Why Website Ad Revenues Today Can Erode Long-term Profitability

I’m a firm believer in design thinking principles, particularly when it comes to web and mobile apps.  I’ve been a product and marketing manager since the mid-90’s.  Back then, complex and clunky workflows and user experiences didn’t matter as much because it was all new and unchartered territory for software product managers and engineers.  As long as you had a “web presence” you were set.  The new norm for marketing materials, including business cards, was to promote a website address. Today, we see Twitter, Facebook, Pinterest, Instagram, etc. added to all marketing communications.

It’s 2015 and we know better about clunky workflows and user experiences.  Design and innovation consulting firms such as IDEO,  universities such as the Institute of Design (d. school) at Stanford University, and the many authors on the subject such as Jon Kolko, “Well Designed:  How to Use Empathy to Create Products PeopleLove”  are all sharing the same information about being user-centric (humanize technology).  There really is no excuse for poor user experiences anymore (and ultimately “customer experiences” across all touch points).

My theory is that Marketing and Sales departments are in a KPI (key performance indicator) battle.  Both groups need to report their KPIs on a regular basis to executive management via a Dashboard or Report on a regular basis.  What’s interesting is that departmental KPIs can be misleading and perhaps even contradict other department KPIs and/or the overall business strategy.  Most organizations want to build scalable business models, which provide long-term profitability and therefore sustainability.  That’s where the hockey stick growth charts come in to play.

If Sales and Marketing are held accountable to their metrics, they can toggle their budgets accordingly as they discover the best performing channels and campaigns. Some lead generation methods incorporate the following:

·      Search Engine Optimization (SEO)

·      Social Media

·      Local Optimization

·      Paid Search

·      Website Design

·      Email Marketing

·      Event Promotion

·      Direct Mail (includes Mobile campaigns)

·      White Papers

·      Document creation (aka – Content Marketing)

·      Telemarketing

·      B2B Appointment Setting 

Why does this matter?  If a company has a tried and true business model that no longer produces the results management is accustomed to, they are simply trying to survive.  Desperate times result in desperate measures. They resolve to “advertising revenue” to stay afloat, or at least get by for the remaining fiscal year.  “Subscriptions” may also be a key element in the business model.  But there has to be compelling value to entice customers to pay for it.  Organizations need to make it easy and enjoyable for end users to access and view the content in order to build out a scalable model.

What is a good example?  The newspaper industry (and Yellow Pages for that matter).  I live in Colorado and my favorite newspaper, Rocky Mountain News, which had been in existence since the Civil War, went belly up.  The “survivor” is The Denver Post.  I’m not sure how they will continue to survive by producing a  user experience such as this:

Screenshot 1:  Top of Homepage

Screenshot 2:  Middle of Homepage

Screenshot 3:  Footer of Homepage

What is the Denver Post’s reason for being?  To deliver the news.  Their primary target market is metro Denver, followed by the rest of Colorado (where there are smaller competing newspapers).  Beyond that, it’s anyone who has an interest in keeping up with Colorado and metro Denver news around the globe.

As their homepage demonstrates, they need a LOT of ad impressions.  Let’s break down their ad positions:

·      Left and Right side of the page; duplicate “skyscraper” banners

·      Top of the page banner

·      Skinny banner beneath the double Navigation bars (which is the same sponsor as the 2 duplicate skyscraper ads on the left and right sides)

·      Ad to the Right of the “Top Story,” below the “skinny banner”

·      Sponsored Content: Left of the “Top Story”

·      Square banner #1 – as you scroll down the page it appears on the left side of the ”right skyscraper banner”.

·      Square banner#2 – just below Square Banner #1

·      Square banner #3 – below Square Banner #2

·      Square banner #4 – below Square Banner #3

·      Bottom of page banner

Did you count how many ads there are on the homepage?  11.  

Plus 2 of the 11 ads remain in view as you scroll down the page to actually try to read the news. The 2 ads are the left and right “skyscraper” banners, in case I didn’t notice them the entire time I’ve been on the page.    Why would this car dealership waste their money?  This is akin to walking down the street and people handing out flyers, the same flyer, with every step you take.  I’m not going to pay attention to the ad, and I’m annoyed with the dealership. Imagine how “in your face” their sales people are when you’re at their lot?  No thanks!

