Archive for the ‘Frameworks’ Category

Incentivize Users to Drive Traffic to Your Site

Tuesday, May 4th, 2010

If you want to get a lot of cheap traffic to your site and quickly build up a user base, then incentivize users to spread the word and market your site for you.  Pyramid schemes work because users have strong incentive to attract more users.  While illegal and non-sustainable, they are still a good example of the how powerful it is to have your users work for you.  SEO traffic takes time to build and can rise and fall with competitor efforts and algorithm changes.  SEM traffic costs money for each user and grows linearly.  Word of mouth traffic grows exponentially.  Below are some examples of sites that have thrived from giving users incentive to spread the word and get their friends involved.

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Today’s Weak Products are Tomorrow’s Disruptors

Saturday, April 17th, 2010

Many great products are very underpowered to start.  Laptops were much weaker than desktops when they were first made, but the gap shrunk considerably over the years and the benefit of portability made it worth the slower speed and functionality for many consumers.  Wikipedia wasn’t nearly as useful when it first launched, but got more useful every day as people added and edited articles until it turned into a resource that millions of users trust as much as a ‘professional’ encyclopedia.  If the functionality and method of attacking a problem is valid, then it doesn’t matter if the product is weak when it first launches.  Some of the most powerful products are those that constantly get stronger the more people use them or the more data they collect.

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Increasing Relevancy of Recommendations with Human Pyramid – Part 2

Monday, April 12th, 2010

In the previous post, I proposed a six layer human pyramid that could overlay data-driven relevancy and discussed the bottom 3 levels as they relate to a ‘Recent Releases’ dvd movie website.  In this post, I’ll describe the top 3 layers, which are potentially the most accurate filters, but can be difficult to accurately achieve.  For reference, here is the pyramid again:

Recommendation Pyramid - Personalized, Social, Community

The bottom 3 layers focus on other people: what critics like, what the community likes, what my friends like.  The top 3 layers shift away from this and move the focus to me.  They are personalized to my tastes, which adds a layer of friction to the service, as I must first provide information about myself to the site before it can use these layers as filters to better serve up relevant results.  Each layer going up needs more data about me than the last to be successful.

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Increasing Relevancy of Recommendations with Human Pyramid – Part 1

Sunday, April 11th, 2010

When building a recommendation site, product or service, there are six human layers you can pile on top of pure data-based relevancy. To define the scope of ‘recommendation product’ more clearly, any search service is a recommendation service. Google is recommending websites to the user based on the search term and the page ranks, meta data and inbound links to the relevant websites. If a user gives input to a website and the website then returns output based on that input, then it is a recommendation service. The 6 layers are illustrated in the pyramid below, with the top level being the most accurate, but also usually the hardest to accurately achieve.  In this post, I’ll discuss the bottom 3 layers, while saving the top 3 layers for tomorrow’s post.

Recommendation Pyramid - Personalized, Social, Community

I’ll use the example of a ‘Recent Releases’ dvd movie site to illustrate the 6 pyramid levels. Without the pyramid, the site would show the 90 most recently released dvds, either alphabetically or chronologically. Instead of making the user sift through all 90 titles and make a decision based solely on name, plot, genre, cast and crew, we can add some or all of the layers below to filter the list to the most relevant releases and give the user more data to use when making a decision. This increases the signal:noise ratio, which is an important meta strategy for the web as a whole, as the internet is full of noise and getting noisier each day with tweets and status updates and blogs and microblogs, etc. Filtering through all of the content on the web to find what is relevant and useful to you will be of growing importance and solutions to this problem will be a big part of the next phase of the web.

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Revenue Management

Saturday, April 3rd, 2010

Products and Services should be priced by what the market is willing to pay, not what they cost to make or provide.  However, there are many different price points available in the market.  There are some customers that will pay a premium for your product or service because it brings them enough value or they just aren’t very sensitive to price.  Other customers want a much lower price in order to buy from you.  If you set your price point at the lower end, then you’ll gain more customers, but will be leaving money on the table.  A higher price may bring in more revenue per customer, but decimate your potential user base.

It isn’t always clear what the best price is for a product or service, but what is clear is that the closer you can get to charging each customer their max spend, the more money you’ll make.  To do this you need to study your market and customers and make educated guesses at the number of customers you can bring in at various price points.  Then, you need to figure out how to charge the price sensitive customers less while still charging the customers who don’t care as much about price a premium.  Doing this is called Revenue Management.

Companies accomplish the above in a variety of ways.  Electronics manufacturers sell refurbished goods, which allows the price sensitive customers to buy in at a lower price point while still getting a higher amount from the customers who buy new.  Golf ball makers will use a sharpie to put an X on perfectly good golf balls and then sell them at a discount as balls with cosmetic imperfections.  Yeah, they have an X on them, that is the imperfection.  This allows the manufacturers to still charge top dollar for the regular balls, keeping their place as a premium brand, and also get customers who can’t afford the premium price to buy the X-out balls.

Another application of Revenue Management is the attempt to shift customers from busy times when the service sells out to the slow times when business is idle.  Golf courses charge less during the week than they do on weekends because they are booked on weekends even with the higher prices.  By discounting weekdays, they bring in some customers they wouldn’t otherwise.  Movie theaters do the same thing with Matinee pricing and many restaurants have lunch specials and happy hour. The danger here is if you discount slow times and your busy time customers shift to the discounted times leaving you with open availability during the premium time slots, causing a loss in revenue. The time and amount of discount need to be properly planned as the intent is to bring the overflow traffic of the busy times to the slower times, where they will provide revenue for you as opposed to going to the competition because you are booked.

