Market Research

When buying something online, how much do you care about how the buttons are laid out? More than you might think.

With content changes on
our websites, we typically use what’s called "A/B testing" to see how
those changes perform. Some site visitors ("group A") see one version
of a page; the rest ("group B") see a slightly different version. By
watching the analytics for the two groups, we can see which design
"wins" — that is, which presentation is clearer, more understandable,
more compelling, and so on.

One day last year, we were
experimenting with small improvements to the shopping cart on our Palo
Alto Software store. On the page that collects the buyer’s address
information, we tried moving the Continue button from the right side of
the screen to the left. We made the change and started the test — and
conversions from the address page immediately dropped 40%.

Forty
percent! Really? All we did was change the alignment on a button. The
product they were buying was the same. Nothing changed in the value
proposition of our software. The button was still visible and similarly
easy to find. No warning bells should have gone off. But for a huge
chunk of our audience, the left alignment of that button was a
dealbreaker.

This sort of consumer
behavior is surprisingly commonplace. E-commerce sites like
MarketingSherpa are replete with examples, like this case study where an office supply retailer changed the size and color of their buy buttons and lifted conversions by 44%.

Making sense of seemingly irrational behavior is the focus of the emerging field of behavioral economics. It’s been in the news quite a bit this week with coverage of Predictably Irrational: The Hidden Forces That Shape Our Decisions, a book by MIT professor Dan Ariely that identifies specific types of irrational decisions that people tend to make, and why. For an overview, see the book’s website, or check out Elizabeth Kolbert’s excellent review of the book in the New Yorker.

Josh Cochrane
Director of Online Marketing
Palo Alto Software

Posted on February 24th, 2008 | No Comments »

Business is global. We have a global economy. Planning should be global as well. Business Plan Pro® Version 11.0 is designed to facilitate planning in the global environment.  When starting a business plan use the Plan Setup to choose a language pack, Spanish for example. The software then formats your topic outline and financial table row labels into Spanish.

El negocio es global. Tenemos una economía global. El planeamiento debe ser global también. Business Plan Pro® Version 11.0 se diseña para facilitar el planear en el ambiente global. Al comenzar un uso del plan de negocio la disposición del plan de elegir un paquete de la lengua. El software ajusta a formato sus etiquetas de la fila del contorno del asunto y del cuadro financiero en español.

Les affaires sont globales. Nous avons une économie globale. La planification devrait être globale aussi bien. Business Plan Pro® Version 11.0 pour l’union européenne est conçue pour faciliter projeter dans l’environnement global. En commençant une utilisation de plan d’affaires l’installation de plan de choisir un paquet de langue. Le logiciel compose vos étiquettes de rangée d’ensemble de matière et de tableau financier dans le Français.

Geschäft ist global. Wir haben eine globale Wirtschaft. Planung sollte global außerdem sein. Business Plan Pro® Version 11.0 für den europäischen Anschluß ist entworfen, um, im globalen Klima zu planen zu erleichtern. Wenn ein Unternehmensplangebrauch die Plan-Einstellung begonnen wird, einen Sprachensatz zu wählen. Die Software formatiert Ihre Aufkleber Reihe der Themaumreiß und der Finanztabelle in Deutschen.

Il commercio è globale. Abbiamo un’economia globale. La progettazione dovrebbe essere globale pure. Business Plan Pro® Version 11.0 per Unione Europea è destinata per facilitare progettare nell’ambiente globale. Nell’iniziare un uso di programma di affari la messa a punto di programma scegliere un pacchetto di lingua. Il software formatta le vostre etichette di fila del profilo di soggetto e del quadro finanziario in italiano.

Editor’s Caveat:  My paragraphs translated using Babel Fish. Mon employer traduit par paragraphes Babel Fish. Mein Punkte übersetztes Verwenden Babel Fish. Mio usando tradotto paragrafi Babel Fish. El mi usar traducido párrafos Babel Fish.  AltaVista-Babel Fish Translation

–Steve Lange
Senior Editor (and soi-disant humorist)
Palo Alto Software

Posted on February 14th, 2008 | No Comments »

I answer ‘Ask the Expert’ questions at www.bplans.com and occasionally I get a question that merits a special comment. This morning I had the following question:

Question:
What is the Environmental Analysis for this type of shoe business?

