(Bridging the online and offline worlds. Get it?)

As digital technologists, we work to identify simple solutions to (sometimes) complex business problems. And one of the most challenging business problems is connecting the web to the offline world.

In our daily job, we follow a straight forward (and rather scientific) process to solve these kinds of problems:

• Identify the problem
• Propose potential solutions (hopefully there’s more than one!)
• Identify ways of measuring the impact of solution
• Implement a solution
• Track the effect of the solution for a set period of time
• Review the effect and refine (as necessary)

As you can see, the process is obviously simple which is great! But there’s the unfortunate hurdle of testing our solution. You see, we need a controlled environment to make sense of the results. And when it comes to the online/offline problem, the environment is NOT controlled and this makes our experiment rather complex.

How is that so?

Let’s take the idea of trying to improve the user experience on eCommerce websites (NOTE: this scenario was actually a topic of conversation at the latest AiMA event). If we wanted to measure the impact of changes to our shopping cart, we would deal with the following scenarios:

• The user may need to temporarily leave the site. In this scenario, a user that’s looking to purchase a high definition (HD) television from Best Buy may start at the website but then swing over to an advice site such as Engadget to review the latest offerings before returning to the Best Buy website. In this scenario, we could determine that the user left our site but the Engadget destination would be invisible.
• The user may use an offline environment to complete the task. In this scenario, a user may come to BestBuy.com to look up the price of the HD television but, because of security concerns, physically go to the store to complete purchase.

In the two scenarios above, we could measure user paths, entries and exits but we would only get a partial view into the complete picture (IOW, maybe the user is not quite ready to make that purchasing decision). Clearly, we need a way to bridge the online environment with the offline world. But how are we going to accomplish this?

Well, there are several (semi-elegant) ways to connect these two environments but you’ll have to wait to Part II for these solutions.

Happy thinking!

Reading the financial sections these days will make you aware of the potential economic downturn (example: AT&T seeing softness in consumer spending). So if you’re contemplating whether you should establish (or grow) an online marketing budget, please allow me to suggest that your monies should be hoarded until the economic “haze” clears because nothing is better than watching your competitors take market share. In times like these, it is clearly important to be more focused and strategic with your online marketing efforts.

If you sell your products offline, it is time to think about:

• Setting up a shopping cart to allow buyers to learn more and directly order your products.

• Accepting payments online to speed up the collection process and improve your cash flow.

• Using a Customer Relationship Management (CRM) system to collect leads or other customer communication and efficiently route them within the organization.

Because eCommerce is a highly matured area on the web, there are actually several affordable/inexpensive solutions that can be easily implemented, and these are great especially if you’re just starting out. But as your business grows, your needs will likely change so you’ll want to give slight consideration to solutions that have more features, can be tailored to your organization or can scale to support more employees (aka users). These solutions will likely require more effort to implement.

If you’re already selling your products online, it is time to add more sophistication to your existing system(s). So, it is time to think about:

• Integrating a Product Review System into your Shopping Cart to enable buyers to better understand the quality of the product.

• Launching an targeted email program that delivers personalized email messages based on a user’s shopping habits, interests or even language preferences (FYI: the next wave of consumers in the US speak/read Spanish).

• Promoting your product offerings within a local search portal or even a mapping service (like Google Maps) to drive more local awareness.

In essence, now is time to get going but not without a strategy. It is simple to go from point A to point B, but only with a strategy can you move forward in a direct line.

RELATED LINKS:

• Hosted Shopping Cart (Ecommerce Web Site by Network Solutions)
• Shopping Cart Software (LaGarde’s Storefront)
• Hosted CRM Solution (SalesForce)
• Google Coupons System

It’s been almost a month since Raghu Kakarala and I discussed widgets together at a Lunch seminar, and there’s been enough interesting news since then that it warranted an update on this topic. The take-away points were: widgets are here to stay (in other words: not a fad), they can be either extraordinarily interactive or simple (so build one if you haven’t yet). and widget distribution is key (because it will extend the footprint of your website’s reach).

Now that you’re all caught up, here’s your widget update for December:

Widget vs. Gadget Debate

We found it interesting that widgets go by various names. For instance, Yahoo and Apple use the term ‘widgets’ whereas Google’s iGoogle and Microsoft’s Live Spaces use the term ‘gadgets.’ According to Widgets Lab, the distinction between widgets and gadgets is that gadgets live in a specialized web environment (also referred to as an ecosystem). Unfortunately, Google has recently made their gadgets interchangeable between the web and the desktop sidebar so this naming convention will likely go by the way side.

