Thursday, December 06, 2012

How to Make Love to Your Customers

Fanatical Customer Intimacy as an Organizing Principle for Startups

     In The Discipline of Market Leaders, authors Frederik Wiersema and Michael Treacy argued that market leaders succeed by narrowing their business focus, not by broadening it. Specifically, companies gain by concentrating on one of three value disciplines--operational excellence, customer intimacy, or product leadership--and aligning their operations behind their chosen discipline. For example, by focusing on logistics, companies like Walmart become market leaders on price. By focusing on R&D, companies like Apple become product leaders. Finally, companies like Disney become leaders in customer experience by focusing on customer intimacy.

     One of my favorite presentations from the Warm Gun design conference this year was made by Kevin Hale, one of the founders of Wufoo, on how they used customer intimacy as the organizing principle for their company.
According to Hale, Wufoo decided from the start to build their company around the discipline of customer intimacy. They became fanatical about creating meaningful relationships with their users and in particular building those relationships by eliciting positive emotions, not by just appealing to rational ideas. This interest lead them to the science of creating and building long-term relationships and to applying dating research to new users and marriage research to existing users.

     Wufoo is an freemium online form builder that was acquired by Survey Money in 2011 for $35.0M. This acquisition netted Wufoo investors a 29,561% return on their investment of $116K. At Warm Gun, Hale described of the secret to their success.

First Impressions
Setting the right tone at the start of a relationship matters

     As the saying goes, you only get one chance to make a first impression. This is true because there is a high-level of expectation when people first meet and because people will use those first impressions to decide whether or not to create a new relationship. If you don't get past this first hurdle, there's no chance for some level of trust to be established and a relationship to blossom. In creating a first impression for their web service, Wufoo went beyond the usual suspects (home pages, landing pages, plans & pricing, signup and login) and also included a host of other moments of truth like first email, account creation, starting interface, login links, ad links, and first support request.
     In order to create a good first impression, Wufoo designed all of these elements to generate positive emotional responses. Whereas many are sites design for ease of use, Wufoo was looking for people to be have a good time with what is essentially a database application. Hale provided several design examples that stood out. First, he highlighted how Wufoo added a the dinosaur to their login button then made it says "RARRR" using a simple tool tip. The goal here was to make every customer smile every time he or she logged in.
A Dinosaur Will Customers Smile
In another example, Hale showed how the now defunct wine news site Cork'd used the text on their sign-up page to generate a similar emotional response.
Effective Use of Copy on the Cork'd Registration Page
There's nothing like a little humor and poetry to make people smile.  Finally, Hale talked about how the company decided to offer a custom forged battle axe as the grand prize in a contest to get developers to write apps for using their new API. Where the latest gadgets and cold hard cash may have failed for other contests, the battle axe got a phenomenal response.  "I'm going for the friggin' battle axe!"

     First impressions are critical.  They set the tone for how new relationships start with users. Careful thought should go into what that tone should be for the relationships being fostered.

Even Successful Couples Fight

     From first impressions to lasting relationships, we now move on to how Wufoo keeps the love alive. Looking at studies on long-term relationships, Wufoo found that successful couples fought just as much as unsuccessful ones and that they fought about the same things: Money, Kids, Sex, Time, Jealousy and In-Laws. Hale discussed how each of these areas have clear analogies to their business:
Why Companies Fight with Their Customers

    Given the inevitability of fights, Wufoo set out to how to anticipate where problems would crop up and put in place systems to handle them.

         According to Hale, fights at their roots are created a misalignment of goals between two people. And goals become misaligned when people don't talk. In the context of customer relationships, this misalignment typically occurs when engineers and designers are divorced from the consequences of their actions. In other words, fights happen when the people building a product don't talk to their customers and don't understand what customers want.

         To fix the broken feedback loop between customers and product development, Wufoo created a process that they call Support Driven Development which makes everyone responsible for customer support. This focus causes two things to happen: 1) customer get better support and 2) the company builds a better product.

    Providing Better Customer Support

         With everyone responsible for support, customers receive more relevant and timely responses to their problems. With designers and engineers in the customer support mix, Wufoo inevitably spent a lot of time finding ways to reduce customer support issues through things like improving documentation, FAQ's, tool tips, help pages and navigation.

         Wufoo devoted significant time to testing their support processes. Hale highlighted one test that involved asking users indicate their emotional state on customer support request forms. Going into the test, Wufoo didn't think that anyone would even bother to fill in the field. As it turned out, almost as many people filled in their emotional state as filled in their browser type (75.8% vs. 78.1% respectively), indicating it was just as important for users to express their emotional state regarding a problem as the technical details.

         By allowing users to indicate their emotional state with a simple drop down field, Wufoo provided a way for their customers separate the emotional content of their request from the other details. As an additional benefit, customers began to describe their problems in a more direct and neutral way.  In turn, Wufoo was able to respond with less emotions as well, while at the same time remaining cognizant of how users were really feeling.

    Building a Better Product

         With Support Driven Development, Wufoo also found that support responsible developers and designers created better software. In researched performed by User Interface Engineering, Jared Spool discovered that there was a direct correlation between the number of hours a team is exposed to real users and the improvements in the designs that team produced. According to Spool:
    "It seems that six weeks was the bare minimum for a two-hour exposure dose. ...And teams with more frequent exposure, say two-hours every three weeks, saw even better results."
    Wufoo employees spent a minimum of four to eight hours every week on customer support. Wufoo also spent nearly 1/3 of their engineering time on customer support solutions and admin tools that customer would never see but only feel.

    Keeping the Flame Alive

         Hale also discussed two techniques that Wufoo uses to show customers that they are invested in their relationship over time. First, every time a user logs in they see a list of all of the new features that have been released since they last visited. Users love this simple list because it tells them about all of the great things that the team has been working on for them. Secondly, every team member hand writes five thank you cards to customers every week. This ritual sets the tone not only for the customers that receive that cards but for Wufoo's company culture.

    The Discipline of Customer Intimacy Leaders

         Of all of three of these paths to market leadership, Hale believes that only customer intimacy can be executed without regard the number of people and amount of resources available to a company. Hale concluded, "You can always be customer intimate, you can always be humble toward your customers, and you can always be intent on listening to them." If you are building a startup, what path would you choose?


    Here is Kevin Hale's slide deck:

    and the video of his 30 minute talk, which is between another presentation and a panel discussion. (Jump to minute 31 of this clip to go directly to the beginning of Hale's presentation.):

    Watch live streaming video from 500startups at

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