Friday, July 29, 2011

1982 study predicted the future very accurately

Fascinating article from the New York Times in 1982 discussing a study by the US National Science Foundation on how technology could transform society.

'Teletext and Videotex' became the world wide web and an impressive amount of what they predicted has come true.

I love the prediction that: "Home-based shopping will permit consumers to control manufacturing directly, ordering exactly what they need for production on demand." Mass customisation anyone?!

Via Carmen Magar

Wednesday, July 27, 2011

Customer acquisition at scale

This post was first published to Power Retail.

A great presentation from Florian Heinemann of Berlin based Rocket Internet discussing how to better understand marketing performance across multiple channels.

This fits nicely into step 4 of our 'Simple Business Plan for Online Retail Startups' as it goes into some detail about ways to accurately measure your customer acquisition costs.

Rocket Internet invest in some exciting European e-commerce businesses like Zalando (a Zappos equivalent in Europe), eDarling (large dating site) and CityDeal (acquired by Groupon for ~$100m).

For those who don't have the 30mins to watch it, a quick summary:

1. Most e-commerce businesses attribute a conversion to the 'last click'. If a customer sees a TV ad, then clicks a display ad online, before finally clicking on a search engine marketing (SEM) ad to convert, the sale is attributed to the SEM ad. The business will then underinvest in TV and display ads and over invest in SEM.

2. As e-commerce businesses grow, they need to start attributing conversions not just to the last click. Instead they need to attribute a percentage of the conversion to all the touch points the customer had with the business prior to converting.

3. Once your e-commerce business can attribute conversion across multiple channels, the next step is to measure the dollar value of each sale across each channel, then also measure reorder rates by channel to get the customer lifetime value across each channel. Zalando has found that the lifetime value of a customer from one channel can be as much as twice as high as a different channel.

4. With this data, you can truly measure and optimise your cost per acquisition across each channel.

5. In the questions, an audience member asked how Zalando track non-click related ads, such as a customer viewing a display ad without clicking on it or viewing a TV ad. Florian explained that this is still a challenge. They use some statistical regression analysis techniques to measure the uplift in clicks they receive when they're spending more on non-click advertising.

6. Zalando don't have a marketing budget, the will acquire as many customers as they can at or below their target cost per acquisition.

Florian makes the good point that getting into this full level of detail only starts to be worthwhile once you're e-commerce business is spending $100,000's per month on marketing. For smaller retailers like us Google Analytics have recently started trialling Multi-Channel Funnels which is a good first step in this direction.

Have you seen any other presentation or blog posts that go into detail on this topic?

via the Exciting Commerce blog.

