7 Frameworks For Predicting Online Marketplace Success

Hands in a swirling pattern

What makes some online marketplaces billion dollar successes and others costly failures?

Uber and Airbnb are forging ahead relentlessly. Yet Homejoy, having raised $40 million in funding, recently shut down.

Why?

How much is down to execution and luck, and how much to fundamental differences between the industries they chose to play in or their precise business models?

What if there was a framework that could help us predict whether an online marketplace would be successful or not in a given industry?

line drawing of man pondering

It turns out that over the last few years a number of smart people have thought about this and shared their frameworks for assessing the potential for online marketplaces.

Let’s take a look at what they had to say…

Framework 1: Ben Holmes of Index Ventures

Ben HolmesIn a post from July 2014, entitled “Autobutler and the Six Characteristics of a Successful Online Marketplace“, Ben described how, when looking at online marketplaces, he and his colleagues at Index Ventures look for a proposition that fulfils 6 key criteria:

For the consumer:

  • Convenience : Is it significantly easier to use the marketplace than not to?
  • Choice: Does the marketplace have a good selection of sellers?
  • Clarity: Are price and service level clear?

For suppliers:

  • Promotion: Does the marketplace provide a way for sellers to efficiently promote their offering to highly qualified buyers?
  • Productivity: Does the marketplace help sellers increase their utilisation or productivity?
  • Practicality: Does using the marketplace fit conveniently into the sellers’ workflow? (A characteristic that can be seen strongly in so-called market networks.)

(They look for strong teams, too, just as they would with non-marketplace businesses.)

Framework 2: Imran Ghory

Imran GhoryIn his blog post Markets for Marketplaces in September 2014, Imran Ghory (previously an analyst at Index Ventures) presented a great list of factors that affect whether an industry is attractive for an online marketplace.

Demand side:

  • Multiple-transaction behaviour (do customers make at least a few transactions per year?)
  • Low vendor loyalty (do customers regularly switch between vendors?)
  • Large market (customer spending of $10bn+?)
  • Expandable demand (is there ‘untapped demand’ that can be unleashed by a marketplace?)
  • Potential to improve consumer experience (e.g. reviews of suppliers)

Supply side:

  • Fragmented (do small suppliers control a large part of the market?)
  • Low conversion/high conversion (do customers typically shop around a lot before making a transaction? If so, a marketplace can have an advantage in customer acquisition costs vs any individual vendor.)
  • Supply-side servicing (can marketplace provide value-add services to suppliers because of their position?)
  • Expandable supply (would a marketplace reduce the barriers for new suppliers to enter the market?)

Transaction:

  • On-platform transactions (can the entire transaction be captured on-platform?)
  • Market open to a marketplace (are the participants willing to move to an online marketplace?)
  • Willingness to pay (are participants willing to pay for a marketplace?)

Framework 3: Bill Gurley of Benchmark Capital

Bill GurleyIn Bill Gurley’s 2012 post “All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces,” he described 10 factors to consider:

  1. New Experience vs. the Status Quo. (Can marketplace offer a better experience for the customer?)
  2. Economic Advantages vs. the Status Quo.
  3. Opportunity for Technology to Add Value. (e.g. providing data about market or facilitating workflow)
  4. High Fragmentation (ideally buyers and suppliers)
  5. Friction of Supplier Sign-Up. (high friction is costly but can be a barrier to entry)
  6. Size of the Market Opportunity
  7. Potential to Expand the Market
  8. Frequency (higher frequency better)
  9. Payment Flow (being part of the payment flow is best)
  10. Network Effects (is experience for customer N+1000 better than for customer N directly because of 1000 extra participants?)

(You might enjoy seeing these 10 factors presented as a slideshow here.)

Framework 4: Josh Breinlinger of Sigma West

Josh BreinlingerIn his post “The Ingredients for a Successful Marketplace” from 2014, Josh listed 5 top factors to consider as a framework for evaluating whether a marketplace should exist in a given vertical:

  1. Recurring Usage
  2. Irregular Usage
  3. Standardized Work
  4. Little Trust Required
  5. Non-Monogamous Relationships

Framework 5: Fabrice Grinda

Fabrice GrindaFabrice has written some great articles about marketplaces as well as being an active investor and operator.

