Posts tagged ‘Don Peppers’
The Twitter Business Model
To many, that title seems to be a bit of an oxymoron. The question I am often asked is, “how does Twitter make money?” At the risk of writing yet another commentary on the popular micro-blogging network, I think a bit of an explanation behind how Twitter got to where it is today is in order. I think there is a valuable lesson to be learned in how Twitter, almost by accident, became one of the most powerful social media tools in existence today.
As I have explained previously, Twitter is a simple enough concept – 140 characters, follow people and they follow you, answer the question “What are you doing?”. So why did it grow almost 1400% last year? People already had ways to communicate with each other. Isn’t it a bit of instant messaging combined with e-mail? In my opinion, the answer to “why Twitter?” is simple.
The key is that Twitter would not be nearly as useful, nor successful, without the slew of 3rd party tools built for, and that interact with, the platform. If you ever listen to one of the founders of Twitter talk, you’ll hear that it started out, really, as a side project. It was something created so that developers could communicate with each other while working on another project. What they built was a simple communication platform with an open API (that’s geek talk for a “plug” where you can have the software you write talk with the existing software).
One of the first useful tools to pop up was a search engine that could search the entire “Twitterverse” and identify anytime a particular search term was “Tweeted”. Now you could not only talk with people in your immediate circle, but you could actively search out others talking about topics you were interested in. In business terms, this was the golden goose. Obviously, Twitter felt search was critical enough that it actually bought popular Twitter search provider, Summize, in the summer of 2008. You can now go to http://search.twitter.com and search for any topic you would like. In fact, Twitter has even integrated search into its new home page design.
In no particular chronological order, some of the other tools that made Twitter what it is today are:
Desktop Managers: Much the way Microsoft’s Outlook or Apple’s Mail make e-mail so much more accessible, organized, and useful, a desktop manager makes Twitter so much more useful. No longer do I have to use the limited funtionality of my Twitter web page (though it is improving). I can have my Twitter stream divided into columns so I can see all of the people I follow, my replies, and my direct messages in a single glance. In addition, a good desktop manager will fully integrate search so you can automate your conversation monitoring. My two favorite desktop managers are TweetDeck and Seesmic Desktop. TweetDeck is great for most, however, Seesmic has many added tools for the power user, such as multiple accounts and the ability to automate many different search terms. Both also integrate Facebook status updates. However, I really enjoy Twitscoop integrated into Tweetdeck so I can see the trending topics in the Twitterverse.
Auto Feeders: This allows you to take any RSS feed and automatically shoot it over to your Twitter account with a link. The king of the heap is Twitterfeed, which allows you to now automatically post things like blog posts to Twitter. This can also be extremely powerful when intergrated with a social tagging service. With the addition of this one simple tool, Twitter has become the most powerful content aggregator in existence.
Follower Tracking: Now you can manage who you follow and who follows you with tools such as Friend or Follow. This allows you to quickly see who you are following that is not following you back. In addition, you can see who is following you but you are not following back. You can get a quick idea of who the Spammers are on Twitter and the ones trying to game the system.If you really want a blow to you self-esteem, you can even sign up for Qwitter, which will send you an e-mail when someone stops following you and the last Tweet you sent so you can see if something you say rubs someone the wrong way.
Automated Monitoring: Closely tied to the search functionality, you can use a service such as TweetBeep or TweetLater to automatically e-mail you whenever someone Tweets about a particular search term. It makes conversation monitoring automatic. In addition, with TweetLater, you can automatically follow or unfollow someone when they follow or unfollow you and can schedule Tweets to go out at a later date.
There are literally hundreds of 3rd party applications built on the Twitter platform, and I use that term for a reason. Twitter has really become the backbone communication vehicle. It is up to you to come up with your own cocktail of tools to make it the most useful to you.
The question, then, always come back to how Twitter makes money. The short answer is – they don’t. However, as noted author and smart guy, Don Peppers, says, “what’s more important today, capital or customers?” The answer is obviously customers. If I have customers, I can get capital, yet it is always the capital that we are measured by, isn’t it?
