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10:00AM: Web Design for ROI by Niehaus and Loveday. This seems like the best book so far (in my domain). People make decisions about the design of a site in 1/20th of a second. Quote: “Am I in a well lit area or a dark alley?” 59.0% of people abandon online shopping carts. Single page shopping carts are on the rise.

11:30AM: Panel - Lessons Learned in E-commerce. Tony Hseigh from Zappos.com (Las Vegas, Nevada; 1,600 employees) talks about how their focus is on Customer Service. They take what would be their SEM spend and put it into the customer experience: free shipping both ways, 24-hour warehouse (Kentucky), 24-hour customer service, surprise upgrade to overnight shipping. This way, the customers do the marketing for them. Zappos is on track to break a $1 billion this year. Get 5,000 phone calls a day. 800-number in the corner of every page of the website. Every customer calls at least once. No scripts in the call center. Survey customers and metrics that judge customer service: “Did you feel like you were talking to a company, a friend, or somewhere in the middle?” If a customer is looking for a specific item, they even look on competitor websites. Referring customers to competitors is good customer service. No measuring call times. No upsells. #1 thing they focus on is company culture. Managers jobs are to inspire the Zappos culture. Empower people to make the right decisions for the company and customer — the reps make their own decisions. Have 5-weeks of training on company culture, taking calls from customers, and working in the warehouse. Then they start the job they were hired for. Put out a culture book, written by every employee, about what the Zappos culture means to them. HR does interviews for culture fit (a second round). This keeps the company culture, even makes it better.

Lesson #1: The E-com Business is built on repeat customers.
They did high profile advertising, such as the billboard behind home plate at Gaints stadium. They got two customers. So they decided to focus on a great customer experience and therefore word of mouth. Primary metrics: % of customers who buy again within 12 months; average number of purchases by repeat customers over next 12 months.

Lesson #2: Word of mouth really works online.
They ask “How did you hear about us?” Use that a metric.

Lesson #3: Don’t compete on price.
They offered a $10 coupon, and were therefore not as loyal. Once someone offers $11 off, they’re gone. They want customers to come for the service and selection. Now they never offer promotions like “buy one, get one free.”

Lesson #4: Make sure your web site inventory is 100% accurate.
They track every pair of shoes. Customers who’s shoes weren’t in stock never shopped with Zappos again.

Lesson #5: Centrally locate your distribution.
70% of the UPS location can be reached from Kentucky (were the UPS hub is) within 2 days. And it cost less. FedEx is Memphis. Customers became more loyal because the appearance was improved.

Lesson #6: Customer service is an investment (not an expense).
No measuring call times, no scripts. Not trying to improve efficiencies, instead making customers happy.

Lesson #7: Start small. Stay focused.
Tweak the formula to get it right. Clothing is 4x the size of the shoe market. Zappos is taking years to figure out what the right mix is. They’re letting customers discover clothing.

Lesson #8: Don’t be secretive and don’t worry about competitors.
They have extranet were vendors can log in are look at Zappos business metrics. They don’t care. Having 1,500 pairs of eyes helps run the business and creates great partnerships.

Lesson #9: You need to actively manage your company culture.
By the time some companies get up to 100 people, most cultures suck. They fire people that don’t fit. Culture is first and foremost, and it has to be a great place to work. “Customer focused culture.” A woman sent back shoes from her husband who was killed a car wreck. Zappos sent her flowers, making customers for life. The woman tells all of her friends. Somebody returned a wallet with $150, Zappos sent the money back, and made another customer for life. The warehouse worker knew it was the right thing to do.

Lesson #10: Be wary of so-called experts (including me…).
Hired consults for lots of things: setting up call center, warehouse, etc. They’ve found most of them were a huge waste of money and resources. Consultants eat up time. Zappos has to undo most of what the consultants have done. Consults aren’t running the business, they don’t know. You have to trust your gut. Don’t rely on them too much.

Copy of presentation is at blogs.zappos.com. Search for SXSW.

Q&A:

• Speed of page is quite important to them
• Decision makers need to buy into not being secretive
• Done experimenting with shopping cart. For them, removing steps didn’t improve conversion. But, people are getting more savvy and it keeps changing.
• 80% of calls answered in 20 seconds in less. They do overstaff, but try to get people on other tasks. Purposely not as efficient.
• Create customer evangelists. They have “tell a friend” on the website, but they don’t work that well. They focus on story worthy moments.
• Book: Made to Stick
• They use Google Analytics and their own logs
• Make decisions on the brand and culture, not on improve the top line or bottom line revenue
• They don’t want customers look to save a $1 from they’re not loyal.
• First step is to define culture. Zappos Core Values. If employees don’t live up to them, they get fired. People are held accountable. Employees get small rewards to say “good job.” Values aren’t the “random management idea of the month.”