In “Thoughts on Building Successful Vertical Marketplaces” from March 2013 he considered marketplaces that specialise in a particular category in contrast to broader multi-category marketplaces such as Craigslist and eBay.

Fabrice identified three factors he believes are important:

  1. Frequency: Users purchase the product or service reasonably regularly.
  2. Value in Specialisation: The vertical marketplace must offer something that is not easy for the horizontal marketplace to offer and truly improves transactions in the category.
  3. Market size

Framework 6: Andrei Hagiu of Harvard Business School and Julian Wright of the National University of Singapore

Julian WrightAndrei HagiuIt’s interesting to think about the similarities and differences between being a reseller (where you purchase inventory) and being a marketplace (where you don’t purchase inventory). In both cases you are an intermediary enabling goods or services to pass from sellers to buyers.

In this HBR article from March 2013, Andrei Hagiu of Harvard Business School and Julian Wright of the National University of Singapore looked at which of the two business models is most appropriate to a given situation.

They argued that the following 4 factors are important in this decision:

  1. Scale effects – high-demand products favour reselling since a large buyer can capitalise on economies of scale.
  2. Aggregation effects – if products and services have much higher value to buyers when bought together than when purchased separately, then this can favour reselling.
  3. The buyer and seller experiences – if customer experience is often poor, reselling tends to work better as it allows more control over the experience.
  4. Market failures – in some cases, marketplaces can collapse, e.g. due to uncertainty about suppliers or large mismatches in bargaining power. Reselling can add stability.

Andrei and Julian also concluded that different models might be preferable at different times. You might, for example, want to start as a reseller and then move towards being a marketplace. By their nature, marketplaces tend to need less capital to operate at a given scale so may be better suited to rapid growth.

Framework 7: Boris Wertz of Version One

Boris WertzIn this May 2015 article, Boris considers what characteristics make an industry attractive for an Uber-style marketplace:

  1. Underlying commoditized services
  2. High purchase frequency
  3. True on-demand use case (In most cases you don’t need a cleaning service or house painter to show up within minutes, or even the same day. But taxis are a different story.)

Conclusions

All these frameworks were designed with slightly different viewpoints in mind and to serve slightly different purposes, so their authors naturally arrived at different results. For venture investors looking for huge exits, for example, the potential size of the market is extremely important. For others, it’s less important.

There are, however, two common factors that appeared in several frameworks as important factors for the success of an online marketplace:

  • Frequency of purchase
  • Potential to improve the buying/selling experience

Imran and Josh both listed a factor that can be a result of Boris’ ‘underlying commoditised services’:

  • Low vendor loyalty

Lastly, one factor that a couple of the frameworks included and that I personally suspect is an important one:

  • Fragmentation of existing players

Explosion

It’s an interesting time to watch what’s happening with online marketplaces, especially given the excitement around the likes of Uber and Deliveroo and the rise of ‘market networks‘ such as AngelList and Houzz that layer social network and workflow components on top of marketplaces.

Which industries do you think are best suited for disruption by an online marketplace next?

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How Thumbtack Built a Huge Local Services Marketplace

Thumbtacks

Thumbtack, an online marketplace for local services, yesterday announced a $100M funding round led by Google Ventures.

Building a local services marketplace is a notoriously difficult problem that has beaten many entrepreneurs. So how did Thumbtack get where they are? What tactics are behind their apparent success?

The founder of Thumbtack, Marco Zappacosta, was interviewed by Andrew Warner of Mixergy.com earlier in the year and covered some of the tactics that Thumbtack used to build its marketplace. You can read the transcript of their interview here.

Here’s a summary of the tactics and approaches Marco described:

1. Built Supply Side Using Scraping and Customised Mass Emails

  • Recognising the chicken-and-egg problem of all marketplaces, Thumbtack saw the supply side as easier to get in place and focused on that first.
  • They used web scraping to compile data on local service providers and developed software to process and organise it.
  • They used the extracted information to bulk send customised emails to service providers inviting them to create profiles on the site.
  • They were concerned about being blocked by email service providers so were careful about monitoring the relevance of their emails.*
  • Their technology wasn’t limited to a specific category or part of the country, so they covered a broad range of categories and the whole US from the start.**
  • With their first $6M of funding, they had listed hundreds of thousands of service pros.

