Behavioral Economics

For years I've been trying to get my head around what is the 'thing' that we as online consumers want out of the online experience. Essentially what is it that we're 'acting out' through our online activity?

I believe the answer has a lot to do with 'behavioral economics'.

"Behavioral economics and behavioral finance are closely related fields that have evolved to be a separate branch of economic and financial analysis which applies scientific research on human and social, cognitive and emotional factors to better understand economic decisions by consumers, borrowers, investors, and how they affect market prices, returns and the allocation of resources.

Behavioral economics is that branch of one, which deals with the study and application of analysis with scientific approach on social,emotional factors for understanding the consumers,investors and the market,and the resources.

The field is primarily concerned with the bounds of rationality (selfishness, self-control) of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory. Behavioral Finance has become the theoretical basis for technical analysis. [1]

Behavioral analysts are mostly concerned with the effects of market decisions, but also those of public choice, another source of economic decisions with some similar biases towards promoting self-interest."

-Wikipedia

If you look at online companies; such as, Threadless they understand that the best way to get people to care about a product is to motivate them to take action. By becoming involved in the product or service we, as consumers, feel a sense of connection. Being able to submit our opinion, ask a question, and access resources creates a sense of belonging and familiarity. Another great online service is Get Satisfaction.

I think this is very powerful considering how alienated we can feel by technology. We become frustrated when we call customer service and can't speak directly to a person. Social media is the cure for automation's failure to be everything to everyone.

Australia's Best Music Site

I'm a big fan of fasterlouder.com.au. It's the best Australian music site I've visited. The runner-up would have to be moshcam.com- in fact, it would be cool if the 2 sites merged. (hint! hint!)

in reference to: FasterLouder.com.au > Fasterlouder.com.au is Australia's leading independent live music hub. Stock up on music and tour news, reviews, gig photos and idle gossip, or bitch to your heart's content in the forums. (view on Google Sidewiki)

Monthly mobile plans shouldn't cost more then your rent.

I recently had an interview with a major telecommunications company here in Australia, and it was without a doubt one of the most horrible experiences of my life. Picture yourself in a bland, dreary meeting room with a couple of wise-mouthed kids. Each time I started describing an idea they only let a few words in before cutting to the next question. Having no chance to clarify the meaning was misconstrued and they'd be armed with enough ammo to send the concept straight into the gutter. The feeling is similar to the dream where you turn up at school naked as the day you were born, or having a classroom of middle school kids laughing at you for farting loudly.

The request prior to the meeting was to familiarise myself with the company’s handsets and applications. I did this, and my observation was that they had lots of clever add-ons for their customers, but with all the extra costs on top of their basic plan. To me, this was an issue. As a consumer who opted to go with a different service provider because of the exorbitant fees I felt like this was an opportunity to bring my knowledge of social media to practical use.

Knowing that part of the job would include managing the app pages on the website the first order of business was to address the lack of consumer info. There weren't any indicators that customers were interested or even using any of these applications. I wanted to bubble-up how often the apps were downloaded. I also wanted to be able to read reviews and here feedback from customers. - To this point I received smirks and scrunched brows, and was asked, “you do know that this is a producer role, correct?”

My point was: If you want people to buy something they don’t need during an international financial crisis you’re going to need to do more then post generic info that states nothing and gives no indication of the added value by buying it.

The next thing I wanted to do was to allow customers to participate in the apps that are provided by voting for them. As I’ve stated in previous posts, Threadless and Amazon do a fantastic job at appreciating the wisdom of the crowd. Using algorithms to lead decision making is the key to sustainable development. Why guess what customers want? Why assume when you can ask them directly? Who cares what types of apps an executive in an ivory tower wants to buy when the majority of your customers want something entirely different?

Another way to enhance the added services is to provide an extra layer of support. I really like the value of open sharing and transparent customer service. This is why Zappos is such a strong favourite amongst internet shoppers. Bravely stand behind your policies and don’t hide individual responses. If the business is based on solid values and positive customer service attitudes there shouldn’t be any worry, right? Get Satisfaction is the modern way to cope with new challenges in managing customer-business relationships. Replies come from other customers or the organisation's employees.

