Building a New Product: Phase 1 – You Are Not Your User

April 7th, 2010

You’ve identified a pain point and figured out a solution to eliminate or alleviate the pain.  So you get to work building out the product, excited that you are creating the next big thing that will take the web by storm.  You spend months building it perfectly to your spec and then launch it and…users hate it, or don’t understand it, or don’t get it.  You feel discouraged and abandon the project, never realizing your dream of creating a successful product.

To avoid this, the first step is to admit that you are not your user.  You know every detail about your product; your users will spend a few seconds before deciding to leave or to engage with your product.  And since users scan, not read, your site, they may engage with your product in a way you didn’t intend. Assuming you know your users and how they will use your product can spell doom if you aren’t ready to test that theory and react if the findings are not what you expect.  For example, if you build a sprocket search site but also wish to allow users to search for non-widgets like cogs and widgets as a secondary task, you may build the following page:

Users will be Confused by this Interface

If you launch with this page, you will find that a good number of users will actually search for sprockets in the cogs search box.  They will scan right to middle of page and see the search box in a similar place to google and bing and enter their search there.  It doesn’t matter that you have 4 lines of text telling the user this is for cogs, not sprockets.  Users scan; they don’t read.  So your users will search for sprockets in the cogs section and get back no or invalid results, resulting in them leaving your site.

If you instead break up the page with an image before the Cog search, then users will not scan down to the secondary search area and will search for Sprockets in the Sprocket search in the header.  To you as the creator, the first interface was perfectly clear; after all, you had 4 lines of text specifying the purpose of the secondary search box.  But you are not your user.

Users aren't confused by where to search here.

As users scan, they are looking for familiar clues about what your product does and how it can help them accomplish their needs.  The clues they get are based on their experiences with other sites.  Jakob’s Law states that “users spend most of their time on other sites,” so if you diverge too radically from the standards users see on other websites, then they won’t be able to relate to or quickly understand your solution and will move on to the next website.  Especially in the early days, you should keep your site as easy to understand for new users as possible.  Later on, there are ways you can move past this to set new rules with your users, but don’t handicap yourself in the beginning.

Users Quickly Scan Webpages
How Users Scan a Website

In the first releases of your product, keep the site layout consistent with internet standards and put a very clear focus on the main call to action that you want users to respond to.  Differentiate on the product or service, not on an innovative landing page layout.  This will help ensure that users understand what they are supposed to do at a glance and allow you to funnel users down the path you desire.

Building a New Product: Phase 1 – Launching the Product

April 6th, 2010

Over the next few weeks, I’ll be focusing on a series of posts on building a new product, from launch to rapid iteration to driving long-term value.  The first phase, launching the product, will consist of multiple posts discussing important concepts to consider when first moving from ideation to getting the product built and out in front of users.  The posts in this phase will focus on understanding users.

Over the next four days, I will cover the following Phase 1 Topics:

  1. You are Not Your User
  2. Minimum Viable Product
  3. Measure for Success
  4. Be Prepared to Change Direction

Cable TV can have Relevant Content as well

April 5th, 2010

You’ve probably heard that Iron Man 2 is coming to theaters next month.  It’s not the only sequel to a major movie or movie series that will arrive in 2010.  Wall Street 2, Shrek 4, Toy Story 3, Little Fockers, Sex and the City 2 and new Twilight and Harry Potter movies are but a handful of sequels or remakes set to release this year.  The weeks surrounding the debuts of these movies are a prime time for people to watch the movies that came before them in the series, either for the first time or as a refresher.

However, over the years I’ve noticed, regardless of the cable company, that the earlier movies do not make it to On Demand during this time period.  If I go to the local Blockbuster, they are inevitably out of their handful of copies of the earlier movie.  Maybe there is a reason that cable companies seem to miss this revenue opportunity dozens of times per year, or maybe they are just too focused on new releases to notice.

I did a little research online and found that Professor Thorsten Hennig-Thurau, of Cass Business School in London has studied sequels in depth and found that dvd sales of the earlier movie do indeed increase when the sequel is released in theater.  People want related content; the internet may have pushed relevancy to the forefront, but it’s always been important to us.

Gas Stations Can Leverage the Internet to Increase Profit

April 4th, 2010

Gas Stations make most of their money on retail sales, not gasoline.  In fact, for many gas is a loss leader and sales inside the convenience store are what keep them afloat.  For some stations, most of their traffic comes during rush hours when people are not price sensitive and when people are in a hurry to pay at the pump and leave, not go inside and find a snack to eat.  So perhaps incorporating some Revenue Management techniques could help the station to bring in customers during the slower times, which also may coincide with the hours that people are more likely to have a snack craving.