Here‘s an example of an email Thumbtack reportedly sent in 2012. What do you think: was this spam?

** It’s interesting to see that Thumbtack succeeded despite going against the common wisdom of focusing on a single city and/or category.

2. Built Demand Side Using SEO (Based on Unique Content of Service Provider Profiles)

  • Service providers creating their own profiles resulted in lots of unique content.
  • As the service provider profiles were crawled by search engines, this resulted in lots of organic search traffic.
  • More and more customers now coming from word-of-mouth and direct.
  • Have started running search and display ads, including retargeting.

3. Tried Different Revenue Models (Commission -> Subscription -> Per-Quote)

  • Initially, tried commission-based model. But had collection issues (hard to tell if an introduction resulted in paid work, lots of providers didn’t pay).
  • Next, tried subscription model. Worked okay, but wasn’t well aligned with marginal value of each introduction.
  • Currently charging providers to respond to quotes. (They can pay per response or buy credits in bulk.)

4. Off-shored Labour-Intensive Tasks

  • 75 of 200 employees are in the Philippines.
  • Main tasks for these employees are: responding to support inquiries (from customers and providers) and helping to onboard service providers.

In summary, then, in terms of building up their marketplace, Thumbtack’s use of mass emails to contacts scraped from the web seems to have been key. Another important decision was to keep their supplier profiles accessible to search engines. This allowed them to grow their demand side through SEO.

At Thumbtack’s current scale and with a large amount of money to spend, it will be interesting to see whether other paid acquisition channels will now start to pay off for them.

What other tactics have you seen used to successfully establish marketplaces? Do leave a comment below.

If you’re interested in tactics for building marketplaces, you make like to read my posts on Getting to Critical Mass: How to Start a Marketplace Business and Skillshare: How to Build a Marketplace for Online Education.

Photo by kellee_g

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What is the Average Churn Rate for a Subscription Box Business?

Foodzie subscription box

I wrote in a previous post about typical subscription e-commerce retention rates and how, when considering launching a subscription box businesses, your assumptions about the retention rate you’ll achieve have a huge bearing on whether or not the business looks like it’ll be profitable.

Lately I’ve come across published details about the retention rates and churn rates of a few other subscription box businesses:

  • According to this interview with one of the founders, Foodzie (selling monthly tasting boxes of artisan food) experienced average subscription lifetimes of 6-8 months. That implies a churn rate of around 14% (and a retention rate of 86%).
  • BarkBox (selling monthly boxes of toys, gifts and treats for dogs) reportedly boasted a 93-95% retention rate in their first year. A 94% retention rate (6% churn rate) equates to an average subscription length of 17 months.
  • UmbaBox (selling monthly boxes of curated handmade goods) reportedly claimed a retention rate of 90% (churn rate of 10%) a few months after their launch, with a not-insignificant $18,000 in monthly revenue. That’s equivalent to an average subscription length of 10 months.

It’s dangerous to read too much into these numbers, especially the ones for businesses in their early stages, but they at least give some ballpark numbers that you might find useful.

Note: do bear in mind that there may be some survivorship bias here – businesses with low retention rate would have been less likely to raise money and get written about. So these numbers may be on the optimistic side.

Have you come across any other published numbers for subscription box churn rates or retention rates?

Photo by ceonyc

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How to Find a Good WordPress Developer on oDesk

Connected

You have a WordPress blog or website. You want some changes made to it, so you need to find someone who can help. But who?

One effective way to find a WordPress developer is through a freelancing website like oDesk or Elance. But finding the right person can be very time-consuming and error-prone. How do you make sure a developer you’re considering is the right fit for your task?

Here’s the 9-step process I’ve used:

1. Craft your job posting to help good developers self-select

Write a detailed description of the task you want completed. The more details the better. A serious developer (the kind you want) will read what you’ve written carefully to see whether it’s something they feel confident about doing. They will only apply if they believe they can do it, so give them as much information as possible to help them self-select.

2. Ask the developer to describe similar projects they’ve worked on

You want to find developers who have already successfully completed the kind of task you’re looking to get done, so you want to establish to as high a degree of confidence as possible whether they’ve done that. Ask them to describe similar projects they’ve completed and provide URLs if possible. Ask the developer for a brief outline of how they’d tackle your task.

