It's Always Been About Trust

Sherpa Ventures released a comprehensive presentation on the “on-demand" economy the other day. It’s worth flipping through it if you have some time.

Slide 8 contrasts the “village economy” with the economy we have today and it got me thinking...

We’ve gone from:

  1. The general store where everyone in town knows and trusts the owner to...
  2. Large, main streets with lots of stores with less intimacy and less trust to...
  3. Larger, big box retailers with much less intimacy and much less trust.

As stores have become less intimate and less personal, retailers realized that, in order to compete, they had to try to maintain the level of trust that the owner of the general store had with his or her customers. That led to massive investments in brands – Wal-Mart, Best Buy, Macy's etc.  They have built brands so that you know they’re low cost, high quality, reliable, etc.  

Every customer couldn't know and trust the owner but every customer could know and trust the brand, the thinking went.

But in the new economy, constant connectivity, new payment platforms and reputation management programs (ratings and reviews) have recreated this high level of intimacy and trust, without the customer knowing the owner or knowing the brand.

"I don’t know that restaurant but it has a great rating on OpenTable."

"I don’t know this artist, but people on Etsy like her."

"I don’t know the guy that owns this apartment in Paris, but people on Airbnb trust him."

The point of this post is that, regardless of the mechanics that drive our economy, it’s always been about trust. Whether your’e relying on your personal relationship with the owner of the general store on the corner, or you’re relying on Best Buy’s brand when buying an expensive flat-screen TV, or you're relying on a five-star review rating when accepting a ride from a stranger on Uber -- it’s always been about trust.

Facebook's Defensibility Is Gone

Traditionally when people have thought of Facebook and their defensiblity, they've pointed to its ubiquity and the size of its network – at last check they had something like 1.1 billion active users. People reasoned that Facebook would continue to dominate social because it's the one place that has profiles for all of your friends. All other social  networks would be forced to plug-in to the Facebook ecosystem. But as Facebook’s defensive purchase of WhatsApp shows, this is no longer the case. Users are bouncing from social network to social network. Social apps are much, much less sticky than initially thought.

Benedict Evans and others have pointed to the seemingly minor but incredibly impactful fact that any newly launched social app can easily tap into your mobile phone's address book and instantly build out a network equal to -- or better than -- Facebook's.

This wasn't a big a issue when most users accessed Facebook through the desktop site, but now that most users access it through their mobile app, Facebook's unbundling has accelerated.

More and more users are migrating to WhatsApp for messaging, Vimeo for video, Instagram for photos, Foursquare for location sharing, etc. And there are niche players internationally that are focused on badges, stickers and other features valued in those communities.  There are now dozens and dozens of social apps in the app store with more than one-million downloads.

Facebook's strategy of running the social ecosystem seems to be shifting more rapidly than they had planned. Because of the mobile phone's address book, the approach of plugging social apps into Facebook may be losing steam. Instead of just letting them plug-in, the better approach, it seems, might be to buy them.

Some Thoughts On Health Monitoring Devices

About a week ago, there was a good discussion on Fred Wilson’s blog regarding news from Apple that the next iPhone will be largely focused on health & wellness. The thinking is that, with Apple focused on this problem, our phones will become the central device for tracking movement, sleep and other physiological measures – as opposed to the wrist bands and watches that have been dominating the space (hold on to your Fitbits, they could soon be a collector's item). The discussion on Fred's blog got me thinking about this trend and how it's going to impact health, wellness and healthcare. A few thoughts:

  1. To date, most of the popular devices are focused on prevention and self-management of wellness -- e.g. staying in shape. This is obviously a great thing, but to really make an impact, these devices are going to have to 1.) easily provide healthcare providers with digestible data and 2.) provide them with data that they actually can act on. From what I’m hearing, most of the data being captured on these devices isn’t terribly helpful to providers, and it’s definitely not actionable. There's lots of data being captured, but a provider wouldn't actually know what do with it (other than to cheer you on).
  2. A few providers have told me that, in the future, the most effective self-measuring device may actually live in our toilets. There's a huge amount of data that could be captured there (signs of digestive diseases, cancer screens, infections, low nutrient absorption, protein levels, etc.). This kind of data passes the 'actionable' test, but it's unclear how this data will get to your provider.
  3. There's no easy way to transmit data from your home to your provider’s office. There are big HIPPA concerns around moving data from a home to a doctor's office. And even if it gets to the provider, it has nowhere to go. The big EMR vendors-- the software makers whose products providers use to manage their patients' health -- haven't opened up to accept this kind of data, much less put it in a format that's digestible and actionable.
  4. Finally, once actionable data gets to your provider in a digestible format, we have to ensure that there are payment models that incentivize providers to actually do something with it. For the most part, this doesn't exist yet. More and more payers are offering outcome-based plans but it's unclear how self-monitoring devices will fit into that model. And payers will have to agree to reimburse for this kind of health monitoring.

