Tag: long tail

Revisiting Dunbar’s Number (and the rule of 150 relationships)

photo by http://www.flickr.com/photos/opensourceway/
photo by http://www.flickr.com/photos/opensourceway/

Today, it’s easier to find out what long-lost friends are doing when they post pictures of their trip to South America on Facebook than keeping up with a trusted buddy in the same town. The power of social networks to keep us close to people with whom we have weak ties can sometimes feel like a poor substitute for actually keeping touch with the people who matter most.

Yet a strange paradox happens when you think about the “go-to” people in your network for a given topic, subject, or interest. Even though you haven’t spoken to them for months or for years, they are the people who will write you back on social networks, call you when you call them, and offer the social glue that you need to support your network. Robin Dunbar – the anthropologist who invented “Dunbar’s Number,” or the observation that our networks tend to top out at about 150 people – believes that social networks have not fundamentally changed our ability to relate to each other in groups.

So should we revisit Dunbar’s Number? In my experience, the basic nature that Dunbar presents – that we are hardwired by biology to maintain a certain number of connections closely – seems true. Yet I’m not sure that Dunbar’s number, when applied to the various spheres in which we relate, has the same meaning in the age of the internet and in describing the ability that we have to form “loose ties” with people whom we meet on the internet. Consider this oddity – you may have met someone for the first time online who talks about some of the same things that you do, and later find that when you meet in real life that the connection you have feels like a “friend.”

The meaning of “friend” in a social media sense – clearly a range from an acquaintance to an actual close friend – is not exactly what Dunbar is getting at when he describes the size of social groups as defined by biology. Dunbar acknowledges that community size has grown over time, and I would argue that social networking has – for at least some of us – increased our Dunbar Number in ways we don’t yet understand.

When you think of the ability to reach out to people you know (either passably or reasonably well) on a given subject or topic and get a response, you realize that Dunbar’s Number may need rethinking. Here’s a proposal: that all of us support multiple sets of “Dunbar Number” communities around our homes, our schools, our workplaces, and our interest. The connections made easier by the Internet have exposed the weak ties between each node in our disparate networks – or between the connectors that tie together those nodes into a sort of edge social graph – and made it easier for us to find the communities that matter around the interests that we have. Even if we haven’t met the 150 people who share our affinity to Pez dispensers (and who would be in our Dunbar Number if they lived closer to us), we can meet and form the similar relationships that would be closer if we lived near them. Dunbar is right in that we can keep up only some close relationships at any one time, but technology has made it possible for us to simultaneously live in many communities at once.

We may only have 150 people in our immediate Dunbar sphere as we perceive it, and our ability to reach out and find the other kindred spirits (some of whom we may come to know well) causes our overall useful universe to grow. How much does it grow? For most people, not to the 10x point of the Dunbar Number. But many super connectors who I’ve met really are able to keep up relationships with a larger group than the 150 that Dunbar posits. The size of the brain that we have doesn’t change, but the technology to augment that brain is growing in ways that we don’t understand yet. Does this change your hard wiring? Maybe. And we’re going to find out over the next several years or decades as social networking and wearable computing become more ubiquitous.

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What makes freemium pricing work?

Free
photo by http://www.flickr.com/photos/bstabler/

 

Should you give away your product for free? The concept of “freemium” — or providing a product offering that doesn’t cost the customer anything, and allows for the prospect of future upsell — has great success for products like Mailchimp, Dropbox, Evernote, and WordPress. The basic idea is that some number (perhaps as many as the high single digits, but more often 2-4%) of customers convert to paying, and as time goes by and the customer sticks
around, that likelihood to convert increases.

What makes freemium pricing work?

Obviously, the zero cost of a freemium product is attractive. One of the challenges inherent in free pricing is that the perception of value for a free product might also be zero unless a few things are present:

  • The product or service offers immediate value to a new customer;
  • There is very low or no sales “touch” required for customer success;
  • And there is one or more natural conversion points where the customer realizes that it’s time to “buy.”

Things that make people say, “That’s valuable!”