An end user’s experience becomes irritating with the bombardment of ads.  End users likely will not click on any stories (or ads) and abandon the site.  The bounce rate for this particular homepage must be quite high.  Hint to the Denver Post:  engage readers, don’t drive them away from your content.  Readers come to your site because they want to be informed.  Unfortunately the site makes it so hard to become informed.  

I want to support my local newspaper. I want it to be my “go to” news source and I would be willing to pay for a subscription to show my support.  But they have a long way to go before I switch my allegiance from Google News.

Why does The Denver Post continue to run their homepage this way? I would imagine it’s because they need a high volume of impressions to drive their revenues.  This KPI contradicts long-term profitability and sustainability because it drives target readership away to substitute products.

The short-term gain of an impression has a long-term cost for them in readership, potential subscriptions, and ultimately loyalty from their community.

What should The Denver Post do differently? 

•        First, spend some time with their readers. Just listen.

o   Conduct one-on-one usability test sessions and record feedback on what readers think of the homepage experience (and subpages if they ever get there).  Make note of what they are saying, but also what their body language is saying, emotions in their words (note anger, frustration, hostility, etc.), feel the pain points your readers feel when trying to read the news at your web site.

o   Conduct focus groups to uncover what reader expectations are in 2015, and what they might become moving forward (key piece likely involves mobile).  Apply what you learn into themes. Prioritize themes.  Plan to execute on high value, big wins.  They are likely low hanging fruit (because a redesign is what you need at this point).

o   Create a ‘reader advisory board’ – readers who raise their hand because they have a vested interest in seeing The Denver Post succeed.  Rocky Mountain News is gone, what’s left for a Denver-based major newspaper?

o   There are more tactics, but these 3 will get you a long way to develop  empathy for your readers.  (I’m assuming you do care about readers, not just advertisers.)

•       Work with User Experience (UX) professionals.

o   They may recommend developing “customer journey maps” and “personas”.  Basically, you need a solid understanding of how to attract attention, keep it and engage with your readers so the focus on ads in their face doesn’t turn them off.  A homepage shouldn’t be similar to walking down the strip in Vegas.

o   Create mock-ups and/or prototypes about what an ideal user experience could be – and test them with your readers.  This is where the Reader Advisory Board comes into play.  Quick feedback, so you can iterate quickly and refine the prototype to get it right.

•       Build the new user experience.

o   This is the tricky part.  It depends on your backend infrastructure and database schema and how you can streamline your content delivery.  I’m not an engineer,  however your engineers will figure out the “how” – and your marketing and product team will deliver a clear vision of the “what”, which is the new website and reader experience.  Communicate with engineering everything you learned through your discovery sessions with readers.  They will appreciate the context and also understand their pain points.

•             Educate Sales on the value of “meaningful” KPIs, which are in alignment with the overall business strategy.  I’m going out on a limb here, but I’m assuming the strategy includes x% increase in subscriptions, x% increase in readership, (and circulation), a metric tied to “happy path” analysis in website, x% increase in reader time spent on website, x% increase in # articles read per reader per session, etc.
•      Engage with your Readers (and reader advisory board) in a 2-way dialogue.  Build and nurture relationships with the readers and build your community (or as Seth Godin says, “build your tribe.”)    

If I were in charge of the “Next Gen” Denver Post website, those are the initial steps I would take.

Bad Business Practices Alienate Customers and Provide a Fast Track to the Bottom of the Barrel

Most companies work very hard to acquire and retain customers.  It puzzles me when business practices perpetuate lack of trust and contribute to customer attrition.  There is one particular company that is notorious for such practices as noted by the Better Business Bureau, Consumer Reports and Consumer Affairs sites.  It’s hard to believe this company is more than a century old and continues to stay in business with their approach to sales and customers.  I won’t call them out by name, but I will call out their bad business practices to educate others. 

The ‘Do NOT Do’ List:

• Bait & Switch Sales:  If customers proactively seek out your service and spend time on the phone with your sales rep, have the decency to honor the agreed upon service package.
• Customers agree to a monthly fee and set-up charges in advance.  They don’t want to be taken off guard when the person that comes into their home to do the installation ultimately provides paperwork for much more expensive services and equipment.  Bad practice.