There are obviously lots of challenges in getting the quantified-self movement to impact healthcare in a productive way. But the news that Apple is going to make an aggressive move into this space should give us lots of hope that some solutions are on the horizon.

Internet Marketplaces: Buyer Utility & Seller Reviews

Charles Hudson had a good post this week titled, Marketplaces, Rating Systems, And Leakage. In it, he talks about leakage in online marketplaces. Leakage defined as a user coming to a marketplace to transact and then completing subsequent transactions off of the marketplace.

Once they’ve acquired a new customer through a service, there’s a significant financial incentive for sellers (Open Table restaurant owners, Uber drivers, Task Rabbit workers) to try to get the user to make their second transaction offline – to avoid paying the marketplace a commission.

But these marketplaces aren’t seeing this type of behavior. They’re seeing that subsequent transactions are staying in their marketplace.

The reason for this is twofold:

  1. The user values the utility of the service (it’s much easier to book a restaurant reservation on Open Table than it is to call, wait on hold, and find they don't have any tables tonight).
  2. As Charles points out, sellers place a high value on reviews from the marketplace. A commenter notes that he once offered to pay for his Task Rabbit project offline and the seller declined. The seller would rather the transaction happen on Task Rabbit so a review gets logged for his work, improving his Task Rabbit reputation. For savvy sellers, a good review on a trusted marketplace is like gold.

Internet marketplaces are always at risk of becoming a lead generation service instead of the central spot where transactions happen. To keep people transacting in the marketplace, it’s important that buyers value the utility of the service and sellers value the reputation gained through post-purchase reviews. Open Table, Uber and Task Rabbit do both of these things well.

Amazon Drones & Offline Spend

[youtube=http://youtu.be/98BIu9dpwHU]

There’s been a lot of hype around Jeff Bezos’ announcement on 60 Minutes that Amazon is building drones (see above) that will ship packages from warehouses to consumers’ homes within 30 minutes.  While this may seem crazy, it’s really a very well calculated strategy aimed at getting access to one of Amazon’s only untapped markets: offline consumer spend.

Offline commerce remains a trillion-dollar industry that most online sellers have yet to tap. It’s still true that most consumer disposable income is spent locally -- restaurants, bars, coffee shops, gas stations, salons, malls, etc.

Amazon and other online retailers have struggled to tap into this marketplace. But lots of them are trying hard...

Consider a company like Trunk Club that sends consumers a trunk full of clothes every once in a while, allowing the consumer to keep what they like and send back what they don’t. With free shipping.

Or Dollar Shave Club that sends razors and other toiletries each month at rock-bottom prices. Check out their brilliant promotional video that went viral a while back.

Or Warby Parker that ships you three different styles of glasses at no cost so you can try them on. And you ship them back for free. For every pair that's sold they donate a pair to a person in a underdeveloped country.

Or Groupon that sells access to local salons or gym memberships or karate lessons at steep discounts.

All of these companies have built strategies that are attempts to tap into local, offline spend -- and the Amazon drone is no different. By shortening delivery times they're hoping to keep people out of stores and in their homes buying goods online. This is a fun trend to keep an eye on.

Your Product Doesn't Sell Itself

Blake Masters posted his notes from a class that Peter Thiel taught at Stanford a while back. The class was focused on distribution for startups and the notes are awesome, awesome, awesome. I've been meaning to write about them for a while. They're a must read for start-up sales & marketing professionals. The whole thing is great but the piece I want to talk about today is where he points out that the idea that a product can sell itself is a complete myth.

