07 important lessons from this lecture: Continue reading “115. Integrated Product Design: Building a Generalist/ Specialist Business”
24 important takeaways from this lecture:
00:00:54 Growth is the gap between conversion rate and churn. These numbers tend to be more mathematically based and measured, however as a startup user interaction tends to be more intimate than calculated.
00:01:37 The best way to earn $1,000,000,000 is to focus on the values that earn you your first $1,00. Get this right and everything else will sort of take care of itself.
00:03:20 In its early stages, Wufoo wasn’t interested in building softwware that people wanted to use that remind our users that they worked in a cubicle; we wanted to build a product that people wanted to love. “We were fanatical about creating meaningful relationships with our users.”
00:04:33 First impressions. Ask a person about their relationship with their significant other, and usually they’ll tell you the story about their first kiss or where they first met. First impressions therefore are important in the starting of a relationship because it is the story we tell over and over again.
Pass/Fail first time interactions – opportunities to seduce – tend to fall under:
- Landing Pages
- First Email
- Account Creation
- Blank/Starting Interface
- Login Link
- Ad Link
- First Support
00:05:00 Whether it is the car we drive, the clothes we we wear, the software we use, the more and more we use it, we eventually ascribe certain personality and characteristics to it, explaining that it behaves in a certain way.
00:07:52 Consider the emotion on your new user’s face as they interact with your product. Wufoo’s early login button below tested positive in early usability testing put a smile on people’s faces. Consider how the potential new user would describe your personality based on their first impression of your website/product.
00:10:10 Knowing what to put on your call to action, how to sell to and how to speak to your new users also requires knowing the personality of your target user and knowing what will urge them to buy your product or service.
00:10:40 Consider something as overlooked as your pre-sell marketing and your after-sales brochures and instructional phamplets.
MailChimp invested the time to make all their manuals to look and feel like magazines. Their readership shot up and customer service went down.
00:12:00 Even competitions and contests are a way of showing your personality, earning free PR and distinguishing yourself from your competitors. Everyone offers Apple iPads and gift certificates.
Change how people talk about their origin story of how they first met your product.
00:14:30 Everybody fights. Expect at some point your users will be pissed off at you. Typical business fights include:
- User’s Clients
00:15:00 Looking at your business’ conversion rate as a funnel, Customer support is the thing that happens in between each step (white arrows). Bad customer support is the reason why people don’t make it farther down your funnel and prevents conversion from happening.
00:15:50 “Software engineers and designers are often divorced from the consequences of their actions.” Before launch, every line of code and software creation is ‘perfect’ and has purpose consumes 100% of your life.
[EDITOR’S NOTE: For more information on but one of the consequences of this divorce, refer to Dark Patterns: Fighting User Deception Worldwide.]
After launch, however, the realities of running a consumer-centric business creeps in, and thus entrepreneurs begin cyphoning off all that other ‘crap’ to other people to manage:
Benefits of having software creators as customer support:
00:17:70 When customer support professionals receive complaints, those complaints are collected and perhaps never dealt with; or dealt with too slowly. However once the software creator has recieved the same customer service problem three times, they stop what they’re doing and fix that recurring problem and they stop getting phone calls about it. At Wufoo, every employee had a weekly customer support shift.
00:18:30 The four main reasons couple break up (and why users quit using your product or service) are:
- Criticism – “You never listen to or think about your users!”
- Contempt – “You think you’re always right and you never listen.”
- Defensiveness – “You think you know what I want better than I.”
- Stonewalling – “You just don’t care and listen anymore.”
00:21:18 There is a difference in the emotional feeling of your user:
- When they need help
- After they have searched your FAQ, help pages and message board for the answer
- After they have invested even more time contacting or calling your company to find their answer.
How your user feels about the problem is JUST AS important as all the technical details you ask of them for you to fix or debug their problem.
00:22:30 When communicating through a text medium, there are basically only three ways to express emotions:
- Exclamation points and emoticons
- Curse words
- ALL CAPS LOCK
Give your user a simple outlet to express their emotions, and they will be a lot less irrational and a lot more patient and empathetic, thus making your job a lot easier.
00:23:05 There is a direct correlation to how much time we spend directly exposed to users and how good our designs get. Adding too many layers between your software designers and customer service causes your software designers to lose touch with your user’s reality and your software will get worse over time.
There is a knowledge gap between what your users currently understand about your product or service and what you want them to be able to understand about your product or service. This ‘knowledge gap’ represents how intuitive your application/product/service is.
