“When 29-year-old manufacturing worker Michael Hellesen sees a Quick Response code around his hometown of Racine, Wis., he sometimes scans it using an application he downloaded to his Google (GOOG)Android smartphone. More often than not, it takes Hellesen to a brand’s website. “About 80 percent of the time, I’m disappointed that I scanned it,” Hellesen says. “Mostly it’s just curiosity at this point. I’m not actually expecting anything useful.”” Business Week
Business Week reports on the slow death of the QR codes — those bizarre looking squares that looked like alien signals or Aztec art of some sort. We have all seen them and attest to their visibility and lack of usefulness. Have you ever taken the time to scan a QR Code? Your likely answer is just like MIchael’s above — No.
The Online Customer Contract
The customer contract is posted as such — cost of customer adoption < received value — for every keyboard or mouseclick that a consumer executes, there must be an equal or greater reaction in the form of value given to the consumer. The more effort it takes, the more the value return must be delivered. Every consumer facing application must satisfy that customer contract. The more you expect the customer to do to access your good or service, the more you must deliver when they attain that service. Like virality coefficients which mathematically portray exponential growth, customer contract coefficients that are not positive will result in larger churn than retention and eventual death of the application.
As Michael indicated above, he would click on QR codes expecting something valuable, but instead he has been turned into a skeptic. Disappointing a customer 80% of the time would be really bad for business, no?
Shiny Objects do not Fulfill the Online Customer Contract
The challenge with QR codes as with so much of technology is a lack of understanding of the customer contract — cost of customer adoption must be < received value. While customers may not explicitly sample a new product or service with that notion in mind, they are unconsciously making that decision. Here are some of the most basic contracts that we as consumers and as vendors embrace.
- Sign up:
“I give you my email address, knowing that you will contact me, in order to try out your product, and I know that canceling your service will be difficult. But I give you my email address with the hope that what I will experience on the other side will be worth it.
- Download an app
I will download your app and absorb the time that it takes with the hope that this app will (1, help me save money, 2), entertain me, 3), discover new things, places, 4) make new friends, etc.)
- Try Freemium Offer — Time Based
I will give you my credit card, knowing that I have to be diligent to come back and cancel the service within xx days if I am not getting the value I had hoped for out of the service.
- Limited quantity service — Quantity Based
I can use your service for free until I exceed the quantifiable maximum. Dropbox and Evernote are two excellent examples of quantitative limits to their products. Measured amounts of the service are much easier for customers to engage in than time based, because we all know that we don’t have enough time to test most services we want to test and therefore pass by many great services because we know ourselves too well.
Rules of Thumb with Online Customer Contracts
- The more time it takes for me to experience the good or service, the higher my bar of delight and acceptance. Time is money. Treat the customer accordingly.
- Don’t bury your prize. Make sure that your key value prop that you claim to do best is obvious to me right away. The company Nextdoor just raised a pile of money from Greylock based on their traction, which was based on their unique value prop — security and neighborhood protection. Everyone cares about that, no app was handling it. They make it clear in the app that its an immediate benefit.
- Measure your ask with your benefit. One of the most important rules in gaming is to give me more than you ask of me in the early stages. Give me free coins when I get started in the game right away for just clicking on modal windows. Make sure I hit a certain point in the game then ask me for something like inviting a friend, or buy something to make their game play faster, better, etc.
Make Your Customer Contract Explicit
Nothing vets a service like an explicit ask or value proposition. You avoid false positives and false negatives. Unfortunately most technologists get too wrapped up in what is novel or cool to focus on making sure the service delivers plugs a real gap of need. If you make your value prop explicit, you will win and lose more customers quickly which in turn gives you the data you need to figure out if you are building something of real value. Unlike B2B services, whose sales often get mired in political infighting, budget wrangling and arm twisting (top down), B2C services involve consumers who vote with their pocketbook every day of their life. Its both easier and harder to win in the B2C space because often we entrepreneurs refuse to listen and build cool stuff instead of stuff customers really want or need.