Given all of the focus on product lately – particularly in the consumer internet space – you might be surprised to hear this from Peter Thiel. But he’s spot-on. Here are the key paragraphs:

People say it all the time: this product is so good that it sells itself. This is almost never true. These people are lying, either to themselves, to others, or both. But why do they lie? The straightforward answer is that they are trying to convince other people that their product is, in fact, good.  They do not want to say “our product is so bad that it takes the best salespeople in the world to convince people to buy it.” So one should always evaluate such claims carefully. Is it an empirical fact that product x sells itself? Or is that a sales pitch?

The truth is that selling things—whether we’re talking about advertising, mass marketing, cookie-cutter sales, or complex sales—is not a purely rational enterprise. It is not just about perfect information sharing, where you simply provide prospective customers with all the relevant information that they then use to make dispassionate, rational decisions. There is much stranger stuff at work here.

To emphasize his point, he uses this framework:

Consider the quadrants:

Product sells itself, no sales effort. Does not exist. Product needs selling, no sales effort. You have no revenue. Product needs selling, strong sales piece. This is a sales-driven company. Product sells itself, strong sales piece. This is ideal.

If you believe that your product is so great that it can sell itself you’re either delusional or your aspirations aren't nearly high enough – and it’s great to see a hugely successful, product-driven investor make that point.

Sell The Concept Before You Show The Data

The other day I wrote about how I believe that salespeople should go easy on the data in their initial sales presentation. I feel this way because 1.) I think the right approach is to sell people on your product's concept first and then back it up with data and 2.) in that initial meeting most people aren't going to take your data seriously -- they don't trust you yet and they know that data can be manipulated to tell any story you want. Seth Godin recently wrote a two sentence post titled, Belief is more powerful than proof. This is really what I'm trying to say. That is, get your prospects to believe what you're saying -- to "buy" your concept -- and then back it up with proof.

For example, if you try to tell people that fewer and fewer people are using the internet, no matter how much proof you show, nobody is going to believe you. It doesn't make sense. They won't believe it.

But, if you tell people that mobile is the fastest growing internet access channel, due to increased Wi-fi access, the growing prominence of the "mobile-only" user, increased processing speeds, etc., people will believe you. They'll buy the concept. It makes sense.

Only after you've confirmed that your story and your concept make sense to the prospect should you show them the data (data that validates and drives home the point). Something like the chart below. Concept first, data second.

Mobile is eating the world

B2B Pricing & Malcolm Gladwell's New Book

Last Sunday night on a late plane ride back to New York I finished reading Malcolm Gladwell’s new book, David and Goliath. It’s not his best work, but it's still thought provoking and worth the time. David And Goliath

The cliff notes version of the book is that it turns out that David wasn't such an underdog after all. He was actually at a huge advantage in his battle with Goliath because he was able to change the rules of the game. Lots of underdogs win by changing the rules of the game so that they become the favorite. To prove his point, Gladwell discusses the civil rights movement, World War II, middle school basketball and many other examples. It's an interesting concept and a pretty good read.

Anyway, as part of his argument, he spends a lot of time talking about the difference between linear curves and U-curves. He argues that there are some things that correlate and may seem like they should sit on a linear curve, but in reality they sit on a U-curve.

Perhaps the most interesting and classic example that Gladwell uses is the correlation between class size and test scores. You might think that the class size/test score graph would be linear -- as class size increases (the X-axis), test scores go down (the Y-axis). That's the conventional thinking.

But it turns out that's not true. The reality is that when class size gets really small, studies have shown that test scores actually begin to decrease again. When there isn’t a range of opinions and when the teacher is too focused on one student, the quality of education goes down. Students benefit from the energy and discussion that comes with having lots of other students in the class. So the correlation between test scores and class size really looks more like a U-curve. Test scores are optimal when the class is around 25 students. Too big is bad and too small is bad.

U Curve

This is also true of crime and punishment. Many believe that as the severity of punishment increases, the amount of crime goes down. But studies have found that there’s a U-curve effect here as well. As punishment becomes more and more severe for smaller crimes, citizens begin to believe that the system isn't fair. That it’s us against them. And they commit more crimes as a result. So you obviously don't want punishment to be too lenient, but you also don't want it to be too strict. Like a lot of things, eliminating crime isn't simple. It isn't linear.