Say a station currently charges $3.00 a gallon for gas at all times. They could decide to lower the price to $2.95 from 1-5 each day.  However, although the station is in a busy part of town, the road it’s on isn’t very crowded during that time of day, so the store sees only a 10% increase in customers, which doesn’t do much for the store’s bottom line.  The increase in customers doesn’t increase retail sales enough to make this a profitable play.

In order to fully realize the plan, the gas station could login to gasbuddy.com at the start of the discounted period and update their price to $2.95, making them the cheapest gas station in the area.  Now the price sensitive customers in the area will go a few streets out of their way to get the discounted gas and the gas station could see a much higher bump in traffic during the afternoon.  Gasbuddy is a free marketing vehicle for savvy gas stations, allowing them to leverage their discounted rates into a lot more traffic than relying solely on passersby to notice the cheaper gas and stop.

In the past, business owners would have to pay to broadcast sales to customers, but today there are online avenues to freely broadcast sales, no matter what category of business.  Gasbuddy.com is focused on gas stations and gas prices specifically, but sites like fatwallet and slickdeals can be leveraged for product and service sales on a local or national level.

Revenue Management

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.

Ease the Pain – Priority Baggage

April 2nd, 2010

In my previous post, I discussed finding Sweet Spots by figuring out ways to ease Pain Points.  The following is an application of that framework:

Two major pain points for Airline Travel are the time spent at the airport before and after the flight.  Over the past few years, focus has been on easing the pre-flight pain with ticketing kiosks, online check-in and the Trusted Traveler Program.  I haven’t seen much progress or innovation in easing the pain of the post-flight baggage process.

Baggage claim and exit sign in an airport

The delay from landing until the luggage arrives at baggage claim is a major pain point for many travelers.  Some choose to not check any bags in order to bypass the wait, but that’s hard for longer trips and especially now that you can’t take more than 3oz bottles of liquids on the plane.  So why not look at how another industry solved the same pain point?

I mentioned in the previous post that time was a pain point for mail.  Priority Mail and Fedex were offered to help ease that pain point and a similar solution could be implemented for checked luggage.  The airlines could offer ‘Priority Baggage’ which would be taken off the plane first and expedited to the baggage claim ahead of the other bags.  Customers that are on a tight timeline or just hate waiting for baggage would pay extra for this service.

Customers would instantly get the benefit of this service as they already realize that time = money and are familiar with priority mail services.  They are also now accustomed to paying for baggage check now that almost every airline charges for checked bags.  The airports already tag oversized and odd bags separately and even route them to a special area in the baggage claim for pickup.  Adding a priority baggage check service would increase revenue and customer satisfaction, and would be a competitive advantage that would gain some travelers choosing the airline solely for this service.

Pain Points – Treasure Map to Sweet Spots

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.

Digitizing the Real World: Virtual Cookie Jars

March 31st, 2010

In my previous post, I discussed a framework for thinking up new products based on Relating to Offline Experiences. The following is an application of that framework:

A low-tech method of saving money is the cookie jar, or envelope, system in which you take multiple jars and label each one: Car, Down Payment, Vacation, Christmas, Clothes, etc. Then you save a designated amount of money in each jar, building up the money over time so you can pay for your vacation directly from the Vacation jar as opposed to putting it on credit, taking money from savings, or trying to fit the vacation into the monthly budget. This system has been repopularized in recent years in the book Secrets of the Millionaire Mind by T Harv Eker. However, if one wants to use this system but prefers to keep their money in a bank for security and interest, then they would have to open, and manage, multiple savings accounts. And each would have to be setup to auto-deposit the specified amount of money from their checking account each month.

It would be much easier to manage if I could have one savings account and break it into as many virtual ‘cookie jars’ as needed. I could use a form similar to the following to setup transfers to my cookie savings account:

Add Funds to Cookie Jars

And then when I want to withdraw for Christmas shopping and a Winter Ski Vacation, I would do so with a form like this:

This savings account functionality would allow users to save money like they do without banks and software. The concept is simple for users to understand and see the value. Major banks like Wachovia, Wells Fargo, Chase, Bank of America, etc could allow this very easily by building an interface like above and a very simple database structure. This functionality would differentiate them from the other banks offering the same paltry 1.24% interest right now. They have already demonstrated that they have the desire and capability to innovate savings accounts with programs like Way2Save. Why not allow people to have one savings account at their bank with all of their cookie jars rather than having to open multiple accounts at multiple banks to satisfy their needs?

Online Products Should Relate to Offline Experiences

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

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.”