Customers think products are valuable when they solve an immediate problem, e.g. the problem that you had when you “hired that product to solve your problem.” Mailing a list that you already have; sharing a big file; keeping an always-on notepad; and writing a blog post are clear, uncomplicated problems for which solving a problem has instant value. Customers also perceive value when there is low effort to implement this solution, and when the exact thing they were trying to solve gets done.

So what should you do if you don’t provide immediate value to customers using your product or service? You can provide “scaffolding” by delivering a simple procedure that will solve an immediate problem. You can deliver Customer Wow. And you can also actively listen to find the items that customers find challenging – those are great candidates to improve as fast as possible.

It sells itself: the magic of “no-touch” selling

It’s easy to believe that with the magic of the Internet, products will sell themselves. And sometimes they do (it’s amazing when that happens.) Most of the time, however, there is some effort required to close a customer from prospect to sale. When customers help themselves; when there is a large enough user based to provide community help; and when there’s no great economic drag on your company to keep them as “freemium” users – it’s all good.

In my experience, the reality of this process falls somewhere in between the perfect situation where users try and buy themselves, and a fully supported scenario, where they are supported figuratively from “cradle-to-grave.” You can help yourself by identifying the attributes that mark currently successful customers (completed activities, speed and acceleration of adoption, and lots of questions to your support and sales team are often good indicators) and try to recreate those attributes in brand-new users. The best way to do that? “Dog-food” your customer experience by trying it yourself and identify the “cringe-list” of items so bad they would make a new customer prospect drop right out of your application.

When is it obvious for the buyer to upgrade?

Sometimes, it just makes sense to upgrade. Run out of space in your networked drive? Need to send to a larger email list? Want to post even more notes to your connected notepad? These are natural conversion points, and are well crafted ways to get you as a customer into the next tier of value for a company. The number of transactions you complete; the number of connected accounts for a complex product; and enough practice to know that you really want to use the product are all good ways to introduce (or gently suggest) a natural conversion point for a freemium product.

Except when life gets in the way, and you really meant to try that product but haven’t taken the time. Placing time limits on the free trial and starting to charge the customer are great ways to use the idea of loss aversion to force the customer to make a decision (“should I stay or should I go?”) You can also use account management and Customer Wow to make this process easier.

Freemium pricing works best on a product when as the customer you understand what you’re getting, you can get what you want without needing help from a sales or support team, and when you know the best time to upgrade (because it just feels right.) As a product team, if you don’t have these attributes immediately, you can create immediate value by providing steps for the 80% solution or “happy path.” You can lower the required touch by fixing the things that first time users most often criticize. And you can place a time limit on your trials (or just leave the customer alone in a semi-dormant state if it’s economically feasible.)

Do you think freemium works for most Internet products? Or is it an idea that really only fits a few, simple and well defined models of behavior that people already use?

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Turkey Soda is the Future of Marketing

Turkey Soda. Ugh. But a unique search term

I sure hope that the future of marketing tastes better than Turkey & Gravy soda. But I got your attention – it was a cheap trick and I was trying to make a point.

What can you do in a Long Tail World to Stand Out?

Turkey Soda stands out because it’s an unexpected term – as a long tail search, it will always be unique because it’s just a little bit weird, and a concatenation of two terms that people search more often – Turkey and Soda. And indeed, the image above has been viewed more than any other piece of content I’ve ever produced, even though it’s just a low-quality shot from five years ago.

In an interruption-driven economy, you can gain attention by interrupting, but the half-life of that interruption is lowering over time to the point where trends on YouTube, Twitter, and Facebook decay within hours, if not minutes. So be loud (and unusual.) It’s clear that outrageous things stand about “above the fold”, but what then?

Make it Viral (Yeah, Right!)

At that point if you’re really lucky, the content you’ve shared by interrupting people will become “viral” and spread all over the world. “Viral” might mean means gross / loud / unusual / weird / amazing / heart -rending – amplified emotion presented elegantly and in a wow package. (And easily shareable.)

This doesn’t happen very often. There are plenty of theories, and even a virality coefficient.

So for the vast majority of shares,  that don’t become interesting to a larger public, what should you do?