• Disguise sales people as “technicians”:  Once a customer agrees to a service package over the phone, they have expectations the technician they are about to allow into their home is there to actually do a successful installation. 
• Hiding the fact the technician is actually a sales person on commission is misleading.  This type of technician is incompetent to complete the installation successfully because their primary goal and motivation is to upsell above and beyond what the customer had already signed up for.  This is where trust dissipates and customers feel duped. 
• New customers believe they are buying into a monthly subscription package and suddenly they are presented with $4k-$5k of additional services and equipment.  The fact the ‘technician’ says the “investment in the home” is interest free for 4 months, does not help.  Customers can blatantly say no, but it’s not easy to do.  There is a hard sell from the technician. They use fear tactics to get you to move forward and sign on the dotted line. Bad practice.

• Misconstrue installation timeframes.  It is very deceiving to tell new customers a 2-hour window is required for the technician to do the work, when the reality turns into double, triple or even quadruple the timeframe without any approval from the customer. 
• I had a personal experience with the installation not being completed within the 2-hour timeframe. When I asked the “technician” for an ETA for when he would be done, he responded it would likely be another 2-3 hours.  I was shocked and inquired why he hadn’t clarified with me the total time it would take to complete the installation. He just shrugged his shoulders.  As a new customer I went from being annoyed to extremely frustrated.  Plus the service still wasn’t operating properly after 5 hours. Bad practice.

• Have technicians leave before the system is fully functional.  It’s too easy for the technician to point fingers at your DSL or Cable provider to say the reason why the system isn’t functioning is due to “blocked ports” with your Internet service provider’s router.  Now the burden is placed on the customer to contact the Internet service provider to resolve the blocked port issue. 
• Typically the customer simply needs to lower the security level of their firewall to open more ports.  You don’t need the help of your Internet service provider to do so; you just log into your account and change the security settings. 
• The customer then calls back technical support to schedule another visit to finish the installation and low and behold – there isn’t another opening for a week or two (or longer).  The delay for the next appointment moves the customer outside the 72-hour cancellation window – and now the company has the customer hostage. Bad practice.

• Provide a pile of paperwork in triplicate and have the technician say “initial here” and “sign here” as they quickly pass the papers in front of you.
• This practice seals the deal on deception. The technician doesn’t want you to read what’s actually in the contract and fine print.  Unless you purposely tell them you would like to review the paperwork before signing, they expect you to simply follow their instructions to initial and sign. Customer beware! Don’t do it. 
• You have no idea what you are agreeing to and how long of a contract you will be locked into.  Take the time, even if the technician doesn’t have the time, to review each piece of paper you have to put your signature and initials on. Otherwise, you will regret it.  The BBB, Consumer Reports and other agencies can’t help you if you signed your life away and didn’t try to cancel within the designated timeframe (typically 72 hours). Customers do not like to be coerced or embarrassed into blindly signing documents.  Bad practice.

• Provide an “incentive” with a catch.  Watch out for the wolf in sheep’s clothing also known as the reward for you to become a new customer.  It’s not always exactly what it seems.
• For example, a $100 Visa Gift card is frequently used by many service providers as a means to get you sign up today.  “Act now – and get this incentive.”  Read the fine print.  Typically it takes 4-8 weeks for you to receive it in the mail and that’s only if you follow the instructions completely. Any failure of requirements to receive the reward, forfeits the reward.  You need a copy of the original ‘reward certificate’, you need a copy of your service agreement, and typically you need a cashier’s check or money order for $4.95 (or more) to cover “shipping and handling” of your free gift card.  This seems ludicrous.
• In addition, you need to send everything in by a specified date, or you also forfeit the gift card.  I don’t know about you, but long delays and jumping through hoops to submit materials is an inconvenient way to ‘reward’ customers for their business.
• Companies realize that many new customers will not submit at all.  Those who do submit will likely misread the requirements and forfeit the free gift.  That’s money back in their pocket.  Bad practice.

