So what is the key to encouraging someone to recommend your business to others? How do you reward or incentivize people to refer new clients?

Showing Your Appreciation
You could just thank people for sending business your way. You could show your appreciation through a small gift or gesture. Or you could reward them with a discount or other offer tied to your business or service? So which to choose?

The question is really about social norms (doing things to help someone out or feel good about yourself, asking for a favor) vs. market norms (being financially rewarded for something, paying for a certain action, creating financial incentives to provoke actions). Either can play a role in what someone chooses to do.

The Science Behind Our Behavior
In his book, Predictably Irrational, behavioral economist Dan Ariely illustrates the effects that social and market norms can have on our behavior and how fragile social norms can be.

He shares the following story about a day care center in Israel:

An excerpt from Dan Ariely’s Book Predictably Irrational

My good friends Uri Gneezy (a professor at the University of California at San Diego) and Aldo Rustichini (a professor at the University of Minnesota) provided a very clever test of the long-term effects of a switch from social to market norms. A few years ago, they studied a day care center in Israel to determine whether imposing a fine on parents who arrived late to pick up their children was a useful deterrent. Uri and Aldo concluded that the fine didn’t work well, and in fact it had long-term negative effects. Why? Before the fine was introduced, the teachers and parents had a social contract, with social norms about being late. Thus, if parents were late — as they occasionally were — they felt guilty about it — and their guilt compelled them to be more prompt in picking up their kids in the future. (In Israel, guilt seems to be an effective way to get compliance.) But once the fine was imposed, the day care center had inadvertently replaced the social norms with market norms. Now that the parents were paying for their tardiness, they interpreted the situation in terms of market norms. In other words, since they were being fined, they could decide for themselves whether to be late or not, and they frequently chose to be late. Needless to say, this was not what the day care center intended.

But the real story only started here. The most interesting part occurred a few weeks later, when the day care center removed the fine. Now the center was back to the social norm. Would the parents also return to the social norm? Would their guilt return as well? Not at all. Once the fine was removed, the behavior of the parents didn’t change. They continued to pick up their kids late. In fact, when the fine was removed, there was a slight increase in the number of tardy pickups (after all, both the social norms and the fine had been removed).

This experiment illustrates an unfortunate fact: when a social norm collides with a market norm, the social norm goes away for a long time. In other words, social relationships are not easy to reestablish. Once the bloom is off the rose — once a social norm is trumped by a market norm — it will rarely return.

The fact that we live in both the social world and the market world has many implications for our personal lives. From time to time, we all need someone to help us move something, or to watch our kids for a few hours, or to take in our mail when we’re out of town. What’s the best way to motivate our friends and neighbors to help us? Would cash do it — a gift, perhaps? How much? Or nothing at all? This social dance, as I’m sure you know, isn’t easy to figure out — especially when there’s a risk of pushing a relationship into the realm of a market exchange.

More Than Just Money
Which brings us back to your clients. Clearly there is some market relationship between you, as there is a financial exchange for the service you provide. But the best client relationships also share a social bond. Besides enjoying your work, your customers should like you as a person (we all want to do business with people we like). And when you are liked, your clients will want to help you. They will also want to help the person they are referring you too, as they feel the service you provide would be of value to them.

The Importance of Giving
This social bond should also be a two-way street. I encourage my clients to reach out to me with questions, even if I don’t charge them for it. And I occasionally sprinkle in a little work here and there that I don’t charge for. Some people would call this working for free. I consider it doing someone a favor. And it’s been my experience that people are always excited to be able to return a favor (like through a referral). I usually only do this for clients who I feel are friends as well as customers. And it’s usually that same group that sends me new business.

Plus, a referral is much more powerful when it’s delivered due to social norms. When there is a financial reward involved, it dilutes the value of the recommendation. It creates the perception that someone may be recommending you not because they value your service or want to help you, but because there is “something in it for them.”

This isn’t to say a reward can’t be offered at all. A nice bottle of wine or tickets to an event can always help you express your gratitude for their support. But keeping any rewards seperate from whatever service you provide can help establish and protect the social bond.

Keeping The Balance
Balancing the social and market aspects of your client relationships can be tricky at times. But keeping the right mix of both is crucial to success. Otherwise, you run this risk of becoming just another vendor.

