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Google apps are free. Not!

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I posted a comment about the new Gmail interface on a social media site. One responder said, “you get what you pay for. Gmail is free.”

Reading that, I realized that the “Google is free” argument used to work for me, but it no longer does. Google apps are not free at all. You’re paying in the currency of giving them complete access to everything you work on, so they can analyze it and target ads. If someone were to make that explicit and ask me, “How much would you charge to give someone the right to scour every email you send and receive and every document you compose so they can build a profile on you for targetting ads?” I would name a figure far, far, FAR in excess of what I’ve paid for desktop software in my lifetime. In terms of my own value system, I’m only now realizing that Google Apps may be the most expensive software I’ve ever used.

What do you think? What would you charge to give someone the right to analyze all your email and documents to build a profile of you? What would you expect in return?

Should we take personal responsibility for business’s impact?

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Many businesses do things that are legal, are in fact good business practice, but which are shown later to have bad effects for society. In some cases, these effects are huge. For example, the contribution of fast food cooking and recipe practices to obesity and heart disease only came to light 40 years after the founding of the fast food industry. And tobacco was only shown to cause cancer hundreds of years into its trade.

If these had caused immediate obesity or cancer, they probably wouldn’t have succeeded in the market. But human beings have an odd quirk: if the effects of something don’t happen quickly, we discount them in favor of immediate gratification. Our compulsion to eat that extra cookie (like I did last night) is immediate, and we act on it much more than we act on the hypothetical, imaginary future world in which we have added a few inches to our waistline.

Then we came up with science and started uncovering these longer-term cause and effects. If a new product were to be introduced that was known to have such negative health effects by triggering short-term gratification impulses, I’d like to think we wouldn’t rush to embrace it.

But even if we’ve gotten smarter (debatable), there’s an even trickier question: some things are fine when done individually, but disastrous when everyone does them. Skipping college is a great example. We’re living in a moment in history where our college costs, educational outcomes, and job prospects are such that it makes very little economic sense for most people to go to college. There’s just no way they can get a job that can pay back their tuition, and we don’t provide enough national educational assistance or reimbursement to encourage people to go unless it has a direct effect on their future income. (Let’s leave out for a moment the recent studies that show that many 4-year colleges are nothing but an extended party and don’t seem to teach very much.) For any one person this makes sense. When an entire generation does it, 20 years later we’ll have a workforce unsuited for anything but manual labor and jobs as check-out clerks. Bad check-out clerks, I might add.

Outsourcing is another place where the individual benefit leads to bad things societally. Any one company can be more profitable through outsourcing. When all companies start doing this, however, it leads to higher domestic unemployment and the gradual deskilling of our workforce. Why would anyone put in the time and effort to develop a skill when they can’t compete with $3/day people of similar skill overseas?

Our economic system is clearly set up to reward the individual, short-term decisions. Sometimes that produces the larger good outcomes, and sometimes it doesn’t. If we as businesspeople are concerned about our larger societal outcomes, how can/should/could we change the system to deal with (a) profitable short-term gratification businesses that have long-term negative effects, and (b) individual incentives that lead to rational individual behavior, but when everyone does them, larger Very Bad Problems?

Do we have any responsibility to address those two flaws in the system? If so, how? If not, then how should we handle the very real societal problems that result?

The potential of the one stop shop

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Autumn is here, with a chill in the air. Which is why it was especially traumatic when our Rheem hot water suddenly stopped working last week.

Ever since we had this hot water heater installed 3 years ago, it’s been a problem. We went without hot water for almost a month while going through the Rheem step-by-step troubleshooting procedure, which involved sending us spare parts one at a time, scheduling a repairman to come out and install the parts, and then calling in again when the part didn’t work.

So far we’ve been 11 days without hot water this time (thank goodness for the gym showers!). We’ve been going through the customer service dance again. The contractor who originally sold us the unit is telling us to call the manufacturer. Rheem is saying we have to remove the hot water heater and return it to the contractor and then they’ll replace it. Really? Remove the hot water heater and bring it back to the contractor? By law, we aren’t even allowed to do that, since it connects to a live gas feed. It has to be done by a licensed plumber. Rheem may think it’s very clever, selling us a lemon and making it virtually impossible to get it fixed. The contractor, of course, is telling us that they can’t do anything, and we just have to deal with the manufacturer directly.

