13 takeaways from this video: Continue reading “179. How to Run A Business: Superbrand Secrets From The Technology Industry”
20 important takeaways from this lecture:
00:01:13 With AltaVista in the 1990′s to win at SEO, all you had to do was have white text on a white background with all the keywords and you ranked number one on search engines. It was a really easy skill to learn.
Then came Google which ranked you based on algorythms, pageranks, inbound links, etc. But even in the early days simply having a listing on the Yahoo! directory got you to the top of Google searches as well.
Google’s adwords was the dawn of sophisticated SEO, which included buying paid clicks from Google and then reselling them through Ebay for a small margin using Ebay’s affiliate program. This became the precurser for ‘Internet growth marketing.’
00:02:26 A good product leads to customers, but you need those customers to stay on your site – retention. Retention is the single most important thing for growth.
Of course your monthly users will be 100% because they paid for the month. But what happens on the first day of the next month? The second day? How many of your users actually continue to use your product?
As long as you have a retention curve of % monthly active (Y-axis) versus number of days for acquisition (X-axis) which is parallel to the X-axis, you have a viable business and a viable fit for at least some sub-set of a consumer market.
What does good retention look like? Different businesses need different retention rates, so there is no one universal ‘good’ or ‘ideal’ retention rate. Look at your competitors’ rentention rates and then compare your retention rates to them.
Retention comes from having a great idea, having a great product to back up that idea, and then having a great product-market fit.
00:06:19 The number one problem I’ve seen inside Facebook for new products is that they don’t actually have market fit when they think that they do.
00:10:32 Assuming you have a good retention rate with a great e-commerce site with a 60% retention rate. To then take this position and then scale your business,
00:11:03 If you’re a startup, you shouldn’t have a growth team; the whole company should be your growth team. You, the CEO, should be the head of growth.
00:12:12 If you’re a messaging application, then the total monthly number of ‘sends’ is should be your most important number. If your users are only clicking ‘send’ on you application once a day, then your application probably isn’t their primary messaging system.
00:13:30 The second you have more than one person working on a project, you can no longer have 100% control over what everybody else is doing. And the thing is that it’s not always clear what the most important thing is for the company – the north star – the one thing that the company measures success by.
Of course a lot of your metrics will overlap: Daily Active Users will be pretty close to Monthly Active Users, Total Amount of Content Shared is also highly correlated to how many users there are because new users share new content. So you need to choose the deepest metric to be that one ‘north star’ metric that aligns with your company’s mission and values that you can focus on for the next few years and that guide your decisions.
00:16:32 How do you drive visiters to that magic moment when they become hooked on your service? With Facebook – as with EVERY other social media site – is connecting with your friends. That magic ‘Aha!’ moment is seeing that first picture of one of your friends already using the site. For Ebay it’s when you find that collectors item you’ve been looking for. For AirBnB it’s when you see a beautiful house, rent it, and then physically walk through the front door. On the rentor’s side of AirBnB it’s receiving your first order confirmation.
Think about what the magic moment is for your product, and then get people connected to it as fast as possible so that people come, sign-up, and then stay on your site. Then base your retention analytics around this and work on improving your retention rate.
00:10:50 When you are optimizing for growth, the people who are already using your product all the time are not the ones you have to worry about. Therefore it’s not always necessary to optimize for notifications (email updates that are automatically sent every time someone in a group updates an event – a new comment, uploaded a new photo, commented on your photo, etc.). Your power users are probably grown-ups and saavy enough to know how to use filters.
What you need to focus on is the marginal user – that one person doesn’t receive any notifications in a given day or month or year. If you’re running a social media site, then a low number of notifications probably means that that user isn’t connecting to their friends quick enough, and therefore won’t experience that magic moment you want them to to hook them on your product.
[EDITOR’S NOTE: For more advice on business growth, watch How To Start A Startup: Growing From Zero To Many Users.]
00:23:00 Assuming you’ve created a product that dominates all other products/services in your market, don’t just believe that the world will start banging your door down for your superior product. This is where marketing comes in.
00:23:42 Internationalization. One of the biggest barriers to long-term growth is language and dealing with competition that is growing up in other languages around the world.