Comment:
This is probably a homework assignment. For the record, I’m not leaving anything out, the question is as shown here, with no additional information. "This type of shoe business" could be anything from manufacturing to retail to repair to whatever, and in any market, in any country, and with any mix of strategy and resources. So of course actually answering the question is impossible.

That, however, is not the point. That’s not why I’m choosing to post this on this blog. What’s interesting here is that this question illustrates a very common misunderstanding. It assumes that there is a "right" answer; that there exists "the environmental analysis" and the person asking the question wants to acquire that one right answer by asking an expert.

This is the same underlying world view that has created the strange proliferation of trade in sample business plans, as if there could be a right business plan for some generic kind of business, like a restaurant business plan or shoe manufacturer business plan. People ask for "the business plan" for a type of business as if it were a recipe. It isn’t.

If the question is homework, then the benefit the student is supposed to gain from it isn’t finding the supposed right answer, but rather going through the exercise of doing the thinking.

Answer:
The environmental analysis in the context of business planning normally refers to conditions and factors external to your company, outside of your company’s control, that might affect its sales, market, costs, and so forth. These are often grouped into kinds of factors, such as the common PEST, which stands for political, economic, social, and technological factors that might affect your company. They might be worldwide trends, or specific local market trends, or anything in between.

A good analysis looks at the specific individual context of your company, in your market, with your strategy and resources, and guesses how these factors might affect your company in the future.

– Tim

Posted on December 15th, 2007 | No Comments »

John, from Duct Tape Marketing gives some great advice on his blog on how to get in front of that journalist you are dying to have write a story on your company.
It’s very practical advice, and fairly easy to follow. Stop sending endless press releases and pitching story ideas… and instead follow John’s advice:

1. Build a list of journalists that you think might care about your story.
2. Read everything they write (use a Google News search by their name and subscribe to the email alert or RSS feed – you can follow a lot of journalists this way.)
3. Find their blog and subscribe to, comment on and write relevant trackbacks to it. (Most journalists have one now.)
4. Set up a routine of sending relevant content to them that is related to articles they write.
5. Don’t push for any stories (unless they are truly news) until you’ve done this for weeks

-Sabrina Parsons
Mommy CEO

Posted on October 8th, 2007 | No Comments »

I just posted on my personal blog, Mommy CEO, about marketing to women. There are some interesting questions that I bring up, and I wanted to cross post here at the Bplans.com blog.

One of the biggest mistakes I see in business planning is people who think that "everyone" is their target market. For example:

I am launching a shoe company. Everyone wears shoes, thus my target market is all 300 million people in the US.

OK, come on. Who are you kidding? Your shoes are probably built for a certain TYPE of person. Figure that out, and then tell me who your target market is.

Read my post about this at Mommy CEO.

Posted on September 28th, 2007 | No Comments »

I just read about MINT, an online money management application, winning the TechCrunch 40 conference. I read TechCrunch, and I immediately wanted to see more about the chosen winner. I also happen to be the person who deals with tracking my household’s finances — from paying bills to budgeting our income. So when I heard Mint won, I was definitely interested in how it might make my life easier.

Here is the rub: Mint does not address this question very well on their website. Here is what they say about why you will love Mint:

1. You’re always up-to-date
2. You know your spending
3. You find real savings
4. We look out for you
5. You’re safe and secure
6. … and it’s free!

I have been using Quicken for over 5 years. Considering the market share Intuit has, I am sure that I am in good company. Do I LOVE Quicken? NO! Does it get the job done? Yes. Is there room for improvement — plenty! This is why I was so immediately interested in Mint. If they can improve on the budgeting side of things I would gladly switch over.