What neither seems to understand is that with this kind of behavior, we’re never going to be customers again of either the contractor or the manufacturer. The inability to get decent service has soured us on both parties.

People Want Solutions, Not Vendors

What customers want (in other words, what I want) is one person they can call to solve their problem. They don’t want you to forward them to your vendor, or to some third party. They want to call you and have you work the magic it takes to get the product working again.

Furthermore, you want them to call you, too. That’s the only way you can make sure the service experience is a good one. Our contractor is going to lose our business through no fault of theirs, but through the fault of the manufacturer. The fact that it’s “industry standard” for customers to deal directly with manufacturers does not matter to me. It’s a stupid standard that is making my life miserable.

What I wouldn’t pay for … a contractor who would sell me a hot water heater, install it, and be a one-call service center for me. Would I pay more for this than simply time + materials? You bet. The contractor would quickly get the experience dealing with the various manufacturers, and could streamline which products they recommend to be the ones that don’t break, or that can be quickly fixed when they do break. If they have enough customers, they could even get some negotiating leverage, either for service response time or price. (“I have 100 customers with your hot water heater in the Chicago area. Let’s negotiate a discount on replacement parts.”)

There’s a market niche, but so far, no one’s filling it.

What experience do your customers go through when your product breaks? Is there a chance for you to deliver serious extra value by being a one-phone-call provider for your customers? If so, will it give you the extra bonus of developing relationships or expertise that ultimately helps you work even faster, cheaper, and more easily?

Think about it. There’s power to being the only person someone calls when they need a solution, and that can be turned into a seriously valuable business.

If you want to reward your customers, reward them!

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I went shopping at RITE-AID today and saw one of my favorite products advertised as: “Buy 2, get $2 off your next purchase.” I grabbed two bottles and made my way to the register … where the clerk informed me that I could only get the deal if I had their frequent buyer card. To join the program, however, I had to give them personally identifiable information. I declined both the membership and the purchase.

There’s no reason a frequent buyer program needs to have my personally identifiable information. As long as all my purchases get charged to card #4234, they can print the offer coupons for card #4234 based on the purchase history of #4234. There is never any need to get my personally identifiable information unless they plan to sell it or cross-index it against other databases to find out more about me.

This seems like RITE-AID wanting to reward me as a frequent customer by giving me future deals that will encourage me to shop there more. In that, we’re aligned. I want to let them do that. But I’m not interested in giving them personally identifiable information that they can sell or use in ways other than encouraging me to shop there more.

If you want to reward your customers, find ways to reward them that does not infringe on them. Most people, if they like you as a merchant or service provider, will be happy to accept and respond to incentives. If you want fanatically loyal customers who rave about you, make it possible for people to have a great experience without stepping beyond the bounds where they stop being comfortable with the relationship. Otherwise, you end up with people like me blogging about your intrusion into their lives, instead of praising you for giving you such a great deal.

Success Starts When You Stop Using Your Own Product

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Have you checked out your competitors recently? I was just reading a review that says the new Blackberry smartphone is by far the best, speediest, most elegant Blackberry ever. But the reviewer would not recommend anyone buy it. Why? Because it’s still missing a lot of the key functionality that other smartphones have. The hardware is leading edge, but they haven’t truly made the device do anything better.

What I want to know is what kind of smartphone the co-CEOs of RIM use? Do they use Blackberrys? I can’t imagine a worse choice. They should be using iPhone and Android devices for 95% of their calls and computing. We’ll let them use Blackberrys, but only on Sunday. And they’re not allowed to have their IT people set them up; they need to do that themselves. Then they’ll start to understand fundamentally what it’s like to use these devices, and why Blackberry is increasingly falling behind.

I’ve been in Blackberry’s marketing research list for years. I want so badly to tell them why my next phone will be an iPhone, and exactly how and why their platform falls short. But they never ask that. They ask too-specific questions about their guesses as to why I might prefer an iPhone. And their guesses are wrong, because they’re so steeped in their own product.

If you’re in a competitive market, you owe it to yourself to adopt your competitor’s product. Don’t just use it for an hour or a couple of days; really integrate it into your life. Understand its strengths and its shortcomings. Do this a couple of times a year. Only then will you have a hope of being able to take the next step and leapfrog what they’re doing with your own next product. Otherwise, you’re playing guessing games. You might get lucky once or twice, but at the end of the day, you can’t create a vision of a next generation product when you don’t even know what this generation holds.