Facebook originally begin as a university-only access, so each university was a barrier. Facebook’s decision to expand beyond universities to high schools was a shaking moment for Facebook as they questioned whether the site and its culture could survive. Again, Facebook’s expanding to everyone was yet another shocking moment for the company as their user-base exploded until they finally ran into a brick wall of 100 million users.
This was when Facebook’s growth team was set up and and we chose to focus on 10 friends within 14 days metric as the North Star to guide the decisions that would continue to grow Facebook.
To grow Facebook outside of the English language, we took the time we needed to build a site that not only Facebook translated, but also users could translate themselves through our community translation platform. Facebook was translated into French in 12 hours. Today Facebook is in over 120 languages, 80 of those were translated by the community of users.
Next, we prioritized the languages by focusing in the big six: English, German, French, Italian, Chinese and Spanish. But today Italian is no longer a top, and French and German are quickly disappearing.
00:27:20 Building for where the world is today is an easy mistake to make. Instead, take the time to build for a scalable and adjustable product that allows you to move with the population.
00:28:00 Virality can be looked at in terms of:
- Payload – how many people can you hit with any given viral blast?
- Frequency – how many times cany you hit them?
- Conversion rate – how much does it take to convert them?
Hotmail created the first brilliant viral compaign of its time by including ‘Email sent from Hotmail, get your free account here.’ to the bottom of EVERY email sent through their service. Today these email and social media providers allow you to import your entire email database and shoot them an email in just a few clicks.
Likewise, Paypal has both the buyer- and the seller-side to it. It’s mechanism for viral growth was offering money-back for people who sold on Ebay, and offered a ‘Sign up and get $10.’ Who wouldn’t sign up for it?
00:34:20 With virality, aim to remove as much friction from the flow as possible. Advertising online means people don’t have to see your billboard, remember your website, logon, find the register button, and then sign up.
00:34:38 Frequency and conversion are related in that the more times a person sees your ad, the greater the chance of recalling your brand in the future. However, it’s shown that the more times users see the same banner advertising, the less likely they are to click on the ad. This is why you should campaign with multiple banners.
[EDITOR’S NOTE: In a 30-minute interview on Dorm Room Tycoons, Dave Trott explains this concept as a branding campaign perfectly.]
00:39:00 When optimizing for keywords, do your research to know what consumer search for based on supply, demand, and value. For example, in the UK, people search for ‘cocktail recipes’ while Americans search for ‘Drink recipes.’
00:39:50 Next, build pagerank through valuable inbound links from high-authority websites and then distribute your link load internally so that Google’s bots don’t have to search very long or deep to find out if your website is relevant to a user’s search command.
00:42:38 If you spam consistently, your email will end up in spam and your email marketing will fail completely, your email will end up being blocked and your email will be bounced. Once email companies file you under spam, it’s very hard to get out.
This counts for SMS and push notifications as well. So be respectful and focus on creating titles that convert.
00:44:47 The most effective emails you can do are notifications, not newsletters. For example, you receive a lot of likes because you have a lot of Facebook friends. As a frequent user you certainly don’t want to receive a notification EVERY time someone likes or comments or uploads a photo. But for new and low-engaged, users those notifications are magic moments that turn the person into a loyal user.
What notifications you should be sending is the first thing you must think about.
