, very quickly.

Even if telephone support is not practical, offering support which actually does something for more than five hours per day would be handy. Web chat or even eating your own dog food and embracing the conversation system set up for buyers and sellers within the Etsy platform may be useful.

Finally, stop setting poor expectations. A big part of my frustration through this process was Etsy telling me things which were simply wrong. Behavior such as being directed to the fictitious process for requesting a phone call, or being told my request would be actioned ‘soon’ and then waiting more than 48 hours cannot be justified. If there are response times which Etsy expect to meet, put in escalation systems for when these are violated. If you only provide global support for five hours in the day and only send one email per day per case, make this known and then people can sleep.

Conclusions

Now the saga is over I am really happy Etsy re-opened my store. Etsy make it very easy to have an online shop and the nature of my product make it an ideal fit. However, with Amazon launching ‘Handmade’, Etsy is no longer the only global handcraft sale site online.

History shows us that today’s go-to site is tomorrow’s archive.org entry. If Etsy is to maintain their dominance they need to manage the relationship they have with all stakeholders in their ecosystem and respect what they value. Having the least commercial resellers but the worst customer service does not do this. Given my shop’s success is predicated on Etsy’s success I really do not want to see this happen.

Salesforce: End of Year, End of Hope

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I am a bit behind in my Salesforce analysis due to recent distracting events so it is time to catch up. I did the actual analysis a while ago but neglected to write it up, so here it is. I have purposely ignored the more recent first quarter results, put out a few days ago, to minimise my bias in reviewing these. I will review these next month.

Alas, Salesforce continues to lose money and their financial situation worsened slightly this quarter. No doubt Marc will be hailing it as the best quarter ever but numbers do not lie.

The Late News

So what did Salesforce get up to in their last financial quarter?

Why Microsoft Beat Salesforce to Acquire LinkedIn

Salesforce Joins Apple and Google in Protesting Trump’s Anti-Transgender Order

Salesforce Opens Engineering Office in Microsoft’s and Amazon’s Backyards

Old Money and Stocks

How did Salesforce fare in the markets up to the end of February?

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We can see that while, in the previous quarter, Salesforce sank into the sixties, the stock price did bounce back to the low eighties (and now sits around the mid-eighties). The biggest jump occurred at the end of 2016. I have no idea why.

Insider Trades

Fortunately, I recorded the Insider Trades when I did my analysis so I have the numbers.

 

2016 Q4

2017 Q1

2017 Q2

2017 Q3

2017 Q4

Insider Sales

4.90%

4.80%

4.80%

4.70%

4.70%

Institutional Sales

5.87%

5.75%

5.68%

5.58%

5.49%

Shares Held by all insider and 5% owners

       

6.27%

As we can see, every quarter ‘insiders’ (such as those on the board, the CEO etc.) sell a bit less than 5% of their holdings every quarter. Institutions (banks, pension funds etc.) are also selling out at a slightly higher rate each quarter.

Yahoo also gave us a new statistic for the end of year of the total shares held by the insiders. The likes of Marc Benioff and all his board buddies hold little more than 6% of the total stock of the company. Every quarter these people say how well Salesforce is doing and yet they own so little of the stock. We know they are constantly selling stock but, perhaps, they are receiving free stock and therefore keeping their ownership stable. This new value will tell us over time.

Numbers of Note

Flattening Transaction Growth

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The number of server transactions is still growing but the rate of growth has flattened to around 25% year on year.

It is interesting that revenue is now at a similar growth rate.

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As I have mentioned before, while revenue growth has remained around 25% year on year every quarter for the last two years, transaction growth used to be a lot larger. In my mind, these two should go in lock-step; as new users come on board, transactions go up and revenues increase. I am keen to see if this will finally start to happen.

Salesforce is Too Costly

As we can see above, the cost of making Salesforce is growing faster than the money it can be sold for. This means the profitability of Salesforce will continue to deteriorate. The moving averages have also crossed now, confirming the worrying trend.