]]> http://www.websterism.com/2010/07/should-you-offer-rewards-for-referrals/feed/ 0 http://www.websterism.com/2010/07/should-you-offer-rewards-for-referrals/ http://feedproxy.google.com/~r/Websterism-BigIdeasSmallBudgets/~3/rSteKtiNBlE/ http://www.websterism.com/2010/07/the-difference-between-tools-and-talent-or-what-we-can-expect-from-google-app-inventor/#comments Mon, 12 Jul 2010 19:41:46 +0000 Mark C. Webster http://www.websterism.com/?p=1462 The tech press is buzzing today with word that Google has just brought “mobile app development to the masses” with the launch of Google App Inventor. The company claims that the tool enables non-coders to develop apps for any phone running on the Android platform.

In a nutshell, App Inventor lets anyone assemble a mobile app by connecting a bunch of “blocks” of code. Apparently Google has been testing this new tool with students in different schools over the last year. The goal is to make mobile development as accessible as possible.

The Dark Side of WYSIWYG
One of the great things about the Internet has been that (in theory) anyone can participate and build websites through the use of what-you-see-is-what-you-get (WYSIWYG) tools. But that has come with a price. The web is full of poorly-designed, poorly-constructed websites. Worse still is that there exists a belief among many people that everyone can design and build websites and that it “isn’t that hard” (anyone who has worked with clients will attest to this). This has led not only to a sea of mediocrity across the web, but also a perception problem regarding the skill and value of web designers and developers.

The New Microsoft Frontpage?
What will the Google App Inventor likely lead to? A whole slew of Android apps ranging in quality from decent to god-awful. I would be shocked to see many useful apps come from this tool. Building great products is about more than just having the tools to do it. Giving anyone the ability to produce these applications with a WYSIWYG platform will mostly lead to horrible results, much like Microsoft Frontpage lead to mostly horrible websites.

The Silver Lining
The upside here is that it will lead to increased interest in mobile development. Users will start to tinker with App Inventor before deciding to learn how to actually develop these types of applications, much like Frontpage and Dreamweaver introduced many of us to web development, enticing us to continue on and improve our skills. This promises to take mobile development out of the hands of a few and grow a much larger talent base.

Whenever you lower the barrier of entry to a platform, it usually floods the market with a lot of garbage. But it also provides an opportunity for true talent to rise above the rest. So I don’t expect great things from Google App Inventor, but I do expect to see great things from the people who got their start with it.

One of the first lessons I learned when starting out was to read everything you can find about freelancing. While there is definitely some questionable advice out there, it’s a good idea to consume as much information on the topic as possible. Recently I picked up a copy of The Wealthy Freelancer by Steve Slaunwhite, Pete Savage, and Ed Gandia. I’m working on a full review of the book, but they had a great suggestion I wanted to share now.

How to Bill Clients For Your Work
Deciding how and when to bill clients for your work is an important part of freelancing. You need to find a balance between being reasonable and protecting yourself from bad clients. The book outlines the following steps to striking this balance.

Step 1: Collecting a Deposit Before You Start
In the book, the authors talk about the importance of collecting a deposit before starting a new project. While some freelancers just starting out may feel awkward collecting money before they’ve done anything, this is a crucial step in making sure you aren’t left working for free. Also, when a client pays a deposit upfront, they are showing that they take the project seriously. Any hesitance regarding paying a deposit is a huge red flag and should make you think twice about working with someone. The authors suggest 50% to start. Personally, I sometimes collect a slightly lower amount depending on the job, but there isn’t any science behind this decision. It really just depends on what the freelancer is comfortable with.

Step 2: Collecting the Balance Upon INITIAL Delivery
Now this is where the book gets interesting. Instead of collecting the remaining balance upon final delivery of your work, the authors suggest billing the client for the outstanding amount upon INITIAL delivery of your work and giving them some set time period (30-45 days) to pay the invoice. This helps to ensure that they deliver any feedback or changes promptly and prevents projects from dragging on and on (something I like to call Final Approval Hell). This is definitely a novel approach and I have never met a freelancer who does it. But I might try it on several projects moving forward to see how it goes.

The Importance of Getting Paid
When you decide to freelance, you give up the predictability of a paycheck, so it’s important to create as much structure as possible around how you bill for your time and work. By setting these types of formal payment arrangements, you’ll not only provide yourself some much needed security, you’ll also encourage your clients to be on their best behavior.

The techniques used in video games can teach us lessons for all kinds of product experiences. Whether you’re explaining to users how your web app works or showing a user how to set up their smart phone for the first time, video games can help illustrate how to find the balance between instruction and entertainment.

Below are a few lessons that video games can share about creating great product experiences:

Don’t Expect People to Read the Instructions.