After posting your job, you’ll likely receive a large number of bids that you’ll need to filter through. Here’s to do that…

3. Remove bids that don’t refer to anything about your task

People who haven’t bothered to read your task description are probably mass-replying to a large number of job postings. Given this scatter-gun approach, they’re more likely than average to not be a good fit for your task. Eliminate them now.

4. Remove any developers who have a less than excellent rating

A quick and easy filter – just get rid of anyone who has a rating of less than 4.5. If they haven’t left a good impression with their previous tasks, there’s a strong chance they won’t leave a good impression on you.

5. Remove any developers who have fewer than 100 hours of work logged on oDesk

Someone who’s completed very little work via oDesk may be inexperienced as a developer or may simply be inexperienced with the oDesk system. Either way, their limited oDesk history means they’re more of a risk. You don’t know whether, if they had built up more history, they would have received good ratings or not. If you still have enough bids to be picky, eliminate all bids from people with fewer than 100 hours of logged work.

6. Review bid details and work histories

Review their oDesk work history and the past projects they’ve mentioned in their bid. In each case, look at what exactly their task was. Was it something very simple, such as installing a WordPress extension, completed for a very small amount of money? Or was it a much more complex task, involving custom development work over multiple weeks?

If you’re looking for a developer to take on a relatively complex project, make sure they’ve completed projects of at least a similar level of complexity in the past. This is very important! Reject any developers who have only done much simpler things than you’re looking for (even if they have great feedback).

Note: this is an easy place to go wrong. It’s not enough to select someone with a lot of hours doing WordPress work if what they were doing was much simpler than what you need them to do.

7. Consider other factors

You may have preferences about such things as the developer’s location, standard of English, or hourly rate. If you still have plenty of candidates, now’s the time to reject any bids that are a clear mis-match against these factors.

8. Hold Skype interviews

You should hopefully be down to around 3 to 6 developers by this stage. Schedule 25-minute Skype interviews with each one (I like using youcanbook.me to give a block of time when I’m available and let the developers pick time slots).

A lot of developers will want to communicate via Skype text rather than audio. Decide whether voice communication is a must-have for you. If it is, make it clear when you arrange the interviews that you’ll want an audio call and that they’ll need a working microphone and speakers or headset at their end.

During the interviews, discuss the task you’re looking to get done and ask the developer how they’d tackle it. Ask them about similar work they’ve done in the past and how they tackled that. As well as getting a feel for their technical fit, you’ll also quickly find out whether they’ll be able to communicate well with you.

9. Make your choice

For a relatively small task, simply hire the developer who seems the best fit and politely decline the other bids. If your first-choice developer doesn’t work out for some reason, you may want to go back to one of the other developers.

For more complex tasks, consider hiring two or three of the developers for a limited paid trial. Agree a trial amount of time or small milestone. Make sure everyone is clear how the process will work. After the trial is complete, hire the developer who has performed best.

That’s It!

If you’ve followed the steps above, you should now have hired a WordPress developer who’s a great fit for your task.

Going through this process can be pretty time-consuming, so you’ll probably only want to do it if you want to hire someone for ongoing tasks or a fairly significant one-off piece of work.

Update: in case you want to take a short-cut, I’m preparing a pre-vetted list of good WordPress developers for $15. Let me know if you’re interested. You can contact me about it here.

Photo by thenovys

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Skillshare: How to Build a Marketplace for Online Education

I always like hearing how entrepreneurs have managed to launch marketplace businesses. TechCrunch recently posted this interview with Michael Karnjanaprakorn of Skillshare, a platform for online education, about how they seeded and grew their marketplace.

He described two main phases in a marketplace’s journey:

Phase 1: Seeding

Where you “Roll up your sleeves up and get it done.”

Michael explains how, at Skillshare, they focused on getting teachers onto the platform as they recognised that teachers already had their own student communities who they’d be able to bring along with them. They reached out to their friends and personal contacts and tried to minimise the friction for teachers to get started, including doing non-scalable things like finding them real-world venues for the classes.

The key points from Michael are:

  • Don’t try to do everything. If you can focus on one side of the marketplace and get them to bring in the other side, then do that.
  • Reduce friction and get to liquidity as soon as you possibly can because once you do, powerful network effects then come into play.
  • At this stage, don’t worry if what you’re doing doesn’t scale.

