ExperienceCurve by Karl Long

I just noticed this little snippit on the Netflix site today:

Now Netflix has 2.3 Million subscribers, so with each subscriber having rated an average of 150 movies that is 345 Million movie ratings. Now those ratings are valuable to three key stakeholders, Netflix, potential customers, and current customers.

1. Netflix gains a valuable resource that is hard to duplicate, that is almost the dictionary definition of a “strategic resource”, or a resource that can lead to a sustainable competitive advantage
2. Potential customers will perceive a way that they will get recommendations of movies they might like, and therefore contributes to customer aquisition
3. Current customers have invested in co-creating value with Netflix, and reap the rewards with movie recomendations and tools to help them discover new movies, contributing to deep customer loyalty

I’m sure many people were scratching their heads when wal-mart backed out of the race, well I think these factors contributed to wal-mart realizing that they could not compete. Netflix did not just create a ‘good’ customer experience, it wasn’t just ‘usable’ or ‘easy’ to navigate, the actually designed a system that co-created value with their customers creating unique and valuable resources that helped them acquire customers and build customer loyalty.

Other companies/organizations that are doing this, off the top of my head:

• flickr.com
• Amazon.com
• del.icio.us
• wikipedia.org
• google.com
• 43things.com
• dodgeball.com
• upcoming.org

Anyone else think of some good examples of co-creating value with customers, email me or drop a comment?

Amazon, one of the leaders in innovating the customer experience has, redesigned one of its few failures, the gold box. You may remember a combination of bizarre recommendations, “you only have 60 minutes to decide” and “pass forever” . Well I kept trying it and it continued to be totally irrelevant, which was surprising considering Amazons investment in personalization, collaborative filtering and recommendations.

So what’s new and improved, well first it actually displays things you might be interested in, second, it displays two similar things side by side, somehow giving an illusion of choice. See my screenshot of the two information architecture books (Lou, if you reading this I already have the polar bear book), which rather begs the question, why won’t Amazon let me say “I already have this, show me something similar”.

I tend to try and keep on topic, but here’s a little distraction that had me laughing out loud. The quality of this little short is brilliant, and the animation style wonderfully quirky.

le-building

Spotted: Screenhead

I was IM’ing with a friend of mine recently, who can be a bit skeptical of things, maybe because I tend to be a bit of an evangelist who likes to foist my opinion on people… anyway, I was talking up feedburner, and was talking about how cool it was, and was getting a “yeah, that’s pretty interesting” etc. Anyway I sent him these two screenshots from my “free” feedburner account:

There you go, that concludes my argument for feedburner I’ll shut up now.

As more and more people use modern ’standards’ based browswers the more and more opportunities are coming about for building very rich web applications as opposed to web pages. Now script.aculo.us has released some object oriented javascript libraries to help with all the very cool things that you can do with javascript, including true drag and drop, and live content via AJAX.

Go play with the drag and drop examples to have your socks blown off: http://script.aculo.us/drag-and-drop

The other interesting thing is that this library is going to be included in the next ruby on rails distribution. If your not sure what ruby on rails is, its basically a very cool development tool, or IDE if you like, for building web applications, and has been used on such successes as Basecamp and BackPackIt

An excelent article from the venrable Peter Merholz on the topic of designs and companies that benefit by relinquishing control to users - adaptive path ��? how i learned to stop worrying and relinquish control.

Relinquishing control and putting the tools in place for your customers to be “creative” is the pinnacle of the customer relationship and in many ways the richest and most fulfilling customer experience. When customers contribute to an organization it is because they get some kind of benefit from it. They like being associated with your brand, they think it might improve their service (netflix), they get recognition from the community (flickr, amazon).

Enabling customer creativity or co-creation also provides powerful competitive advantage in many cases due to network effects. Netflix beat walmart because it had loyal customers that weren’t willing to switch to save a buck, and because they had probably reviewed hundreds of DVD’s and weren’t willing to give up that equity. Imagine if you had 1000 customers that had each reviewed 400 dvd’s, how much more valuable is that service? How much more loyal are those 1000 people?

Nokia is developing a mobile version of upcoming.org, a folksonomy driven event directory, and as with any good user centered design project they are looking for feedback from current users. Now, with quite a significant presence in the Dallas area, Nokia might provide a shot in the arm to the Dallas section of upcoming.org wich currently has 102 members
Upcoming.org: News: Nokia and Upcoming.org

Technically interesting….? yes, but it may produce a more coherent “folksonomy” by making suggestions as people are typing a tag to describe the link they are posting.

BTW http://del.icio.us is a social bookmark management tool that has pioneered many of the techniques used by flickr.com, upcoming.org and other social software plays. Also one of the most fun uses of the .us domain.

And in the spirit of shareing here’s my del.icio.us page http://del.icio.us/mrkook that also come as an rss feed:http://del.icio.us/rss/mrkook

I just recently came across the OMC Group, a UK group that positions itself as a customer innovation research and consulting company. I find myself nodding my head a lot as I read through their content and really enjoyed their “20 fundamental CRM and Marketing Lessons“, here’s a couple that I wanted to highlight:

20 fundamental CRM and Marketing Lessons

and here’s the blog from the founder of the company, which is how I found them:
Creating Positive Context

Another insightful little snippet, or meme, from Seth Godin on the topic of good enough. The idea being that just because something better enters the marketplace doesn’t mean it’s going to dominate, because there may be something already there thats “good enough”. Seth’s example is the philips head screw, a better screw might get designed but the philips head screw is good enough. Seth’s Blog: What sort of screws are in your house?

I’ve been thinking about this recently from the standpoint of HD DVD, the industry is getting excited about it, but IMHO DVD is “good enough”. DVD is one of the fastest adopted technologies ever, over the course of 8 years over half the TV owning households in the world have a DVD player. Lots of reasons for this, but one of them was that VHS wasn’t good enough, in comparison to DVD.

In the end it is a cost/benefit. Does the adoption of the new technology require change? Or is it just an incremental innovation? Changes to the customer experience should be weighed against what change the customer is going to experience. If you have a tonne of customers using an existing interface, a redesign may make it better, but the change is going to be painful to the customers currently using it. Good enough is also better the devil you know.