Monetization of Widgets Debate

As widgets have become increasingly popular, technology pundits have challenged the widget community to show them that widgets have real monetary value. News broke last week that GoodWidgets, a widget company that offers a slideshow widget, is up for sale for $10k. While this is “small potatoes” in comparison to other widget makers like Slide (Slide is Pitching For A $200 Million Valuation. Or Not.), it demonstrates that widgets are evolving into a “product” that can be sold. This comes on the heels of news that Clearspring has rolled out an ad network for widgets which lets users monetize their widget traffic. So while we’ve still got a long way to go, there’s at least monetization momentum.

e-Commerce Widgets Become More Seamless

In our presentation, we talked about eBay’s listings widget that could feature items from eBay stores. The idea was that famous listings can garner more attention. In other words, now your blog post on the recent Britney Spears Birthday Bash could include the listing for the half-eaten chocolate cake from the party. Well, it seems that PayPal is taking that same concept a step further by offering a PayPal storefront widget with a shopping cart. So now blog owners can create a store, add merchandise that’s relevant to their posting, and post the store to their blog. The neat thing about this concept is that only the financial portion of the transaction has to be completed on the PayPal site.

Again, it is another step for widgets becoming more useful and a part of the mainstream web.

I came across a recent American Marketing Association consumer survey. In a press release issued in conjunction with the survey, AMA’s CMO, Nancy Costopulos, says “more Americans are taking their holiday shopping to social networks instead of the mall…”

Now, as marketers, we’re intimately aware of the impact social media has on consumer (and even business) behaviors. For instance, we already have an idea of how product ratings and reviews can influence online purchases.

This AMA survey sharpens the picture we had in our mind of how companies can leverage social media to inform consumer buying decisions - particularly during the holiday season. Check out this chart, which highlights Prospective Holiday Use of Social Networking Sites:

This chart shows us in black and white (and purple and red) that - if the service were available - almost half (47%) of all respondents said they would go to a social-networking site to download coupons or search for gift ideas. And nearly as many (45%) would use a social-networking site to find out about upcoming sales in stores or discounts on products.

This makes sense. But, why social networking sites and not just the company’s website or email newsletters, where sales and offers already exist?

I wrote a while back about Industry Specific Social Networks. Vertical social sites such as these are strong indicators of what this survey is referring to. People want to leverage their social networks - where people of like interests already congregate - to inform their buying decisions. Social influence and personal opinion is highly valuable.

For an example: On the advice of Shelfari, (who commented on my industry-specific blog post) I installed their facebook widget/application.

(A ’shelf’ in my Shelfari widget. Of COURSE there’s a children’s book.)

What makes this such a good example is not just that I have this shelf, or that people can see what I read; but that my ratings and reviews of them might influence others to purchase these books. For example, my co-worker Travis Bailey also has a ’shelf’ on facebook … and I do look at his book selections and reviews. (BTW - the application, which is very well designed - does allow you to link to Amazon.com to purchase the books you’re interested in.)

Pay attention during next year’s holiday season. I predict an increase in the amount of holiday purchases stemming from social websites.

The music world has always been a tough gig, but it just got tougher! In recent news, it has become clear that Vivendi is utterly pissed upset with Apple. Vivendi seems to be fighting Apple’s iPod + iTunes services with two approaches in order to reduce apple’s music download dominant share.

It started this summer when NBC Universal yanked their Fall shows from iTunes because Apple rightfully refused to charge $5 per TV episode (NBC Universal is 20% owned by Vivendi). In the end, NBC Universal moved their Fall season shows to Unbox Service from Amazon, which allows Tivo subscribers to download shows onto their Tivo digital video recorder (in my opinion a bad move!). Fast-forward to today, Universal Music Group (UMG) which is 100% subsidiary of Vivendi has decided to challenge Apple in creating their own music service.

While details of the emerging music service are in flux (currently covered by BusinessWeek), it appears that UMG is testing out two models:

Challenge the iPod Player

Provide an all-you-can-eat subscription service that’s FREE with the purchase of select devices. The thought is that hardware manufacturers will subsidize the subscription fee. Of course, the idea is to the subscription with Zune, the ailing media player from Microsoft.

Challenge the iTunes Store

Distribute music that’s playable on any devices via outlets such as Walmart, Google and Best Buy. The idea is to challenge Apple, which only offers a limited number of DRM free songs through the iTunes store.

