Envysion regularly visits our customers, providing training and receiving feedback about how to improve Envysion video.

A new customer of Envysion Insight last week had a great story to share.  An area manager had just explained to his employees the full system capabilities and how they will be used.  One of his stores saw immediate 20% increase in sales next three days and had only 1/3 of the inventory discrepancy vs normal for the week.  This made a store profitable that was never profitable before.

When a customer tells you are bringing them value, it makes you feel good!

The Envysion team recently hosted a Texas Hold’em tournament.  All employees were invited, along with a couple of special guests.

Congraulations are in order for Dan Caruso, who took first.  Dan got to the final two with a commanding lead, and he never let up.  Perhaps his blogging on the Telecom Texas Hold’em paid off. 

Second place went to Steve Wilson (no relation), who recovered from some early disappointments to dominate the rest of the field.  I specifically remember this early moment from the tournament.  “Ok Steve, what do you have?”  Steve – “Just the six-seven-eight.”

As for me, I placed 11th.  Out of how many?  That’s not really important.  What is important is that the event was enjoyed by all, and my early exit provided me with ample time to catch up on my pizza consumption.

Early in 2008, our company was in the process of re-casting our marketing efforts.  New logo, new tag-line, updated website, etc.

While discussing our tag-line, I recall mentioning to a colleague that every company I could think of had a tag-line, except Starbucks.  In fact, I also noted that they rarely, if ever, advertise.  I certainly don’t recall ever seeing a Starbucks commercial, in print, on the radio, or elsewhere.  Yet still, look at the business that they have built.

Reflecting back on my comments, I would add that they also rarely engage in special promotions and/or discounting.  Sure they have an occasional event, but they have been limited.  Even during these events, I recall hearing of them word of mouth or through free news coverage.  Still, no commercials.

So I was surprised to read about the company’s announcement that they are going to offer “value pairings”.  To me this makes sense.  Move more product, target value conscience new customers, turn the perishable food inventory.  This makes sense to me.  But remember, I’m a finance guy.  As a Starbucks customer, I wonder if this move slightly tarnishes the brand – one that has been built on premium priced beverages.

Have you ever heard a requirement or a request from a customer and been tempted to debate with them as to the merits of said request?  I’ve seen a lot of people and companies that do exactly that and try to convince someone that what they are asking for doesn’t make any sense.  This is clearly not a winning strategy.  Best case, the idea is actually not a good one, but in debating with your customer and convincing them they are wrong you end up alienating the customer b/c you’ve made them feel stupid for asking for something.  Worst case, you alienate the customer AND you miss the nugget of value that was in the request that you clearly didn’t understand.  In both cases you probably risk losing the customer.

I find it best to implement a rule that the Chicago Bain office had as one one of their office codes of conduct.  It was a rule called “The 2% Rule”.  It’s premise was simple – consider the 2% chance that you are wrong.  For a company that prides itself on being data driven, very analytic and being full of highly educated type A self-confident folks, this was an important rule to have.  To consider the 2% chance you are wrong means that even when you are 98% sure you are right, you should consider the merits of the other argument and attempt to think about things from the other perspective.  It’s not that you need to give in or change your mind, rather you should be open to the possibility that you are wrong and listen to the other perspective, giving someone else a chance to make the case for why they might be right.  By listening and giving someone a chance to explain their rationale, you may uncover misconceptions on their part or you may learn something you did not know about the situation that may change your perspective.  Even if you end up being right (and you were 98% sure you were right to begin with!) you are more likely to end up in a good place with whoever held the other position as you took the time to understand their perspective.

Why I am I writing about this today?  I had to catch myself from jumping to a 98% certain conclusion without considering the 2% chance I don’t get it.  The customer request was this: they wanted to be able to see live POS data alongside the video when they stream live video of their location.  Our service is capable of doing this, but we haven’t rolled out this capability b/c we haven’t had a lot of customers ask for it.  My personal view is that it is a feature that sounds good, but really adds very little value.  What are the odds that you see something interesting on the POS when you are watching live video?  How long did you have to sit there and stare at the video to find something valuable happen live?  Why was it important to see it live when it seems so much more efficient to search for whatever you are looking for in a specific transaction or type of event (even if you are searching as recent as the last 5 minutes) and then pull up only relevant video so you don’t have to sit through irrelevant transactions.