This leaves you with two options to decrease this knowledge gap:
- Increase the amount of knowledge your users need to understand and use your product, or
- Decrease the amount of knowledge required to use your product or service
Adding new features only means increasing the amount of knowledge your users must have to use your product, and investing massive amounts of time monitoring and crafting a perfect FAQ page or a message board to help users navigate the problem doesn’t get to the root of the problem and there is no guarantee your user will take the time needed to try to find the answer before they pick up the phone and call you.
[EDITOR’S NOTE: For more on ineffective business models, watch This Is Broken by Seth Godin.]
00:27:00 One way brands try to keep the relationship going over the long-term is by running a blog or a newsletter. Truth is most of your users will have no idea all the awesome stuff that you’re doing for them.
Instead, build into your user’s administrator dashboard a time-stamped ‘How we’ve improved your product since the last time you logged on’ updates feature lets the user see first hand how their experience is improving rather than you hoping the user will find your blog and read through your blog.
From this perspective the user thinks “Even though I’m still paying the same monthly subscription amount, It’s incredible to see all the awesome improvements you are making; it’s great seeing how you’re spending my money and that I’m getting maximum value.”
00:31:50 There are only three ways you can achieve market dominence, and how you want to achieve market dominence dictates how you must organize your business:
- Best Price – focus on logistics like Walmart and Amazon
- Best Product – focus on R&D like Apple
- Best Overall Solution – focus on being customer intimate like luxury and hospitality brands such as Chanel and 5-star hotels
00:33:21 When you have a product with lots of different types of users with varying and perhaps conflicting needs and wants, focus on the people who are the most passionate about your product; at least during the early stages.
So again, make your product as easy as possible to use, and any feature or anything else you add to it must be well-polished.
00:35:48 Word-of-mouth growth is the easiest kind of growth and how a lot of the great companies grow. Look at marketing and advertising and public relations as a tax you have to pay because you didn’t make your product remarkable. That being said, there should be no point where you ONLY focus on product. Ideally, devote time where you work on product and then see what your users have to say about it to you – a constant virtual feedback loop.
But you can’t just cater to every whim and request for new features and changes your users ask for. So focus on the underlying reasons why they are asking for that specific feature. It’s dangerous to have multiple different product directions that require you to spend a lot of time to try and figure out.
[EDITOR’S NOTE: For more information on building a product that benefits from word-of-mouth, watch the lecture How To Start A Startup: Growing From Zero To Many Users.]
00:38:40 Rather than having a “Hack-a-thon” where your coders and designers create features and ideas that, in all reality, 99% of the ideas will never be incorporated, twice a year Wufoo held “King for a day,” where a person’s name was drawn from a hat and that person was granted full authority to make whatever changes to the product that they didn’t like. This turned out to be invaluable because:
- 99% of the ideas weren’t thrown away, rather 1-3 relevant pet peeves with the product were addressed.
- It democratized the company policy more so everyone felt more equal, regardless of their station within the company
- It boosted morale because the ‘king’ know how s/he had improved their product.
[EDITOR’S NOTE: Running a project like “King for a day” requires the owner have full faith in the competence and leadership skills of your employees. For more on finding employees you trust, watch the lecture Human Resources Management: Attracting And Selecting The Best Candidates.]
00:39:40 A lot of people like to romanticize it, but remote-working is very tricky. An office space gives you a lot of benefits and conveniences that you’ll have to compensate for when all your employees are working remotely.
00:41:30 Issues such as your site is down or the payments aren’t working, require immediate attention, but most problems within your company don’t need to be solved in real time or right away.
27 important takeaways from this video:
00:01:13 Take all advice as directionally good guidance, meaning that it will lead you in the right way, but every business and situation is different, so don’t assume that what worked for someone else will automatically work for you.
00:01:26 To launch a startup you need to have a lot of compressed time in your schedule (1-2 days uninterrupted) where you can really dedicate yourself to its success.
00:02:35 A typical amature and failed approach to starting a business is:
00:03:20 When you launch your company, you really should initially launch on a major website such as through Tech Crunch to get your brand and product in front of a ton of new people who can then become customers or reveal ways to improve your business.
00:03:43 You should be able to describe the problem you are trying to solve in one sentence:
- What is it?
- How does it relate to you?
- Verity others have it.
00:05:44 Popular advice for disrupting an industry is to have absolutely NO experience going into the industry, that way you see everything with fresh eyes. But a more practical approach would be to begin as a cog in the industry and conduct research by learning until you become a sort of expert.