Phase 2: Scaling

The labour-intensive approaches used in the seeding phase tend not to scale, so you then need to transition to building things into the platform to power further growth. Skillshare are currently improving their product to deliver more value to their users and help users create content and resources that, in turn, bring in more users.

Further Reading

Photo by: Emilian Robert Vicol

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What’s a Typical Subscription Commerce Retention Rate?

retention symbol

What’s a typical retention rate for a subscription commerce business?

If you’re trying to model a potential new subscription box business, or just wondering how profitable an existing business is, retention rate is a key variable. What retention rate should you assume?

The answer, of course, is “it depends.”

But you need something to plug into your calculations. So let’s look at some potential comparables.

Retention Rate Comparables

Here’s some retention data that has been shared publicly:

(If you know of some other good public data, please let me know — this sample is a bit limited at the moment!)

Why Churn Rate Tends to Decline Over Time

If you look at the H.Bloom and Relay Foods examples, you’ll see that lots of subscribers cancel early in their subscriptions and the remaining ones tend to be more loyal. I’d expect to see this in most subscription businesses — customers that aren’t getting value from your service are likely to leave early on. Those that remain are likely to be doing so because they like the service. Consequently, as your business matures, your overall churn rate is likely to fall.

Churn Rate Varies by Acquisition Channel and Offer

You will also find that your churn rate is affected by how people sign up. At Boudoir Privé, for example, we found that, when we ran a special offer giving a discounted first box, a lot proportion of those new subscribers cancelled after they’d received that one box.

Churn Rate vs Retention Rate

I’ve been talking about churn rate and retention rate. But how are they related?

Churn rate is the percentage of subscribers who cancel in any one period. e.g. if you have 100 monthly subscribers and one month 20 of those subscribers cancel, then your churn rate for that month is 20%.

Retention rate is simply the percentage of subscribers who remain. In the example here, 80 subscribers remain and your retention rate is 80%.

retention rate = 1 – churn rate

Modelling Retention Rate for Your Business Plan

In my opinion, simple is good where possible. And I think that applies to modelling retention rates and churn rates for subscription commerce businesses.

Here are a few models you may want to use:

1. Average subscription length: Probably the simplest model (and my favourite for back-of-the-envelope calculations) is to assume an average subscription length and not worry about the details beyond that. This is good for estimating whether or not a business is likely to be profitable.

2. Fixed churn rate: To model cashflow, you’ll need to look at retention over time. One simple way is to assume that a fixed percentage of your overall current subscribers will cancel each month.

3. Declining churn rate: A slightly more complex model is to assume a slightly high overall churn rate to start with, dropping gradually over time.

Any of these approximations is probably fair for a pre-launch business where there are large amounts of uncertainty about other key factors of your model anyway.

More advanced businesses with a better idea of their numbers (or early stage ones run by ex-investment bankers) may want to look at a cohort analysis to better predict and model how the churn rate for a particular group of customers is likely to change over time.

Your assumptions about future retention rates significantly affect how profitable a business looks in the long term, so whatever approach you take, it’s worth understanding this component of your model and any simplifying assumptions you’re making.

How about you? Are you trying to model retention rates for a new business idea? What approach are you taking?

Update: you may also like to read this more recent article: What is the Average Churn Rate for a Subscription Box Business?

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How to Build a Successful Startup – an Interview with David Tisch of TechStars

It’s 11.38pm as I’m starting to write this, so I’ll keep it brief.

The latest startup interview from Grovo came out today. It’s with David Tisch who runs the TechStars incubator in New York.

David sees lots of startups from an early stage, so has an interesting vantage point on things.

Here’s a quick rundown of the more actionable highlights from what he had to say…

Founder/product or founder/market fit

This is one of the things David looks for when selecting startups for TechStars. You need at least one of the following:

  1. Direct experience of a pain point in the space
  2. A thesis on the space (how the status quo is broken and how things will look in the future)
  3. A network within the space that gives you an unfair advantage over other people

The actionable takeaway is this: when choosing a business to start, find one where you have at least one (preferably two or three) of the advantages above.

Personally, I agree with 1 & 3, but I’m not sure about the existence of a thesis on the space as a useful indicator of ‘fit’. For example, I have a thesis about the future shape of the National Health Service (NHS) in the UK but as I’ve never worked in that sector, it’s very likely my thesis is wrong in important ways.

