Austin Web CEO Best Practices meeting held

On Friday we had the second Austin Web CEO Best Practices meeting at River Place Country Club. The first meeting was held in April and we had 5 companies represented. The Friday meeting had 17 participants with 12 companies represented. A really great turnout. The nice thing about the meeting was that we had a really good group that was open and there was a lot of sharing of ideas and resources. Our goal for these meetings is to further support the development of successful web businesses in Austin by creating a forum and network of executives living the challenges and opportunities on a daily basis.

I wrote a blog early this year which got a lot of flack about the risk/value of starting a web-based company in Austin rather than in the Bay Area. The negative was that I got a lot of unpleasant mails about my choice of subject. The positive was that I heard from others in town who said that they were constantly asking the same question. That posting (and an initial get-to-meet others luncheon hosted by Rudy Garza of G-51 Capital) led to the formation of our Best Practices group.

A really nice recap of the meeting was written by Jeremy Bencken on his blog.

If you’d like more information about the Web CEO Best Practices group drop me an email at daltounian@itaggit.com.

Prioritizing development projects

One of the biggest challenges that we are dealing with right now is prioritizing development activities.  In a perfect (unlimited budget) world we’d have multiple development teams tackling the projects in parallel.   …but we’re not in a world of unlimited budgets.  We have development projects across four major buckets:

1) Revenue driving features – integrating affiliate stores from other partners has a direct impact on income for the company;

2) Enhanced capability – providing new features that provide additional functionality for attracting and retaining users;

3) Usability enhancements – changing/modifying user interface elements and simplifying select tasks;

4) System architecture updates – changes to improve the performance and or capabilities of the core product engine.

Selecting projects across these would seem to be easy – but it’s not.  For example; it’s important to drive revenue features, but if there isn’t enough ‘grabby’ traffic then no one will be online to use the features.  You could focus on usability to improve the site experience but if you do that at the detriment of new features or revenue driving features then your site gets stale.

What we are finding appears to work is to break the projects down into smaller project chunks and not allow the development team to get totally focused on one major project.  Additionally, we’re finding that writing good specs and providing graphic comps of what the pages should look like is cutting down on the back and forth between marketing and development and allowing for projects to be completed quicker.  We try to complete one revenue, UI, and feature project for every release cycle right now.

I’d be interested in comments from others about how projects are prioritized and managed.  Comments?

What’s the Value Proposition?

Distilling down the value proposition is always important, but it’s never as easy as it seems.  Creating a simple value proposition for iTaggit has been gnawing at me because the ‘value’ depends on who the user is.  For example, the value of iTaggit for an artist is to document their work and share it with potential buyers, the value for a dealer is to showcase items and assist with SEO, and for casual collectors it’s getting the value of their items.  So is the value Organize?  Showcase?  find the dollar value?  It can be all of those.

The problem is that the value is specific to the person hearing the value proposition.  I was struck by this today here at Demo as I listened to the executives on stage try to describe what their business is.  One executive talked about his site being a ‘mobile publishing platform for connecting social contacts and building a mobile social fabric’ or something like that….  The best one that I heard today was ‘the worlds easiest database for normal people to organize, publish, and distribute data’.   Pretty good.  I’m a semi-normal person.  The only thing missing is the ‘why’.

What we finally came up with for iTaggit is that we are ‘the online destination to organize, showcase, value, and monetize the things that you are passionate about’.

Why is this important?  In my experience (and borne out by watching multiple onstage demonstrations today) you get or lose the interest of the customer in the first two to three minutes.  If that’s what it’s like when there is a captive audience in a presentation forum, what’s it like when a potential customer is looking at passive ad content?  It’s critical to figure out what resonates to optimize the conversion of prospects to ‘interested’ prospects.

Helpful books for Web Marketing and Design

I’ve started a public collection on iTaggit of books that we are finding helpful in building our website and in assisting with Web Marketing.  The collection has the book information, our ratings and comments, and link to Amazon for those that want to purchase the books.  There is a great book on Google Analytics (it sheds some light on the black hole), homepage design, and SEO.

As we find more books that are relevant I will add them to the collection.   We are scouring and learning as fast as we can.  I will share what we find through the collection!

Finding out what users REALLY do…

We’ve had endless debates internally about what customers want to do with our site and what works or doesn’t work with the layout of the pages. We have tried things that work in traditional marketing such as focus groups, surveys, analytics, etc. Unfortunately, what people tell you they WANT to do doesn’t always translate into what users REALLY do when they are on a site.

