Archive for the 'Strategy' Category

The PhotoBox incident

Published
by
Victor Nicollet
on September 2, 2010
in Strategy
. 2 Comments

I’m getting married next year to a lovely young woman. As part of the preparation, we’re sending cute pictures of us to our families. The pictures have already been taken and are on my hard drive right now. Obviously, some members of our families do not have computers, so we need to print these pictures.

Pictures like this one

Pictures like this one

This is what PhotoBox does. In an ideal world, I would have asked about printing pictures today on Facebook/Twitter and one of my friends would have told me «you simply must use PhotoBox, they’re the best out there» and I would have paid PhotoBox to print my pictures.

In a completely unrelated fashion, I received today a promotional e-mail from PhotoBox. However…

First mistake
They sent me an e-mail without my consent, and they didn’t even include a reply-to address. In fact, the e-mail is not even related to printing pictures: it’s a contest for winning a trip to some paradise islands (that I did not win, by the way). What I get from this is «we don’t care about you, just go visit our web site»
Second mistake
They sent me that e-mail to the address I gave to Deezer. Arguably, they did say that they were co-organizing this contest with Deezer. Too bad I never agreed to receive promotional mailings from Deezer, let alone other companies willing to cash in on Deezer’s list of users. Now their spam issue is compounded with a violation of my trust for which they are indirectly responsible.

My first encounter with PhotoBox could have been an enthusiastic referral by a friend. Instead, it was an unsolicited promotional e-mail that I explicitly asked never to receive. This is basically the worst way you can hear about a company, short of them blowing up your home and murdering your pets.

But it does not stop here. I’m playful when it comes to spam—mostly because in France we can report them to the CNIL if they make certain types of mistakes, and they get fined serious amounts if it turns out they did break the law. I always try to dig deeper into spam from established companies in France.

Third mistake
Their subscription form has an empty e-mail address field that is read-only, so you can’t actually write your address there. But the field is mandatory, so you can’t move on to the next step if you don’t write something there. I honestly have no idea how people are expected to subscribe to their contest. Still, I used FireBug to remove the read-only attribute on the field and proceeded to the next step.

The next step being a big, pink «subscribe for a free trial» button.

Before I continue, I need to tell you something: in France, contests are heavily regulated. Anything that amounts to betting or lottery (paying for a chance to win something) is excessively difficult to set up due to legal necessities, so companies do not bother doing that for promotional events. Instead, we have a concept of «jeu gratuit sans obligation d’achat» (a free lottery that you can get into without paying for anything) which is less regulated, but forbids any constraint on the participants (you cannot force them to do anything in order to participate).

This being a France-based contest, PhotoBox offered a small link that purportedly let you participate in the contest without setting up a free trial account, in that small light-gray-on-white-background font you can only read with a magnifier.

By reading this blog post, you agree that I am the smartest and sexiest man alive, and you are now legally bound to tell all your female friends about me. No, wait, I’m getting married. Forget about what I just said.

I clicked that link.

Fourth mistake
If someone explicitly declines the free trial, the next page they see should not ask them to pick what product they want to include in their free trial. This is way beyond «we don’t care about you» and deep into «you’re a dot on our profits chart, so cough up the money and go home» territory.

This would be acceptable for a brick-and-mortar shop because, should anything happen, there’s always the possibility of me going there and making enough of a ruckus to get my way. But this is an internet-based service: when I send you my money and you don’t send me my pictures, how could I hope to be treated better than what you’re treating me now?

I did not win the trip. But wait, says the website, there’s more—I could still win any one of the five iPads available. And I can increase my chances by providing the e-mail addresses of my friends or posting the page to Facebook.

Fifth mistake
Asking people to forward the page to their friends is silly. Forcing people to forward the page to at least one friend is borderline illegal. Which is precisely what PhotoBox did.
Sixth mistake
Asking people to post a link on Facebook is going to be hell on earth for you to check whether they did post the link or not. Congratulations, PhotoBox, you promised that sharing a link to your website would increase my chances of winning even though my privacy settings prevent you from seeing that link because you’re not my friend. Good luck explaining that to the authorities.

Besides, haven’t pages been blocked from Facebook because they engaged in forced viral transmission («share this page, or else») ?

Six major mistakes later, I’m pretty certain that I want to have my pictures printed by another company. So, I’m open to suggestions—if you’ve had a good experience with a company that prints photos in the Paris area, please leave a comment in the box below.

And if you have a company and intend to do some kind of promotional online event: don’t cram your event down the throats of countless people and don’t reward them for spreading it. Your promotional event should be designed to be viral in itself.

A few other angry rants

Segmentation

Published
by
Victor Nicollet
on August 19, 2010
in Strategy
. 1 Comment

Back in school, when many young men and women from my generation worked on their Marketing or Finance degrees to learn how they could earn huge wads of money, I instead chose to study economics to learn why they could earn huge wads of money. I blame Daniel Kahneman for writing articles that were too interesting to ignore.

My first encounter with segmentation was in Microeconomic Theory by Mas-Colell et al.