Monday, July 25, 2011

Making big decisions

Making big decisions – How I decided to leave Google

This is part 1 of a 6 part series by Mark Capps on his experiences of leaving Google to start up a new online retail company.
I've always wanted to start my own company. However I’ve struggled to actually make the decision and do it, instead I’ve continue to work for various large companies. Recently, I made what I hope will be one of my best life decisions: I left the scale and certainty of one of the world’s most amazing companies (Google) to become an entrepreneur, starting something new and uncertain in online retailing. The decision was hard because both staying and leaving had many compelling advantages. A friend prompted me to realise my decision making approach was hindering, not helping. Here’s what I learned about making decision:
Pros and Cons - my old approach
My go-to decision making approach used to be this - maybe it sounds familiar! I'd write down pros and cons in 2 columns. Then I'd assign each a score. Finally, I'd add up the scores to see if the pros or cons won. Here's an example of deciding whether to drive, or take a taxi, for a night out with friends:
Pros of driving:
- Forces me not to drink alcohol; I'll be fresh tomorrow [5]
- Avoids the difficulty of finding a taxi at midnight [10]
Cons of driving:
- The bar has my favourite beer - I won’t be able to drink it [5]
- Having to find parking is a nightmare [5]
It’s reasonably easy to assign scores - I’ve put mine in square brackets and the pros get it with 15 points to 10, so I’ll drive. Assigning the relative scores was simple as it’s mostly an apples-to-apples comparison. It’s easy to decide that finding a taxi is twice as hard as finding a parking space. Now let's try my rather more complicated career decision - whether to leave Google and become an entrepreneur:
Pros of becoming an online retail entrepreneur:
- Fulfill a life ambition and create something new
- Potentially larger financial upside
- Certainty of staying in Australia for a few more years
Cons of becoming an online retail entrepreneur:
- 'Safety net' of a large company replaced with uncertainty
- Harder to go and live for a few years in Asia
- No salary
This is much harder - how do you weigh up the pro of fulfilling a life ambition with the con of no salary? Or the benefit of staying in Australia vs the excitement of working in Asia? I found it impossible to create a consistent scoring system and come a decision. The process didn't work, it lead to endless circling of the issues.
Diagnosis - my new approach
I was explaining the problem to my friend Annie Baxter, and she shared a fantastic insight she had read. The pros and cons method works for smaller decisions, but for bigger decisions a diagnostic approach may be better. Instead of listing pros and cons, you ask individual questions one at a time. If the answer is 'yes' you move on. If it's 'no' you stop.
I tried this for my career decision and the effect was amazing:
- Does the idea make economic sense (Yes – analysis looks good)
- Do I want to work with these people (Yes – they have tremendous skills, we get on well)
- Do I want to live in Australia for a few more years (Yes – the economy has strengths, the sailing is awesome)
And so on.
What's different about this approach is that you're making clear, individual decisions one at a time. You can narrow your thinking, do the research, make a decision and move on. It eliminates trying to compare completely different concepts.
Pros & cons vs diagnosis
With this new approach I cut through my indecision. The pros and cons helped me identify areas to question, but it was the diagnostic approach that helped me break the circling and decide how to act. I certainly won't stop using the pros and cons approach for smaller decisions, however for bigger decisions I now use the diagnosis method.
What methods have you found effective for making really important or complex decisions?
Image credit for Scales

Friday, July 22, 2011

Welcome to the team Mark Capps!

It's with great pleasure that we introduce Mark Capps to our team. Mark joins us after spending 6 years at Google working in various sales strategy roles, a year at Virgin Money, a year as a volunteer with Technoserve in Africa and 2 years at McKinsey & Company. Mark studied Engineering, Economics and Management and Oxford University.

Mike and I spent some time working with Mark while we were at Google and he was nothing other than extremely impressive. In his time at Google he was promoted very quickly through the sales team and sat a number of rungs ahead of where Mike and I were. He brings some very impressive skills to our team.

In addition Jodie and I have been good friends with Mark and his wife Allegra for a number of years. They're both incredibly nice, generous and impressive people and share a similar set of values to us, so Mark makes an excellent cultural fit with us.

Mark is joining us as a Co-Founder and CEO of a new online retail venture we've been exploring. We're not quite ready to announce it publicly yet but we will do so on this blog over the coming month or too. In the meantime Mark is going to join us as an author on this blog sharing his experiences moving from the corporate world into the entrepreneurial/online retail space.

We're very excited to have Mark on board, please join us in welcoming him to the team!

Tuesday, July 19, 2011

Where to invest your time in a startup

This post was originally published to NETT.

As our business grows a question we're asking ourselves more and more is 'Where should we invest our time?'

Early on we were of course focusing our time on key tasks like building the website, customer service, PR and marketing. And those areas are still critical to our business. However early on if opportunities came up to present at a conference or meet with someone in the startup space we had the time to grab them with both hands. We no longer have the same amount of time. We're limiting the time we spend in meetings and instead we're holding TechTalks and we've started a Sydney entrepreneurs running club to meet other people in the industry. We're now being selective in regards to the events we speak at taking up opportunities to speak at key online retail events but turning down other events like an online payments conference and more general chamber of commerce events. While these activities are helpful in building ours and our businesses profile, and in an ideal world they'd be great to do, the return we get on our time from them is lower than we can get working on other aspects of our business, so we need to be selective about where we spend our time.

When faced with the decision of whether or not to do a particular activity we need to ask ourselves not only whether the activity will give a positive return on our time, but whether that return is higher or lower than the other activities we can be spending our time on.

How do you determine where to invest your time?

Image credit

Monday, July 18, 2011

Design your own shoes - department stores

This post was first published to Power Retail.

As Yusuke has blogged about previously, we've been trialling a Shoes of Prey display in the new Marui store in Kyoto, Japan. The trial has been going really well and we're in discussions with Marui about rolling the concept out across more of their stores.