The corollary back to the story of David and Goliath is that you can't improve education simply by adding more teachers and reducing class size and you can't reduce crime by simply making punishment more severe. With complex problems, brute force doesn't always win.

With the U-curve in mind, I've been thinking a bit about price increases and how they impact client relationships. Traditionally, companies like to have modest annual price increases of, say, 2% to 5% per year. Companies like these small increases because they reduce the risk of putting a large strain on their client relationships or losing clients all together. And generally, due to inflation and other factors, clients usually find these increases acceptable.

But as you begin to raise the annual price increase more and more you'll generally see clients resist more and more; 2% is acceptable,15% is not. Like the examples above, on the surface, it seems that the correlation between price increases and client resistance should be graphed on a linear curve. As the price goes up (the Y-axis), so does resistance from clients (the X-axis). Keep your price increases low and your clients will be happy.

But I don't think this is true either. As price increases, client resistance certainly increases, but only to a certain degree. At some point, say 10% and up, in order for the increase to make sense there has to be a substantial and fundamental product change. A 20% increase isn't caused by inflation, increased labor costs, or a greedy salesperson. The increase is happening because there's a substantial change in the product and the product's value. As a result, clients should be much more accepting of this change and client resistance will start to go back down -- creating a U-curve. If the increase is sold and communicated properly, clients will begin to recognize that they're buying a much different product, or at least a much more valuable one. They'll understand that the rules have changed. In fact, I'd argue that at some point most clients would welcome these large but less frequent increases more than they would the small, annoying increases that don't show a corresponding increase in product value.

Increasing price is a requirement of any sustainable long term B2B relationship. And like most things, it's not simple. It's not linear. So when considering a strategic approach to pricing, companies should consider the U-curve and not rely on small, inflation-based annual increases that barely impact revenue. They should cancel those increases. That energy is better spent finding ways to change the rules -- to completely rethink product function, value and positioning. To make a splash. To delight rather than satisfy.

In short, the lesson of the U-curve is actually pretty simple. Don't avoid client resistance by keeping price increases small, modest and frequent; get clients behind them by making them big, bold and rare.

Internet Marketplaces Should Be Seller Agnostic

When you're running an internet marketplace (Etsy, OpenTable, eBay, Uber, KickStarter, Yelp, etc.), it's very tempting to give sellers the opportunity to buy premium placement. This could be things like homepage placement, better placement in search results or enhanced profile pages. Selling this stuff is certainly a very logical way to monetize your user base.

But the problem with this approach is that every time you give priority to a seller that pays you more money, you've muddied your value proposition and taken an equal amount of value away from your user base.

A good marketplace is one that creates an easy, beautiful, seamless and open buying experience that enables rating and recommendation systems so that users can decide the best sellers and the worst sellers. Selling premium placement effectively circumvents your users' preferences putting you in a race to the bottom.

Sure, by charging for premium placement, in the short term, you'll generate some cash. And you can use that cash to do some marketing so that you can generate more users. But over time, if you want to continue to grow, you'll need more and more money and more and more marketing. That will force you to create more and more premium placement options (subsequently devaluing your marketplace).

The better approach is to prioritize the user and compete in the race to the top. Give your users the best possible marketplace experience and let them decide which sellers should win and which sellers should lose. Those great experiences will result in buyers telling their friends to use your service and that will result in more people going through the experience and more people telling their friends to use your service and on and on.

That's the way to scale. And you can't do it favoring one seller over another. Give sellers a great experience too, but don't prioritize them. Prioritize the user.

Fighting For Mobile Real Estate

The other day I wrote about the unbundling of web services. That's where an aggregator comes along and adds value by pulling lots of different services into one place -- Craigslist and Facebook are good examples. As these companies become successful, competitors come in and bite off little pieces of their service and build slick apps that do one thing really, really well. StubHub and AirBnB are good examples of apps that are 'unbundling' Craigslist.

With this in mind, I came across this chart noting that later this year mobile internet usage is going to exceed desktop usage.

Mobile Usage

As mobile usage overtakes desktop usage, specialized apps that do one thing really well are going to be more and more important.