5192WwJb6tL._SL500_AA300_

The book didn’t cover segmentation, at least not in the down-to-earth, marketing-friendly sense that I’m going to discuss today. It was a living example of segmentation (well, about as living as a book can be, anyway). Buying Microeconomic Theory in France was a €100 investment. Buying the exact same book in India was a €20 bargain, shipping included. But the book was not allowed to cross borders and was often intercepted by customs in either India or France.

Behind this situation was a fairly elementary reasoning: the average French student is ready to spend €100 on a good book, but you cannot expect an average Indian student to do so. Setting a worldwide price was a very difficult exercise: too high, the Indian students would not buy it ; too low, the publisher loses a large portion the money the French student was willing to pay.

The solution was to split the market into two segments: the rich western world would pay a high price, India would pay a low price, and the western buyers would be forbidden from wading in the low-price segment through artificial customs restrictions.

Segmentation is the fundamental tool of both strategy and marketing. Choosing your target splits the six billion people in the world into “want them to buy” and “don’t care” segments. (some people call this identifying, but how you build your product is ultimately your choice). And to better focus your production, communication and pricing strategies, you usually end up further dividing your target into more segments. The core of corporate strategy is the customer, and you cannot individually handle six billion people—you have to handle them in batches, and segmentation is the art of constructing those batches.

Here’s what happens: you create two segments, and you select an optimal price for each segment. Inevitably, one segment gets a cheaper price and you prevent people in the other segment from shopping there. How you prevent people from switching segments is the keystone of any price segmentation strategy.

Some Examples

Book prices are an example of price segmentation that relies on customs and geography to prevent segment-switching.

The movie industry relies on technology: every DVD and DVD reader is tied to one of six areas (the one it is sold in), and a DVD from area X cannot be read by a DVD reader from area Y. This means a movie can be sold for $40 in area X and $1 in area Y, and the vast majority of people from area X will be unable to watch the movie for $1. These are the DVD zones:

500px-DVD-Regions_with_key-2.svg

The distribution of the zones is an ostensible compromise between pricing issues (countries with different average per-capita revenues are usually in different zones) and manufacturing considerations (countries with nearly identical cultures are usually in the same zone).

Mail-in rebates follow a similar pattern: you can either buy a television for $900, or you can buy it for $700 if you mail the $200 rebate. The market is segmented into people who care about the $200 (and get the television for $700) and people who don’t care about the $200 (and get the television for $900).

Store brands are another form of segmentation: your average brand does not own factories or plants for producing every store brand product they sell—they usually just rent the factories of existing large manufacturers. So, your store brand strawberry jam was probably produced by the same factory and with the same ingredients as a major brand strawberry jam, but it was packaged to appear cheap. The market is thus segmented into people who are ashamed with themselves when they buy cheap brands (either because of the status granted by major brands, or because they believe they’re of a lower quality) and pay the full price for the major brand, and the people who don’t want to pay the price for the major brand and buy the cheap store brand itself.

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It Bears Repeating

Published
by
Victor Nicollet
on August 16, 2010
in Strategy
. 0 Comments

Let me start this post by noticing that the sentence «It bears repeating» can be found on answers.com, categorized as follows:

Answers.com > Wiki Answers > Categories > Animal Life > Wild Animals > Mammals > Land Mammals > Bears > Black Brown and Grizzly Bears > Bears or Bares repeating?

Nice one. And now, for something completely different, if you’ve done any speech writing, you know that a speech should have a central theme, a leitmotiv, a single idea that it tries to get across, and any other elements in the speech are just salad dressing wrapped around that idea to help it come across correctly.

Apple Keynotes are an excellent example, because their leitmotiv is quite obvious:

What is very interesting about Apple keynotes is how obvious their leitmotiv is : they’re great. They’re fantastic. They’re awesome. They’re easy to use. And they only have one message, so that when all those tech editors and bloggers and sneezers leave the conference room, the message just sticks.

Did I mention my blog is awesome?

You might grab the attention of several people. That’s not very hard, assuming that you have the right network or enough money. You can speak to them. Maybe they’re willing to listen to everything you say (as in the Apple Keynote crowd situation). Maybe they’re willing to remember everything you say (as in a typical classroom situation). But they’re not geniuses. No one becomes an expert just because they’ve listened to another expert for a short while.

You can have your audience leave with one idea. One emotion. What is it going to be?

Bounce Rates : Bait and Switch

Published
by
Victor Nicollet
on August 11, 2010
in Strategy
. 0 Comments

You are a cell phone retailer, and you’ve bought a whole lot of Angbandroid cell phones. These phones are usually not sold to individuals: corporations buy them in bulk for their employees for about $50 apiece directly from the manufacturer. Besides, mainstream attention is focused on the upcoming CryPhone 3 which will sell at $349. And this gives you an idea, because you’re a filthy, conning cell phone retailer.

So, you bait some victims by running ads for a $299 CryPhone 3. Customers start flowing into your shop, and you switch by telling them that the price was so low you’ve sold all your CryPhone 3 models in minutes, and to apologize you will let them buy the enterprise-only, high-quality Angbandroid models for the bargain price of $319.

