Monday, October 6, 2008

The Art of the Customer Surveys

The Art of the Customer Surveys

Guy Kawasaki of How to Change the WorldGUY KAWASAKI OF HOW TO CHANGE THE WORLD | SEPTEMBER 30TH, 2008 - 08:05 AM 

As a small business owner, you’re probably concerned about what your customers think of you, and many of you have done, or would like to do, customer surveys. A buddy of mine, Dave Wanetick, shared some interesting thoughts about customer surveys. He is the managing director of IncreMental Advantage.

  • Accurate reads on customer thoughts are nearly impossible. Responses can be swayed by just one word or even the order in which the questions are asked. Some have compared trying to read customer sentiments to the soothsayers of yesteryear who tried to divine meaning from chicken entrails. Consider how one word conjures up drastically different recollections in this real-world exchange:

    Lawyer to Witness: How fast was the car traveling before it ran into a telephone pole?

    Witness: Forty-five miles per hour.

    Lawyer to Witness: How fast was the car traveling before it smashed into the telephone pole?

    Witness: Sixty-five miles per hour.

  • Depending on who is responding to the survey and in what setting, the results can change. Many survey respondents, for example, are self-selecting, which skews the results. Sometimes asking the same people the same question at different times of the day—for example, before or after a meal—will yield different responses.

  • Customers do not want spend time answering surveys. Completing a survey that takes longer than the delivery of the service in question is annoying. The mere act of sending a customer a survey can so greatly annoy some people that it tarnishes the company’s brand. Thus, customers often race through surveys to get them over with, and their haphazard responses are a precursor to the collateral damage that will result from relying on such information.

  • Excessive soliciting of feedback will inevitably result in criticism. Unwarranted criticism is most likely to be evoked when people believe that their ability to criticize is a sign of their intelligence. A serious problem arises when this criticism shakes the employees’ confidence. This criticism can demotivate sales people and render them less effective.

  • Some customers are not worth having. The peril in soliciting extensive feedback is that the most critical and demanding suggestions are likely to come from customers who offer the company diminishing prospects for profitable returns.

  • Customers who are only moderately disappointed with a company may become irate when their concerns are not addressed. Thus, companies that rely on extensive surveys are faced with a dilemma: either bend to the customers’ wishes or suffer their wrath when failing to do so.

According to Dave, some of the most revealing customer surveys can be quite simple. Dave cites Fred Reichheld’s idea that one can distill customer satisfaction surveys down to one question:

“Would you recommend our service to your friends and colleagues?”

This is a powerful question because it gauges whether or not customers like your product enough to put their own reputations on the line with their friends and colleagues.

Saturday, October 4, 2008

9 rules of innovation from Google

1. Innovation, not instant perfection 
Trial launch with a beta. Perfection can evolve
2. Ideas come from everywhere 
"We let everyone comment on an idea. Comments lead to new ideas."
3. A license to pursue your dreams 
"We let engineers spend 20% of their time working on whatever they want, and we trust that
they'll build interesting things."
4. Morph projects, don't kill them 
Change projects which seem no market ready into ones that market needs
5. Share as much information as you can
Snippets - Every Monday, all the employees write an email that has five to seven bullet points
on what you did the previous week. Being a search company, we take all the emails and make a giant Web page and index them."
6. Users, users, users 
Users, not money
eyeballs translate to either subscription services or advt. revenue
7. Data is apolitical 
Decision should be based on data and not on closeness to a person.
8. Creativity loves constraints 
There is always a constraint and you need to think out of the box to get over it.
9. You're brilliant? We're hiring 
"...wanting to work on big problems that matter, wanting to do great things for the world,
believing that we can build a successful business without compromising our standards and
"If I'm an entrepreneur and I want to start a Web site, I need a billing system. Oh, there's Google Checkout. I need a mapping function. Oh, there's Google Maps. Okay, I need to monetize. There's Google AdSense, right? I need a user name and password-authentication system. There's Google Accounts."
"This is just way easier than going out and trying to create all of that from scratch. That's how we're going to stay innovative. We're going to continue to attract entrepreneurs who say, 'I found an idea, and I can go to Google and have a demo in a month and be launched in six.'"
Google Checkout, Google Maps,  Google Adsense, Google Accounts