Use An Editor!

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If you want to produce extremely high-quality work, it may be wise to find someone to help. It’s hard to be objective about our own work. Almost by definition, we believe if we did it, it must be good. But yet, sometimes an objective eye can help us take our good work to the realm of greatness. The objective eyes I’m talking about belong to editors.

Editors ROCK! When I’m writing a Get-it-Done Guy episode, my natural sense of humor comes out. My natural sense of humor was developed doing comedy improvisation with college audiences. “Decorum” is not high on the list of words you would use to describe my first draft material.

Fortunately, there’s a very dedicated editor at Macmillan publishing who reads my drafts. She sends them back with paragraphs circled in red pen. In the margin, she writes notes like, “If you say that, the FBI will open a file on you, start wire-tapping your phones, and put you under 24-hour surveillance. Again.” While most people would enjoy free protection services, I find it cramps my style when I go out clubbing. So I rewrite the paragraphs she highlights, this time using Goldilocks and the Three Bears as the central metaphor of my piece. My editors approve, and another Get-it-Done Guy episode is born.

Editors come in many varieties. Some editors can make sure your humor is appropriate. They can make sure your text flows, that you don’t repeat yourself, and that your points build on one another. Copy-editors handle editing the details. They double-check your spelling, your grammar, and your punctuation. I was a copyeditor for the school newspaper when I was a student at Harvard Business School; I need to give my marketing staff a special therapy budget, so they can deal with me.

If you have to write reports, pamphlets, or anything where quality matters, get yourself an editor. It doesn’t have to be a professional, a colleague who writes well may be all that’s required. If you’re worried about letting your coworkers see your work before it’s polished, find a friend who has the write skill set, but works at another company. You can be an outside helper for each other, without worrying about work-in-progress-quality work getting out to the people in your company.

If you’ve never worked with an editor, give it a shot. You’ll discover that having an extra pair of eyes double-check your work can often produce something better than either of you could have written on your own.

Know the Lifetime Value of Your Customers

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When that lone customer arrives at your restaurant on a busy night, it’s tempting to make him or her wait, in favor of the party of 12 that’s sure to rack up a huge bill. But it just might not be wise.

When you’re deciding how to structure your business, who to give service to, and when to go the extra mile for a customer, don’t just consider the transaction you’re in the middle of dealing with. Consider the total lifetime of interaction with your customer. The “lifetime value” of a customer is how much you expect that customer to spend over the course of their association with you. That lifetime value is what you want to take into account when deciding how far out of your way to go. I’ve recently had a few run-ins with companies that have taken a short view, much to their detriment.

I eat lunch 5 times a week at the same deli. They discontinued my favorite kind of hot pepper, leaving no condiments that I enjoyed. I asked them to please bring them back, and they refused. I offered to buy my own jar for them to use. They refused. And I stopped eating there. Five days a week, times 50 weeks a year, times $7 per lunch is $1,750 of income a year they were happy to forgo to avoid dealing with the hassle of keeping a jar of peppers around. My new deli is part of a franchise. They are only supposed to serve their approved condiments. I spoke to the owner and he happily kept a special jar of peppers just for me. In the 3 years I’ve been eating there, they’ve made $5,000 and my previous deli has gone out of business.

My friend passes through Reno every year on the way back from the Burning Man festival. He stayed in Harrah’s because they gave him a free upgrade if they had rooms available. He then spent the money he saved in the Harrah’s restaurant and spent even more in the casino. They stopped giving free upgrades, and he changed hotels. It would cost them nothing to give him the upgrade, and instead, they’ve lost year-after-year of restaurant and casino business. Let’s not even consider how much Harrah’s would make on all the referral business my friend would bring. Smooth move, Harrah’s.

To return to the original example, while it may make sense on any given night to forgo seating one person in favor of the party of 12, if that one person dines at your restaurant three times a week, in the course of a year, they’ll outspend the entire party of 12. As unintuitive as it may seem, treating the solo customer well may be a better business decision than handling the occasional bachelorette party. And believe me—the cleanup’s a lot easier, too.

When you make decisions about your customers, do you consider their requests as separate events, or do you consider the lifetime value of each customer before deciding how much to commit to their happiness?