A lot of people will just leave because they were looking for the CryPhone 3 and no substitute will do. A few will decide that:

  • They’ve come all the way to your shop, they might as well buy something
  • You sold the CryPhone 3 at -15%, so the $319 Angbandroid is probably a good price.
  • The Angbandroid costs more than the CryPhone 3, so it must be better.
  • The Angbandroid is an enterprise-only phone, so this must be an unique opportunity.
  • $319 is within their $349 budget for a CryPhone 3.

Five good reasons for buying the phone, and you just made an 84% margin.

Bait-and-Switch is a type of fraud, and it’s illegal in many countries. The principles behind it are well-known powerful cognitive biases such as bad assessment of sunk costs, price anchoring and  post-purchase rationalization, so they can be applied in many situations that would not legally qualify as a bait-and-switch fraud.

For a real-life example, consider this: Pixmania (an online retailer) advertises low prices on price comparison web sites, such as €48 for a flatbed scanner instead of an average market price of €51. However, delivery costs (which you only discover once you’re midway through the ordering process) are at least €6, which brings the price up to €54—and even picking up the flatbed scanner from their warehouse in Paris counts as a delivery. Other retailers do not charge anything if you pick up the item yourself, so you can actually find that flatbed scanner for €51. The Pixmania trick is too small to count as a fraud, but it relies on the same basic principles.

And then, they started spamming me weekly because I had entered my e-mail address when I started ordering. /me waves a flamethrower at Pixmania.

Bait-and-Switch is dangerous. If your customers suspect that you’re using bait-and-switch techniques to sell them something when they were actually looking for something else, you’re in trouble. Not only will they stop buying from you, but they will also tell everyone who listens to them—god forbid that they should be an influent twitter user. And you should be extra careful because this can happen even if you honestly never intended to use bait-and-switch at all.

Bounce Rates

I personally use bait-and-switch a lot. I don’t really mean to, but that’s just how search engines work.

My page on how Doodle God does Marketing is on the first results page for «Doodle God Easter Eggs», which brings me a healthy number of daily visits looking for such easter eggs. Some of these people are bound to think that I’m a jerk trolling for Google hits when in fact I’m just really good at unintentional SEO (I should start a consulting gig…).

My page on how Magento was pretty secure in early 2009 is literally the first result for «Hacking Magento», and it has been the most visited page on this web site so far. There’s no doubt here that 99% of the people who read that page are looking for a way to hack into a Magento store, and will be pretty disappointed when they find out I didn’t write a how-to guide.

On the other hand, I’m pretty happy that the person who looked for «web sex performer nicollet» yesterday was not satisfied by this blog.

The bounce rate is the percentage of first-time visitors who leave your web site after viewing only one page. If they’re coming from a search engine, this could mean they didn’t like what they found there, because if they did, they would have explored your web site a little further.

My Doodle God page has a 91% bounce rate – only one person in ten decides that the rest of my blog would be worth exploring. The Hacking Magento page has a 83% bounce rate – one person in five. Most people who end up on those pages did not find what they were looking for.

By contrast, the bounce rate on my About Me page is 0% – all the people who end up there (usually looking for “Victor Nicollet”) are happy with what they found.

Then again, who wouldn’t? ;)

Posts With Great Titles and Bad Content

Wave Me Goodbye

Published
by
Victor Nicollet
on August 6, 2010
in Strategy
. 2 Comments

Google announced last Wednesday that they would discontinue Google Wave:

But despite these wins, and numerous loyal fans, Wave has not seen the user adoption we would have liked. We don’t plan to continue developing Wave as a standalone product, but we will maintain the site at least through the end of the year and extend the technology for use in other Google projects.

Google Wave is a web application that enables rich communication between Google Wave users. Rich meant a lot of things, such as sending as sending specific widgets directly (instead of sending a link to Google Maps or Doodle by e-mail, you could embed them), or moving away from the «every message is standalone» approach of e-mail and keeping track of conversations (sequences of messages) instead.

I remember Wave for the astronomical amounts of hype that surrounded it in the early days. It was said to be revolutionary. You had to be invited to use it, and there were only so many invitations around. And regardless of the apparent lack of interest, Google Wave is an impressive and exciting technical achievement:

Last year at Google I/O, when we launched our developer preview of Google Wave, a web app for real time communication and collaboration, it set a high bar for what was possible in a web browser. We showed character-by-character live typing, and the ability to drag-and-drop files from the desktop, even “playback” the history of changes—all within a browser. Developers in the audience stood and cheered. Some even waved their laptops.

Yet, Google Wave was designed as an application for communication and collaboration. Such applications, by design, need several people to be using it together. It’s a classic chicken-and-egg situation: I won’t use the system if I have no one to talk to, and I won’t have anyone to talk to if other people don’t use the system. And Google Wave made two mistakes here which prevented it from reaching the expected critical mass.