I clearly have a personal view of whether this feature should be high or low on our development priorities.  Problem is, a few of our customers (mostly smaller ones) think this is very important.  My personal view is that this is b/c some of the traditional video providers that don’t do robust POS integration and instead do simple text overlay have made this a selling point in their sales pitch to customers.  Set aside for a second the fact that text overlay is a crude way of integrating with the POS and is incredibly limited in terms of the searching and cross-store exception reporting you can do, the one thing it does do is show the transactions live as they are printed to the receipt printer.

When one of my sales people came to me with this request today, my first was reaction was not very open-minded (or polite).  After I remembered the 2% Rule, I asked the salesperson to go back to the customer and dig deeper into the value proposition that they get from viewing live POS transactions so we could understand what they are trying to accomplish.  Not sure we’ll build that into our service or not in the near future (you could say I’m 98% sure we won’t) but I can guarantee you we’ll understand why they want it.

This just in from the North Pole – Santa Claus has chosen Envysion Video to deploy its state of the art MVaaS solution to all of the toy making facilities at the North Pole. 

The North Pole Toy Facility is a complex of over 25 separate toy making locations spread out over 100 square miles.   The facility has over 5,000 elves all working to supply toys to the children of the world. Needless to say it is quite a complex job to manage all of the seasonal worker elves spread throughout the multiple locations.   

As the demand for toys has grown so have the toy making facilities and it has become increasingly difficult for Santa to manage the vast number of elves.  In an effort to improve operations and become more efficient Santa has chosen to install Envysion Video at every location.  Santa can now simply log-in with a user name and password and instantly see live video at any location or do a quick search and pull up video from the last 30 days.

Mrs. Claus has been on Santa for some time now to start spending more time with her, but with the toy demand increasing time has been very limited for Santa.  Santa will now be able to stay home with Mrs. Claus and log-in remotely and be able to make decisions without having to gear up the sleigh and reindeer to travel to the toy facilities in person.   In the words of Santa Claus himself ” Envysion video is so easy to use that I can log-in in a blink of an eye and see how the toys are coming along”.  In the words of Mrs. Claus herself ” Thank you Envysion for giving such a great operational tool to Mr. Claus, it has really freed up his time and we have been spending some great quality time together”.

By utilizing Envysion Video, Santa has more time which makes Mrs. Claus very happy.  All of the reindeer including Rudolf are happy because they also have more time to play reindeer games by not having to drive Santa to the toy facilities as often. The children of the world are especially happy because Santa is so much more efficient that he can easily keep up with the increasing demand for toys.

I’m always glad to see business owners fully leveraging the power of video surveillance. This happened about a month ago in a Denver suburb and highlights a successful theft recovery effort made possible through the use of recorded video.

http://www.rockymountainnews.com/news/2008/nov/14/deputies-seize-85-bottles-suspected-stolen-wine/

Retail shrink is expected to increase over the coming year. Envysion’s MVaaS technology is a great tool for business owners who want enterprise-class video technology without the cost our support needs of today’s traditional systems.

On January 1, 2009, the State of Colorado will impose an hourly wage increase on businesses from $7.02 to $7.28. The reason behind the increase stems from legislation passed in 2006 which measures the CPI of Denver, Boulder and Greeley. The CPI measurement from the first half of 2007 through the first half of 2008 was 3.7%. As a result, wages were increased the same amount.

At first blush, 3.7% sure doesn’t seem like a whole lot, probably just noise for businesses raking in over $1M in annual sales. But is it really? What is the economic impact to a business with sales of $100K per month?

At $100K monthly sales, a typical restaurant or retail business targets labor at 25% or $25K. Under the wage increase, this cost will rise by $925. Still doesn’t seem like much, does it? Let’s dive a bit further.

Using the same assumptions, a moderately profitable business enjoys income of 5% or $5,000 per month. If we take $925 away from that, we are now at $4,075. Wait just a second – how did that measly 3.7% wage increase turn into a profit reduction of 18.5%??!!

