Thursday, September 25, 2008

Greeting from North Platte, Nebraska

So we have made it to half-way on our trek across country.  We're currently in North Platte - a smallish town in the center of Nebraska.  

Unbeknownst to me, North Platte is home to the largest railway sorting yard in the world - the Bailey Yard.  I never even knew trains needed sorting, go figure.

It really is an impressive site though.  Thousands of trains come and go every day and all sorts of goods pass through the yard.  The picture above was taken from a tower created specifically for viewing the yard.  It's 8 miles long so you kind of need a vantage point to take it all in.

It has been a surprisingly easy trip so far.  We've had some great weather though - so knock on wood that continues.

I might get one more update in before we hit San Francisco.  Then the travel posts will stop - I promise :).

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Monday, September 22, 2008

On The Road...

Well, we finally got on the road to San Francisco.  My wife and I are moving out there for good and we left last Friday for a 12 day vacation road-trip across this great country.

I'm in a hotel in Des Moines as I write this post, having just traversed half way across Iowa. Before that we had a day in Chicago, and before that a night on Lake Erie.

We passed through Ohio on the way.

There is a lot of corn out here.  Vast landscapes filled with corn fields - as far as the eye can see. No, literally, as far as you can see.  It's corn all the way to the horizon.

I have friends who are from this neck of the States and until now, I never quite appreciated what it would be like living out here.  Everything seems dwarfed by the sheer scale of the agricultural architecture.  The mid-west is one huge farm dotted with occasional cities.

The people are nice though and the drivers are excruciatingly polite - after driving around NY/NJ for 5 years, you come to rely on a certain level of rudeness to grease the wheels.

We have a lot of driving ahead of us though.  I will try and update the blog a few more times as we go.  

San Fran still seems like a long way off...

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Tuesday, September 16, 2008

Customer Recency

There is a site called the KPI Library that lists Key Performance Indicators for a range of business areas.  It's a community site of sorts so the KPI suggestions largely emanate from users (as far as I can tell).

It is somewhat of a strange concept - a whole bunch of unrelated business areas submitting performance management goals - yet seems to work.  Although the 'community' aspect has a way to go as I can't seem to find a lot of discussion about the KPIs on the site.

Which is a shame, as some of them merit more of a debate.

One that caught me eye was Customer Recency, defined as:
Recency is defined by the number of days or weeks since the customer has performed the action (purchase, visit, etc.) you are profiling. The more recently a customer has engaged in an action, the more likely they are to repeat the action, especially when encouraged to repeat by some kind of promotional effort.   
The definition is a little wonky, but it gets to an important aspect of customer engagement - how often they interact with you.

To use it properly, you need to normalize it by expected interaction time - so your goal as a food retail outlet is different to your goal as a vacation resort.  Yet in both cases more recency is generally better.

And as the definition points out, you can use the KPI for anything from a purchase, to a visit to a web site, to a phone call, etc.  Any point of contact.  

In fact, throwing all these contact points into a segmentation model and defining behavioral groups based on recency for certain activities is a powerful way to think about loyalty.  This type of analysis give you a window on your customer's 'expected relationship'.

An 'expected relationship' is the relationship your customer thinks they have with you.  They are calling you weekly, buying weekly, using your website daily - they really like you!  Do you know who they are and do you reciprocate in like?  If not, you run this risk of making them feel like the dork in school who chased the prom queen and got embarrassingly rejected.  

On the flip side, does someone log into your website once and give you an email address only for you to start treating them like a long lost friend - sending multiple emails with multiple offers etc.  An equally embarrassing situation and definitely not cool.

Managing the 'expected relationship' through interaction recency (and type) is a powerful way to connect with your customer base.  Or at the very least, managing it so the above embarrassing situations are less likely to happen. 

In the absence of asking customers what type of relationship they want - which is always awkward and not something you do to strangers so why do it to customers - measuring 'recency' is a core component of a Permission Marketing plan. 

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Friday, September 5, 2008

"Chrome" and the Google Brand

I downloaded and installed Chrome the other day.  Chrome is the new Google browser.  

I'm not going to talk at length or postulate on the strategy behind Google releasing a browser - this has been covered on many other blogs.  What I am going to mention is how you release a piece of software with a personality - a Brand Personality - built into it.