As we know, the challenge with a mobile app is that they're very limited in what they can do. You can't do as much on an app as you can do on the desktop. So as mobile becomes a bigger part of our lives I think we'll see more and more of this unbundling.

But I think we'll also see more and more bundling of retailers and merchants. That is, we're not going to download multiple grocery store apps or multiple clothing store apps or multiple travel apps.

Using myself as an example, I travel a lot. I book with 5 different airlines and probably 6 different hotel chains. As we move towards more and more mobile usage, am I going to download 11 apps? Of course not – I’m going to download one -- Expedia.

The interesting paradox with mobile is that while it will certainly continue to force innovation and specialized, "unbundled" web services, it will also drive lots of "bundled" retailer and merchant applications. Consumers will increasingly demand (and need) less and less clutter on their screens.

In short, the apps that will win the fight for real estate on our home screens will be those that serve a very narrow function very effectively (buying a plane ticket) while at the same time offering the broadest variety of options (tickets from every carrier).

BlackBerry's Rise And Fall

The Globe & Mail had a great profile of the rise and fall of BlackBerry last week that’s worth reading when you have some time – it’s a fairly long piece. It got me thinking, BlackBerry is going to make a great business school case study some day. Anyway, I’ve always been of the opinion that BlackBerry didn’t fail because of hardware. As a very loyal user for eight years, I've always believed that they failed because they were way, way too late to the app game. I remember buying a new BlackBerry long after they launched the app store and finding that the app store didn’t come installed. I had to go download the App Store app so I could start downloading apps. And when I downloaded it I found that it was super hard to use. It’s clear that apps weren't a priority for BlackBerry.

When Apple released its App Store it was the core part of the phone. It was easy to use and the app options were nearly unlimited. The advent of apps literally made the iPhone 100x better. That's not an exaggeration. And for some reason BlackBerry missed this opportunity and got into the app game way too late. As a result they literally had no chance of competing against the iPhone or the Android.

I’ve always wondered why they missed this and the Globe & Mail article offers some insight. Check out this excerpt:

Trying to satisfy its two sets of customers – consumers and corporate users – could leave the company satisfying neither. When RIM executives showed off plans to add camera, game and music applications to its products to several hundred Fortune 500 chief information officers at a company event in Orlando in 2010, they weren’t prepared for the backlash that followed. Large corporate customers didn’t want personal applications on corporate phones, said a former RIM executive who attended the session.

Surely BlackBerry had lots of problems but imagine operating in a super competitive business and having one group of customers holding you back from creating the best product you can for another group of customers?

Blackberry could’ve tried to serve both sets of customers but intrinsically and culturally their corporate customers put them at a massive disadvantage when it came to innovation and serving the consumer.

What a paradox: it seems that what once made BlackBerry so successful – large corporate contracts – may be the thing that eventually caused their demise.

When Selling A B2C Marketplace, Worry About The C, Not The B

A traditional tactic for enterprise salespeople is to be very focused on their prospect’s business – their strategic priorities, their competitors, what keeps them up at night, how they’re growing, etc. But when you're selling a marketplace the focus should be less on the prospect’s business and more on the consumer. Some examples of these businesses include:

  • Yelp
  • Etsy
  • Open Table
  • WorkMarket
  • Expedia
  • Skillshare
  • Amazon Marketplace

These businesses are selling their marketplace. They're really just a middleman between a business and a set of (hopefully) engaged consumers.

It's important for Open Table’s restaurant salespeople to understand their prospect’s business, but it’s much more important for them to understand the consumer. What do they want to eat, when do they want to eat, what kind of experience do they want, how do they want to be marketed to, etc. And most importantly, why is Open Table going to be their destination when they look for a restaurant?

Your customer’s know their business better than you do. There’s not much you can tell them that they don’t already know. But they very likely don't understand the consumer as well as you do. So when you’re selling a marketplace, don’t bore them by trying to be an expert on their business, educate them by being an expert on the consumer.

In An Internet Marketplace, Competiton Helps

Fred Wilson had a good post yesterday talking about the Fallacy of Zero Sum Game Thinking in internet marketplaces. The Zero Sum Theory suggests that as more sellers come onto a marketplace it hurts the early adopters. I’ve worked in internet marketplaces in 3 different industries -- real estate, e-commerce and now healthcare -- and I can tell you that this theory is a myth. I posted the following comment on Fred's blog:

The zero sum game theory is really just a misunderstanding of how good marketplaces drive traffic and acquire new users.