Thursday, October 2, 2008

The Truth about Pricing

The Truth about Pricing

Any Entrepreneur that's ever tried to bring a new product to market has had to deal with one frustrating fact – no one knows what to charge for it! No matter how well you think you can predict the market or how much research you've done, until people start paying for your product you're still just guessing.

Even then, when people are actually forking over their hard earned cash for your product, you still don't know if you've optimized for the best possible price to generate the greatest number of sales.

Fortunately there are some simple strategies you can employ to quickly arrive at a happy medium and give yourself a little piece of mind.

The Binary Nature of Pricing

The first pass you'll want to take at pricing is to eliminate all of the people that weren't going to pay you to begin with.

What may shock you is that when it comes to a consumer's perception of pricing, it's not always the actual amount that scares people; it's whether or not they have to pay at all. Pricing is more or less binary for consumers – they are either going to pay or they won't – the actual price is incidental.

Having launched ten companies myself, all in different industries ranging from automotive to financial services to television casting, I've found that in each case you get a group of consumers that are willing to pay just about any reasonable price for the product, and a group of consumers that won't ever pay a penny.

There's something that goes off in a customer's head when they have to pull out their wallet. Up until that point the value you were providing may have gone relatively un-noticed. But when the customer has to break out their credit card and start typing in those 16 magical numbers, they think twice about the value of your product.

Instead of developing your pricing to lure the group of people that just aren't willing to pay for your product, focus on maximizing the yield of the customer who will pay for your product. It's a lot easier to get someone to pay 10% more for your product than it is to reduce the price of your product and get more people to pay for it.

The "Freemium" Model

Next you'll want to figure out how to separate the paying customers from the non-paying customers, without alienating either.

Leave it to the overzealous Internet nerds like me to invent a word like "Freemium" to explain a basic price gateway model. Freemium is a word used to describe giving a portion of your product away for free in order to attract interest, then charging the most passionate customers for premium benefits.

I'm not entirely sure, but I think this model was pioneered by Baskin Robbins every time they handed me a free sample of chocolate ice cream in order to convince me to buy an entire cone. These days the freemium model appears when I want to sample a song on iTunes but have to pay to download the whole song onto my iPod.

The beauty of the freemium model is that allows you to test two pricing strategies simultaneously. You get to see how many customers would be interested in your product for nothing at all to gauge the overall interest in your product. It then allows you to learn exactly what about your product people are most interested in paying money for.

Try every Possible Price

Once you've separated the paying customers from the non-paying customers, you still need to settle on the right price to charge them. There's one simple answer here: try every possible price.

I'll give you an example. At, a site that allows people who want to get out of a car lease to connect with people who wanted to get into a car lease, we charged people to post their car leases on-line. The problem was, we didn't know how much to charge them, so we tried every possible price.

Our early estimates figured we would probably get around $24.95 per posting on the site. We constantly tried new pricing strategies to figure out what would be the right price that consumers would accept.

Wouldn't you know that after six months of testing we found out the number was over $100 per post!

The only thing that kept us from simply making four times as much per sale was our willingness to test the sensitivity of price. Had we gone with our gut instincts we would have vastly undervalued the product and left a whole lot of money on the table.

It Pays to Try Everything

The only thing you can rely on when picking the price of your product is having to change it – a lot.

If you can develop a system to test as many possible price points with as many consumers as possible, you can hopefully uncover that hidden gem that is your perfect price. Until then, keep trying something new. It's the only surefire way to win.


Wil Schroter is the Founder and CEO of the Go BIG Network, the largest network of startup companies and entrepreneurs at He is also the author of the new book "Go BIG or Go HOME".