While researching ideas I stumbled on an article about how Sprint has opted to create a developer sandbox, and shared this as an option for generating a massive directory of applications. Local businesses could create applications ready for use on all smart handsets, why not?

The final angle was to restructure the costs being sent to the customer. Why not involve advertisers instead of charging customers for apps? Or follow what other subscription-based business are doing to attract more users? The Washington Post allows you to become a subscriber in order to access certain online articles, or allows users to sign-in using the Washington Post Facebook application. The trade-off is free articles for access into certain portions of the user profile. Some say it’s a potential privacy issue, but it’s not compulsory - it’s a choice. If users would prefer to pay for an uninterrupted experience they are free to do so. Monetising the experience through advertising is a great way to keep costs down for the customer, and will likely generate more revenue in the long-run.

I also like free apps that make buying choices easier. A great example of a cool music app is Guitar Hero for iPhone. The commerce aspect can be easily set up via the App Store, and an application gives artists or labels an easy way to distribute content.

At the end of the interview the 2 goons asked me, “so what applications would you produce?”

My response was and continues to be, “Whatever the majority of customers want to buy and use. My biased opinion is irrelevant”.

Needless to say, I wasn’t invited for a second interview and have never received any form of communication from the industry giant. I guess some people have the wrong perspective of social media, and empowering consumers. The reality is that there are tons of apps out there and most are FREE. If you want consumers to pay for something you need to ensure it's set up as a valuable service.

Gameplay Matters

More and more company’s are becoming involved in social media. Some brands attempt to foster an online community or create online personas - to mixed reviews. Getting these types of endeavors off the ground is a huge undertaking and in no way should be attempted without a little research and hands-on experience. There’s nothing worse then awkward participation by someone unfamiliar or uncomfortable with social media. I don’t think McDonald’s needs a Twitter profile, I don’t think anyone read Kmart’s blog, and Microsoft's "advertars" (Avatars generated by advertisers to pimp their products in MMOs and virtual worlds) while creative and clever isn't the best idea. I believe it's important to know about the historical precedents in order to tailor a strategy for adaption and integration.

Online communities aren't as new as you might assume; they actually started with the creation of MUDS in 1975. Cyberculture, screen names, moderation, forums, avatars all came from these innovative games. Game creators learned very early on that one person can’t monitor everything and enlisted hardcore gamers to become the eyes and ears within the game; thereby, allowing the creators to focus on enhancing the overall experience. Moderators were provided with the tools to refocus fellow gamers - idle minds lend to idle hands. The role of a moderator is not to police other players, but to positively challenge them. I have observed that our current online communities operate quite similarly.

There are all kinds of ways to enhance the online experience. Apps and Widgets allow users to come to you instead of the other way around. By being dynamic and linkable they add a valuable service.(Going mobile is a great way to get ready for what's to come in the near future.) Another great innovation is trivia games and recommendation tools. Thanks to social media users can rate products and services negating the need for traditional marketing surveys. Also through association you can become memorable. Contributing to the experience in a positive way should be an objective instead of lurking in the shadows and noting every negative comment. The National Oceanic and Atmospheric Administration (NOAA) created a Virtual Tsunami in Second Life. It is not only a great example of eLearning it also illustrates how to become apart of an online community by enhancing the experience.

Another example is Sugar Inc. which focuses on creating communities for women between the ages of 18-49 and boasts 8 million monthly unique visitors and more than 50 million page views. Because the experience is transparent advertisers can speak to consumers directly without having to jump up and down to get their attention. The Sugar Network is comprised of 16 distinct lifestyle and entertainment sites covering topics that include celebrity, fashion, shopping, beauty, entertainment, food, health, etc. ShopStyle integrates fashion and design trends through social media and commerce tools to create a personalized shopping experience. Sugar Inc. has managed to create sites that feel as though the user is existing within a fashion magazine. Another shopping site called Threadless invites community members to submit t-shirt designs online, and the designs are then put to a public vote. A small percentage of submitted designs are selected for printing and sold through an online store. Creators of the winning designs receive a prize of cash and store credit. Also of notable mention: ebay, etsy, and Kaboodle.