This has us excited about taking the department store concept to other countries. In the Australian market we have two department store chains, Myer and David Jones. Both are very similar though arguably David Jones pitch themselves as slightly more upmarket than Myer. Myer have 63 stores and David Jones have 37. Taking a look through the Myer and David Jones stores in Sydney's CBD I think our concept could work in either of them.

As we see it, there are 4 key benefits for Myer or David Jones to work with us.

1. Innovative retailing
We've blogged previously about where we see the future of online retail. While the concepts in that post are likely at least 10 years away, pieces of this are possible for us to do now. Imagine walking into a your local department store and being presented with a large screen with our shoe designer. Standing in front of the screen, together with your friends you can use gestures (we could integrate our designer with an XBox Kinect) to change the shape, structure and materials to design your perfect shoes. Once you've finished designing the webcam turns on and the screen appears like a mirror with you wearing the shoes you've just designed in an augmented reality view. You can then pick up a leather swatch book in the store to flick through the leathers and make changes to your design. And finally you can try the shoes on to determine which size shoe suits you best.

In my view this would be a fantastic retail experience. It's not been done before so would be a world first and it's a perfect example of multi-channel retailing, the experience combines the best of online and offline retailing into one experience that can't be replicated in either channel alone.

2. Driving online traffic offline
Our website conversion rate, while improving, is still lower than we'd like it to be. One of the most frequent comments we get from our customers is that they'd like to be able to try on our shoes and see, touch and feel them in person before ordering. I experienced this myself when I ordered my custom shoes from NikeID. Trying the shoes on and seeing the leathers and materials in store got my over the line to make my first purchase with them. What better way for Myer or David Jones to utilise online retail in a positive way than for us to drive some of our 6,000 daily website visitors into their stores to try on our shoes.

Both Myer and David Jones have recently come around to the idea that online retail has a future in Australia however both still at least partially view this as a threat rather than an opportunity for their businesses. Partnering with online retailers to drive that traffic into their stores is a great way to turn online retail from a threat into an opportunity for their businesses.

3. Upselling customers
The main reason Marui gave for getting in touch with us about trialling the Shoes of Prey concept in their stores was a deflation in the average purchase price of their shoes over the last decade. Reasonably priced, high quality shoes from China have been driving down the average sale price for women's shoes eating into the revenue figures of retailers. Marui wanted to partner with us as a way of encouraging their customers to trade up to a higher cost shoe increasing Marui's average sale price and revenues.

We recently surveyed 610 of our customers and 55% normally spend between $100-$200 on a pair of shoes with a further 23% averaging less than $100. Our average sale price is $280. Our customers have shown they're willing to trade up and pay extra for the experience of designing their own shoes.

4. Cross selling customers
The experience described in 1 above would provide a fantastic customer experience, but what about simplifying the process and having iPad's in the women's clothing department so that customers, when purchasing a dress, can design a pair of shoes to go with it? We could work with Myer or David Jones to incentivise their women's dress concession store holders to cross sell custom shoes. It's a much easier pitch when that can be done by the same dress salesperson and when we offer so many design possibilities rather than attempting to send the customer to a different floor and department to select a pair of shoes off the shelf.

What are your thoughts, do you think our concept will work offline in Australian department stores? Do you see any other benefits for these stores to work with us? Do you think either of Myer or David Jones would make a better fit for us?

We're in contact with both Myer and David Jones, we'll let you know how we get on.

Friday, July 15, 2011

Welcome to Shoes of Prey Andy!

It's with great pleasure I introduce the latest member of our China team!

Andy comes from Nanchong, Sichuan province and will be joining us as an expert shoe master. He will be working very closely with James, who coincidently comes from the same province.

Andy did his degree at BaiYun College, Guangzhou majoring in leather design and technology. He also has significant experience working for large Chinese footwear companies ST&SAT and Belle. Away from work Andy enjoys basketball and movies.

We're really excited for Andy to bring his experience to the ever growing Shoes of Prey team!

Thursday, July 14, 2011

The Green in...

A friend of mine Emily D'Ath lives and works in Beijing and blogs about corporate social responsibility and sustainability. She interviewed me for a series she runs on her blog titled 'The Green in...'