3 Lessons to Learn about Capitalizing on that Interruption

There are a few lessons that we can glean from the idea of Turkey Soda to gain attention.

  1. Once you’ve interrupted someone and gotten their attention, you need to share relevant and interesting information – or they will leave for something else shiny and new.
  2. It’s not enough to be just weird (or loud, or whatever other maximized attribute) – you also need to provide a great experience. In the case of Jones Soda, it was the ability to offer a limited-time offer that you could share with your friends (and gain your acceptance to try other weird flavors in the future.)
  3. If it’s “on-brand” or really resonates with the customer you’re trying to reach, you have the opportunity to build a long-term relationship.

It almost goes without saying that If you’re concise, write great copy, and have something great to sell, people will always keep coming back. So if your idea or product is not yet great, keep asking people until you find the one thing about it that’s great and sell to that attribute. This means both maximizing your benefits and listening a little bit to the “satisfiers”, or the people when asked say “yeah, it’s ok- I like it.” You’ll get much more bang for your buck in your marketing if the end result is people hating or loving your idea. (Hopefully the latter, but …)

Good luck sharing relevant information that is truly timely and on-brand. (And ask your customer whether it’s working.)

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Always Build Content – Agile Marketing Priniciple #5

photo by http://flickr.com/photos/kmtucker

This is the fifth in a series of posts on Agile Marketing – the working definition of which is to

“Create, communicate and deliver unique value to an always-changing consumer (or business) in an always-changing market with an always-changing product.”

Even if you’re not shipping today (or next week) you have the opportunity to make it easier for your customers to understand what you do – you can do this by the ABC method – Always Build Content. Read the first Agile Marketing post here.

Agile Marking Principle 5: Sustainable marketing requires you to keep a constant pace and pipeline

What does it mean to Always Build Content? For starters, it means that you can produce information that will help your customer learn more about your product and – in the process – grant more room for unexpected “we won’t ship this week” or “remember that thing we told you about? it changed” moments. Content can take a few forms, and ideally should conform to a calendar with daily, weekly, and monthly activities. The quality and pace of these activities is really up to you and to the needs of your business, but consider these tools when you are thinking about the ways you can continue your Agile Marketing activities at the same frenetic pace as your developers.

Reaching out Every Day Builds Ideas for Content

Your customers are talking to you every day – whether on social media, through emails or phone calls, or in person – and you can gain really valuable insight from them just by making sure you have (at least) a few customer contacts every day. This is an excellent way to find out what people don’t know, and to check your knowledge of where they are encountering problems with your existing product. You might have the best information in the world (but they can’t find it.) You might have thought of a great scenario (that they have trouble mapping to the way they use the product.) Or things might just be harder than you thought. So take it upon yourself to talk to and listen to customers as your content-building pipeline.

Do you think of your content as a Curriculum, and your Customers as Students?

If you think of the customer lifecycle as an arc that goes from no knowledge of your product to total knowledge of your product, you should be building content for all points of the product knowledge/experience continuum. A great place to start is at the top of the funnel, by producing a great, easily digestible “get started in 3 minutes” document and video. This is not meant to replace other forms of learning – it’s just the first place your customers will come into contact with your marketing efforts and it should identify a clear reason they should use your product and demonstrate how easy it is to get started. (If it’s not easy, please break the startup steps into something that seems easy.)

As customers become more familiar with your product or service, they will want more demanding topics. Keep a list of these topics and when you hear them more than a few times, create some content to address that issue. And there’s always the “compilation post” where you explain the content you’ve built already and share different ways to use it.

Today’s content may lead to tomorrow’s sale (or loyal customer)

How many Tweets, blog posts, Knowledge Articles, and Customer contacts will you have today? At least some of the items in that content pipeline will generate future business (you just don’t know which ones will provide the most lift yet.) The Long Tail will help in this regard, and so will some luck (it helps to be both lucky and good.)

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What should your business model be: Free, “Freemium”, or Paid Content?