24 important takeaways from this documentary:
00:10:01 “The icons of this generation are the ‘Like’ button, the ‘Tweet’ button, the ‘Rebog’ button. This is the biggest transformation that we’ve had in terms of communicating with consumers in our lifetime, and to not learn how to participate in those channels is outrageous; to stand on the sidelines is not an option.” – Bonin Bough, VP of Global Media, Mondelêz Int’l
00:12:48 “All those selfies you take and post on Instagram helped that company to sell for over a billion dollars. Send a tweet, and you help raise the value of Twitter to around $30 billion. Facebook is valued at around $140 billion. Those numbers aren’t based on profits, those prices are based on the number of likes they can generate; and likes don’t generate themselves.” – Douglas Rushkoff
00:13:10 “Likes don’t generate themselves. Thats why companies need kids to stay online clicking, and liking, and tweeting. They do that by giving kids the chance to be a part of the game: fame by association. Reach out to anybody, and there’s an implied promise that they might reach back.” – Douglas Rushkoff
00:15:50 “Social media is all about sharing; and that includes sharing the wealth. When kids with large audiences work together, everyone benefits." – Douglas Rushkoff
00:16:15 "There’s no point in not wanting all of us to help each other be successful and rise together.” – Tyler Oakley
00:17:57 “It used to be that if a kid didn’t have any connections, hardwork and talent were the only path to fame; and even that was no guarantee. But today you can build and leverage a social network.” – Douglas Rushkoff
00:18:45 “(You might) have genuine talent, but that’s beside the point. To get ahead you need to attach yourself to others who have mastered the game of ‘likes.’ It’s basically just merging all the fan bases together. – Douglas Rushkoff & Liam Horne
00:20:50 "You need to stop worrying about your followers and start worrying about the money.” – Steven Fernandez
00:23:04 Lots of people can do what you do. What you need is a way to cut through the clutter. – Douglas Rushkoff
00:25:50 If you don’t have a zillion hits, then you generally won’t get noticed by a sponsor.
00:30:18 If you’re connected to a person and that person likes a brand, and then you like the person and then as a result you like the same product, then now you’ve got a double-endorsement to your friends. – Oliver Luckett, CEO of the Audience
00:30:58 Get social media, then use social media to promote your career, brand, product, etc so that you get to the point where you have a social media network that you can sell. That is every SMART person’s goal with social media. You are your own media company. – Douglas Rushkoff and Oliver Luckett, CEO of the Audience
00:31:47 Start with the research and strategy phase where you really dig into who your audience is, and then figure out how your audience uses social media to communicate… The challenges would be using that audience in the way that you want to use them in order to see the results you’re looking for. Instead of selling the product to the audience, get the audience to sell your product for you. – Kendra Campbell-Milburn, Sr. Director for TGVLA & Douglas Rushkoff
00:34:04 What’s designed to look like a grass roots wave of excitement is actually a meticulously planned marketing strategy. It may be catching fire, but it was doused with gasoline beforehand. – Douglas Rushkoff
00:34:16 Day-by-day, hour-by-hour; absolutely nothing is left to chance. Your goal is to create a controlled brush-fire online to the point where the fans are convincing each other. All the little tid-bits you give them serves as fuel for the fire you’re trying to create… That is how brands both keep interest up and prep for the next one.
From the beginning to the end, every bit of the marketing strategy is being manipulated; a year out. – Brooks Barnes of The New York Times
00:34:45 Consumers aren’t just being marketed to, they’re actually part of the marketing campaign itself. – Douglas Rushkoff
00:37:02 Your consumer is your marketer. That is a real shift because it used to be a one way conversation of the marketer to the consumer, and now your consumer is doing as much as the marketer is and getting the message across; consumers are wanting to be as much a part of the process as the company will let them be. -Jane Buckingham, President of Trendera
00:41:10 Surprisingly, consumers can always tell when you’re ‘pushing’ something. So try to keep it transparent and honest because consumers know it’s your job and they know that you have to pay bills. – Tyler Oakley
00:41:55 ‘Selling out’ is not selling it anymore; it’s sort of getting the brass ring. If you get a brand to send you stuff, that brand realizes that you’re important enough that you’re an importance audience to reach. –Jason Calacanis, Founder of Insider.com
00:42:17 ‘Selling out’ doesn’t even exist as a term anymore. You don’t hear young people talking about selling out; I’m not even sure that they know what it means. – Alissa Quart, Author of Republic of Outsiders
00:43:17 Can you really win when you don’t make the rules? Maybe that’s why some of them are opting to become the game makers themselves. – Douglas Rushkoff
00:45:07 A seamless blend of marketing, media and everyday life; every moment of your consumer’s life can be turned into a branding opportunity. There are nuances in how you present things that create different psychological responses. Don’t even call yourself an ‘ad’ to consumers: call yourself ‘rewards’ and ‘moments.’ As consumers go out and experience the world, the things that make the most impact are the things that seemingly come up serendipitiously. Serendipity by design. -Brian Wong of Kiip and Douglas Rushkoff
00:49:50 Kids take the very marketing techniques that have been used on them, and use them on one another; all in pursuit of the same prize. – Douglas Rushkoff
00:50:30 Getting likes feels good; at least in the moment. – Douglas Rushkoff
How does your job fit into the advertising process? Data mining is typically one of the first things brands want done, either as a prerequisite to an advertising or marketing campaign or as an audit of the overall health of their brand. I work mainly with account planners and strategic planners. I don’t normally work with creatives, however that is something I would be open to doing.