Additional Challenges for UMG

While the fight between Universal Music Group and Apple is just starting, UMG is also facing challenges on a second front — their signed artists. In recent news, both Radiohead and Madonna have independently decided to leave their music labels making insiders wonder whether distributors are even necessary in this age of the internet.

Clearly, this is not a good time to get into the music world as things are only getting uglier.

Many user experience professionals shy away from marketing.  In many ways, who can blame them?  We’ve observed customers ignore banner ads, watched pop-up ads annoy and confuse customers, and read rants by usability pioneers about the evil that ads wield on web design.  We have seen attempts at applying a traditional “broadcast” model of marketing fail in interactive mediums.

But good marketing is more than ads—a whole lot more. Several concepts in marketing jive quite well with user experience.

Integrated Marketing Communications

Relationship Marketing

Customer Relationship Management

The Good: The Communication Experience Is the Marketing
By emphasizing consistency, customization, and credibility, these concepts echo a few characteristics of what I’ve described as customer-centered communication.  

These concepts additionally

• Lead us to view a customer’s interaction with a brand holistically instead of isolated in certain channels.
• Challenge us to effectively apply customer data such as demographics and buying history to improve communications.
• Encourage us to think about building long-term relationships with customers.

The Potentially Bad: User Experience Opportunities
The potentially bad side of these concepts is, of course, their execution. (Remember those banner ads.)  Here are a few ways user experience professionals can help avoid the bad.

Don’t Interrupt Me: Placement and Content 
Because user experience professionals understand how and why customers actually use the channels, we know when and where marketing communication is most appropriate.  We also can inform its content.

Example: A well-placed, relevant, and undisruptive BP banner ad on CNN.com that engaged even a skeptic like me. It shares a similar topic with the article, visually stands out on the simple page, and expands instead of taking the user away from the page.

Don’t Just Tell Me—Show Me
Telling is reporting that you hiked 25 miles on the Appalachian Trail last weekend.  Showing is describing the weather, the scenery, the sounds, the animals you encountered, the soreness in your muscles.  Telling makes you aware of what happened. Showing engages you in the experience. I think showing is critical to making brand attributes clear and to developing trusting, long-term relationships with customers.  User experience professionals can help brands “show” in interactive mediums.

Example: Betty Crocker has been demonstrating brand attributes such as practical, friendly cooking expertise since the 1920s through recipes, cooking tips, cooking shows, promotions for discounted cookware, and more. (Below is a 1951 print ad with tips and a recipe.) These efforts continue successfully today on the Betty Crocker website and its RSS feeds.

Help Me Help Myself: Applying Customer Data
User experience professionals can make the most of customer data across customer self-service channels and applications such as store kiosks, web applications, automated phone systems, and more. We know how to leverage that data to make self-service customized and therefore more valuable and easier to use. 

Quiet the Noise: Optimizing for Specific Channels
Of course, we can make marketing communications highly usable and accessible in specific channels.

Since the beginning of the month, I’ve been reading up entranced by the bitter fight between NBC and iTunes, which had been well covered by Phill Ryu. This is an interesting case where someone at NBC sadly thought that this was a good idea but have clearly miscalculated.

Basics of What Happened

This case can be summed in 5 basic steps:

1. NBC’s sells shows on Apple’s iTunes Store at $1.99 per episode; contract comes up for renewal
2. NBC tries to re-negotiate with Apple asking $4.99 per episode; Apple refuses to budge on price
3. Negotiation goes public; NBC hoped “the people” would side with them, forcing Apple to concede
4. Negotiations goes nowhere; NBC switches to Amazon’s Unbox service for Tivo
5. Wheels fall off the bus!

So who’s the Biggest Loser?

I think that NBC will lose because:

Reason #1: People will buy the DVD

NBC is operating under the assumption that people are willing to pay $5 per episode. Considering that a typical television season has 21 - 23 episodes (according to Ryan Tuttle, who is an avid TV watcher), I’m calculating that viewers of shows like 30 Rock, which had 21 episodes, will shell out almost $105 based on the new price:

21 episodes/season * $4.99 per episode = $104.79

That’s a fair sum, considering that you can buy the 30 Rock Season 1 DVD for less than $50. If viewers paid $1.99 per episode, they would be shell out a more reasonable $41.79:

21 episodes/season * $1.99 per episode = $41.79

Reason #2: People will steal download shared episodes for free

In comparison to movie downloads, shared TV episodes are more popular. It seems that while only a small fraction of shared files, or torrents, are TV series, 50% of all download activity is focused on grabbing these shared files. And at $4.99 an episode, downloading these for free would be a steal.