Many games include a tutorial at the very beginning to give users a hands-on lesson on how the game and controls works. The image above is from Call of Duty, showing the training course that serves as the first level. Simulating the actual gameplay in a structured environment gives users a chance to test things out.

Walking users through their first experience with your product will give them an opportunity to learn how to do something without any concerns about making a mistake or accidentally deleting something.

Take Advantage of Downtime

Most modern video games use load screens when first starting up or in between levels. It’s common to see tips or tricks included on these screens, so that users aren’t just staring at a dead screen. The image above (also from Call of Duty) shows how each load screen has an “Intel” area where game tips are shown.

With many products, there is going to be some inevitable downtime. It may be when a user is waiting for an email confirmation to show up in their inbox. Or as a travel site completes a search, or a device is being configured for the first time, or a piece of software is installing. Take advantage of that time to educate a user about a feature or tip that may not know about. By sprinkling this kind of information throughout the product experience, you will work towards building smarter and savvier users.

Build a Great Default Experience. Then Allow Users to Change It.

When game designers create a game, a lot of thought is put into how the controls should be setup. When a user first picks up the controller, the interaction should be intuitive, responsive and enjoyable. So nailing the default setup is crucial.

But there are always users who want to have specific preferences. Maybe they are used to a layout from a different game and want to configure this game to work in a similar way. Not allowing for this type of customization can lead to annoyance and frustration.

Most users won’t change initial preferences, so focusing on building a good default experience is a must. But allowing power users to go in and edit the experience to their liking is an important part of building loyal fans.

Saving Progress Should Be Easy.

I still remember playing the original Super Mario Brothers. Three lives, no way to save. You basically had to play it all the way through in one sitting. It was maddening (though oddly intoxicating for an 11 year old).

Most games today employ Checkpoints. As you’re playing, you’ll hit a checkpoint and your game is automatically saved to that point. Having your work saved without requiring a user to manually take an action is a good idea for obvious reasons: we’ve all seen hours of work lost when something happens to our computer before we saved it.

The less responsibility that a product places on a user for having to do certain tasks or follow certain practices, the better. One example of this is a shopping cart on an e-commerce site. If a user has added something to their cart, it should be there the next time they come back, regardless of whether or not the last transaction was completed (or even if they have an account with that site).

(Note: as I write this post, I see a Draft copy being automatically saved every so often in the toolbar. Nice work WordPress!)

Video Games Are Nothing But an Extended Product Experience.

A video game is judged solely on the experience it provides a user with. By adopting some of the best practices used by video game designers, businesses can ensure customers find their products both entertaining and easy to use.

On Day Two, a company named art.sy presented their plan to change the way people discover fine art online. One of the judges they presented to was Jason Calacanis, CEO and Founder of Mahalo, a user-powered search engine. During their product demo, art.sy had a problem connecting to their site over the network and they stumbled over showing a key piece of their product.

When the judges shared their feedback, Jason Calacanis has this exchange with art.sy founder Carter Cleveland:

Calacanis: “What you have to do when you do these presentations is you have to channel Steve Jobs. And after he shows you something, he’s like, “Oh, and one more thing, let me show you something…insane.”

Cleveland: “That’s exactly what we did when the internet just like…when the search page stopped working.”

Calacanis: “That’s no excuse. You could have had this demo in tabs and as a screencast and you should have had that as a backup. That’s your f*ckup. You’ve got to be ready for the Internet to get screwed up. You’re at an Internet conference! You have to do better. You should have had it canned so you can switch immediately.”

And for anyone following Apple’s Worldwide Developers Conference (WWDC) today, you probably know that Steve Jobs had his own network connection problems during his presentation of the new iPhone. As Jobs floundered around, trying to get the wi-fi to cooperate, he seemed to have no backup plan, finally giving up and jumping over to a lame comparison of photo quality in the new version of iPhone (video embedded below).

It was odd to see the usually polished Jobs make such an amateur mistake during a product demonstration. But it further proves the importance of Calacanis’ comments.

There are no excuses for a bad presentation.

Creating a backup plan is a crucial part of being a great speaker. So when you get up in front of a group of people, make sure you’re ready for anything.

As a comedian, you have to start the show strong and you have to end the show strong. Those are the two key elements. You can’t be like pancakes. You’re all happy at first, but then by the end, you’re sick of ‘em.

It’s easy to start strong. A customer hears about your product and becomes excited by the potential offered. It seems to solve a problem they have. Maybe the experience starts with seeing your commercial on television. Or on the shelf at a store. Maybe they have read through your website and decided to sign up for your service. Perhaps your salesperson has just finished a pitch and convinced the customer they want your product.