Wednesday, July 13, 2011

7 options for Australian startups to raise capital

This post was originally published at StartupSmart.

We've bootstrapped Shoes of Prey to date but we've been exploring the possibility of raising capital to help accelerate our growth. As we've gone through this exploration process we've learnt about some different options for raising capital in Australia which we thought we'd share.

1. Incubators
Incubators provide capital and mentoring services to very early stage startups in exchange for equity. Y Combinator and TechStars in the US lead the development of the incubator model and Australian startups can apply to join their highly competitive to get into programs. 2 incubators have recently launched in Australia - Startmate and PushStart.

A slightly different take on the incubator model is Pollenizer. Pollenizer take a much more active role in the startups they're involved in. With a software development and marketing team in house Pollenizer help to actually build the business rather than just take a mentoring approach. The much larger stake they take in the business reflects this but it allows the startup to grow much more quickly. Spreets is a prime example of where the Pollenizer model worked exceptionally well.

2. Competitions
The University of Queensland Business School runs a competition called ENTERPRIZE. While the competition is open to all Australian residents and their businesses, the competition winners have always been technology related and the site says that the judges are looking "for submissions that best capture the ingenuity and innovation which they feel could have the most significant impact in the market." The winning entry receives $100,000 in seed funding.

Tech23 is another Sydney based competition open to technology related startups. Tech23 offers a range of prizes for Australian startups totalling $150,000.

3. Government funding
The Australian and state governments offers a range of funding programs. This website provides a great list. The ones we've looked into are:

Commercialisation Australia
This program is designed to help fund new innovative businesses developing valuable intellectual property in Australia. We applied for this program but found out that the key to getting this grant is that what you're developing must result in something that you plan to patent. We didn't apply for a patent on our shoe designer so didn't qualify for the grant.

R&D tax concession
The R&D tax concessions provides tax benefits to businesses undertaking risky research and development work. The grant is designed to encourage Australian businesses to invest in R&D. The R&D work must be innovative and risky in that it has a chance of not succeeding as planned, as opposed to making incremental improvements to an existing innovation. The grant can be taken as cash (which generally works best for unprofitable businesses not paying company tax) or an additional tax deduction and franking credit (better for profitable businesses). Shoes of Prey is currently applying for our first R&D tax concession.

Export market development grant
The export market development grant provides a grant to qualifying businesses equal to 50% of the overseas marketing expenses for Australian exporters. The grant is designed to support small Australian businesses sell their products overseas. Shoes of Prey received a $5,000 grant under this program last year and we're applying again this year.

4. Friends and family
Friends and family can be a great potential source of funding for a startup. No one knows you better and generally there will be few people as willing to invest in your business as your friends and family. If you're going to explore this path the key is to not take advantage of the trust your friends and family have and not behave in a way that might damage your relationship in the future. Their investment will be risky and that needs to be clear at the outset. The valuation and the terms of the investment should be reasonable. If your business is not successful that's going to be bad enough, without it damaging family relationships or friendships in the process.

5. Angel investors
There are a growing number of Australian angel investors open to investing in startups. The way we've met a number of them is through personal and business networks but Sydney Angels is a collective group of Sydney based angel investors so that group is worth getting in touch with.

6. Australian venture capital firms
The Australian venture capital industry is still very small compared with the same industry in Europe and particularly the US. From our limited experience the two most experienced firms in the space are Starfish Ventures based in Melbourne and Southern Cross Venture Partners with offices in Sydney and Silicon Valley. The primary thing a venture capital firm can bring to your business is of course capital, but the partners of both Starfish and Southern Cross have significant entrepreneurial experience themselves so can be helpful in thinking through potential paths for the growth of your business.

One of the downsides of raising money via a VC firm is that they'll tend to have more restrictive requirements than the previous 5 options. They'll want a board seat, liquidation preferences, anti-dilution protection and a range of other similar clauses. For a great series of posts discussing the terms generally included in a venture capital term sheet check out this great blog post series from Brad Feld.