Many restaurants and retailers faced one of the toughest economic environments in history during the latter half of 2008. Very difficult decisions were made – raising prices, deep discounting, layoffs and in some cases, bankruptcy. With many of these cards already played, how will small businesses combat an additional threat to their bottom line? I certainly have my ideas but your comments are welcome.

For a small business owner, the adoption of a video system in a restaurant or retail environment is often not unlike the Kubler-Ross model, otherwise known as the Five Stages of Grief. See if this sounds familiar:

Phase 1 – Denial: I don’t have any shrink in my business, there’s no way my employees are stealing from me.

Phase 2 – Anger: How can this happen??!!! Those ungrateful %*$!

Phase 3 – Bargaining: I just need to give them another chance, a simple warning should suffice.

Phase 4 – Depression: Why do I even bother? I’m just going to close shop and work for the man.

Phase 5 – Acceptance: Wow! Within a few months I hardly recognized my P&L. Cost of Goods is down nearly 2%!

This has been an interesting last two weeks in both the broader financial markets and in our market for video solutions.

I’ve already written about my views on the near to medium term impact on the MVaaS space – I’ve hypothesized that MVaaS providers will do differentially well during tough economic conditions given the strong ROI and the fact that a managed service is easier to implement than an enterprise/IT intensive solution.

Given my lengthy consulting background, I am always looking at data to validate or refute my hypotheses.  Here are a couple of the meetings that I’ve had over the past few weeks and how they’ve influenced my thinking.

Large national retailer #1 has close to 1,000 stores.  They are actively evaluating video and have narrowed it down to two providers.  They were hoping to have already rolled out video to a large number of their stores this year.  They aren’t doing that well financially and their investors have them freezing capex for the time being.  Project will be delayed a couple of quarters.

Large national retailer #2 has close to 4,000 stores.  They have video today, but can’t use it very well and only use it in the store and only for security incident investigation.  They are in very low margin business and see opportunity to drive profitability with MVaaS solution without requiring a tremendous amount of upfront capital.  They are also on a limited IT budget so this is leading them to favor managed solutions.  Interested in 30-50 store pilot in 1Q.

Large national restaurant chain #1 with ~2,500 locations.  Customer is in lower end of restaurant segment from a demographic standpoint, so recession actually helps them as customers trade down.  Had plans for upgrading video solutions next year and definitely interested in anything that can show demonstrable ROI impact in 1Q.  Interested in pilot to prove ROI.

Large national restaurant #2 with 2,500 locations.  Interested in solution, but need IT blessing to spin up as a project.  IT budget being cut so most new projects deferred until 2010.  We have some work to do to educate them on how minimal IT involvement would need to be, but this one will be uphill battle for forseeable future.

Four customer conversations, four different situations.  I’ve had a number of others in this span as well and it only reinforces my hypothesis.  The market may be challenging, and some customers may just not be buyers for a while, but for those that are, MVaaS will be a compelling option for them to consider.

I am continually amazed at how limited some large organization’s current video capabilities are today.  I always assumed that smaller operators would be at a disadvantage and would have a more minimalist set of video capabilities than the big operators that have large corporate support infrastructures.

I also assumed that these large operators, many of whom have very material loss prevention departments, would be utilizing the latest video technology and would have implemented it as part of their loss prevention practices.  The assumption here would then be that we’d be selling in these large accounts against at least a traditional video deployment and would emphasize the benefits of MVaaS from a scalability and manageability standpoint over their current solution.

My recent conversations with some large prospects would suggest the bar is even lower.  I just pitched to a name brand national retailer with north of 3,000 corporate locations and they have next to no video capabilities.  They do have some standard DVRs in a fraction of their stores, but they can’t access them remotely at all.  They have a massive LP group though, and this group spends a fair amount of time driving around to locations to do investigations and, where possible,  view video to help investigate.  It is a lot of fun to pitch these customers as so much of what we provide is a completely new capability for them (starting with easy remote access and ending with the enterprise-wide POS integration and exception reporting capabilities)

Just more evidence that this is a market with a lot of very near-term potential.  Hopefully we’ll get them aboard and I can then share another success story.