In fact, if we look at the cost growth, it is the highest it has been for over two years; Marc is falling into bad habits again.

More Money Printing

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The growth of stock-based expense, the paying of employees in shares is growing at a higher rate than it has in the last four years. I will explore this more, in the future, when I do this year’s Lemonade Stand analysis but Salesforce is yet again getting drunk on printing their own money via shares.

The GAAP/Non-GAAP Difference

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For the end of the year, Marc really cranked up the accounting acrobatics and rhetoric, clocking up a difference of 11 (13 Non-GAAPs to 2 GAAPs). Does Marc realise his GAAP numbers point to a deteriorating set of finances and, therefore, he is dazzling the crowds with something other than brilliance? Almost certainly.

Earnings Call Buzz Word Bingo

 

2016 Q4

2017 Q1

2017 Q2

2017 Q3

2017 Q4

Number of words

2163

1997

2511

2505

3317

Customers/Customer

5

27

17

20

26

Revenue

14

10

19

18

31

Cloud

8

6

16

12

14

Platform(s)

4

5

5

9

4

Growth

12

7

9

10

15

Operating

11

8

6

3

18

Software

4

1

3

3

7

Salesforce/Salesforce’s

     

20

18

The stalwarts of Customers, Revenue and Cloud remain but, as we can see, at five quarters with less than ten mentions, Platform(s) and Software are no longer of interest to Marc and the team.

My guess is, rather than talking about the specifics of what Salesforce offers, he is selling hope, focussing on his Non-GAAP financials and the promise of what CRM software can do for a business.

Looking into the Future

As the next quarter results have come out, I will not predict what they say but I had predicted the last quarter for Salesforce would end with $2.3b in revenue and a break-even for profit. I was on the money for the revenue ($2.29b) but Salesforce sadly made a loss of just over $50m in the last quarter. Better luck next time, Salesforce.

Conclusions

Other than the bouncing back of the share price, from my perspective, it is another lacklustre quarter for Salesforce. Costs are growing fast, rhetoric is up and the insiders/institutions continue to sell their stock.

Next month I will revisit with the numbers that just came out to see if things have improved or worsened.

CRM Portals Metadata Essentials

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This time last year I did a four-part series on setting up CRM Portal forms. It is very easy to do and no code is required.

In my current project I am using CRM Portal forms a lot and to make them even more powerful you need to use metadata. So here are some pointers for the metadata options for entity and web forms in CRM Portals.

Metadata are held in two entities:

  • Entity Form Metadata (for Entity Forms)
  • Web Form Metadata (for Web Form Steps, NOT Web Forms)

Let us look at the Entity Form Metadata first.

Entity Form Metadata

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There are, as you can see above, six metadata options to choose from.

Attribute

The one I use the most is Attribute. If you select this, you will need to also select the attribute you wish to modify.

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Once this is done some of the things you can modify for the attribute are:

  • The label (Useful for long labels or labels constructed as questions)
  • Grouping fields to total a sum e.g. 100%
  • Grouping fields for a ranking scheme e.g. preferences
  • Grouping for multiple choice questions
  • Displaying option sets as radio buttons
  • Displaying lookups as dropdowns
  • Prepopulate the value of a field
  • Set the value of a field on save
  • Add a description for a field
  • Regex validation
  • Making a field compulsory (this is my preferred way of making fields compulsory as it ensures if the field is displayed elsewhere, it does not have to be
  • Modification of the error messages displayed on the form for the field

Notes

This allows the display of the notes associated with the record on the form and determines how the form user can interact with them.

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There are also advanced options for adjusting things like labels.

One thing to note is that notes will only appear if they begin with “*WEB*” in the CRM entry. Without this they will not be seen. This is useful if you need to keep some notes private.

Section

This simply allows you to change the section label on the form.