In other words, they were hungry. They looked at the pancakes, and man, did they sound good.

“I’ll have the pancakes.”

But then they dive in. They start using your product and it’s alright at first. But as they continue to use it, the disappointment starts to set in. The experience is frustrating. The interface is confusing. It becomes a chore. The initial excitement is gone, it becomes unpleasant, and in the end, they’re happy to see it taken away.

It is no longer enough to just drive sales. Your product needs to continually deliver. It needs to live up to the initial promise. Marketing is more than just getting people to buy. The end-to-end experience people have with your product is also marketing. In fact, it’s the most important part, because if you’re leaving people sick of your product at the end, word will spread. The Internet provides everyone with a megaphone and if they aren’t happy, others will know.

And then what happens? People will stop ordering your pancakes.

“ I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description ["hard-core pornography"]; and perhaps I could never succeed in intelligibly doing so.

But I know it when I see it, and the motion picture involved in this case is not that. ”

In other words, he couldn’t define obscenity in words but he could decide whether or not something was obscene by actually seeing an example. This concept became the basis for the common expression “I know it when I see it.”

“I know it when I see it.”
While it’s admittedly an odd parallel, I’m a big believer that most people know good websites when they see them. And they’re able to spot a bad one a mile away. And by “most people” I’m referring to web designers, developers, users and yes, even clients.

But it’s a rare skill to be able to describe what makes a website good. Putting things into words is much more difficult than reacting to what we can see, use and interact with. And it’s even harder to be able to visualize what things will look like based on just reading text.

So why does every web project start with words? Clients write a Request For Proposal, vendors respond with a written proposal, and everyone decides on critical issues such as cost and time lines all before anyone has seen anything. This is why there are so many mediocre websites out there. And why so many clients and vendors get frustrated during the process. We all assume everyone can put what they want into words and that’s not the case.

Don’t Just Say It. Show It.
Wireframes and prototypes can serve as a great starting point to capture ideas early on in a project. It allows everyone to actually see what is being discussed, allows good ideas to be demonstrated, and often leads to bad ideas being killed early. I’ve used this process on multiple projects and it always produces better results in the end.

Starting out a project with something visual, something people can interact with and react to, is definitely unconventional. Few people do it. Which is why you might want to try it.

Too much of our business focuses on the end result. Maybe it’s time to reevaluate the process that produces those results.

All of this is happening in the wake of the Tiger Woods debacle, which happened to include an incriminating voicemail Tiger had left on his mistresses’ phone.

(A piece of advice: If you’re golfing legend Tiger Woods and you need to ask someone to change a voicemail message so your wife doesn’t find out about your affair, don’t leave that request in a voicemail. And definitely don’t start the message with “It’s me, Tiger.”)

Here are two different examples of wealthy, famous individuals who both have a lot to lose from the public knowing about their affairs. And what did they both do?

They handed someone they couldn’t trust a lever.

What’s a lever?
A lever “will lift, pry, or force an object to respond through the proper distribution of pressure,” according to the book, Games Criminals Play by Bud Allen and Diana Bosta. In the book, the authors outline how criminals manipulate people. For example, inmates create a setup against a corrections officer in order to gain leverage over that individual. It usually has to do with getting them to bend the rules slightly, like by sharing a cigarette with the inmate (which is against the rules within prison). They then threaten to report the guard for the infraction unless some other favor is done for the inmate. The situation can continue to escalate, leading to serious crimes like having the guard smuggle drugs or weapons into the prison.

If you’ve ever read a news story about a prison guard risking their job and their family by doing something serious like this and wondered why they would do it, this book outlines the process the probably led up to it.

Not Just For Corrections Officers
I’m assuming not too many readers of this blog work in a prison. But I share this book because I consider it recommended reading for everyone. It outlines some basic principles of human behavior and psychology, describing a sequence of events that can lead to people being manipulated and doing things they would have never imagined. And it usually starts by handing someone a “lever” that can be used against them.

And it’s not just celebrities that make these mistakes.

Obviously, whenever someone cheats on their partner, they are handing a great deal of power to the individual they cheat with. But it applies on a smaller level too. When you tell a co-worker you weren’t really sick when you called in the other day, you handed them a lever. When you engage in gossip about someone, you hand a lever to the person you’re sharing with. Most of the time the lever is never used. But by continually handing them out, you’re increasing the chances that it will be.

Don’t be manipulated.
Games Criminals Play describes various setups and how they are used to influence people’s behavior. A lot of colorful language is also used to describe the process, like lever, ducks, stings, and protectors (I won’t spoil it by explaining what each one means). There are also a few entertaining case studies that describe actual events and situations. It’s a great book and has a lot to share about making sure you aren’t being manipulated.