• Make it difficult to cancel the subscription.  Why not a simple click of a button on the company’s website to “cancel now”?  Why the hard copy paperwork that needs to be mailed or faxed by a certain date (typically within 72 hours)?  Now the burden is on the customer to see how the company will handle the submission of the Cancellation Notice and that their refund will actually happen.  Bad practice.
• Complete your due diligence in this scenario.  If you choose to cancel by Fax, do so at a service center that will provide you with a transaction report confirming a successful transmission of your notice.  I personally went to FedEx/Kinko’s to use their coversheet, as well as their transaction report to verify the fax successfully transmitted.  Also, I kept the cash register receipt showing payment for the fax.  Evidence is key to prove the cancellation was submitted in a timely fashion.  A 3^rd party Fax service is your best bet for proof of transmission. 

How can a company performing the above bad practices, turn things around?

• Be Honest.  The only way for a customer to trust you, is if you earn it.  Stop the sleazy sales tactics and be open and transparent with your potential and existing customers. 
• Build profitable and long-term relationships with your customers.  If you do this right, you won’t have to use sleazy sales tactics or trick your customers and hold them as hostages due to legalese in a mound of paperwork.  
• Provide Incentives without a Catch.  The best way to delight a new customer is to kick-start the relationship with a reward that is easy to obtain.  Asking new customers to perform cartwheels and backflips to receive their incentive 1-2 months from now is not much of a reward.  If you surprise and delight your customers, you will have loyal customers.
• Hire the right Call Center Staff.  Hire top-notch and motivated employees who want to provide peace of mind for customers by offering services with the right value proposition for them.  The key emphasis is “what is right for the customer” not what is right for the employee to sell based on commission rates.
• Hire technical technicians – not quasi-sales reps. The technicians are the first face-to-face experience your customer will have with your company. You want the best foot forward, the right image, and the ability to convey trust.  Provide training so the technicians can get in and out of the home in a timely fashion.  Also, have them communicate and obtain approval from the customer regarding that timeframe.  Ensure the system is up and running and walk the new customer through the system.  Provide empathy regarding the learning curve the customer will have to get used to the system.  Provide true customer service in the moment.  Everyone is happy in the end.
• Allow customers to leave if they choose to.  It’s not the end of the world if a customer decides the service is no longer right for them. But if you did all of the above right, and they still want to leave, make the exit process painless.  Why?  Because if they had a good experience working with your company from start to finish, and the service was excellent, they can still be an advocate for your business and send you referrals.

The key to sustainability: loyal customers who share their experiences with others. 

Companies using bad business practices should also focus on Talent Acquisition: 

--Hire the right talent who will always represent the core values of the company.

--Train talent to do their job well.

--Reward talent for a job well done.

Product Management - Key to Sustainability

I often get approached by people who want to learn more about product management and product manager roles, as it seems a bit mysterious and a potentially exciting career path.  I typically share a handful of resources to help others decide whether or not it is worth pursuing.  I’d like to share my personal favorites below to assist anyone else considering the product management path.

Pragmatic Marketing.  Let’s begin with the value product management brings as a discipline to an organization.  As Pragmatic Marketing states, “..a market-driven focus leads companies to build products people want to buy.”  [DownloadPDF here:  “The Strategic Role of ProductManagement.] Organizations need to create and deliver value to a specific target market and the target market must be willing to pay for that value.  PragmaticMarketing.com is a great place to start the discovery process, review resources, take courses, get certified, and more.  Understanding the fundamentals and the product management framework is critical for success.

Solving the right problem.  Can your organization say with certainty they are creating the right value --solving the right problems for the right customers -- and the potential customers are willing to pay for it?  If so, then revenues should be coming in at or above your sales quotas.  They are, right? If not, keep reading.

Customer Empathy to Create Value.  Empathy is a requirement during the discovery process  in order to understand potential customer pain points.  Start with the basics and talk to them about the problem.  Probe deeply.  Keep asking “Why?”  Sometimes half the battle is to verify you are working on the right problem. 

A perfect example is EmbraceGlobal.org.  This product came out of the realization infant mortality in developing countries isn’t on the rise due to failing incubators in a hospital or clinic.  The team was tasked to build a better incubator, requiring low maintenance.  After speaking with women in villages surrounding the clinics, the team quickly realized the incubator wasn’t the problem at all.  The real problem was how to keep babies warm from the moment they are born.  Often times, babies are born in villages miles away from a hospital or clinic and may not survive the journey there.  By keeping newborns warmer from the moment they are born (day 1), infant mortality rates could potentially decrease.  If the team hadn’t gone out to the villages and probed to better understand the issues, they may not have uncovered the true problem to solve.  The Embrace innovation may never have happened.  Fortunately, Embrace was created and delivered to the market – and infant mortality rates have been declining.

