Month: September 2006

September 22, 2006

Web Application Tracking Surprise

I just posted an interesting discovery on the FreshBooks blog – the post includes a really useful tip for anyone building a web app.

Check out the article, and consider what the reduced conversion rate implies about users and their disdain for marketing offers in their user experience. Paul Kedrosky wrote this on eBay’s decision to offer Goolge Adsense ads on their site:

“any high-traffic application that does not also run ads is passing up material revenues, and its shareholders should take it to task.”

To which I replied:

“I’d like to see more data on this. While you are probably right, when you run ads you give up realestate and make usability trade offs that may have more of a long impact on your numbers than may be apparent at first blush. eBay built eBay didn’t they? Part of the appeal for users has been lack of ads. Isn’t lack of ads a community first approach and therefore a good thing long term? I’d say yes, but again, I’d like to see some real numbers on this…and let’s not forget when google runs ads in their free apps, they have no middle man therefore their margins are not comparable (read HIGHER) than other apps who run Google’s ads….”

How do design distractions affect your bottom line over time…hard to calculate, but worth considering.

September 20, 2006

Shape the Direction of the Canadian Internet

From my fellow mesh founder Stuart MacDonald’s blog:

As Chair of the Nominating Committee, I’ve been remiss in not mentioning that the CIRA Board Elections are happening now. If you own a .ca domain, this is your chance to influence the direction of the Internet in Canada, and I would encourage you to check out who is running, what they think, and to vote!

Nice selections Stuart.

If you are interested in shaping the direction of internet use in Canada, cast your vote.

September 14, 2006

Managing Customers as Investments

I am working the spreadsheets this week and I am trying to quantify “the lifetime value” of a FreshBooks customer. In digging into that, I came across this excerpt from “Managing Customers As Investments“:

On average, a 1% improvement in acquisition cost improves customer value by only 0.1%. Improving margins by 1%, for example, by cross-selling, improves customer value by about 1%. This result is similar across firms and is consistent with the margin elasticity discussed in [an appendix]. Improving customer retention by 1% improves customer value by almost 5%. In addition, retention shows a virtuous cycle – the higher the current retention rate (e.g., Ameritrade’s 95% versus Amazon 70%), the higher the impact of improving retention.

Customer service in the services world – and I include web services in that world – is SO important. To some extent that belief has always been a gut thing; it’s great to find the research to backup your instincts. Here’s a good review of the book.