20-30 years experience in an industry probably isn’t the best time to launch a startup in the industry because you’ll be set in your ways, but a few months or years into the industry you should:
- Understand the industry best practices
- Know what makes a product successful or unsuccessful
- Know everything about every competitor in the industry
- Develop enough of an expertise in the industry that people trust you
- Create a network within the industry to get your business running
[EDITOR’S NOTE: In my interview, Derek Sivers, author and entrepreneur talks about the benefits of becoming a semi-expert.]
00:09:58 Next you should identify all relevant customer segments and the products they are using and know what they all have in common that you can build your business on, but then also optimize your product for one specific customer segment so you can focus your marketing efforts on making that niche customer segment loyal before expanding.
00:10:40 Before you write any line of code or begin creating your product you should storyboard the ideal user experience to solving your problem from the first point of contact through to after-sales support.
00:11:52 Having done all that, now you create your Version 1: Minimum viable product. Viable is extremely important here because many startups simply launch a product with one special feature. Ideally your product or service should have the smallest feature-set possible that solves the problem you’re trying to solve and that people are willing to pay for.
00:12:48 Alongside your minimum viable product you should also have your product positioning down, that way you can clearly and concisely explain to potential customers precisely what your product is and what problem it solves.
You should be able to fit your product positioning into one sentence. This one line is paramount to the success of your pitch and catching the person’s attention.
[EDITOR’S NOTE: For more information on exactly how important your pitch introduction is, watch the video How Can I Introduce My Pitch So Investors Want To Invest In My Brand?
A really good book on the art of pitching and introductions, read the book The Jelly Effect by Andy Bounds.]
00:14:08 You are now ready to find and get user feedback from your first few users. Start with the people in your immediate circle who already know and trust you.
Going from zero to one to three to four first customers you will likely have to get out from behind your desk and actually meet people face-to-face on the street where your target customers usually go.
[EDITOR’S NOTE: In the video How To Start A Startup: The Importance Of Finding Your Idea and Product, Sam Altmann explains that Pinterest found it’s first users because the owner Ben Silverman walking up to people in coffee shops and asking them to use his product, and pre-setting all the browser settings at the Apple store products to have Pinterest as it’s homepage.]
00:17:50 Rule number one in getting customer feedback is having an easy way for customers to contact you: a phone number with voicemail service, surveys, an email address, a contact form…
In general, people only respond if they really love you or they really hate you, So you want to get the person to a point where they feel comfortable talking straight-forward with you about the strenghs and weaknesses of your product, but be beware of the honesty curve as people tell you what they think you want to hear about your product or service.
For FREE products, the closer that person is to you, the less honest they will be and the more ‘white lies’ they will tell, or the more they will avoid critiquing your product or service.
The farther away from you they are, such as strangers you cross on the street, won’t really care about you and are likely to answer your questions half-heartedly.
For PAID products, the closer they are to you, the more likely your close friends and connects are to lie about their satisfaction with your product, however the farther away that person is to you, the more honest you can expect their feedback to because they have put money into your product, and so expect improvement.
Meaning, you get more reliable feedback from paying customers than from free users, so if you’re offering a product that you eventually plan on selling, you want to get to that point as quickly as possible.
[EDITOR’S NOTE: For more information on how to conduct consumer research and listening to users, read my interview with Peter Spear, Brand Listener and Strategist.]
00:20:00 Customer retention is one of the best ways to track how well your product or service is doing: how many new customers came in the door today? How many came back the following day? The day after that… etc.
As your business grows, you will pay more attention to monthly retention rather than daily retention. But obtaining this information is slow and time consuming, and a problem when you are still in the product development and refinement phase.
A quicker way is to pay close attention to customer ratings – how many star reviews are they giving you on the app store, on your website, in your surveys, etc.
Your reviews and customer retention should be going up over time. If your customer retention isn’t really moving up or down, then you should probably return to learning more about your customer demographic and what new features you could add to attract more people and make your current customers want to share you.
00:24:38 Process is very important; especially as you scale and grow. So do things manually before you automate them. By manually doing it yourself you understand how best you can automate what needs to be automated.
Automate too quickly and you may lose control of your branding and customer relationship as well as knowing the best and most effeciency questions to ask and points to address in the automated process.
For example, if you’re accepting job candidates, conducting a hundred face-to-face job interviews will give you a list of the top 10 most reliable questions for determining whether or not the person is a high potential candidate, whereas simply automating your questions from the start you’ll never realize that you’re asking the wrong questions.
[EDITOR’S NOTE: For more information on the recruting process, watch the video Human Resources Management: Attracting and Selecting The Best Candidates.]