Test the concept. Gather feedback and metrics as evidence to support the proposed solution will actually solve the problem, and is differentiated (better/faster/cheaper) from other products or substitute products.  Ultimately, the potential customers are willing to pay for the solution because of the benefits derived from solving the problem and the value outweighs their cost. The bonus is when they grow to love your product.

Well Designed.  One of my favorite books that addresses this process is “Well Designed:  How touse empathy to create products people love” by Jon Kolko (Harvard Business Review Press, 2014). Jon addresses design thinking but emphasizes it’s the ‘design doing’ that matters. By continuously iterating your idea to ensure you are solving the correct problem and there is a market willing to pay for it, you have the key elements for sustainability.  I had the pleasure of having Jon guest lecture in my Spring 2014 class.  My students learned first-hand the importance of creating value and building products people love. 

Day in the Life of a Product Mgr.  Product Managers don’t just sit at their desks writing user stories based on what sales, marketing or members of the executive team say the market needs and therefore the company should build.  Their inputs are valuable.  However, these are very different perspectives than a product manager would have.  The inputs need to be vetted and ensure they enhance the overall product portfolio and are in alignment with corporate objectives.  Working on pet projects and shiny objects can be distracting and take away resource allocation for the real strategic initiatives.

The Product Manager represents the voice of the customer and is point person to monitor the industry and competitive landscapes to listen for signals. Product Managers spot emerging trends, patterns, new market opportunities (problems to be solved) and drive the process from ideation to proof of concept to prototype and ultimately the launched product in the marketplace. In essence, the product manager is the true SME (subject matter expert) for what the market needs and the types of solutions that the organization should build and deliver. 

IDEO. I’m a big fan of IDEO, a design and innovation consulting company. 

In particular their Blog “Design Thinking” and the book “ChangeBy Design” both written by Tim Brown, CEO. Founder David Kelly has many TEDTalks worth watching.  (I secretly imagine how cool it would be to work for IDEO.)

Courses. I had the privilege of experiencing a hands-on application of design thinking principles in the “Empathize and Prototype” course within the Innovation andEntrepreneurship Program at Stanford.  Jeremy Utley and Perry Kleban taught the course and are  professors at the Hasso Plattner Institute ofDesign at Stanford (also known as the d.school).  I highly recommend the I&E Program, a collaboration between Stanford’s Graduate School of Business and The School of Engineering.  It’s a brilliant way to bring innovation, design thinking, and basic business management principles into one unique program.  

Go-to-Market.  Once you have a solid understanding of the problem and you have articulated the requirements to build the solution in a differentiated manner, you have a winner.  “Winner” products lead to sustainability and profitability.  The marketing strategy to deliver your value proposition into the marketplace becomes a piece of cake if the product management team has done their job properly.  If the value proposition is designed right, sales and marketing efforts just got a whole lot easier.  If you fail on the value creation and delivery, even a top-notch sales and marketing effort can’t bring in the leads, which ultimately convert to revenues.  These basic fundamentals apply to building a sustainable and profitable business with loyal customers.  (Pointing out I didn’t say “satisfied customers” as “satisfaction” is fleeting but loyalty is not.  Learn more at NetPromoterScore.com.) 

Tools.  If you are looking for a product management tool to manage your product roadmaps, check out MindTheProduct.com.  I use their ProdPad service, which allows you to show a roadmap for one or more products.  View what’s in progress now, what’s coming up and what’s slated for future work.   You can collect and store customer feedback, user personas, collaborate as a team, share ideas, and easily reprioritize initiatives.  It’s easy to use with its intuitive UI.  Their customer support is on top of it. They love user feedback and are quick to respond to questions and suggestions.  I’m a huge fan of their co-founder, Janna Bastow. One of these days I hope to meet her at a MindTheProduct event.

What’s your take on product management?  Share your ideas with me!