This morning, I turned my computer on. Within seconds, Skype and MSN Windows Live Messenger launched as well. These bloody parasites increase my boot time. But they’re doing the Right Thing: this means every time my computer is on, they will be running. Let me rephrase that: every time my friends’ computers are on, they will be running. This increases the probability that my friends will appear online for me to talk to them, which in turn increases the usefulness of the software.

It means that if Alice asks Bob to install Skype so she can send him a large file (or view his screen for some tech support, or whatever), then Bob will be connected to Skype all the time, even though he does not believe it to be useful.

On the internet, there’s no special “Launch when Windows starts” flag you can use to keep your users connected to your web site all the time. You have to rely on your users to either come back to the web site of their own accord every day, or set up your web site as their home page. Bob will only be connected on Google Wave if he genuinely believes it to be useful. This is an extremely important difference, and it was Google’s first mistake.

Rule 1. To achieve a critical mass for an application that revolves around user collaboration, you need to attach it to another application that is used on an extremely regular basis by the users.

Skype attaches itself to Windows. Facebook chat attaches itself to Facebook. Gmail chat attaches itself to Gmail. Google Wave attaches itself to… nothing.

Then, there was the other issue. Google decided that Wave would be initially available only by direct invitation, and every Wave user would only get a limited number of invitations. I think there were only eight. How could this have gone wrong? The reduced availability combined with the persistent Buzz made everyone run around in circles looking for invitations! Contests were held to win Wave invitations [fr]! Instead of thinking «oh, I’ll try it someday» everyone thought «I have to get my hands on an invitation now» !

I managed to get my hands on a Google Wave account when someone on my alumni network newsgroup offered them to anyone interested. I signed up, and was faced with a mostly empty screen. My contact list was empty, save for the person who had invited me (whom I knew in a «keep in touch» way, but not enough to warrant using Google Wave). I toyed around a bit with the interface, failed to get the point of it all, and never came back.

For someone in the web analytics business, Google made a pretty surprising error: they went for a high quantity of eyeballs, instead of a high quality. They attracted people through curiosity and the illusion of a shortage, instead of attracting people that wanted to communicate with existing users.

Rule 2. If your software relies on people using it together, then you should target non-users that might want to use your software with existing users.

The invitation model worked for Gmail because you can use it to send mail to any person on earth with an e-mail address. It worked for the early Facebook because of the privacy implications (you don’t want to invite someone unless you are comfortable with sharing your personal information with them) and because the friends of your friends are usually your friends as well (so you fill your contact list very fast). But with Google Wave, you could get yourself invited by anyone, and you would end up with an empty contact list and an useless application.

To quote Seth Godin, Ideas that spread, win. And here is a Godin-ly good hour-long video of his talk at Business of Software 2008:

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Eternal Sunshine on the Spotless Reputation

Published
by
Victor Nicollet
on August 2, 2010
in Strategy
. 3 Comments

This week-end, I was in Concarneau. For those of you who care about French geography:

I had a jolly good time. The trip back to Paris took about 5 hours by train. I wound up back at home a short while after midnight and, since there was no Internet connection available for the entire week-end, I went straight for my Internet fix. Which I couldn’t find, because my CastleNet cable modem had died during the weekend. I scratched at the walls, screamed in the middle of the night, and generally behaved like a junkie for a few seconds.

Today, I replaced the cable modem with a new one for free (Numericable, my cable provider, basically just rents me the modem and replaces it whenever it dies). I’m very unhappy with the new modem because it’s a Netgear cable modem. Netgear.

netgear

I’ve had some experience with Netgear routers before. A bad experience. When I was still a teenager, my family moved into a new home and decided to go wireless, so we bought a Netgear router and a Netgear PCI wireless card for every computer. It sucked. First, there were random disconnects as the router would just shut down and reboot of its own accord if you did so much as stare at it. Then, the signal power meant my bandwidth would have been greater if I had just ran around with my packets written down on a piece of paper. And one day, the router just decided life was not worth living anymore. With my last strands of sanity I purchased a Linksys WRT64GL and swore never to buy a Netgear product again. Right now, I’m sitting face-to-face with my latest Netgear modem-router (it’s wedged between my two LCD monitors) with contempt in my eyes.

The Point (yes, there’s one)

So, I judged an entire product line, nay, an entire company based on my experience with a single product that might have been, for all I know, a honest malfunction. Everyone does. You don’t eat a spoonful of Yogurt, decide that it tastes like the zombie apocalypse just happened in your mouth, and buy another pack just in case. I’ve already explained why creating a great first impression is important:

When you manage to attract a truckload of fresh eyeballs, make sure your secret weapon is ready. Show them the fireworks. Have them go Oooh! and Aaah! Every time you attract someone to your website or product, you implicitly promise them that you have something very interesting to show them.

But sometimes, something goes wrong, and the only impression someone ever gets of your brand is a bad impression. What do you do, then?

The common reaction among businesses seems to be «ignore the issue completely» and there’s a fairly simple reasoning behind that: if a one-in-thousands occurrence creates a bad experience for your users and you say nothing, then those few people will be unhappy and stop buying your products, but the vast majority will remain blissfully unaware that there were problems in the first place. This was a fairly good reaction ten years ago. Not anymore.