Pain Points – Treasure Map to Sweet Spots

Thursday, April 1st, 2010

Pain Points are the parts of a process, product or functionality that annoy or even block users.  By definition, they are not fulfilled by Competitors and are desired by Users.  Those are 2 of the 3 ingredients of Sweet Spots.  The only thing missing is your capability to ease the pain.  So take a look at what the pain points are for your customers and find a way to solve them and you’ll have a differentiating offering, or Sweet Spot.

Headache

One of the pain points for free web-based email was the full inbox due to limited storage.  Google saw that pain point and found a Sweet Spot with a 1gb inbox (256 times larger than the 4mb standard at the time), which made Gmail massively successful and saw people paying upwards of $100 for an invite when it launched.  Netflix solved the pain point of driving to the store to rent and return movies on time by dropping return dates and late fees and using prepaid envelopes so customers didn’t have to leave their home to send and receive movies.  Paypal saw the pain point of transferring money to people online and made it easy to send money to anybody who had an email address.

For most industries it is easy to see the pain points; if not, just ask your customers.  Sometimes pain points can’t be easily solved, but sometimes it just takes a little innovation to give big relief to users.  Perhaps the last time solutions to a pain point were considered the technology, economics or other factors prevented a solution from being built but maybe now those factors have changed, opening up the door for a sweet spot innovation to provide a competitive advantage.

Online Products Should Relate to Offline Experiences

Tuesday, March 30th, 2010

People do and understand what they know.  They don’t read manuals for websites and most sites don’t have commercials telling us why we should use that site.  For an online website, product or feature to take-off, it helps if the user can quickly and easily relate the functionality to offline experiences.  Users spend only a few seconds when they land on your site or look at an unfamiliar feature of your site before deciding if they want to continue or not.  If they easily understand what they see then they are more likely to proceed.  Also, if you want users to champion your product, then they need to be able to easily explain it to others so that the people they talk to “get it” and the ideavirus can spread.

Hopefully this isn't your user!

So one framework for creating new ideas is to examine real world behaviors and ponder how they could be translated to the online paradigm, preferably enhanced greatly by leveraging the power of the internet and software.  Note that this does not mean that you can simply port offline activities online and expect to be successful.  As you look to build products and functionality for your website, consider what offline behaviors or products they relate to and how a user will view them with that context in mind.

One of the main use cases for the internet is to enhance what people already do offline.  Email is a faster form of the mail and online shopping is usually cheaper, faster and offers more options than offline shopping. Online news is instantaneous instead of daily, from many sources instead of a handful and  online radio is customizable and commercial-free.  A few more quick examples:

Virtual Gifts – It has been historically difficult to get users to make micropayments online.  Users don’t want to go through the hassle and security risk to make  a $1 payment here or 50 cent payment there.  One of the very few places that micropayments have gained traction is Virtual Gifts, which is estimated to be a $1.6 billion industry in 2010.  Our society loves to give gifts so it’s pretty obvious that users get the idea of virtual gifts as soon as they are exposed to it.  By allowing users to quickly and easily mimic their offline behavior of gift giving, Virtual Gift merchants have struck gold.

Online Reviews – People love to spread the word about businesses and products that they either love or hate.  They want to help people find the gems and avoid the duds.  Online reviews tap into our desire to tell others about our experiences.  In the past, if you had a bad experience you may call 5 of your friends and family to warn them about the business or product.  But online you can tell your story once and broadcast it to thousands of people across the globe.

Don’t Think Outside the Box – Expand It, Compress It, or Build a New One

Monday, March 29th, 2010

The phrase “Think Outside the Box” is thrown around a lot.  It can be helpful: open brainstorming, writing down everything you think of no matter how out there or implausible it is, can lead to some unique solutions as you process the ideas, attempting to make them feasible.  However, what is meant by thinking outside the box is really removing the constraints that you place, consciously or subconsciously, on potential solutions.  It may be that you have ingrained prejudices about how things should be done, or that the industry standards are unknowingly holding you back from finding the best solutions.  This is why many times an innovation in an industry comes from someone new to that industry.  They aren’t prejudiced by “how things have always been done,” and can thus see an “obvious solution” that alluded the brightest in the field.

The Danger in Thinking Outside the Box

"Outside the Box" isn't always the most productive place

“Outside the Box” is a BIG area.  There are infinite ideas outside of the box because there are no constraints.  It can create too much noise, drowning out the potential solutions in a sea of implausible or unhelpful ideas.  A helpful alternate exercise is to break down the box that you are in.  Determine what constraints make up the boundaries of your box and figure out which need to be thrown out and which should be kept.  This will build you a bigger box, which hopefully contains the solution you seek, as you remove those unnecessary constraints.

If you determine that there are no constraints that should be thrown out, then you can compress the box by finding additional constraints to add to it.  If you are accurate that there are no incorrect assumptions, then the solution exists “inside the box” but the box may just be too big to easily find it.  The noise of all the potential solutions from a too-large box is drowning out the real solutions.  So hone in on the solutions by compressing the box, raising the signal-to-noise ratio until the solution is easier to find.

Another method is to find a new box.  Start from zero assumptions and add constraints to form a new box.  Logically think through what constraints should be in place and why instead of blindly putting the standard constraints in place, which would simply build the original box again.  Perhaps the new box will yield solutions that were hidden from you before.  If you only put in place the appropriate boundaries, then you will still have the potential solutions inside your box, but the box won’t be infinitely large like the area “outside the box.”