November 29, 2010

65) Dropbox Votebox

危 wēi  danger

I’ve written about Dropbox before here.  The file storing, sharing and syncing service is great, not least because of its simplicity.   In fact, I often reference it as an example of a company that did a great job of launching with ‘just enough’.  Too often companies kid themselves that they need more features, often to avoid launching (a strange defense mechanism?) or addressing negative feedback.  I’m not alone in loving the service, Dropbox now has more than 4 million users and its reach is truly global, as shown by this cool video showing its client activity:

With this success the feature requests came flooding in via email after launch, how would Dropbox ever be able to prioritise the right features?

机 jī opportunity

Dropbox’s solution is Votebox, a section on the website that lets users suggest and vote on what features should be developed next.  Votebox retains the simplicity of Dropbox while doing more than a basic forum – it enables users to nominate new features and vote on those that they would benefit from most.  Dropbox allocates regular users 6 votes per month and ‘premium’ users 9 votes per month.  Votebox also makes clear what the team is working on and celebrates new features launched.

The system is effective because:

  • Dropbox only works on the features most beneficial to its users
  • It stays true to its premium users (by enabling them to have more votes it ensures that it doesn’t just cater for the needs of the non-paying users)
  • It shares what it’s working on, reducing duplication of requests
  • The commenting feature enables debate by users, iterating feature ideas
  • Finally,  it acts as a marketing tool – reflecting the company’s continual development and often referred to by existing users – a quick Google search for ‘Votebox’ shows the number of users trying to drum up votes for their feature request.  @Dropbox:  why not make this easier and allow people to ‘share’ their requests and votes through social media?  Ironically, should I have put this idea on Votebox?

How About…

  • Remembering to only ever launch with ‘just enough’?
  • Creating an intuitive system for users to offer feedback and feature requests? GetSatisfaction (more consumer facing?) or ZenDesk (better as an enterprise solution?) might  offer simple solutions
  • Assigning importance to different user types?

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October 13, 2010

63) Netflix

危 wēi  danger

Great businesses continually improve, prototyping new offers and services before rolling them out to the relevant customer base.  But, success criteria for innovations are often vague and ‘success’ is therefore highly subjective, particularly when innovation teams only prototype to small groups of customers.  The alternative, rolling out to large numbers of customers immediately is too risky though?  And anyway, given how quickly markets change how could the team say with confidence that any change in performance was attributable to the change in strategy?

机 jī opportunity

In my previous post about Netflix I sang the praises of the company placing a top-level strategy summary in the public domain – you can see it here.  Slide 20 particularly caught my eye, a brief slide on customer satisfaction:

I love the idea of breaking customer bases into equal sized groups, allocating each to different employees or teams and then giving them free reign to attempt to improve their group’s experience.  I imagine that this enables more offers to be prototyped and creates a competition internally to deliver quantifiable results.  I also admire the size of these groups in this case – many companies would be tempted to limit the trial to a handful of customers at most, going with groups of 10,000 enables Netflix to really quantify the benefit and assess relative performance.

The approach establishes what would be called a ‘control set’ in a science experiment and encourages agreement in terms of what success metrics might be in advance.  In fact, my colleague Elizabeth said in a talk recently that she likes to approach piloting using the scientific method:

set a hypothesis -> agree variables -> agree metrics -> agree duration -> feedback and conclusions

That makes sense, and contrary to many people’s perceptions it doesn’t need to stifle creativity. After all, the development of new approaches to pilot and the spotting of interesting new patterns in any results depend on creativity.

How About…

  • Taking a scientific approach to piloting new offers?
  • Thinking how you might divide your business into comparable units for benchmarking?
  • Tasking teams with innovating the offer to different units, then rolling out the most effective new approaches?

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October 4, 2010

61) Amazon Prime

危 wēi  danger

Retailer loyalty programmes fall in and out of fashion.  Their supporters describe increased customer stickiness (particularly for retailers that become known for value in price-sensitive markets), increased average spend per customer and valuable data aggregation for market research on shopping habits.  Tesco clearly believes in these benefits as it relaunched its Clubcard last summer, leading to an increase in scheme members to 15 million.  However, the schemes are expensive to launch and run: Clubcard’s relaunch cost c£150m.  In addition, as referenced in this Marketing Magazine blog, Tesco is quite unique: it sees data frequently and across many items, is able to change its offer using that data and can sell the data to its suppliers, turning a cost-centre to a revenue centre.  Given the high costs and uncertainty of benefits Amazon would surely be crazy to launch a loyalty programme open to everyone in a similar way?

机 jī opportunity

Maybe not.  Keith Melker, my friend from HBS, recently brought to my attention a slightly counter-intuitive trend in the introduction of ‘paid’ loyalty programmes in the US, and helped me understand why they’re often smarter than they appear.

Amazon Prime, launched in 2005 is one such example in which members enjoy unlimited free shipping with no minimum purchase amount.  But, instead of giving membership away free Amazon charges $79 per year.

Superficially you might expect this to be taken up solely by Amazon’s most frequent customers and that the programme would be loss-making because those customers place frequent orders (which Amazon would have to foot the shipping bill for).  But that assumes that customers don’t change their behaviour as a result of being a Prime member and a quick scan of various blog posts suggests that they do.  In fact anecdotal evidence suggests that Amazon’s customers go from about $160/yr to $600/yr after they buy Prime.  It appears that once customers pay for Prime they begin to order more (perhaps because they feel that they’re beating the system).  So, assuming the combination of the Prime charge and the increase in margin per member is greater than the value lost through free shipping it’s a business masterstroke.  Had Amazon given it away free the uptake might have been greater and the behaviour change might not have been as dramatic: that could have been hugely expensive.

How About…

  • Re-examining loyalty programmes – perhaps deliberately offering it to a select group (rather than everyone)?
  • Or even charging for it if it might drive positive behaviour change?

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