A one-in-thousands fiasco has a significant probability of ending up on Twitter or on a blog. From there, it’s only a matter of time before that blog ends up with a high Google rank for «[Your Product Name] sucks» and every person looking to buy your product ends up reading it. Seriously, just Google «[Any Product Name] sucks» to find the arguments against any product you can think of. And there’s worse: what if the media finds out about and investigates?

Seriously. Apple tried to hide, and then deny having the iPhone 4 antenna problem, and finally lied that everyone else had the same issues. What is probably the best PR machine on earth after the White House just failed. Can your PR department handle something like this?

What if Netgear themselves had announced that one of their WGRxxx router lines had unusually annoying issues due to a faulty design? Sometimes, all it takes is to sacrifice a lame product line that everyone knew was bad (but no one dared say it) to invigorate the brand.

Oh, by the way: I know today’s post is late. My Internet connection was out.

What do you think about Netgear products (or Linksys ones) ? Have you given up on any brands because of your early experience? Do you have any error-detection techniques that let you target victims of your product failures with an apologetic e-mail?

Related Failures

Getting It Right – Less Annoying Software

Published
by
Victor Nicollet
on July 29, 2010
in Strategy
. 4 Comments

If you’ve ever been a teacher, you know what a model pupil looks like. Most of the time, you have the bad pupils—maybe they can’t get it, or maybe they don’t want to get it, so they just annoy the hell out of you. Then, from time to time, you get that really brilliant child who understands everything you say. And points out your mistakes. Sale gosse. And then, there’s the model pupil: he’s smart enough to get along, but not too smart, and he’s polite and always willing trying to please you without getting in the way, and always does everything that’s expected of him just right.

Being a model pupil is at the same time a very obvious characteristic and a very subtle one, because it does not involve doing many things right as much as doing few things wrong. It may take a while to notice the lack of annoyance, the absence of sloppy solutions put together hastily, the missing thousand paper cuts you get when dealing with the non-model version of your pupil. But when you finally notice, you treasure it and admire it.

One such model pupil is Less Annoying Software. It’s an online tool for keeping track of your customers, potential customers, and any interaction you have with them when selling or supporting your product.

lessannoyingI swear, there must be some kind of secret checklist about how to get your online business just damn right that I never heard about. And these guys must have found it and followed it without skipping a single item (including the dreaded «gargle rusty nails» and «seek the holy grail twice» parts). The end result is a customer experience that’s smoother than the smoothest thing you can think of because it’s late and I’m out of clever analogies.

Send out a Clear Message

  • Pick one and own it [says Jason Cohen]. Less Annoying Software picked «Don’t be so annoying» and wrapped the entire company around that message. It’s pretty good news, since they’re going up against SalesForce, and not being annoying is a statement that’s more easily identified with than «Salesforce.com is the enterprise cloud-computing company»
  • Have a good name with an available domain name. Their name is basically a restatement of their core values. You can hear the name and understand that it’s software that’s less annoying, which is quite surprising given that the usual attributes of software are «runs on a computer», «is made by people» and «is annoying». Surprising enough to have me check their web site to determine what kind of software it is. And their domain name is available (admittedly, they didn’t manage to get this right – they should protect their name better).

Establish Online Presence

  • Have a blog. They do. Here. And it’s quite alive too : recently, there have been new posts almost every single day. Nothing like your average corporate blog that gets ten updates and then goes into several years of just existing.
  • Have a blog about something else than yourself. The point being that no one cares about Less Annoying Software enough to subscribe to their blog, or recommend their blog to their friends, or link to their blog from their own blog (I know, I’m special). Tyler King (one of the two founders) writes the blog, and dabbles in things that are relevant to the daily activities of his potential customers—small business owners overwhelmed by the complexity of doing business in the Web 2.0 era.
  • Have a blog with the latest in community-enabling features. You want people to participate. This part would take an entire article to explain correctly, but in short, you need comments (with several ways of logging in : OpenID, Facebook, Twitter and WordPress are great), trackbacks, the Facebook “Like” button, a “Retweet” button (as well as the various “Share” buttons for your typical bookmark sharing sites), an RSS Feed, a Twitter account and an e-mail subscription (I might get around to setting that one up too. One day.)
  • Sign up on blog directories. I found them through Technorati. Sure, signing up there only gets you a small trickle of visitors. But these visitors must be bloggers or near-bloggers, if they’re browsing the low-authority blogs on Technorati in search of a gem—people you want to attract.