7. Foreign venture capital firms
We were fortunate that early on in the life of Shoes of Prey we were a finalist for the 'Best Bootstrapped Startup' in their 2009 Crunchie Awards. Following on from these awards we were contacted by a large number of US venture capital firms and we met either over the phone or in person with around 10 of them. The conclusion we came to with all of them is that they're very open to investing in Australian businesses, however for businesses based outside the US they're generally looking for the business to be worth $20m+ before they'll invest. When they work with smaller startups they require them to be based in the US so they can work more closely with them. One of the VC firms we met with a couple of times was Accel Partners and we've seen them put this philosophy into action with investments in Atlassian, OzForex and most recently 99Designs, all at $50m+ valuations.

While it might not be quite as easy for an Australian startup to raise capital when compared with our US friends, there are a range of good options available to us. And if none of them offer exactly what you're looking for you can always take the same approach as we have with Shoes of Prey, and self fund your business out of your own savings and business cash flow.

Any other options for raising capital that you've come across?

Image credit

Monday, July 11, 2011

Zappos and repeat customers

Interesting the importance placed on repeat customers in this Zappos presentation from 2008.

via @mikeee

Saturday, July 9, 2011

Raising capital

Fascinating blog post from Rand Fishkin, co-founder and CEO or SEOmoz discussing his thoughts on whether or not to raise capital.

Friday, July 8, 2011

Results from our first customer survey!

This post was originally published to Power Retail.

In mid June we sent an email to 2900 of our English speaking customers who had bought shoes from us before asking them to complete a customer survey. 610 (29%) completed the survey and given readers of this blog were so helpful in assisting us with putting the list of questions together, we thought we'd publish the results with our thoughts on what we found. I'd love to hear your thoughts on how you'd interpret these results and questions we might want to ask in our next survey.

1. What is your date of birth? (Converted to age)
0 - 5 : 0.0%
5 - 10 : 0.0%
10 - 15 : 0.3%
15 - 20 : 2.6%
20 - 25 : 8.2%
25 - 30 : 24.0%
30 - 35 : 25.5%
35 - 40 : 11.5%
40 - 45 : 9.5%
45 - 50 : 6.6%
50 - 55 : 6.7%
55 - 60 : 3.1%
60 - 65 : 1.3%
65 - 70 : 0.7%
mean 34
median 32

50% of our customers are aged 25-35 with a further 35% aged 35-55. The 25-35 bracket tend to be very fashion conscious and have a high disposable income and it's great that half our customer base comes from this group. It's also good that we're not reliant on this group entirely and that a significant portion of our customers come from a slightly older age bracket who tend to be more discerning about what they're looking for. The spread of customers across these age brackets highlights we're a mass market rather than a niche business.

2. How many pairs of shoes do you own?
9.7%: Fewer than 10 pairs
49.9%: 10-30 pairs
24.8%: 30-50 pairs
12.6%: 50-100 pairs
3.0%: 100+ pairs

Half our customers own 10-30 pairs and 85% own less than 50 pairs. This indicates we're catering to the mass market in addition to shoe fanatics.

3. What is the average price you pay for shoes?
22.7%: Under $100
54.7%: $100-$200
19.2%: $200-$300
2.8%: $300-$500
0.7%: Over $500

75% of our customers normally spend less than $200 on a pair of shoes. Once again we're catering to the mass market here rather than a niche of only the most shoe loving women. Our average price is $280 so our customers are trading up when they purchase from Shoes of Prey. They see value in being able to design their own shoes and are willing to treat themselves and pay extra for this experience.

4. How often do you shop online?
7.6%: Shoes of Prey was my first online shopping experience
28.6%: I shop online a couple of times per year
16.4%: I shop online a couple of times per month
32.7%: I shop online most months
14.8%: I shop online most weeks

I find it very exciting that 7.6% of our customers are first time online shoppers! Given you have to design your own shoes on our website we're hardly the easiest place to have your first online shopping experience but it's great to see our concept is attractive enough to encourage people to try shopping online for the first time. One of our favourite customer service stories was Susie helping a 70 year old man create his first email address so he could buy a pair of shoes for his wife on our site!

5. Which industry best describes the one you work in:
2.0%: Manufacturing
1.0%: Transportation
3.1%: Full time parent
11.0%: Government
3.0%: Agriculture, Mining
10.8%: Retail, Wholesale
7.7%: Communications, Utilities
10.8%: Finance, Insurance, Real Estate
13.3%: Health Care
1.0%: Construction
7.9%: Student
4.6%: Internet
12.6%: Services
4.1%: Nonprofit
7.1%: Law

Once again these results highlight that our customers come from a broad selection of the population. No particular industry dominates our customer base and the results from this question also indicate that we appeal to a broad cross section of socio-economic groups.