So the next time someone mentions the great work you’re doing and how it’s obvious your boss doesn’t appreciate you, ask yourself: Are they just looking for a lever?

This year’s figure, diligently compiled by outplacement firm Challenger Gray Christmas, puts the total assault on productivity at $1.8 billion. And that’s down from a record high of $3.8 billion in 2006.

So how can we tolerate such a loss each and every year? And what has changed to slash this financial havoc by more than half?

Calculating the “Damage”
First, a quick look at where this $1.8 billion number comes from. Challenger Gray Christmas first looked at an MSN survey from 2009 says 45% of Americans planned to enter at least one college basketball pool last year. Well then, according to them, that must apply to every single worker included in payroll employment (129,526,000) which means that 58.3 million workers will be participating in office pools.

Already this starts to fall apart. Almost half of the American workforce will participate in March Madness? Really? But let’s keep going.

So, take that 58.3 million people, and assume that each worker makes an average of $18.70/hour (according to the Bureau of Labor Statistics). That’s more than $6 bucks every 20 minutes. So if each worker (stay with me here) spends 20 minutes every workday of the first week of March Madness (5 days) on non-work related activity, then ta-da, $1.8 billion in damages.

Because, you know, every single minute you’re at the office, you’re working.

This assumes that March Madness will take away from actual work, as opposed to just reallocating some of the slack-off time already built into each workday. Or that the morale and team-boosting effects of participating in an office pool doesn’t have any sort of positive productivity result.

The Truth Behind the Decline
So why the huge decline from previous years? In 2006, Challenger Gray Christmas counted all 16 days of the tournament in their estimate. They used to assume each day was of equal weight. After getting called on it over the years by multiple keen observers, Challenger Gray Christmas now only counts the first week of the tournament, assuming that’s when people are most interested in researching teams and are following the early rounds, which consist of multiple day games. After the end of the first round, many casual observers lose interest (after sadly watching their bracket crumble). Plus, the majority of games are during non-work hours in later rounds.

Overall, these figures have huge, unrealistic assumptions built into them. About half of the workforce participates. Every one of those workers spends 20 minutes everyday for an entire week following the games instead of working. That every minute of every workday you are actually working. That there are no positive effects that come from co-workers being involved in a group exercise like this. And so on.

Good PR. Bad Math.
You have to hand it to them. Every year, Challenger Gray Christmas gets their name in media all over the globe with these stats. But as soon as you dive into their methodology, it doesn’t hold up.

So if you’re a sports fan, don’t feel guilty spending a bit of your workday following the action. It’s not going to create billions in damages.

Hopefully you’re not reading this blog post while you’re at work, otherwise you are hurting the already distressed American economy. Maybe I should issue an annual press release titled “Websterism Costs American Employers About $36 in Lost Wages Each Year.” The newspapers would eat it up, year after year, and I would continually get my name in print.

Actually, I might be onto something.

There are various excuses as to why people haven’t included a photo. The most common seems to be that it could become a point of discrimination for a recruiter, as it reveals your ethnicity and approximate age. Since these would all be obviously revealed when they meet you in person, it shouldn’t be much of a concern.

There are many reasons to make sure you include an appropriate headshot with your profile. This could be a long list, so I’ll focus on just three reasons.

1. You will instantly stand out from the crowd.
LinkedIn includes the profile photo in all searches, messages, and job inquiries. About 40% of LinkedIn profiles don’t have a photo on their profile. So by adding one, your profile would already stand out above nearly half of all other users.

2. It adds personality and authenticity to your profile.
Giving users too much creative control over profiles can lead to disaster (MySpace, anyone?), so most popular social networking sites use a standardized look and feel for all user profiles. This means that your photo is the only opportunity you have to visually differentiate your profile from others. A photo-less profile looks cold and sterile. And though it sounds obvious, a photo shows that your profile represents a real person.

3. It creates a sense of visual recognition.
People react more openly to familiar faces than unknown ones. It is hardwired in our brains, a remnant from a time when recognizing faces was an important part of survival. When a recruiter, potential employer, or professional contact sees your photo on LinkedIn, their brain will consider you “familiar” when they meet you in person, causing them to drop their guard a bit.

LinkedIn considers adding a photo a requirement for your profile to be considered 100% complete. There is a reason for this: It makes your profile more effective.

If you don’t have one, go find a professional-looking headshot of yourself and update your profile now.