Google is a master of this.  Microsoft is terrible.  Various other software vendors fall in between these two extremes.  Apple is a genius at it, although in a very different way.

Here are some examples of Google's Brand Personality creeping into the Chrome product...

1. When you click on the Task Manager in the Developer section there is a small button that lets you see some more detailed information.  Typically this is generally called 'more information'. Or, 'more data'.  Or something very Microsofty, 'Additional technical information'.

In Chrome, its...

2. When you open the 'incognito' window (the one that allows you to surf as a spy - ok, you're not actually a spy, it just doesn't let other people spy on you), there is a list of things that going 'incognito' doesn't protect you against.  This list is important as it's about security and security is a serious issue.  Look at the last two entries...

3. When you choose the Options item from the main menu, a new window appears with some options in it.  There are three tabs.  Usually these tabs are broken down by functionality - maybe a 'General' tab, a 'Security' tab etc.  In Chrome it's...

4.  When you try and uninstall most software products it's a pretty dull, unemotional affair.  You click through the uninstall procedure and hope that the annoying software goes away.  Chrome is easy to uninstall, but it's the first software product that's genuinely polite about it...

These are small things but they speak volumes about the personality of the product and company you are dealing with.  You don't have to like them - not everyone will.  But at least they stand for SOMETHING.  

The difference between companies that inject a bit of their own personality into their products and those that don't.... is courage.  

And that also speaks volumes.

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Tuesday, September 2, 2008

Political Prediction Markets

I came across a site called intrade on my general web surfing the other day. Intrade is a prediction market. You register for the site and can actually 'bet' money on the outcome of certain events.

There is a long history of prediction markets for all sorts of things from sports to Hollywood movies - 'long' in the Internet sense of the word, which is 'short' in historical terms. Wikipedia has a page giving some good background details.

I navigated my way to intrade as it was mentioned on a political news site. On intrade, McCain is currently siting at about a 40% chance to win the White House while Obama is in the low 60% range. This was interesting as poll after poll puts them in a dead heat.

I looked into the intrade system a bit and it looks fine (I am no expert here but at least I understand it - there are probably some pretty smart people behind it). You buy and sell 'contracts' with other traders and the price of a contract varies between $0 and $10. Each 'contract' has an unambiguous binary outcome and is ultimately worth (at the conclusion of the event) either $0 for it not happening or $10 for it happening.

So if you buy Obama contracts at $6.10 and he wins the election, you get a payout of $10 - $6.10 = $3.90 (minus a commission - finally a Web 2.0 site with a business model!). If he loses the election you lose all your money as your contracts are worth $0.

This is the Obama chart on intrade:

So why does Obama look like a shoe-in on intrade but a lame duck in the polls? Is Obama mania getting into the heads of intrade traders? Do they long for change? Need hope? Feel higher taxes on the rich is the solution to their poor lot in life as traders? Likely none of these.

On the surface it's tempting to equate the prediction market to polling, but it's really very different. The intrade numbers aren't saying Obama is going to win in a landslide 60%/40%, all they are saying is he is most likely to beat McCain - margin unspecified (although you would think there would be a correlation between the strength of the prediction and the ultimate margin - we just don't know what that is).

So intrade traders think, given the current polls and events, Obama is still more likely to pull it off. However, if you look at the Republican v Democrat leanings (a vote that indicates preference for a party rather than an individual), support for a 'generic Democrat' is strong.

Or in other words, McCain is neck-and-neck with Obama despite strong support for a Democratic ticket, an unpopular president from the same party, an unpopular war and an economic downturn.

You would think a logical trader trading in presidential picks would give McCain better odds considering what he as overcome to be even at this late stage. Of course balancing this is Obama's huge war chest - money for political advertising - that will be unleashed in the coming weeks. Obama media saturation here we come.

Although even with that war chest, I don't think I would give Obama much over a 50% chance. He still seems over priced.

Ultimately though, no one really knows who is going to win. Prediction markets for political outcomes are just a stab in the dark as there is no set of logical sequences or historical precedents that point to one outcome or another. There is just a whole lot of future uncertainty.

It's like trying to predict the price of oil. Demand and supply can be forecast somewhat accurately, but Israel bombing Iran's nuclear facilities with no UN backing can not.

I'd like to see the political prediction markets on intrade react when Obama reveals he is the illegitimate child of a certain elderly Arizona senator. It could be true...

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