If most of Etsy's traffic came from them buying SEM or running TV ads, then yes, there is a fixed amount of traffic that sellers are competing for. But I'd bet that the vast majority of Etsy's new buyers come to them organically. That is, a buyer has a good experience on Etsy, then tells a friend, and that friend tells a friend, and that friend tells a friend, and on and on.

More sellers >> more good buying experiences >> more buyers.

The beautiful thing about marketplaces where traffic is driven by a quality buying experience (and word of mouth) is that instead of sellers competing with one another for traffic, they actually rely on one another for traffic.

I recommend checking out the original post. There's some great stuff in there on how, despite the controversy, Spike Lee raising money on Kickstarter actually increased funding for lesser known filmmakers. Great topic.

Some SEO Insights

I picked up some good insights on search engine optimization (SEO) over the last few weeks. For those that aren't familiar, SEO is the process of affecting the visibility of a website or a web page in a search engine's "natural" or un-paid ("organic") search results. So these are not the 'bolded' results at the top or right hand side of a Google search page. 80% of users click on the organic links instead of the paid links (personally, I almost never click on paid links).

16% of Google searches that occur each day were never searched for before.

Google’s primary job is to satisfy the user, so they’re going to send the user to the place that will make them the happiest. So the primary drivers of good SEO results (in no particular order) are:

    1. Number of inbound links to the content
    2. Amount of content
    3. Recency of content
    4. Click-through rate (from search result to click)
    5. Stickiness of site (time spent on site)
    6. Lack of dummy content (content that isn't relevant to the page or topic)

There have been incidents in the past where e-commerce sites would intentionally and blatantly ripoff a portion of their customers -- causing those customers to go to the internet and write bad reviews with links back to the offending site. It used to be that this kind of behavior would cause the site to be listed higher in organic search results (more links = higher SEO score).

To prevent this, Google has started to use something called sentiment analysis or opinion mining. By applying an algorithm against a variety of social media sites, discussion boards, blogs and news sites, Google can get a pretty good sense of whether or not the internet likes your site. And if they do, you'll rank higher.

Of course, sentiment analysis is complicated and not 100% reliable (due to cultural factors, language nuances and wide-ranging contexts) but is a useful way for Google to ensure that individuals aren't gaming the system.

In short, I think the key insight is that if you want to rank high in SEO over the long term, you have to do the right thing. You have to give users a site that makes them happy. You may be able to fool Google for a little while, but they'll eventually catch up and when they do you can forget about SEO as a source for acquiring new business.

Patient Acquisition Segments

I had a great conversation with a healthcare executive last week about segmenting and targeting new patients. When you think about acquiring new patients, you can bucket them into four segments. Patients that care about...

  1. Brand -- they want to see a doctor that is employed or affiliated with a prominent hospital or health system.
  2. Facilities -- they want nice, clean offices in a good neighborhood.
  3. Convenience -- they want easy access to good doctors near their home and to get in and out quickly
  4. Cost -- they want to pay a smaller co-pay, receive less expensive services, etc.

We agreed that very roughly 25% of patients prioritize brand, 35% prioritize facilities, 35% prioritize convenience and only 5% prioritize cost.

My personal take is that the fastest growing segments are the cost and convenience segments. Federal and state governments are providing a variety of incentives that are driving patients toward the lower cost providers, and I think we'll see that trend continue. And just like most industries that begin to move online (healthcare is a laggard in this area) consumers will begin to value convenience and ease of access more and more.

And I think it is the brand segment that is shrinking. As quality and cost become more and more transparent to patients, brands will become less important. If a patient finds a doctor online that went to a decent medical school, that has good reviews from other patients, and good availability, the brand that they're affiliated will matter less and less.

3 Random Marketing Thoughts

Here are three random marketing related things on my mind this week.