This was the best talk so far.

12:30PM: Mobilizing Generation 2.0 by Ben Rigby. Talks about how politicians are using MySpace and Facebook to find and profile potential voters. Mentioned Hillary’s horrible video, how it’s not a conversation and she got flak for it. Mention “Yes we Can.”

3:30PM: PANEL - Stuff we’ve learned at 37signals. Jason Fried from 37signals talks about their experience.

“The great unknown”
When launching a project or product. What happens if? What happens if have 1,000 customers? Fried: “Who knows and who cares?” 37signals giving people 4 day weeks instead of 5. They’re letting people spend money. They’re helping people with their interests. “Change if you need to change.” “Optimize for now.”

“Red flags”
Red flag words: need, can’t easy, only, fast. Need: The word need puts a barrier up, prevents discussion. Very few things actually need to get done. Use maybe, or “how does this sound.” Don’t say “need.” Can’t: just do it. Easy: describes somebody else’s job. Only: Never rarely do you need one more thing. Phase: “It’s only one more feature. We really need it. We can’t lunch without it. It should be easy. Can’t you just do it real fast?” This is a loaded paragraph.

“Be successful and make money by helping other people be successful and make money”
People happy to pay for Basecamp because it made them money. Basecamp allows them to make more money because they can manage more clients easier. Spot chain reactions, be the catalyst. Web 2.0 pressure: “How do you make money?” Fried: “You charge for stuff?” Just make sure you show people value. Mention: The Innovator’s Dilemma and The Innovator’s Solution, by Clayton Christianson. Minimize the chance for competition from entrenched players. Go after non-consumers.

“Question your work regularly”
Why are we doing this? What problem are we solving? Is this actually useful? Are we adding value? Fried: “You can remove value by adding features.” Will this change behavior? Fried: “Maybe on the edge some people will find that useful.” Take out things that don’t change behavior. Is there an easier way? What’s the opportunity cost? Is it really worth it?

“Read your product”
Freid: “The biggest sin is shitty copywriting.” To much focus on pixels, not enough on words. Words are the cheapest and easiest things to fix. Rewrite first, redesign second.

“Error on the side of simple”
Tried to do too much. We’ve always screwed up because we’ve done too much. Start with the easy way first. Don’t start a C-corp, start an LLC. Get three things done in one week instead of one thing done in three weeks. People need to stay excited. The longer it takes to develop someting the less likely you are to launch it. You can lose momentum, motivation. Keep people in the new zone. Resist the urge to do more the next time around. What do you need to do really well? Focus on what you’re good at.

“Invest in what doesn’t change.”
Focus on the stuff that works today and will be important 10 years from now. Google’s things are speed and accuracy, so they invest in speed and accuracy. Focus on fundamentals that don’t change. 37signals investing in simple software.

“Follow the chefs”
Be inspired by famous chefs. Famous chefs share, a lot. They tell you everything they know. They build their empires by sharing their empires. Build by sharing. Tell people what you know. They give away their knowledge, their technology. What’s your cookbook?

“Interruption is the enemy of productivity”
The closer you are with people the more apt you are to interrupt them. “Hey, check this out” A fragmented day is not a productive day. Passive communication reduces interruption: e-mail, IM, Basecamp. Do things like “on Thursday afternoons, nobody talks.”

“Road maps send you in the wrong direction”
Why is it that financial plans always go up? Roadmaps lock you into the past. Why would you want to be locked into decisions you made 18-months ago? It’s ok to think about the future, jut don’t write it down. Mention: Maverick by Ricardo Semler. Do the right thing at the right time.

“Be clear in crisis”
Be open, honst, public, and responsive. The web doesn’t shut up just because you have. You must tell the truth immediately.

“Make tiny decisions”
Break problems down to the atomic level. Celebrate little launches. Morale feeds off progress. You make tiny decisions you can’t make big mistakes. Companies have big cover ass sessions to make big decisions and share accountability.

“Make it matter”
Everything you do should matter. Pixels. Words. Hires. Think about if what you’re doing matters.

Q&A:

• You make great culture by being who you are.
• IT departments are going to fade away. Enterprise apps don’t matter. Small teams within big companies are using our products.
• Group chat / IM (Campfire) is most effective against interruption.
• Look for curious, motivate, honest people. Don’t care about degrees or rock stars.
• Use what you build aka. smoke your own
• It’s better for customer to grow out of something
• What would software look like if it was a physical product? Use this visualization to prevent feature bloat.
• Thinks of hacks as debt. Everybody needs it, but it’s bad.
• Fried: “If they (VCs) want to invest money, they should do their own projections.”

Tonight’s parties: Google, Frog Design, 16bit. More on those tomorrow.

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