00:26:32 Temporary brokeness is much better than permanent paralysis. During the minimum viable product launch and refinement stage, perfection is irrelevant until you have found your product that people are willing to pay for and share with their network. It is during your growth stage that you start worrying about perfecting your product or service.
00:27:19 So you’ve gotten honest and reliable feedback from a lot of users; avoid the temptation of going home and simply making all the modifications the users told you to and then showing the users your modifications the next day.
Instead, get to the bottom of why users are asking you to build a particular feature. Their feedback could be a symptom of a larger, unrelated problem, or a smaller problem such as a lack of understanding of how to correctly use your product.
Piling on a bunch of additional requested features could in fact be hiding the main problem altogether.
00:28:21 No matter when you launch, if you have a really good idea, someone is going to steal it. It’s inevitable and unavoidable. Unless you’re building something that requires tens of millions of dollars to start, there is no point in waiting around and keeping it secret until the last minute.
00:29:40 Don’t spend all your time and money advertising across multiple channels; focus on only one channel at a time. For example, spend 200€ and one week advertising EXCLUSIVELY on Facebook, gather the results, and then move on. Doing so you are more able to test that channel and determine whether or not it is the correct channel to continue focusing on.
00:30:46 Once you identify channels and strategies that work, continually repeat them.
[EDITOR’S NOTE: In his book Permission Marketing, Seth Godin clearly illustrates this saying that the only people who should be allowed to tell you when to change marketing techniques should be your accountants; when the sales start slipping, it’s time to change tactics.]
Over time, you should periodically revisit to your originally failed channels and try again, this time with your lessons learned. It’s possible that at that point in time your marketing on that channel failed was because your brief moment of channel-testing may have coincidentally coincided with a large marketing push by a more financially-backed competitor, which may no longer be the case.
00:33:00 Sustainability is the key to growth, and your objective should be to maximize ROI with your marketing spending so that as little money that is put into marketing as possible is lost or wasted.
00:34:00 Sticky growth happens as long as you keep deliving a good and addictive experience; then your customers will want to keep using you. This can be measured using a:
- Customer Lifetime Value (CLV) analysis: the net revenue a customer brings into the door for you over a certain amount of time: 3 months, 6 months, etc.
- Retention Cohort Analysis: The percentage change over time between two measurements: For example the number of first time website visits and the month, or the amount of page visits for men versus the amount of page visits for women.
[EDITOR’S NOTE: For more information on SEO and measuring rates and statistics, read my interview with Benjamin Descazal, Data Consultant for KBMG.]
00:38:52 Viral growth also requires a superb and addictive experience, but also include something that makes them want to share your product with their friends. Additionally, you need an easy way for those people who want to talk about you to talk about you.
00:39:10 Customer touchpoints are where are your users learn that they can refer other people once they arrive on your website or application:
- At the top of each page?
- On a popup?
- Hidden at the bottom of each page?
- Right after the person signs up?
- After the person has had a chance to use your product?
00:40:40 Program mechanics include offers such as: “Get one of your friends to spend 5€ and we’ll give you 3€!”
00:41:21 A user finding your website and sharing it with all his or her friends isn’t the same user journey as the friend of that user who will click on the friend’s share and find your website. You must account for this, such as by having them land on a page that says ‘Hey, Your friend <insert name here> suggested you check us out!’
00:46:36 Pivoting. Have a growth plan when you start out, and at an early stage you should always be growing, but once you realize that you cannot grow, or that despite building out all these great features and getting user feedback people just aren’t paying or sticking around, or the business model economics doesn’t work, then you need to be able to accept it and move on or adapt your existing idea.
00:50:18 There is always a switchover cost of convincing customers to use your product instead of what they’re already familiar with and trust. Focus on finding the moments where your product is very much better, or very much differenciated from what their existing solution. Once those consumers start realizing all the little advantages you offer, they will eventually turn into big advantages, and the consumer may eventually abandon their current solution for yours.
[EDITOR’S NOTE: In my interview with Bérénice Goales, Client Services Director for Wunderman, she tells the story of how Free was able to disrupupt the cell phone market and convince consumers to break long-term contracts with their current providers to sign up for Free’s offer.]
Business Director of Brand Activation and Digital for Cb’a, Damien Sterbecq has 20+ years experience helping brands succeed in product packaging, retail and digital: the three main consumer touch points.