How can you make money off of a free product?
Chris Anderson writes in “Giving it All Away” in today’s WSJ that the classic example is the two-sided model, where a small number of paying customers (AdSense buyers or TV ad buyers, for example) subsidize the vast majority of users (Google or TV) and that is a self-fulfilling feedback loop. More eyeballs == more potential buyers == the highest CPM (if, of course, some of these customers buy the product). Anderson posits that new business models, such as “Freemium” (most users free, some users pay for increased functionality), have exploded in popularity as the marginal cost of giving you more digital bits heads to zero. This is very similar to the Microsoft model of providing you with different models of the same OS, unlocked by different serial numbers. The basic cost to write and build the software is the same no matter who buys it. It’s the revenue end that’s tricky.

John Gourville’s classic article on the resistance sellers face from buyers gives us a few directional ideas on what to expect. The realistic possibilities (absent a very complicated model like Airline pricing where practically everyone pays a different price) for many new and current businesses are free (most likely ad-supported); “freemium”, where the few paying customers support the many non-paying customers; and paid content, where the information is not available unless you pay. Which model should you choose?

Free — where nobody pays, or do they?
Free* is the title of the newest Jim’s Big Ego album. This Boston based group is following in the tradition of the tip jar by providing a version of the new album that you can download for nothing. If you like it, buy the physical album, or simply contribute to the band. Radiohead tried this gimmick last year, and eventually ended it because, presumably, there was no reason to download something from Radiohead that you could get anywhere. Gourville’s premise — based on the research showing that buyers want something three times better than what they have, and that sellers overvalue what they are selling by up to a factor of three — is that something new has to be nine times better than what went before to get. What’s nine times better than free? If you are a world-famous band like Radiohead, it’s probably good enough publicity to give away an album when you are handling the distribution yourself instead of using a record label. But maybe not for your business.

“Freemium” — where the needs of the few trump the needs of the many
“Freemium“, or the practice of giving away a version of your product or service for free, is a digital version of the “loss leader” practiced by many brick and mortar stores. Get enough people talking about your product, the theory goes, and eventually enough of them will buy and make up the difference. Your overall average price may be lower, but you have a larger potential pool of customers. LinkedIn and Flickr are excellent examples of this business model, and by segmenting the customer base, savvy marketers can find highly profitable niches (for LinkedIn, it’s turned out to be recruiters; for Flickr, some professional photographers looking for additional exposure — no pun intended). This model, however, hasn’t worked out so well for Twitter, which is wildly popular yet seeking a business model; and Facebook, which should be an ad machine but curiously produces low CPM rates. I’m cautiously optimistic on this model, because the really active, paying users will create the equivalent of the classic two-sided model. The iTunes store shows that if you can price your app correctly, you can be very very successful because the volume of users is so large.

Paid Content — the Holy Grail, but no one really wants it
The Wall Street Journal was the poster child for paid content on the web. The Journal trumpted its paid subscriber base and boasted that it was one of the only sites on the web actually making money through paying customers. Yet a funny thing happen last year: the Journal opened up its pages. Why give the milk away when you can get the cow for free? Obviously the beancounters at the Journal decide that they could make more than the estimated $75m/yearly revenue through ads. So why didn’t the WSJ continue its walled garden?

Tight Niches equal Profit Potential
The Journal opened its walls because there were free substitutes available. From Google News to the Daily Huffington Post to your local newspaper, you can read the news in lots of places. One example of a highly targeted niche is PayBefore, an online resource for the prepaid card industry. This site offers news, opinion, and information to “the prepaid and stored value card industry”, which is essentially a trade magazine online. But no one else is covering this particular trade — hence the profit potential.

So, what now? Which model makes the most sense for my business?
Ask yourself a few easy questions:

  • What am I doing to create, communicate, and deliver unique value?
  • Is my offering 9x (or 10x) better than the substitute people might otherwise choose?
  • Why would users come back over and over again, and tell their friends?.

If the answer to all three of these questions is yes, then you’ve probably got a niche that could be served well by a Paid Content offering. Yet you should ask yourself — how could I increase my reach by broadening the potential appeal — and create a free offering that will seed future customers and provide a feedback loop for growth.

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