6. Prior to purchasing from Shoes of Prey, did you know someone who had made a purchase from Shoes of Prey before?
11.3%: Yes
88.7%: No

7. Prior to purchasing from Shoes of Prey, had you seen a pair of Shoes of Prey shoes in person?
10.2%: Yes
89.8%: No

These two question indicate that seeing our shoes in person or knowing someone who has purchased from us isn't a complete barrier to purchase. The 'yes' responses to these questions should grow as our business continues to grow and more of our shoes are on women's feet around the world.

8. Prior to making your purchase, did you come to the Shoes of Prey website with a specific shoe design in mind, or were you inspired by the site and shoe designer to create something you hadn’t considered before?
56.5%: I designed something I hadn’t considered before.
43.5%: I came to the site with a specific design in mind.

A near 50/50 split is a great result for this question. Customers are inspired to come to our website to design something specific, however our site is also inspiring enough that some customers will come and order something they may not have considered purchasing before.

9. For what reason did you purchase your Shoes of Prey shoes? Tick all that apply:
15.0%: I wanted shoes for an event I’m attending
12.7%: I wanted shoes to match a particular outfit I own
10.5%: I received a Shoes of Prey gift certificate
12.7%: I wanted shoes for the office/work
8.3%: Shoes of Prey make shoes in widths I can’t easily purchase in a store
12.5%: Shoes of Prey make shoes in sizes I can’t easily purchase in a store
18.2%: I didn’t have a specific reason, I just wanted to design something unique for myself

Once again a very broad range of responses to this question. This highlights we're not just satisfying a particular niche in the market, women order from us for a broad range of reasons.

10. How satisfied were you with the experience of designing your shoes on the Shoes of Prey website? (Scale: 1 = not at all satisfied. 10 = extremely satisfied.)
1: 6
2: 2
3: 3
4: 1
5: 10
6: 20
7: 54
8: 122
9: 131
10: 260
promoters: 64.2%
passives: 28.9%
detractors: 6.9%
net promoter score (promoters - detractors) 57.3

11. How satisfied were you with the level of customer service you received from Shoes of Prey? (Scale: 1 = not at all satisfied. 10 = extremely satisfied.)
1: 2
2: 0
3: 1
4: 1
5: 6
6: 5
7: 16
8: 47
9: 87
10: 444
promoters: 87.2%
passives: 10.3%
detractors: 2.5%
net promoter score (promoters - detractors) 84.7

12. How satisfied were you with the packaging of your Shoes of Prey shoes? (Scale: 1 = not at all satisfied. 10 = extremely satisfied.)
1: 1
2: 2
3: 2
4: 1
5: 16
6: 7
7: 20
8: 48
9: 91
10: 421
promoters: 84.1%
passives: 11.2%
detractors: 4.8%
net promoter score (promoters - detractors) 79.3

13. How satisfied were you with the quality of your Shoes of Prey shoes? (Scale: 1 = not at all satisfied. 10 = extremely satisfied.)
1: 6
2: 5
3: 1
4: 7
5: 19
6: 17
7: 64
8: 93
9: 143
10: 254
promoters: 65.2%
passives: 25.8%
detractors: 9.0%
net promoter score (promoters - detractors) 56.2

14. How likely are you to recommend Shoes of Prey to a friend or colleague? (Scale: 1 = not at all likely. 10 = extremely likely.)
1: 9
2: 5
3: 5
4: 5
5: 17
6: 11
7: 29
8: 64
9: 95
10: 369
promoters: 76.2%
passives: 15.3%
detractors: 8.5%
net promoter score (promoters - detractors) 67.7

15. How likely are you to purchase from Shoes of Prey again? (Scale: 1 = not at all likely. 10 = extremely likely.)
1: 13
2: 8
3: 5
4: 15
5: 44
6: 33
7: 56
8: 86
9: 91
10: 258
promoters: 57.3%
passives: 23.3%
detractors: 19.4%
net promoter score (promoters - detractors) 37.9