  1. Facebook is becoming more and more powerful as a marketing channel. One neat thing they’re doing is allowing advertisers to send them a list of all of their customers' email addresses. Facebook will then cross reference the advertiser's emails with their own user base and re-target ads to drive repeat purchases. I’m sure there are some privacy questions around this but that’s a super compelling proposition for advertisers -- a very efficient way to spend ad dollars.
  2. If you’re shopping for a television on Best Buy’s website, you might be shocked to see small advertisements for televisions from other merchants on the page (with links out to their websites). The risk that you might click on one of these ads is apparently offset by the high CPA Best Buy will get if you end up clicking away and buying the television from someone else. That’s pretty amazing – and a clear sign that the consumer is so much more in control these days. Best Buy's thinking is, "hey, if people are going to shop around, we might as well get a piece of it."
  3. A while back, I learned (the hard way) that when you misspell a word in the subject line of a marketing email, it’s very likely that you’ll get a higher response rate than if you had spelled the word correctly. The mistake jumps out and gets people’s attention. I got an email from Choice Hotels last week that spelled Worcester, Massachusetts as “Worchester”. I opened it right away…to find that they had spelled it correctly in the body of the email. Not a tactic I’d recommend, but sometimes you just gotta do what works.

The Photocopier Effect

I've written in the past that one of the secrets to negotiating with partners or potential partners is to always communicate the reasons behind your position. It's critical. The partner doesn't have to agree with your position, but you must explain the business logic behind it. People don't like things that don't make sense. With this in mind, I came across an interesting phenomenon called the "Photocopier Effect" in a Malcolm Gladwell New Yorker article from a while back. The Photocopier Effect proves, scientifically, why it's so important to emphasize the reasons behind your position. From the column:

...Harvard social scientist Ellen Langer. Langer examined the apparently common-sense idea that if you are trying to persuade someone to do something for you, you are always better off if you provide a reason.

She went up to a group of people waiting in line to use a library copying machine and said, "Excuse me, I have five pages. May I use the Xerox machine?" Sixty per cent said yes.

Then she repeated the experiment on another group, except that she changed her request to "Excuse me, I have five pages. May I use the Xerox machine, because I'm in a rush?" Ninety-four per cent said yes.

This much sounds like common sense: if you say, "because I'm in a rush"--if you explain your need--people are willing to step aside.

But here's where the study gets interesting. Langer then did the experiment a third time, in this case replacing the specific reason with a statement of the obvious: "Excuse me, I have five pages. May I use the Xerox machine, because I have to make some copies?" The percentage who let her do so this time was almost exactly the same as the one in the previous round--ninety-three per cent.

The key to getting people to say yes, in other words, wasn't the explanation "because I'm in a rush" but merely the use of the word "because." What mattered wasn't the substance of the explanation but merely the rhetorical form--the conjunctional footprint--of an explanation.

Two Good Super Bowl Commercials

There were two Super Bowl commercials that caught my eye the other night.  One really funny one from Doritos and a somewhat serious, but very cool one from Dodge, narrated by the great Paul Harvey. I've embedded both below.

Doritos - Goat For Sale

[youtube http://www.youtube.com/watch?v=4d8ZDSyFS2g&w=420&h=315]

Dodge Ram - Farmer

[youtube http://www.youtube.com/watch?v=AMpZ0TGjbWE&w=420&h=315]

Blocking Out The Competition

Over the last few months, Twitter has removed the auto-preview feature for Instagram Tweets. So now you have to click through the link in the Tweet to see the photo. Presumably Twitter did this to encourage their users to use their native photo sharing application. When LinkedIn redesigned their profile page about a month ago, they dramatically decreased the exposure of a user's Twitter account. In fact, it's not even on the main profile page, you have to click "contact info" to see a user's Twitter account. This is a drastic change given the LinkedIn/Twitter integration that used to exist.

So LinkedIn is blocking out Twitter and Twitter is blocking out Instagram.

I think this is dangerous for LinkedIn and Twitter. I've written in the past about how difficult it is to build a successful B2C business. Your product has to be so great and so valuable if you want to win. You don't have the luxury of a salesperson whispering in the user's ear giving them context on your decisions or information about what's coming soon and how the product will improve. The product has to be great, right now.

Of course, I don't know all of the facts behind these decisions. But I do know that the effect of blocking out applications that users like is bad. And in a B2C business, what's bad for the "C" very quickly becomes bad for the "B".