One of our eminent advisory board members (thanks Wendy) spoke to us several months ago about the importance of tools such as heat maps to see what goes on with the site. We finally found a great tool that is beginning to expose real issues and opportunities in building a site that users will really Heat Mapuse.

CrazyEgg (www.crazyegg.com) is a great tool that allows web site managers to visualize what users do when they visit your site. Heat maps tell you by color where clicks happen. Here is an example – this is a landing page for Antiques. What you’ll notice is that there is a tremendous amount of clicks on the search box and go button on the right, on The Gallery and My Home on the left, and nothing on the orange Take the Quick Tour button in the prime location in the middle! Obviously this is a page that we are going to redesign!

Another great feature is called Confetti – which gives you detail by click about what users do. They show things like time to click, operating system, browser type, search term, and other important facts about user behavior and profiles.

The best thing about CrazyEgg is the cost and the ease in implementing the tool. CrazyEgg starts at FREE and is priced based on need up to $49/mo. We are using one of the lower pricing tiers at iTaggit and it’s working great for us. The best part is that we can ramp up our pages and tests as we need to on demand.

Implementing the tool is easy. It’s a line of code on the page that needs to be watched. It took us an hour to implement the tool and immediately started to see results.Confetti

I’m not in the habit of trying to push someone else’s product, but this one is a great tool for any web marketer’s arsenal. Let me know if you find this tool useful. I’d also like to know if tips on tools like this is worthwhile too.

Customer Acquisition Costs

Here’s a real challenge – what makes up the true acquisition cost for a customer in a user-generated content site?  And what constitutes a ‘customer’?  Since revenue on sites like ours is driven by advertising and affiliate product purchases a ‘customer’ can be either a registered user (who can contribute content) or a visitor (who just looks at the content).

Customer Acquisition cost is made up of 5 major contributors in a business like ours – Pay Per Click advertising (Google, Yahoo), Banner Advertising, SEO Optimization, Viral Marketing Campaigns, and community management (headcount driven).  But these costs can drive both registered users and visitors.   Here are the relevant metrics from my view:

1) Cost per Registered User – monthly aggregate marketing spend/# of registered users

2) Cost per Visitor – monthly aggregate marketing spend/# of Unique Visitors

3) Cost per Action for Pay Per Click advertising

4) Cost per Action for Banner and Viral Marketing

These are interesting metrics to track and trend, but they beg some real questions.  How do we define an ACTIVE registered user vs. just a registered user?  Does it matter?  How do you factor in the value of items added as compared to number of registered users?  Is one user that adds 200 unique/interesting items (which positively affects SEO and visits) more valuable than a user that adds 2 items (or none, but blogs)?   Is there a way to segment registered users in a way to spend more efficiently to get the high value registered users?  Is that a smarter spend than just driving activities to get visitors who may drive more purchases and ad views/actions?

If you think about this question, it has important ramifications for most web 2.0 companies.  I’d be interested in understanding how others approach this question.

Closing loops..

One of the challenges that web 2.0 sites have (and iTaggit also has run into) is tracking and quantifying ‘mashup’ activity. If the value proposition includes linking to other sites and providing cross-site benefits then it’s probably important to be measuring the amount of activity in this area. For example, we have an Amazon link which allows users to download info from Amazon on specific items and includes a BUY FROM AMAZON button.screen-capture.png To understand how important and/or how well this works for users it would be important to be able to track how often the features are used. And, if the user abandons the activity, where and why. The problem is that with mash-ups and cross-site integration you can only use analytics to see what’s happening on YOUR site. What happens if there is something funky going on in the other site and a high percentage of users abandon the activity?

Additionally, as we add more features like the ‘What’s it Worth To You’ feature in partnership with WIW2U.com, we’ll need to start pruning off the mash-ups that are not effective or actively used. Once a user clicks on a feature we can count that, but does that mean the user completes the activity? Are they pleased with the results? We usually don’t know because at that point the user is ‘living’ on our partner’s site and infrastructure. They’ve gone through the teleporter and we won’t be able to see them again until they return to us. We’re spending time and energy trying to understand how to ‘close the loop’ on these cross-site activities. As we discover more things around this challenge I’ll share them here. If others have ideas or have been dealing with this issue I’d love to hear about it.