With 32 million unique visitors last month, which was 13 million more than the previous month, Twitter definitely has the customer base. The fact that there is a feeding frenzy from the biggest brands in technology, such as Microsoft, Google, Facebook, Apple, and more throwing 10 figure numbers at Twitter goes to show that where there are customers, there will be money. However, now there are a myriad of ways to monetize a customer base of that size. You can:
- Monetize with the old standard of display advertising (though I wouldn’t recommend it)
- Take the Google approach and go with contextual advertising
- Charge 3rd party software vendors to “plug” into Twitter
- Charge commercial users for added value
- Sell the data to big brands on the back end for focus-group-type purposes
- Charge companies to add increased functionality to their home pages
- Or any one of a plethora of revenue models
Simply put, the possibilities are endless. So the answer is that Twitter may not make money right now, but it possess something much more valuable – the hearts and minds of passionate consumers worldwide.
What about you? What are some of your favorite 3rd party Twitter applications? What are some of the ways you think Twitter might be able to monetize its customer base?
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Get Out!…and Other Bad Examples of Customer Service
How many of us have seen the sign on the door of a local eatery or coffeehouse that announces “We reserve the right to refuse service to anyone”? Has anyone had the unfortunate experience of having that right exercised on them for reasons other than indecent exposure or a drunken brawl?
I had the wonderful experience the other day of being asked to leave Thomas Hammer, an area coffee house, because I had not purchased a drink within an allotted time frame. I was told that it was their “policy” (don’t you love that word) that those who did not buy a drink could not sit there and use their WiFi. What, am I living in the late 80s?
Let’s go back and review the principles of customer evangelism, class. Let’s see … nope, nothing in there about kicking potential customers out of your place of business because they have not bought anything before the last grain of sand falls from the hour glass. What a bad idea in so many ways.
Now, I have to go back and be honest here. I was sitting there naked. No, I am just kidding about that. However, I sat in the store for about 10 minutes before the counter gal (let’s call her “Grumpy” for brevity sake – and the fact that she, in actuality, bears a stark resemblance to the cartoon dwarf) announced to me the store policy with her characteristic snarl. Being the obstinate (let’s say “donkey”) that I am, I thought I would test ol’ Grumpy out.
After about 45 minutes, good ol’ grumpy was back with a “what can I get you to drink” ploy. Ahhh, the game of cat and mouse continues. I retorted with a “give me a couple of minutes and I will be up there” response.
Finally, after 90 minutes, Grumpy stormed on over and said, “it’s time for you to leave. I told you our policy and you have had an hour and a half to buy a drink”. I was floored.
I have to be honest. I didn’t think she would actually enforce the “policy”, but she had the guts/lack of tact/missing brain cells to do it. So I literally went right across the street and bout two drinks from their biggest competitor. Not only will I never go back in there again, I am doing my part to let everyone else know about my experience there.
Let’s take a couple of lesson from this tale. First, don’t hide behind a policy, nor create a policy in the first place that is directed at the lowest common denominator. The competitor, Dawson Taylor, across the street was floored as well when they heard about my experience. They told me that they ask rowdy teenagers to leave when they become too loud, but never peaceful WiFi stealers like myself. Personally, I can understand the rowdy teenager, but never a customer like myself who has been in their establishment many times and bought many drinks from them in the past.
Second of all, why create policies at all? They are typically for the minuscule minority anyway. One of the best examples of employee empowerment comes from Nordstrom, who is world renowned for their customer service. Almost any seminar on customer service I have ever attended consists of several examples from Nordstrom. Their personnel manual consists of one sheet of paper that says:
“Welcome to Nordstrom, here are the Nordstrom Rules:
Rule #1: In all situations, use your good judgment.
There will be no additional rules.”
Now, you can speak with any employment lawyer and they will drone on about the liability of not covering everything in your employee handbook, however, what a statement about Nordstrom – that they trust their employees implicitly to deliver a superb customer experience for their customers. And they do.
Finally, in a commodity marketplace like we have today, as Don Peppers would say, customers are our scarcest resource, not money. If I have customers, I can get money. Therefore, treat your customers like gold, for that is exactly what they are. When there is a competitor directly across the street, can you afford to offend a customer simply because they did not spend $6 on a cup of dirty brown water? I would think not.
Instead, try the opposite approach. Make your customers feel at home. Make them feel like they are welcome any time, any where. Make them feel like they are rock stars. I guarantee you, you won’t be able to keep the dirty brown water on the self.