Reason #3: iTunes is FREE while Tivo’s are not!

You can download iTunes for FREE but the barrier to entry for Amazon Unbox Service is a Tivo box. While there are potentially 1.5 million broadband-ready TiVo boxes that can take advantage of this service, it seems that Amazon is tight lipped about how many subscribers are currently purchasing movies through this service. Even if you estimate that 2% of subscribers, that’s only 30,000 potential customers, which will fetch about $150k per episode which seems a bit on the lighter side.

Reason #4: People will opt for cable/satellite TV

Many of the folks that I’ve known who buy episodes do not have cable. They buy episodes from iTunes because it is more cost effective. If you assume that a viewer watches three TV shows and there are 4 episodes a month (one per week), a typical viewer would pay much less than a regular cable bill:

3 shows * 4 episodes * $1.99 per episode = $23.88 per month

When you compare that to a normal cable/satellite bill (approximately $30 to $60 per month), viewers can save a ton of dough. But when you price an episode at $4.99, a viewer will now pay $59.88 per month and at that cost viewers will likely opt in to cable TV.

Reason #5: People will Tivo the episode

One of the reasons that people have Tivo’s is that they can digitally record shows. The benefit of having the Unbox service is that you can access movies, and that is worthwhile if you are a bare-bones cable subscriber. A typical Tivo subscriber would “Season Pass” the show and enjoy the show at their leisure.

Final Marketing Pressure

To makes matters worse, Apple is considering a more aggressive marketing strategy for the TV episodes, with rumors swirling of a price cut to $0.99 per episode. When you consider that NBC had a 30% market share of downloads on iTunes, I see NBC really taking it on the chin.

Oh well, hope that you don’t own any GE stock shares (GE is the parent company of NBC).

Okay, maybe communication never truly left … but our awareness of it has grown keen as we shape effective customer experiences in interactive media. Recently, Donovan (Director of User Experience) gave a presentation about web 2.0’s impact on the landscape of user (customer) experience.  He convincingly described how web 2.0 capabilities evolved as a response to user needs and allow the web to become, among other things, the communication medium people envisioned 10 years ago.

In this changed landscape of customer experience, what is communication exactly?  How do we ensure customers not only get our messages but also find them relevant and convincing?  How do we coordinate messages across multiple channels to deepen our relationships with customers?

As a start toward answering such questions, I just published “Rediscovering Communication“ for the online magazine UXmatters.  Please add your insights as we journey through this exciting landscape together.

Virtual worlds, like Second Life and Entropia, are well… virtual. Avatars created in these worlds often have little or no relevance to their real life users. However, with the fairly recent creation of Kaneva, the line between the virtual world and the real world may begin to look rather blurry.

Kaneva, which is still in its beta version, was developed by Chris Klaus, who created Internet Security Systems (ISS) and later sold it for $1.3 billion. Since selling ISS, Klaus has directed his attention full-time to designing Kaneva and giving a very different feel than virtually any other world out there right now.

What sets Kaneva apart is that it combines the elements of a 3-D virtual world, a la Second Life, with a 2-D personal profile website, a la MySpace. When users first sign up, they can create their own 2-D profile page on Kaneva and add friends, send messages, and share photos and videos in much the same way that users on MySpace can. After signing up and creating their own profile, users can enter Kaneva’s 3-D virtual world and create their own avatar, just like users can in Second Life.

While many aspects of Second Life are obviously tailored only to the virtual world (many Second Life avatars have wings and sometimes look more like animals than humans), Klaus’s goal is for Kaneva to be a virtual world that mirrors the real world. Through its 2-D profile website, many users create avatars that are similar to the real-world personalities.

Another unique aspect of Kaneva is that it provides its users with a free virtual apartment once they create an account and enter Kaneva’s 3-D world. Users can then upload pictures and graphics from their Kaneva profile and place them as framed pictures in their new apartment. Users can change the style of the flooring and walls in the apartment. In addition, they can shop in-world and place their own furniture in their newly decorated apartment. Finally, if users choose to buy a TV in-world, they can then upload videos that they have put up in their real 2-D profile site, and then watch the video on their virtual TV in Kaneva’s 3-D world. Through all of these features, Kaneva has seamlessly bridged the distinction between aspects of the real-world and aspects of the virtual world.