Subgrid

By default, a subgrid on the CRM form used for the portal form displays as read only. To allow more interaction, this metadata option allows for the configuration of:

  • Creating new subgrid entries
  • Viewing existing entries
  • Editing existing entries
  • Delete existing records in the subgrid
  • Deactivate existing records in the subgrid
  • Downloading the subgrid to Excel
  • Associating/disassociating records in the subgrid to the CRM form record
  • Allow the portal user to run a workflow on a record in the subgrid

When I wrote the Web Form part of my original tutorial, I did not know about the ability to modify subgrids but this certainly provides another option for dealing with the addition of child records as part of a form submission e.g. line items in an expense claim.

Tab

Like the section option, this simply allows for a label change.

Timeline

This allows for the display of Activities as a timeline as well setting associated configuration options such as labels and whether attachments are made accessible.

Web Form Metadata

For Web Form Metadata we have the additional options:

  • Setting an Entity Form for the creation of fields on lookups
  • Setting up payments for events (this one is pretty involved so here is a description which may be useful if this is of interest)

Otherwise, as far as I can tell, all the options for Entity Form Metadata are available for Web Form (steps) Metadata.

Conclusions

As you can see, while CRM Portals makes the display of simple forms very easy to do, with metadata, we get an array of configuration options to make our forms even more powerful.

If you are setting up portal forms and cannot find a way to meet a request through standard configuration, metadata may be precisely what you are looking for,

An Innovative Solution For Defeating Shoulder Surfing

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A client of ours recently had a problem with security. Specifically, shoulder surfing. The office they used was co-leased with another company and they feared the employees of that other company could walk past and see important information on the screens of their workers. Knowing KPMG is a leader in this field they came to us for advice.

What is Shoulder Surfing?

Shoulder surfing is where someone stands behind you, while you use technology and they gain access to privileged information. The most common scenario, familiar to many of us, is at the ATM, making sure no one is watching as we enter our PIN.

According to Secure:

  • 85% of those surveyed admitted to seeing sensitive information on screen that they were not authorised to see
  • 82% admitted that it was possible information on their screens could have been viewed by unauthorised personnel
  • 82% had little or no confidence that users in their organisation would protect their screen from being viewed by unauthorised people.

So the fears of the client were justified.

The main piece of software used by our client was Dynamics 365 (CRM) so I was brought in to assist.

Dynamics 365 (CRM) and Encryption

CRM has a comprehensive set of security options such as information encryption, field and record level security. However, there is little out of the box for screen-level security. In fact it is an area lacking in most modern applications. We had to think outside of the box.

Label-Encryption

The solution we came up with was comprehensive label encryption throughout the product. This way, if someone glanced over the shoulder of one of the workers they would not be able to determine what the information on screen referred to. The elegance of this solution is the fields are still transparent and editable, allowing the user to continue managing processes and entering data.

To ensure the users knew what fields were which and which entities were which, they went through computer user navigation training. This involved using an unencrypted system so the user could memorize where things were on the screen before using the production system.

How The System Looked

All levels of the system were encrypted. This is how the the navigation ribbon looked.

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All entity labels were encrypted to prevent onlookers from gaining information on the browsing of the user. The users, having undergone their training, knew exactly where the entities they needed were. Similarly, views were encrypted to prevent wholesale data theft.

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Even if a malcontent stood behind a productive user, with the entity, view name and column labels masked, they would be at a loss to gain useful information from the system.

We also encrypted the fields on the forms. However, we ran into a small problem due to the Social Pane.

Record

While the Activities label took its cue from the entity encryption, the others could not easily be changed. I recommended the client move to the old Activity grid, as we used to have in previous versions of CRM, as this could be fully encrypted.

Even Advanced Find was protected from prying eyes.

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Problems With Implementation

While the users took to the system without incident, the administrators had more difficulty. With the labels encrypted, it was hard to know which entities were which.

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However, once the administrators were put through the same training as the users, the problem was resolved.

Conclusions

With the innovative encryption solution in place our client’s information was secure and with the intensive training, the users could navigate the system without issue.

As a gift to the community, I have also been given permission to release the source code for this solution to improve productivity and security for all CRM systems. If you are interested in implementing this “best practice” solution, you can obtain it here.