How does your job fit into the branding process? CB’a is the brand activation and design agency specializing in the three consumer relationship touch points: product packaging, retail, and digital. As the Business Director, I am the one who guarantees the success of our agency’s work. Over the past 20+ years I’ve worked in customer experience, digital, customer relationship management, advertising, and currently brand activation and design.
How do you define brand activation? Brand activation boils down to entering the consumer’s life and creating a deeper engagement between the brand and its consumers. The end of brand activation is the beginning of the traditional marketing and advertising methods and techniques brands use.
Yes, brands can use marketing and advertising, but it’s important to recognize that consumers don’t share “advertising;” they share content that is entertaining and that has an impact on them and that they find interesting. The goal of brands today should be to increase top-of-mind by creating useful, engaging, and high-quality content that consumers want to seek out and, by extension, share.
Begin by creating a real consumer insight that leads to a unique idea that can become the foundation of a brand activation campaign.
As a small startup, should I invest my limited advertising budget on an advertising campaign or on a brand activation campaign? Strategic planning is the first and most important aspect of any campaign, brand activation or otherwise.
Advertising is reminding consumers that you are still in business; brand activation is pushing consumers to buy your product instead of your competitors at the crucial time when consumers are in the market to buy what you have to offer.
If you’ve a limited budget – and especially if nobody knows you exist, then I’d recommend investing your budget in the sales and customer service experience and bring in profit and revenue. Then you can begin focusing on advertising and brand activation.
Today, your brand’s clear, unique and decisive value proposition is what persuades consumers to purchase your product or service over your competitor’s.
What are a few misconceptions brands commonly have about your industry? That television advertising is still the most important means of staying top of mind with consumers. If your target consumers are older, then yes, television plus web is the most important. But with the younger generations, the internet is your best bet for reaching them and staying top of mind.
Further, ways of staying top of mind with your target consumers are constantly changing. This is one of the reasons why I love what I do – it is never boring!
What can you tell me about user experience design? You have customer experience, which includes each and every touch point between the customer and the brand. The brand user experience refers to the experience as it pertains to a specific digital interface – i.e. on your website. This user experience is very important because if your customers have a bad experience on your website, it’s your responsibility and your customers will hate you for it.
But if you sell a physical product then online user experience is but one part of the experience. Customers will likely have more experience with your product packaging design than your website user interface.
It can sometimes be complicated for agencies when brands have such strong convictions about who they have to be and the opportunities they have to take that they don’t take full advantage of our expertise and experience. They meet with us and explain that:
- “We HAVE TO be like this.”
- “Why do you HAVE TO be like that?”
Often times brands and their agencies don’t always agree with each other and most times agencies have a difficult time explaining their ideas to their clients about why we disagree with how they “HAVE TO” be.
How long can a good branding strategy last? Bill Bernbach said that “A good branding strategy can remain untouched for decades.” Well, that statement was said in the 1950s before the internet and digital. Today’s branding strategy lifespan is less and less than it was before. You don’t want to rebrand your branding strategy every year, but I would recommend taking a serious look at your branding strategy every three years or so.
The Parisian taxi services have had the same strategy for over 20 years. Why would they change? However Uber’s business model and branding strategy has been met with an alarming success and has become a serious threat to the entire industry – revealing how antiquated and outdated their service has become.
If the Parisian Taxi Federation had been paying attention to what was going on in their industry, they would have seen Uber as a potential threat back when it was originally founded in 2009, and then an imminent threat when they launched UberX. Today the taxi federation’s success depends on how quickly and effectively they can update their branding strategy and business model to compete to this threat.
[EDITOR’S NOTE: As of 19 December, 2014, UberPop will be banned in France for ‘unfair advantage.’]
This is also happening to smaller and unknown snooty bars and restaurants who depend on a steady stream of tourists who have no way of alerting other tourists to stay away from the restaurant. Sites such as Trip Advisor is making all businesses and restaurants rethink their branding strategy.
What are some problems brand have distinguishing themselves from their competition? First things first, define your brand promise and selling proposition that ONLY you can offer people.
I have a small marketing budget, any advice? If you truly believe in your brand’s success, but lack the budget to advertise it, then seriously consider bringing in investors who are willing to put the necessary money into your marketing campaigns.
I want to do your job, any advice? Build your social network. It’s easier to find employment and move up in a company when you have other people recommending you.
People learn by comparison.
They learn by comparing new things to the things they already know. That’s why redefining a category is much easier than creating a new one.
When you position your product in an existing category you’re essentially saying “it’s like something you already know but better”.
When you try to create a new product category you’re essentially saying “it’s like nothing you’ve ever seen before”.
That’s a provocative statement, but hard to learn by.