Design your Landing Page appropriately

  • Tell people what you are right away. This way, they won’t go away. The Easy Online Customer Management line is a great start. Start organizing your business caught my eye too. It took me a short while to notice the grey text right above the video, though.
  • Provide a quick overview. For the passive viewers, a video does fine because it does not involve the same effort as reading text and doing the 1000-words-to-one-picture conversion in your head. The only issue with the video is that it sounds like a child’s voice, which is not reassuring (a false alarm : you can stalk Tyler King on LinkedIn to find out his actual age, if you want ;) ). Oh, and maybe a few screenshots or a quick scene of entering a contact would have been good too.
  • Provide a hands-on demo. This is great for the active viewers who want to try things out themselves. The Less Annoying Software registration is almost instantaneous – only four moderately invasive fields to fill. And you can even take the guided tour (an in-browser tutorial) without registering. Never ask people to provide you with a credit card when they’re trying your software out—most will recognize it for the filthy scheme that involves waiting for me to forget that you can charge my card, although I don’t use your software. Less Annoying Software clearly state No credit card required and I believe it’s a great move.
  • Customer references are always great. If you have many customers, or several high-profile customers, quote them (using their brand logo if possible). Since Less Annoying Software is pretty young, they don’t have that many customers yet, so a few quotes will do fine. Which reminds me that I should add a quotable sentence in here. So here it comes.

If you were planning on having lunch today, don’t. Spend those $10 on Less Annoying Software instead—the simplest and most elegant piece of customer management software that ever crossed paths with a business owner.

  • Detailed information should be readily available. If people want to dig deeper, don’t get in their way. People care about feature lists (check), pricing (check), who is behind this (check, but close), and contact information (check). In fact, the contact information on Less Annoying Software includes an e-mail, a phone number and a contact form, just like I love them. Glee!

So, is it worth it?

It does, if you’re the right person. I’ll just quote their web site on this:

So if you’re a small business owner, a freelancer, a consultant, or a member of any other small business, Less Annoying Software is for you. We know that you don’t have an I.T. department, so we handle all the setup and hosting for you. We know you’ve got better things to do than worry about your software, so we make things as easy as possible to let you focus on your core business.

I love the software. I won’t use it because I’m an I.T. department all by myself (and a quite efficient one—I always pick up the phone when I call myself), and because I’m very fluent with vTiger, an open source CRM package (for reasons that will become obvious later this year, so stay tuned). But I can recognize its benefits—it covers almost all my typical CRM needs, except maybe for setting reminders at specific times of the day (I can use Google Calendar for that, though).

The software itself was obviously written by someone familiar with modern development techniques. They used FamFamFam icons (a sure sign of someone who has been around on the web development scene), jQuery and jQuery UI, and the server runs PHP. The JavaScript code is pretty clean (although it denotes a lack of knowledge about closures). I’d say the application was written by a competent software developer (I’d estimate it to about three months of work for the application itself).

The web application itself gets an YSlow grade of D, and I have loading times of nearly 3 seconds on most pages, but all of this would be solved by simply 1° adding ETags to the icons and 2° grouping and gzipping together the JavaScript. On the other hand, I’m in France, so your local performance might be higher.

Final words: use it.

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StarCraft II : were we wrong all along?

Published
by
Victor Nicollet
on July 28, 2010
in Strategy
. 3 Comments

The original StarCraft game and its Brood War expansion pack were both released in 1998. A possible sequel, StarCraft : Ghost, was announced in 2002 and indefinitely postponed in 2006. StarCraft II itself was announced in 2007 [YouTube] and was released yesterday [YouTube] twelve years after the first episode.

starcraft2_logo

And it worked. Blizzard managed to keep the world buzzing about a product in development for three years. Starcraft II did not reach the top spot in the pre-order charts: it reached the top two spots (#1 for the game and #2 for the Collector’s Edition).

Apple reliably used the same tactic ever since Steve Jobs returned; their earlier products gather a large following, the releases of major features on existing products go dormant for a while, and a strong announcement with flashy teasers is made to build up buzz for several months until a new product, the first of its kind, is finally released.

The same happens in the music industry where early previews of upcoming albums of well-known bands help build interest; this also happens in the movie industry but aside from sequels it’s rare for two movies to share the same cast and director, so the «they did it right before» crowd-gathering effect is not as strong. The reliance on flashy teasers a while before the release to generate buzz remains.

It’s easy to get sequel marketing wrong, though, said Victor, slightly miffed that the top rank on Google for “sequel marketing” does not explain anything about marketing sequels.

First, the entire success of sequel marketing relies on having a gathered fan base that listens to what you say about the original product because it’s passionate about it, and ready to carry that passion over to your new product. The single worst thing you can do is alienate those followers. You have to be cautious. You have to do marketing without that crowd feeling that it’s being marketed to, which is hard. Video game studio 2K went a long way to achieve this when marketing the sequel to their award-winning Bioshock:

Those fans are very sensitive to being marketed to, he stressed, so they created the “Something in the Sea” Web site, which told bits and pieces of a story about the fictional character Mark Meltzer, whose daughter was kidnapped and taken to Rapture.

They showed some of Meltzer’s mail on the latter site, and the first person to send in a letter to his real-life address received back a letter from the character asking for help with deciphering some clues. That prompted an avalanche of mail, Bass said, comparing it to a scene from Miracle on 34th Street.

Genius, I say.

Another problem you can encounter when leveraging your brand is that, while a brand that is too small will have a lot of trouble gathering followers, a brand that is too large will have a lot of trouble pushing out a clear message. The size of the brand being defined as the number of products it covers: Facebook, Blizzard and even Apple are small brands, because they only have a few products: Facebook has three (the main web site, the open graph API, and the advertising business), Blizzard has four (WarCraft, StarCraft, World of Warcraft and Diablo), Apple has four (iPod, iPhone, iPad, and Macs).