======== TOTAL ============
promoters: 72.4%
passives: 19.1%
detractors: 8.5%
net promoter score (promoters - detractors) 63.8

Thanks to everyone who suggested we use the 'net promoter score' for these questions. For those who haven't worked with it before, you ask for responses on a scale of 1-10 with 10 being the highest. People who give 9's and 10's are 'promoters', they've had a fantastic experience. 7's and 8's are passives, they've had a good experience, not particularly outstanding but not bad either. 1-6's are detractors, they've had a below average to bad experience. Your net promoter score is the % of promoters - the % of detractors. Wikipedia says that a net promoter score of 0 is good. On average you have as many promoters as detractors. A score above 50 is excellent, it means you have lots of promoters and not too many passives or detractors.

On this measure our results for these questions are outstanding. We had an average net promoter score of 63.8 across all these questions. Our highest score was for the customer service question with a net promoter score of 84.7 - an incredible result! Susie, Jonaye and the team in China are nailing customer service and our customers love it. Our vision for the business was to offer bespoke, tailored customer service to go with your bespoke, tailored custom shoes and we've executed on that to near perfection.

Next up was packaging with a net promoter score of 79.3. Qun, Holly, Jophie, Penny, Ken and James in China are doing a fantastic job with the packaging. Customers love the handwritten note (though we may still switch to doing a tailored, typed note instead), the photograph of their shoes and the inserts that help with sizing, all of which we've been doing since launch. Earlier this year we updated our shoe box, added a high quality shoe bag and now wrap our shoes in Shoes of Prey tissue paper, a ribbon and have added an outer carton to protect the entire package. We're finally happy with the packaging we're shipping our shoes in and clearly our customers are too. It's the only physical touch point we have with most of our customers so we view it as important to get this right.

Satisfaction with the experience of designing shoes on our site cam in next with a score of 57.3. This is an excellent result. Our customers clearly love our online shoe designer, as do our competitors. That said, this is an area we think we can improve on.

Satisfaction with the quality of our shoes came in next with a net promote score of 56.2, another great result. Clearly our shoe making and quality control processes are working well. That said, with the addition of Ken and James to the team, both of whom have shoe industry experience, this is a figure we plan to improve on.

How likely are you to recommend Shoes of Prey to a friend came in with a net promoter score of 67.7. This highlights that the overall experience is excellent and the concept is viral and one that our customers plan to tell their friends about. The figure in the earlier question that only 11.3% of our customers knew some one who had purchased from us prior to ordering their shoes will no doubt grow as our customer base grows.

The final question, how likely are you to purchase from Shoes of Prey again came in with the lowest net promote score of 37.9. This is still a great result but put in the context of the other questions it's quite a bit lower. Why would so many people love our service and be willing to recommend us to their friends but not be likely to purchase from us again? We suspect it's due to fit, a question we didn't ask about in the survey. Selling shoes online without customers trying them on is no easy feat and like any brand of shoes, our shoes aren't suitable for every shaped foot. We'll add a fit question to our next survey.

Still, given our return rates fit can't explain the entire reason the results for the question aren't as high as the others. Any other thoughts on what might explain this?

To encourage customers to complete the survey we offered free shipping within 2 weeks of sending the survey, 51 customers (9% of those who responded) have taken up the offer to order shoes. That's a great result considering free shipping is effectively only a 10% discount. This highlights that we should be doing a lot more to re-market to our existing customers.

I'd love to hear your thoughts on how you might interpret the results in a different way, and any other questions you think we should ask in future surveys.

Tesco's virtual store in a subway

A brilliant approach to marketing an online retail store by Tesco in Korea:

And a fascinating discussion from Roy Nyberg on his blog here about this Tesco campaign as an example of using existing structures to ease people into new innovations.

Via Quentin Cregan.

Wednesday, July 6, 2011

Sydney office culture

Just over 3 months ago we moved into our new offices in Surry Hills after spending 12 months sub-leasing space from Jodie's former employer The Campaign Palace. We loved sharing space at The Campaign Palace, not only were their offices amazing but it was great to be around lots of creative, interesting people each day. That said, since being in our own office space we've realised how difficult it is to build a company culture when sharing space with other people, the change in our culture over the last 3 months has been remarkable and exciting.