I’m far more interested to engage with a brand through play then stark advertising that interrupts my regular online activities. As an example, if I went into a store and the sales staff kept trying to force me to buy a jacket that wasn’t my size and didn’t interest me I’d quickly run out the nearest exit. Advertising within an online community can be a delicate art. The best way to engage an audience is to provide them with a service that adds value to the user experience. Think of a street vendor selling hot dogs - setting up at rush hour in front of a bus stop might get you a few customers; however, setting up at lunch time inside a business park or beside a nightclub at last call is far better idea. Knowing your customer and giving them what they want at the right time is vital to increasing conversion.

Read more about "social commerce".

Usability Focused SEO Strategies

Recently I had a brief phone call with someone asking me how to ensure a website quickly shows up in the first page of a search engine result. I offered that showing up in organic search can take time, and a fast solution is pay per click. Conducting an entire site overhaul is commonly what it takes to show up in the top results of an organic search. There are also simple tricks to show up in local search results. Geotargeting is an easy way for locals to find you.

Years ago, SEO was an extremely dry concept entailing keyword strategies and primitive analytics as clairvoyant as a Magic Eight Ball. (Anyone who tells you they can read a users’ mind using a heat map is a charlatan.) The answer to a question such as this one is not simple and can’t be summarized without insight into a company’s objectives and core demographic. Also, the truth of the matter is that SEO has far surpassed traditional online marketing and keyword selection. SEO starts with good development strategies and ends with consistent testing. Knowing your user and seeing your site through their eyes is the best way to developing fine-tuned optimization.

To start, knowing that web browsers are the point of entry should help in determining keyword selection. I think it’s a good idea to know what the experience is like in both the latest version and preceding version of Firefox and Internet Explorer. Not only test that your site is efficient and bug-free, but conduct regular outside user testing to gain insight into how users find your website. As an example the Awesome Bar in Firefox slowly adapts to a user’s preferences and offers better fitting matches when entering a URL. Firefox can also tell websites your physical location resulting in more relevant and useful results (for example, getting directions or finding restaurants nearby). Another idea is to consider what languages are most common in specific regions. Certain browsers can translate site copy; however, it's not always perfect and you might want to consider providing translated versions of your site. I recommend using Google Trends for Websites to find out more about keywords based on regional statistics. Knowing what capabilities exist within a browser will help you know how to optimize the user experience and improve SEO.

An important element of SEO development is ensuring your content is properly categorized, labeled, and indexed. Amazon.com is a great example of how to label and index content. The site is consistent with it’s use of titles and descriptions which lends to optimal searching - both internally and externally. Search Engines such as Google dislike Dynamic URLs. Masking dynamic content using URL Rewrite will optimize the pages of your site. Also, creating an XML site map and using Cascading Style Sheets (CSS) to assist crawlers in locating the important content is an easy and important undertaking. Always remember that content is king, and duplications or sloppy organization can ruin SEO.

Linking and navigation are also vital to improving SEO. The easier it is to get around your site the better the overall experience for everyone - both users and bots. Google’s Webmaster Guidelines clearly states that it is important to ensure there is a clear hierarchy of content and text links. “Every page should be reachable from at least one static text link.“ Another vital element is to employ robots.txt to prevent crawling of search results pages or other auto-generated pages that don't add much value for users coming from search engines. Using my previous example, Amazon is a great site to model after in terms of it’s use of linkage. Internal links whisk you through near flawless navigation while external links and widgets are fun to use and easy to setup. Amazon’s affiliate program is one of the best I’ve seen and it’s resulting traffic is phenomenal. Amazon’s online presence stems from a quality website and utilization of online partnerships. The more sites that link back to yours means you must be important or at the very least extremely popular.

In conclusion, the whole point to the beautifully simplistic algorithm deployed by leading search engines is to ensure a quality experience for the user. The 1990 attitude of “if you build it they will come” doesn’t cut the mustard anymore. Your website needs to work well, actually know it’s audience, and be setup as a service to the user. All the marketing in the world can't make a site run better and SEO is Web Usability - contrary to what some may believe you can't enhance the experience by adding a blog. The purpose of a quality search experience is to present the user with the information they want to find; not send them to content masquerading as important in a desperate attempt to gain more site traffic. Always ask yourself, "does this have value?" if not loose it and focus on what matters most.

**BTW, Are there any developers out there who know whether the Rudd government decision to mandate online filtering, and to retrofit it to a decentralized network architecture has any ill effect on search?