Data mining is the study of monitoring consumer behavior. I begin by uncovering:
- Descriptive statistics: developing a snapshot of the consumer’s current behavior – age, gender, demographic, which of your product(s) consumers purchase and how often, how many coupons do consumers cash in, etc.
- Predictive statistics: using probability to anticipate what consumers will do, what, when and how they will buy your product next and assessing your brand’s position in the minds of your consumers.
For example, if data mining reveals that your brand’s typical consumer goes shopping every week, but only purchases your product once a month, the brand must address the problem and then encourage consumers to return. For example, perhaps:
- Your package size is large enough that they only need to buy your product on a monthly basis
- Your brand is considered a parity product and consumers don’t actively seek out your particular brand
In my experience, brands usually have their own data and it’s my job to organize that data, combine it with other available information such as questionnaires or online information and then interpret that data into actionable solutions for the brand. For grocery stores it could be your purchase history. With tele-communications companies it could analyzing the amount of time you spend talking on the phone and communicating via text message.
[EDITOR’S NOTE: Refer to the book Emotional Branding by Marc Gobé for more on how brands collect information about you and how you can use it to better meet your consumer’s needs.]
For example, I once worked with a large hypermarket that wanted to create a personalized mailing list catered to each ‘type’ of consumers who were shopping at their store: Single? Married? With children? If yes, their children’s ages? Etc.
For predictive statistics, the company had data from several questionnaires as well as a fidelity card program where families could register in exchange for discounts. With this data I was able to determine the family status of each individual customer in their customer base:
- How often they shopped
- Which products they purchased and in what quantity
- Which products they bought faithfully and which they bought periodically
- The hours during the day they usually when shopping
- If they cancelled their fidelity card, was it due to bad service or through a competitor’s marketing
This snapshot then allowed us to personalize the brand’s mailing lists by predictively anticipating the best products and promotions to offer each consumer category, when to schedule more cashiers to meet the influx of consumers, and so on.
For example, if your business is run on a contractual or a subscription model, then understanding who is unsubscribing and why will give you an indication as to who is likely to unsubscribe in the future. If you’re a tele-communications company and you notice that an unusually large number of consumers who typically use their phones more to send written communications than they do to talk to a person directly, then you might be able to deduce several things:
- The consumer didn’t use all of the services that came with the contract, either because the consumer didn’t care about the services, or perhaps because the consumer wasn’t sufficiently informed when they signed the contract.
- Disruptive mobile applications (such as the free Facebook messenger) may have diminished the tele-com’s current offers to the point where those consumers now want the least expensive offer available.
- A competitor, having conducted their own data mining and already uncovered the profitability of this developing consumer behavior may have launched a special offer aimed directly at that demographic.
- That your competitor’s special offer is so appealing relative to your current contractual agreement that consumers are willing to end their relationship with you for your competitor’s offer.
- That unless you act now, that identified percentage of consumers within your target demographic who prefer text messaging may soon be enticed to leave you as well.
Can you walk me through the data mining process? First, we sit down with the brand and create a brief to uncover the objectives of the company and the data mining process. I need to understand all of the problems the brand wants to solve. Typical questions we could ask include:
- What target(s) specifically does the brand want me to address? To be more efficient? Because a lot of customers are leaving for an unknown reason? To follow up on an advertising campaign and determine the campaign’s conversion rate and profitability?
- What does the brand think is the cause of the problem they’re having? This question is particularly important as a hypothesis to determine if the brand has any deeper underlying problems that need to be addressed such as brand mission or another internal inconsistency.