We were already doing it in our office in China and as planned, we started providing lunch and snacks to our team in Sydney when we moved into our new office. We pick a lunch place to order from that day and when the food arrives we all eat together around a dining table we've set up in the middle of our space. Previously at The Campaign Palace we didn't really have a break out area like this so we tended to just eat lunch at our desks and continue working. Initially in the new office we tried having formal brainstorming sessions over lunch where we'd all brainstorm solutions to a particular problem we were having in the business, but these weren't a lot of fun and weren't relaxing which ideally lunch should be. Taking 45 minutes out during the middle of the day is refreshing and eating lunch together has been great for us all to get to know each other better which makes coming to work and spending our days together much more enjoyable.

Friday Drinks
We've taken to having drinks on a Friday from 4:30pm. We keep our fridge stocked with beer and we've got quite a bit of wine in the office now too. That, combined with some music makes for a good way to end the week. That said there's been a bit of a tendency to head back to our desks with the drinks and continue working which is not really ideal. I think we need a Nintendo Wii or something similar set up to draw us away from our desks.

We've now held 3 TechTalks in the office and they've been a great success. Not only have the speakers shared some fascinating insights, but it's been fun inviting other people to the office and getting to know other Sydney based entrepreneurs over a few drinks and an interesting entrepreneurial related topic.

It's still early days for the development of the Shoes of Prey culture but I think we're headed in the right direction and for our Sydney team, our new office space certainly makes a big difference.

We had originally thought we would sub-lease some of our space to other people running startups but we've since decided we probably won't do this. We've found it's much easier to build a strong culture when the space you work in is yours.

What has your experience been with culture building inside the organisation you work for?

Friday, July 1, 2011

YouTube TechTalk summary

Last night Suzie O'Carroll from YouTube joined us at our offices to share her thoughts on how startups can use video and YouTube to promote their businesses. It was a really insightful presentation, following are my notes:

1. Why Online Video?
- Online video growth is up and to the right
- Video makes up 30% of all internet traffic. Forecast to trip to 90% by 2015.
- Video is social

Peak online video consumption time is 6pm-8pm during the week and 8pm-11pm on weekends. Matches peak TV viewing time. 2 years ago online time was dropping during those periods as people switched on their TV. That's changed.
- Over 50% of all online video views are with YouTube.
- Video is great for SEO - videos show up in search results.
- 15 months ago 24 hours of video was uploaded to YouTube every minute
- Today this has doubled to 48 hours per minute uploaded

2. Understanding your customer
- Orabrush = 2nd most subscribed channel, behind Old Spice, ahead of Apple.
- Diary of a dirty tongue - new content every Tuesday encourages you to subscribe
- YouTube Analytics provides fantastic feedback on who is watching your videos, their age, country, how they found your site, 'hot spot' showing engagement levels during the video - particular points in the video might engage better than others = great content feedback.

3. Distribution and promotion
- "Content is king but distribution is Gold Almighty" - It's all about distribution
- OVer 50% of video views come within the first week. Important to promote your video during this period to get on trend lists etc.
- Video is social, 150 years of YouTube video is watching on Facebook every day.
- Every tweet results in 7 video views on average
- Orabrush used promoted videos when it first launched. Targeted on keywords their target customer searches on.

4. Engage your consumers
- YouTube moderator - Ask your audience what content they want, other audience members can vote.
- Interactive video - Create different permutations and video paths. Eg. The Streets.
- Lauren Luke - make up how to videos
- 73% of forwarded videos were done to make their friends laugh
- 2-4min videos = perfect
- - what are people watching

Susie then went on to share popular channels and brands that create fantastic YouTube content:
- Home Depot
- Food recipe channels - combining visual tips with linking ti recipes - Jamie Oliver and Sainsbury's
- The Carphone Warehouse - lots of how to videos for their phones
- Toyota US - driving TV viewers to YouTube - demos, spec videos etc.
- Net-a-Porter - lots of great fashion content
- French Connection - Cat Dal, fashion stylist. They also use interactive videos so you can easily look at whichever trends you're most interested in.

Mike asked the very good question, 'Are there any distinguishing characteristics of the most subscribed channels?'. Suzie said it's difficult to put a finger on this, but humour is a key piece.

Thanks so much to Suzie for coming in to share her thoughts with us.