Klaus also said that Kaneva’s goal is to reach a different user demographic than many other virtual worlds. “Unlike most companies in the gaming space, we are not pushing the latest and greatest graphics. Our world is about connecting with people in a very casual way,” said Klaus in an interview that he gave in February to Digital Arts Online.

Because Kaneva is still in its beta testing version, no companies have signed on and agreed to promote their brands in-world. However, Klaus believes that because so much of the Kaneva experience is rooted in the real-world, it’s an ideal opportunity for companies like Coca Cola and IBM to advertise. One of Klaus’s main business objectives is to design Kaneva such that it has many different purposes and is able to be redesigned so that other virtual worlds can be built on it. Klaus’s long-term vision is to have companies like Coca Cola use Kaneva’s world, and later on possibly create their own worlds for purposes of e-commerce. Klaus feels like this type of e-commerce could lend itself to companies using the virtual world for all different types of experiences, from virtual town hall meetings to virtual conference rooms.

Kaneva has published on their website that the has a world population of over 290,000 (remember, they are still in early stages of development). Comparatively, that’s about 4 percent of Second Life’s population of over 7.1 million. All of Klaus’s current ideas and plans are projections. No companies have officially signed on to advertise in Kaneva.

Regardless, Kaneva has perhaps changed the virtual world landscape. The line between the real world and the virtual world is a little less clear-cut. It is possible that in the future users may see other virtual worlds that combine aspects of the real world and virtual world in much the same way that Kaneva has. It may still be to early to tell, but one thing is certain, in terms of marketing it has a great deal of potential and upside.

Last night, Peter Merholz of Adaptive Path spoke inspiringly to a group of user experience professionals, CHI-Atlanta, about “Experience Strategies.”  Not any ordinary presentation. It reminded me why I care so deeply about user experience and rekindled my vision for it to be not just good but innovative—for it to not just compete but leapfrog competition.  I’m sharing a few high points here and will share more in another post.

Take an Experience-Based Approach
Peter talked extensively about what this means, especially for products–applications, websites, devices, etc.  It’s easy to get mired in technology and features without truly understanding the problem we’re trying to solve and envisioning the experience we’re trying to design.  In the words of Steve Jobs:

When you start looking at a problem and see a simple solution you don’t understand the problem. You keep looking and see how complicated it really is and you are halfway there. The really great person will keep going to find the key underlying principle and create a beautiful, elegant solution that works.

The stage of looking at the problem is one of the most critical and often the most overlooked.  Looking at the problem takes research with real customers/users, understanding the competitive landscape, understanding the brand’s system of customer touchpoints (channels, etc.), and more.  Reflecting thoughtfully on all these considerations helps us find that key underlying principle.  And all this takes time.  (I’m reminded of the CHI 2006 keynote address given by Scott Cook, co-founder of Intuit, where he discussed the culture of innovation.  He views every touchpoint with customers as an opportunity for innovation.)  One of the most compelling examples Peter mentioned was the Nintendo Wii.  Rather than staying in the same features and graphics game as PS3 and XBox, Wii changed the game by introducing physicality—and has outsold the competition in huge numbers ever since.

Employ Experience Strategy
So how do we apply an experience-based approach?  Largely by articulating an experiential goal and sticking to it. Peter also noted it tends to be where business value and experience opportunities align.  This doesn’t have to be expressed in reams of documentation.  It can be a few paragraphs or a few words.  Its purpose is to remind everyone what the end experience should be.  Peter artfully described many examples, but I am simply noting a few here:

• Kodak camera (in 1884): You press the button, we do the rest.
• Flickr: Articulated on their About page. 
• Google Calendar: Shown on the AdaptivePath blog.

Think Systems—And Leverage Them
Perhaps my favorite part of the presentation, Peter described how a customer experiences not just a product but a system.  The system is comprised of the brand/company’s processes, or channels (web, paper, IVR / call center, store, etc.), or more.  The product is just an interface to access the system.  For example, the iPod itself doesn’t have much functionality.  It’s the iPod device (to access the media) and iTunes software (to manage and buy the media) together that make the system, albeit a system Apple tightly controls.  A more complicated but still tightly controlled system is Target’s prescription bottle and communication system.

More complicated still are the multiple channels of a financial services company he encountered when designing its website.  The danger there, Peter warned, is treating the channels as silos, not as a system.  This partitioned view results in a fractured experience for the customer. It burdens the customer to figure out the system, rather than burdening the system to help the customer.  I cannot stress how important this point is for large companies and big brands, especially those offering services.  Designing the experience for a single website or application is good.  Designing the experience across channels is what leapfrogs competition.