- What data mining have they already conducted and what were the results? This helps us compare with the previous results, know if we need to present the data in a particular way congruent to the previous data’s layout and could save time by not re-analyzing data.
- What data is available? How old is the data? In what format is the data?
- Who at the brand is in charge of the project and who else in the brand’s company might be interested in knowing the results of our analysis? This question is important at the beginning when I am determining the different variables because if later it’s discovered the Sales department could benefit from the analysis.
Step two is retrieving their data, either via USB key or through access to their online database, and configure it for my statistics software. There are many different software available for analyzing consumer data which can come in the format of: .txt, .xls or .csv files, for example.
Reliable data mining software include:
For step three I confirm that all of the data files sent to us can be correctly configured into my data mining software. If their data files were incomplete or corrupted, then I try to salvage what data I can before contacting the client to explain the problem and discuss possible solutions.
I then follow up this step to ensure that the values are correct and that there aren’t any important values missing. With all that correct I am now confident I can data mine and answer the objectives outlined on the brief.
Step four is analyzing for the descriptive statistics.
Step five is analyzing for the predictive statistics I mentioned earlier.
Step six is turning my findings and recommendations into a PowerPoint presentation that answers the brief for the brand to understand and act upon.
And finally, step seven involves incorporating the model into the brand’s database for future use.
From there, the findings may go to the strategic planner who incorporates the findings into his branding strategy or to the creative directors and copywriters who then create an advertising campaign.
Typical data mining models include:
- Scoring – the probability a consumer would do something such as purchase a particular product, unsubscribe to a mailing list…
- Text mining – analyzing open-ended answers and customer comments against a dictionary of words to determine positive and negative feedback.
- Percentage – percentage of consumers who are happy with a particular product
- Classification – regrouping people who have similar behavior and profiles and sort and adapt them according to each grouping.
[EDITOR’S NOTE: The books Consumer.ology by Philip Graves and Buy*ology by Martin Lindstrom as well as my interview with Peter Spear discuss the risk of including questionnaires in your data mining models, notably how questionnaires subconsciously influence the consumer’s decisions, thus potentially rendering the data gleaned useless.]
What is the importance of investing in data mining? Understanding your consumer is the fundamental building block of a brand and absolutely crucial to a successful communications campaign. Imagine spending all your money creating an advertising campaign or paying a public relations expert to communicate the wrong message to your consumers and potential consumers!
Secondly, basic problems such as a low conversion rate or a mass customer exodus with no apparent reason are often symptoms of a larger problem(s) that data mining can help detect shed light on.
At what point should I consider investing in data mining for my business? Data mining can be quite expensive, but like I said understanding your consumer is crucial. So monitor your global statistics: conversion rate, rate of consumers joining versus leaving, etc, and when you get to the point where you have so many consumers that you can no longer monitor everything they are doing, then is the time to consider periodical data mining analysis just to stay on top and in touch with them. You could run probably some pretty good statistical models with as little as 1,000 consumers.
What are some misconceptions brands commonly have about data mining? « Tu peux faire tout ce tu veux aux chiffres ! » Translation : “You can say anything with numbers!” Meaning, some brands may approach data mining with a preconceived outcome that they want the data miner to validate, regardless of what the actual numbers indicate. Like I said, it’s good to have a hypothesis so we can test your expectations against the actual data, but the objective should be better understanding your consumer, not making sure the numbers prove your point. If that’s what you want, then you’re wasting your time and money.
Another misconception is that data mining can be done quickly and easily. Rule number one is ensuring that all the data has been transferred correctly. That is the most important and time consuming step. If your raw data isn’t correct, then your results won’t be correct.
Another time consuming step is actually translating the results of the data mining into actionable information the brand can take and use.
How often should a brand conduct data mining on its consumers? It’s important to begin slowly and overtime invest more deeply. The thing about data mining is more you learn about your consumers, the more questions you’ll have and the more you will want to learn about them.
Facebook’s pages platform reaches only six percent of a brand’s followers; and it’s headed down to one to two percent.
If businesses want to make sure that people see their content, the best strategy is, and always has been, paid advertising.