Storytelling

David argues that storytelling is the number one skill you need to learn as an entrepreneur. You need to be able to express your story in an exciting and engaging way. e.g. why are you doing this, what hiccups and successes have you encountered along the way. This isn’t just important when speaking to investors (like David) but to everyone: journalists, customers, potential hires, etc.

Marketing

As a startup, David recommends experimenting wildly and widely with your marketing (at least, I think he’s talking about marketing when he mentions this). Test as many things as you can and see what sticks.

I’d agree broadly with that. Though in reality, limited time and money generally mean you have to be selective and prioritise testing the handful of marketing techniques you think are likely to work best. This is one area where I think experience can be very valuable.


The rest of the interview is more focused on TechStars and New York. You can see it all here.

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How to Publish and Sell by Email – an Interview with Ben Lerer of Thrillist

I told you about an interesting interview with the Bonobos founder last week on a site called Grovo. Well, Grovo’s next interview with a founder of a successful Internet company is now available and it’s another good one.

This week’s interview is with Ben Lerer, the co-founder and CEO of Thrillist, a daily email city guide with over three million subscribers. Thrillist also owns JackThreads, a members-only online retailer, and Thrillist Rewards, a ‘localised commerce business’.

It’s interesting to hear Ben’s perspective on his large, email-centric businesses.

A few key points for me were:

  • For Thrillist, the daily emails are the full content; for JackThreads they’re about merchandising – showing people a curated set of products that they will hopefully go and buy on the site.
  • Currently, everyone gets the same emails. Over the next year, they’re planning to start personalising the JackThreads emails so the stuff you’re shown will tend to be more of the things you’ve indicated an interest in (I’m assuming this’ll be based on actions like clicks and purchases.)
  • Ben sees fast iteration as key. Over time they’ve become better at the try / monitor effectiveness / make changes cycle.
  • Building a brand online is about: knowing who your audience is, being consistent, and being authentic. They use an honest, slightly irreverent tone.
  • Over time, they’ve moved away from building ‘what Ben wants’ to letting the data drive things.
  • Having this kind of data-driven approach is important.
  • With the e-commerce business, the numbers are very specific (sales, profits, etc.); with the publishing business, they’re fuzzier.

The interview is here.

I’ve enjoyed this interview series so far, so I’ll be continue to follow it. If there’s an interview I think is particularly good, I’ll share my thoughts about it with you here.

 

 

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How to Build a Fashion Brand Online (According to Bonobos)

I came across an online education website called Grovo this evening. Perhaps you’ve heard of it already?

Grovo has lined up a series of what promise to be interesting interviews with successful figures in the world of online business. Their first interview (and only one for now) is with Andy Dunn, one of the co-founders of Bonobos which is a very successful men’s fashion brand in the US that was launched via the web.

In the interview, Andy offers some fascinating advice about doing the kind of vertically-integrated retail that has worked for Bonobos. He sees personalisation and curation being extremely important trends that will improve the online shopping experience.

In case you don’t have time to watch it, here are my notes:

Building a Brand Online

Four keys:

  1. Aggregate customer service to one point and staff that well (the “Zappos model”).
  2. Have a high-quality product.
  3. Vertically integrate so that you look after sourcing, design and merchandising.
  4. Get great at brand story-telling.

Customer Acquisition

Early phase: use word-of-mouth, editorial/PR and direct-selling; get up to a run-rate of $1 million to $2 million (!)

Growth phase: multi-channel (test everything and use what works best). Requires:

  1. Culture of analytics and experimentation
  2. Money to run the tests
  3. Understanding of your customer lifetime value (LTV)

Differentiation

  • Bonobos have differentiated through their vertical integration into design (starting with better-fitting men’s trousers, now expanding into other garments).
  • They focus on serving a specific demographic really well: 25-50 year-old active, urban, professional males.

Leveraging Social Media

  • Have a conversation (don’t just talk at people)
  • Use social media as a channel for real-time customer feedback
  • Be hugely responsive on social media
  • Use social media to let customers and your team connect on a human level (e.g. Bonobos ran a poll to ask customers to vote on which Bonobos team member had the best Halloween costume)

Evolution of Commerce

  • Think of the online experience as a bundle of product and service.
  • Be a great storyteller.