Yelp or not to Yelp

Several years ago on a trip to San Francisco I discovered a very resourceful website called Yelp. Heard of it? If not, there’s no doubt Yelp will be popping up in your city sometime soon. Yelp, Inc. is a Web 2.0 company that operates a social networking, user review, and local search web site of the same name. According to Wikipedia, over 25 million people access Yelp's website each month, putting it in the top 100 of U.S. Internet web sites. Founded by Jeremy Stoppelman in 2004 the site is near to becoming an international household name. In the spring of 2009 Yelp crossed the pond venturing into new UK territory.

There are lots of fantastic tales to read on Yelp, most of which come from quip personal anecdotes regarding local haunts by the site’s regular community contributors, but there is also a controversial story regarding the enterprise. An extortion claim is a journalist’s wet dream, and the question as to whether Yelp hides negative reviews for a price is an interesting concept to explore. Yelp strongly denies the allegation, but it does seem suspicious that the site seems to thrive despite little advertising. What’s the business model?

Yelp runs quite similarly to Google’s search results. Businesses can pay for top results on internal searches. In other words, sponsored results. A fantastic concept in my opinion. Users see what the community is saying, but businesses are also provided with an opportunity to get attention. In many ways, Yelp is an interactive Yellow Pages with Web 2.0 capabilities. It is also an example of how to get around the SEO minefield by using a smaller website to gain traffic and potentially increase sales.

Other tools were implemented to breakdown potential walls including a free REST- and JSON-based application programming interface (API). The API provides access to business listing details, reviews, photos, and ratings and can be used to add business information to a website, widget, or mobile application. The API has been used to integrate business reviews into existing Google Maps applications such as on Zillow.com and HotelMapSearch.com. Additionally, Yelp implemented Facebook Beacon, a part of Facebook's advertisement system that sends data from external websites to Facebook, ostensibly for the purpose of allowing targeted advertisements and allowing users to share their activities with their friends. Certain activities on partner sites are published to a user's News Feed. Yelp is also mobile and can be used on the go through Apps and a smart-phone friendly site.

Many similar sites exist, but Yelp’s success stems from it’s foundation in community framework. By using user generated content and not turning to professional writers for their reviews the end result is a cultivation of peer to peer networking that fuels habitual behavior.

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Reading in the Brave New World

We exist in a consumer society - I hope I’m not stating anything new to you with that statement. Our current challenge is how to remain hardcore consumers while minimizing our carbon footprint. I’d say, reducing the amount of bleached, heavily treated paper is a good start.

After years working for a major book retailer I can assess that people want options, and the way we read has been changed forever by new media. As an example, it’s surprising to discover magazines and newspapers without any online presence except to list statistical information concerning their distribution and ways to advertise. Forget about seeing an App or podcast available. Instead of embracing new directions there seems to be a sadness over the dwindling sales of printed material and traditional media. There are also concerns that modern communication and information searching tools will injure our intelligence.

Luckily there are experts on the subject and we don’t need to continue scratching our heads over how to understand the reading brain. Maryanne Wolf, is a cognitive neuroscientist and child development expert from Tufts University and author of the exceptional book, Proust and the Squid: The Story and Science of the Reading Brain

“Human beings were never born to read,” she writes, “Reading is a human invention that reflects how the brain rearranges itself to learn something new.”

Contrary to what your 3rd grade english teacher led you to believe reading is an evolutionary exercise and doesn’t follow an intrinsically strict rule book. If language and reading were to remain the same we’d still be saying ‘thou’ and ‘shalt’ instead of ‘you’ and ‘should’. The main difference in these contemporary times is that technology is at the helm of consumption. New forms of communication are altering spelling and causing the older generations to squirm at the sight of lol, brb, and whatever other forms of new speak the kids are talking these days.

While I can’t say that I’d jump at the thought of reading a book or even short story written entirely through IM abbreviations it would be an interesting visual representation of the times. After all, isn’t that what most art tries to achieve? The classics that define our culture will never die because adaption ensures their survival.

Finally, tools such as Literature Map will take care of those pesky publicists who believe their opinion should dictate which books are worth reading. Peer to peer sharing and personalized recommendations are how I want to find new authors and books worth my time and money.

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