Marketing vs. Sales vs. Copywriting vs. Design

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I’ve recently noticed that many entrepreneurs hire a “marketing person” and then end up with someone who doesn’t do what they expect. Sometimes it’s because they didn’t realize what “marketing” means. Other times, it’s because the person they hired didn’t know what marketing means. Here is a quick guide to understanding the difference between professions that are distinct, separate fields, but get confused, because the titles are so often misused:

Marketer. A marketer decides what market a product will be sold to, how the product will be described to make it stand out from its competitors (called “positioning”), and how it will be priced. A market is a broad set of people who might want to buy the product that can be reached by the company. “Every adult over the age of 25” is not a market, because there’s no way to reach every adult over the age of 25. “Single women between 18 and 35” is a better market because there are magazines, TV shows, web sites, and other venues where members of that group hang out. Those places—often called “channels”—are how a company can reach that market.

A marketer also chooses the message to send to a market. Whether to say “We’re the lowest cost pony rental service in town” or “We have the only purple pony east of the Mississippi” is a marketing decision. The first message will appeal to members of the market who care about price. The second message will appeal to customers who care about … purple.

Salesperson. Marketers deal with defining the product. Once the market is identified, the salespeople actually go out and convince people to buy. The marketer decides, “We’re selling private jet memberships to corporate CEOs.” The salesperson drives out to the country club, finds a CEO, and says, “Would you like to buy a private jet membership?”

Note: the “junk mail” and “spam” professions are often called “direct marketing.” Those professions are rarely marketing; what they are is sales-at-a-distance. Very few people I’ve met who do direct marketing spend much time defining their market and competitive strategy. They spend their time selling.

Copywriter. A copywriter writes the text that will appear on a web site or in an advertisement. Text must accurately represent what makes a product unique and appealing to its target market. Knowing takes a marketing perspective. If it’s ad copy, it must also persuade. That’s a sales perspective. The text must also be clear and well-written. That’s a writing skill. You’ll do best with a copy writer who has good writing skill, and the perspective appropriate to the piece being written. A website “about us” page may require a marketing perspective, while a product sales landing page might require a sales perspective. Don’t assume the same person can write both kinds of copy. Also, don’t assume that a good salesperson or marketer can write good copy. They’re separate skills.

Designer. A designer makes things look good, and creates a certain feel using visual design. The designer will choose your website layout, your fonts, and so on. Designers need to know enough about your site to create the mood you want. That mood, however, is usually decided by the marketers, and it should send the right signals to the target market. Marketing would decide “We want a cartoony, happy feeling because we believe that will appeal to single women between 18 and 35” or they would decide “We want a professional, elegant feel to appeal to single women between 18 and 35.” The graphic designer would then create a look, feel, illustrations, etc. to make that impression.

These are different skills, and they often require different people to get them right. But when you get the right marketing, powerful salespeople, killer copy, and a great design, you’ll build a much stronger, more powerful business than you would otherwise.

How do you deal with fundamental overload?

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When you’ve made real commitments that add up to 100%+ of the time/mental energy you have available, how do you deal with it? I’m in that situation at the moment and find myself debating whether to concentrate on one thing, get it done (while other things fall by the wayside and/or miss deadlines, causing a backlog to pile up), or continue making small progress on many fronts, but not finishing anything.

Or perhaps there are other ways? What are your thoughts?

Make It Easy To Communicate

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If you’re a businessperson, relationships and partnerships are a key part of getting things done. Communication is one of the most important components of successful working relationships. Yet all the communication technology we’ve invented has actually made it harder to communicate. We have so many options, we don’t know how to connect.

A friend and I decided to schedule a meeting recently. He has three phone numbers, four IM accounts, three email addresses, a Skype account, a Facebook, and a Google Plus account. It took an entire conversation using two forms of email to decide which medium to use for our real conversation next week. Too much choice is making it harder and harder to reach each other. This is not progress.

If you want to spend your time forging relationships and getting work done with other people, choose a single email address, a single phone number, and a single IM account, and give those out as your contact information. Of those ways of contact, decide which one you prefer and let people know. You can even put it on your business card: “Email preferred” or “Please text me” or “Voice is best.” That way, when people need to reach you, they know exactly where and how to do it. It also means you know where to go to process your inbox, rather than having to check a dozen different places.