I love what Bonobos have managed to do and I think there’s lots to learn from their success.

Grovo have done a great job with this interview, so I’m looking forward to checking back with them soon.

I’ll keep you posted here with any interesting notes.

 

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How Google Suspended My AdWords Account Forever (With No Warning)

Stay Classy Mr. Top Hat

I want to like Google.

They have all those free services: search, Gmail, Analytics… what’s not to like with those?

And I’ve been a customer of Google’s for a long time, too – spending money on their AdWords ads since February 2007.

Google does a lot of good things and I’m sure most people who work at Google are good people.

But the way Google’s UK & Ireland AdWords team has treated me in the last 4 weeks has made me realise that all is not well at Google. In fact, it’s very dangerous to rely on them in any way.

Google Permanently Suspend My Account With No Warning

Four weeks ago, I’d created two AdWords ads. They’d been shown a grand total of zero times.

Then I realised the ads might both be in violation of Google’s ad policy. Not wanting to violate that policy and preferring to play it safe, I cancelled one of the campaigns. And I tried to cancel the other one.

I didn’t intend to break Google’s rules. I made an innocent mistake and tried to correct it as soon as I could.

At this point, I assume Google looked at my ads and decided they did indeed violate their policy.

Fair enough. [though I’ve subsequently reviewed their policy and can’t see any way the ads were in violation. From what I gather, Google AdWords penalise anything that looks like affiliate marketing, though don’t make this at all clear in any AdWords policy documentation I’ve managed to find.]

Next, though, instead of alerting me to the fact that my ads were against their policy and not running them, Google decided the appropriate course of action was to permanently suspend me from using Adwords. Forever.

What?!!

“Not to worry,” I thought. “Those folk at Google are smart and reasonable. When they hear what’s happened, they’ll realise a permanent ban was a bit heavy-handed and re-enable my account.”

I Try to Contact Google, but am Ignored

So over the course of the next several weeks I politely tried to reach out to Google’s UK & Ireland AdWords team.

I called them. I wrote to them. I wrote again. And again. In return, when they did reply, all they did was to send me template emails that completely failed to address any points I’d tried to raise.

I did speak to an AdWords customer support person on the phone at one point. They were friendly enough, but their only authority seemed to be to pass on a message to someone else. Nevertheless, I hoped this might do some good. A few days passed. Then I received it … yet another template email. Grr.

I filled out their online complaint form, asking for a more human interaction. Again, nothing but a template reply.

Google refused to engage with me in any meaningful way.

Charming, Google. Truly charming.

Barred from Accessing 91% of UK Search Traffic

Google have now barred me from accessing 91% of the UK’s search traffic with paid search. And they don’t bother to even properly respond to my queries about it. Great.

I used to test lots of business ideas by running small Google search ad campaigns. Now I can’t.

Google’s UK and Ireland AdWords has refused to discuss why they’ve taken this action. I suppose this is always a risk when a company has the kind of dangerously dominant (*cough* monopolistic *cough*) market share that Google currently enjoys.

I know there are good people at Google; people who want to do the right thing. Sadly, Google’s policies no longer seem to be letting them do that. Now when I call customer support, the people I speak with tell me that there is nothing they can do: the policy people have spoken and they must be right. It’s like some kind of Orwellian nightmare in there, with policies in charge rather than people.

Google Favour Large Businesses Over Small Advertisers

What’s especially galling about this is that Google don’t treat everyone the same way.

Google treat larger customers with more respect.

I used to work for a company that was (and still is) an extremely large AdWords buyer. When they screw up, it’s a different story. A quick word with their account manager and Google turn a blind eye. Their account isn’t suspended. They don’t have to wait days for a response. And they don’t have to put up with condescending template emails.

It’s the small guy that gets the raw deal. It’s the small guy who gets penalised for an innocent mistake, then ignored by Google.

What Next?

If you work for Google: we both know your organisation can be better than this. Let’s sort this out. You can contact me here.

If you don’t work for Google, please warn your friend about the reality of AdWords:

Your AdWords account may be shut down permanently at Google’s discretion at any moment without any warning or explanation and with no way of speaking to Google about the decision.

Do you really want to be at the mercy of an organisation that treats its paying customers like that?

Further Reading

Creative Commons License photo credit: airinnajera

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