aamir virani

How does good/better/best apply to my product?

While at National Instruments a few years ago, I got to see a large company clean up and simplify its product lines. The company wanted to move from a huge catalog of products (NI-DMA-PCI-6024E-16) to a standard set of lines (M Series, N Series). One mantra I repeatedly heard during this process was breaking things into good/better/best – that is, having three different options to appeal to the main segments of any buying population:

• good – those who always, always take the least costly option
• better – those who don’t want to look cheap, so they go one step up
• best – those who always, always take the most expensive option

If you’re selling a product or service, then you are leaving money on the table if you don’t consider a cheaper version of your product or a more expensive service plan. In fact, this is at the core of the whole freemium meme – slightly interested users will never ever pay for your product, so give them a solution good enough to use and talk about. The more interested and serious user will actually pay for it.

Now, the cool thing is that the same good/better/best breakdown applies in markets. So, fellow startup person, are you:

1. providing a cheap solution in a market dominated by expensive solutions?
2. providing a best-of-breed platform in a market fragmented by other companies?
3. in the middle hoping to fight both ends of the market?

If you answered 1 or 2, best of luck! If you answered 3, then you should really think about how you’ll stand out and get your marketing message across. It’s hard describing that you bought the middle MacBook – the aluminum one without the illuminated keyboard. How will you describe your company if it’s not the cheapest solution or the highest quality one?

What are typical usage and pricing trends for an iPhone app?

Andrew Chen pointed out an awesome iPhone presentation by Pinch Media, which covers some really useful insights you should use if considering whether to make your app free or paid, as well as whether your app is doing well when compared to other apps. Here are some of the key points.

Whether you have a free or paid iPhone application, the users returning falls off exponentially. If you retain more than 5% of users after 60 days, you’re doing really well. Long term retention is about 1%; this is true for both paid and free applications.

You shouldn’t necessarily give away your application for free and make your money on advertising. Because current CPMs are around $2.00 and applications are usually run 12 times at most, you may be better off just charging $0.99 for an application. Charge first, and adjust as you see a trend (high usage per user, target demographic, or lots of users) indicating advertising makes you more money.

The Brilliance of Starbucks

I’m sitting in a Starbucks right now, and it has been packed all day. Why? Because the company is giving everyone who voted a free coffee today. All you have to do is say you voted and boom – you get a free cup.

Two interesting observations:

1. No one has just a coffee. It looks like nearly everyone (including me) is picking up some sort of pastry to go with the coffee.

2. People are talking and hanging out, both about the election and other stuff.

The second point is key because it falls in line with Howard Schultz’s vision for Starbucks. Here is a Business Week article on what Starbucks is all about. It’s not just coffee – Starbucks is trying to be the hub of your community. The place where you gather, hang out, snack, discuss, etc. Capitalism in a community-building move.

Why does Starbucks succeed where companies like Dunkin Donuts or McDonald’s fail? It’s because of this emphasis on messaging to the community that it’s a participant. Go vote! Come see the local art! If you’re a local group, ask us for donations! If you’re a cop, come hang out! (Maybe that’s just at this Starbucks.) Schultz’s vision of anchoring the neighborhood is definitely true here.

By the way, you did vote, right?

Positioning a Business

Lance Weatherby had a post on positioning last week that summarized some ideas from Crossing the Chasm. Consider the following template when thinking about positioning your company:

For [target customer], [your company] is a [your category] that [need filled]. Unlike [competitor], we [describe difference].

If you can clearly describe your company using this template, it’s a major positive.

For scientists and engineers, NI is a hardware and software vendor that provides measurement and automation tools. Unlike HP, we focus from the beginning on the software (like LabVIEW), so that scientists and engineers can interact with the hardware in a standard way.

Of course, NI is huge and incredibly successful – they defined their market over the past 30 years. PR and X are new, and both are creating new markets.

For e-commerce merchants and shoppers, PR is a web software company that provides a free review display and mining engine for merchants and a product research website for shoppers. Unlike other shopping websites, the focus is on product research and comparison so that the shopper can find the right product for him/her. The PR review engine is better than competitors because it’s free, in line with merchant interests, and self-hosted.

That is confusing and doesn’t feel tight – the reason is because there are two objectives, and the two aren’t always in sync (the buyer and seller are adversaries). This actually explains a lot about why things weren’t smooth when it came to product timelines and development.

On to X:

For emailers/corporate emailers/power emailers/Outlook users/???, X is a software company that analyzes your inbox to liberate the meaning and data contained within it. Unlike other competitors, the focus is not on better filing or organization of your mail but instead on the people and relationships within it.

Really, all of the blanks are questionable. The company emphasis and vision aren’t clear yet. The great things about both PR and X, though, are clear by doing this exercise – the value added is not just one or two features. If executed correctly, both are establishing new ways of doing things in e-commerce and communication.

When analyzing ideas and future companies/employers, this exercise will definitely be part of the toolkit. If it’s hard to come up with the blanks or if they sound crazy/fluffy, that may be a sign of weakness. If the blanks fill perfectly, though, keep going.