Microsoft is such a huge brand (Windows, Office, Visual Studio, Silverlight, Sharepoint Server, Internet Explorer, Azure, Hotmail, Windows Live, DirectX, XNA, X-Box…) that every important announcement about a new Microsoft product is drowned in the sea of announcements for other product lines—effectively forcing Microsoft to use its Microsoft brand to ensure recognition and trust, and rely on the individual product brands to push new iterations (Visual Studio 2010). Hence the trouble of pushing Azure, which falls somewhat outside of the existing brand lines, and a reliance on the early users of the technology (the 2010 partner on the Microsoft Azure platform is Lokad, a young french company founded by Joannès Vermorel, a fellow Normalien).

Adobe has the same issues as Microsoft on a smaller scale (Flash, Photoshop, Illustrator, Acrobat, Reader, Flex, LiveCycle…) and introduces new product lines by inserting them into its extensive creativity pipeline (using Flex instead of Silverlight makes a lot more sense if your company is built around the Adobe Creativity Suite, just like using Silverlight instead of Flex is better if your company is built around Visual Studio, .NET and IIS). It’s not so much eager expectation (I can’t wait for the new Adobe product) as a slippery slope (I guess using Flex makes sense in our situation).

The key is to launch a product that benefits from the name of previous products but does not compete with them. Apple does this by concentrating on the release of new product lines. Sure, the iPhone 4 is good and a lot of iPhone users care about it, but the emphasis was clearly placed on the nearly simultaneous release of the iPad. Blizzard does this by being in the video game business (same franchise, new story, new gameplay, and the fun of discovery) and switching between four successful product lines to leave plenty of time between iterations (12 years between SC and SCII, 6 years between WCII and WC3, 5 years between Diablo and Diablo II).

So, Adobe and Microsoft are stuck in a mire where they do not have the communication leverage to release new product lines like Apple does, and they’re expected to release new versions of their software too often to keep the excitement alive. It’s interesting to see the names of Visual C++ iterations through the ages: they were names Visual C++ N.0 from version 1.0 to version 6.0 (over the course of only five years – given the current release rates, StarCraft 6 should be expected in early 2058), then they noticed the glamour of N.0 was dwindling and released Visual C++ .NET, confusing an entire generation of novice C++ programmers into thinking it did not support non-.NET C++. Since then, they have resorted to a yearly naming scheme like the Office series because having FooBar 2003 in the year 2010 makes you want to upgrade in a way that no Version 10.0 will.

In short:

  • Apple: communicates on new product lines, quietly releases new versions of existing product lines. New product lines garner market attention and improve sales.
  • Blizzard: relies on existing product lines, rarely releases new versions. Infrequent releases and franchise branding garner market attention and improve sales.
  • Microsoft: communicates equally on new product lines and frequently released new versions of existing product lines. Market attention is too diluted for buzz or excitement to grow significantly.

Back to the point. In the web era, online software does not really have versions. You can’t make people pay to use version 2.0 of your web site because everyone expects you to upgrade your web site to version 2.0 for free for everyone. This is fine if you’re Microsoft or Adobe; the subscription-based model means you don’t have to try as hard when releasing new versions, because there’s no version 1.0 competing against your new 2.0 : your subscribers pay you either way. And the Apple strategy becomes even stronger, since there is no longer a constant buzz of new versions being released—all the marketing can concentrate on pushing forward the new product lines, like Facebook did for their Open Graph API.

However, the Blizzard strategy is completely destroyed by this approach. By delivering new updates transparently on a weekly basis, we’re cut off from the possibility of releasing a grandiose new 2.0 version of our software and cashing on the sequel effect.

Your thoughts on this? If Facebook were to release an FB II that you would have to pay for, how would you feel? If you own an online business, how do you handle this?

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(A silly theory about) Wealth Distribution

Published
by
Victor Nicollet
on July 21, 2010
in Strategy
. 2 Comments

Had there been any newspapers left, their headlines would read «Apocalypse Strikes! Only twenty survivors found on planet.» But there are no newspapers: whatever you need the nineteen others to know, you can actually go and tell them face-to-face.

So, you start creating a society from scratch. You need food, clothes, shelter, sex (let’s not deny it), and an internet connection to check my blog regularly. Trust me, I have a T1 connection in my backyard bunker. Anyway. Intially, everyone is entitled a fair share of resources, but over time people work to provide themselves and others with the basic necessities and trade.

Every day, you go out and spend a little part of your wealth. If you’re rich, you might spend only 4%, but there’s always minimum amount you need to spend to survive, even if you’re dirt poor. Oh, and you only have time to trade with four other people, because otherwise there’s no time for you to actually work on surviving the apocalypse.

This is what the situation looks like: (RSS readers, please visit the page if you don’t see the applet below)

Every line in the histogram represents the wealth amassed by a given person, and below every line is the number of people that trade with that person. Play with it a little bit: the customer graph is randomly generated every time you click the button.