But they don’t address me as a potential customer at all. They don’t seem to allow me to import financial data that I have sitting in Quicken (which could help them build a better budget for me). They also don’t address why I may not need to import my financial data. 

Help me out Mint — write a little marketing copy to hook me in and sell me your service. I am a perfect potential customer — but you lost me on your home page.

Sabrina
Mommy CEO

Posted on September 19th, 2007 | No Comments »

Question: I am working on my business plan and I need target market information and demographics. Since my business is quite unique (a holistic health center) I am not sure how to find the information that I need to feel in this part of the business plan.

Answer: It’s easier than you think.

First, refocus the goal. It isn’t a test. There isn’t some exact right answer hidden somewhere, making all other answers wrong. What you want, for a business plan, is a sense of market. You want to know who needs this, who’s going to buy from you, why, and how many of them are there. What message do you send them? Where do you reach them?

So let’s make this specific for your case:

1. Start with general information about your local area. You can get it at www.census.gov and at the local chamber of commerce and at the advertising department of the local newspaper or any local magazines. The advertisers call it a media kit, by the way, so ask them for a media kit and if they ask them why, tell them the truth — you’re doing market research.  What you want is how many people, genders, families, age groups, and income groups.
2. Figure out a way to quantify a target group of most likely buyers. Call that group a market segment. It’s hard to guess from your email what exactly a holistic health center means, but you’ll know whether your most likely buyer is wealthy or not, older or not, and local or not. Pull the specific group information out of your larger demographic information.
3. Find a way to verify that your most likely buyers are good prospects. The following are just suggestions, do one or two, not all.
   • One thing you could do is explore businesses offering similar or competing products or services, see how many there are, and how well they are doing. For just one hypothetical example, suppose a holistic health center offers deep-tissue massage. If that’s the case, then you’d want to know how many deep-tissue massage offerings there are in the local area, and how has that number changed over time. One simple thing to do is count advertisements in the yellow pages.
   • Park outside a competing business and count its customers for an hour or two at a few different times of the day or week.
   • Interview 10 people who are in the most likely prospect group, ask them what they want and why, what they now buy, how much they need the service.

It should help you a lot to realize that knowing your market is about making sure that you’re guessing correctly, that there is a need, and likely buyers, and people will spend money. You’re trying to reduce risk. It’s basically the question "if you build it, will they come?" This isn’t like a treasure hunt in which there is some theoretical right answer or perfect information hidden somewhere and you get a prize if you find it.

Don’t fuss over how your problem is unique. Everybody’s business is unique. Thank God that it’s unique, because if it weren’t, you’d be looking at a much tougher problem. Everybody has the same problem. We all need to know our specific markets in our specific business area, local or not, and our strategies make our markets specific.

This uniqueness also means that you are trying to make a good educated guess. Sometimes that helps people understand that there is no specific right answer or hidden treasure. You want to make good guesses because your business is at stake.

Now, having said all the above, there are also free resources available that can give you a lot more detail and granularity than this specific email. Read the "Know Your Market" chapter of the Hurdle book, which you might have already and if not you can get it at PaloAlto.com or at amazon.com or read the free version — just as complete, and more updated — at www.hurdlebook.com. 

– Tim

Posted on May 21st, 2007 | No Comments »

Passion is a key ingredient in the recipe for successful products, and more importantly the people that create them – customers and creators alike. But where do you get it – and are there different types of passion? I’m going to tune you into a blog that might just help you figure it out.

The Creating Passionate Users blog, produced by the authors of the Head First books, is a great read for anybody with an interest in producing better products or services. Much of the writing is tuned towards the more technical but anybody with a customer will benefit from the free content this blog dishes out. Their posts are insightful, well researched, and often actionable. Death by risk-aversion and Listening to users considered harmful? are a couple of my favorite posts. Click into the Creating Passionate Users blog to reinvigorate your passion machine today!

Cale Bruckner – Palo Alto Software, Direct Product Development

Posted on November 22nd, 2006 | No Comments »