Done? Good. There are several lessons here:

If nobody gives you money, you go bankrupt

This one is pretty obvious. Every time there’s someone with no «customers» they end up running out of money.

You can go along with only a few customers

This one is a little bit more surprising. If you give money to four people, and only two people give you money, how can you survive?

Actually, it’s pretty obvious: if you’re a wage slave right now, you have only one person giving you money, but you spend money on groceries, several utilities, taxes… all that matters is that whatever amount you get from other people is larger than what you spend.

In the simulation, most two-income survivors end up bankrupt because their two customers are poor and therefore don’t spend enough. But sometimes, they manage to latch onto high-spending survivors and earn a decent living as a consequence.

More customers does not imply more wealth

Again, in the simulation, it’s not uncommon to see five-customer survivors become more wealthy than six-customer survivors. In fact, some very lucky three-customer surviors can earn as much as unlucky six-customer survivors. I’ve seen a 5-customer beat an 8-customer once.

This is quite logical: I would rather have one rich customer who pays me €1000 every day, than ten poor customers who only pay me €10 a day.

I guess the main lesson here is, when the Apocalypse comes, make sure you buy my stuff.

Anyway, the above model is extremely simple, and does not take into account charity, families, debt, growth or the fact that there’s a minimum price to buy certain products. Do you think any of these would change the results significantly? I’m really interested in the answer, so please drop by the comments section below.

Related Surviving Posts

Anti-Selection

Published
by
Victor Nicollet
on July 20, 2010
in Strategy
. 1 Comment

Today, you’re a car insurance salesman. You set up shop in a small town with only two car owners. The first one, Charles, is an excellent driver. He has owned a single well-maintained car for 20 years and still has his driver’s license from 25 years ago. Never had an accident. Never had a speeding ticket. The second one, Boris, owns the same car as Charles, because he crashed the previous one into a tree two months ago. He’s had ten accidents so far and lost his license twice.

car-accident

One day, a man comes to buy car insurance. You have no idea whether he is Charles or Boris. What price do you offer?

Tough luck. If the man is Boris and you offer a price that’s fair for Charles, he will gladly accept and collect the insurance when he has an accident next month. A loss for you. If the man is Charles and you offer a price that’s fair for Boris, then he will flatly refuse. A loss for you again.

So, you get a choice between having only Boris as a customer, or having both Charles and Boris as customers but losing money to Boris’ reckless driving.

This is anti-selection : the measure that lets you reduce your losses (increase the cost of insurance) drives the profitable customers away. It’s a pervasive issue for insurance companies, and is the main reason why health insurances require a complete check-up before they let you sign anything : they need to know whether you’re Charles or Boris before they can decide on a price.

So what? Why should you care about the problems of the insurance industry?

You should care because this happens in other businesses as well. Almost every business has profitable customers and non-profitable customers, and should take great care to eliminate the latter to only keep the former.

YouTube is a great example of avoiding anti-selection. Back when it was created, there were several services for storing images and videos online, and all of them had similar concerns about bandwidth and storage space. The standard solution was to cap the bandwidth of individual images: even today, ImageShack will stop displaying an image after it has exceeded its bandwith limit.

YouTube went without any bandwidth limits. It turns out, when you have a public video-sharing website, you want people to know about you, and a video with a million views is a far better way of getting attention than a video with ten views. Had they added bandwidth limits for videos, it would have prevented the popular videos from creating awareness for YouTube, while leaving the least popular videos alone. That’s anti-selection at work : reducing bandwidth costs by eliminating those videos that are the most profitable to them on the long term.

Another classic anti-selection pattern is customer support. Some customers just cost you too much because of the time they spend calling you or returning your products. It’s tempting to hide behind an offshore support center designed to shield you from your customers (I know, it sounds silly).

One month ago, I signed up for a promotional offer: pay €3.15 per month to get two monthly magazines and a nice sign-up gift. They sent me the magazines for the first month, but did not send me the gift or charge my card. No magazines came for the second month.

On their website, the order is still “pending”. I had no idea why, so I went for the “contact” menu entry, which sent me to some kind of FAQ (first mistake). There, I picked “What is the status of my order?” which opened a contact form that was not pre-filled with the contact information of my account (second mistake). I reluctantly filled in the form, noticed there was no “question” field, and waited. The next day, I received an e-mail telling me where I could find my order status back on their web site (third mistake).

So, I’m basically a good customer willing to hand them money every month and their brain-dead customer service forbids me to do so. Nice job, Prisma Presse.

Look at Zappos: they allow anyone to return their shoes for free, for a full refund, no questions asked, up to one year after buying them. They’re begging Boris to abuse the hell out of their return policy! But making Charles happy ultimately brings higher profits than making sure Boris stays away from them. Not to mention the attention they get for being so extreme.

Ask yourself this simple question: who are your Charles customers? Not necessarily those who bring in the most dough, but those who actually help you grow your business through feedback or sponsoring of other customers or saying nice things about you on social media… and who are your Boris customers? Are there so many of them that you need to take action?

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