Fine, it might not be a very common name, but still…

The screens will not be LCD or E-ink.  There will be no screen.  The visual outputs will be directly coupled to our optical nerves.  We’ll be able to “see” things on our minds internal screen.  Perhaps this mind-screen will be visible when we close our eyes, or projected over our vision in some way.  It sounds crazy but, consider that scientists are already developing bionic eyes that give the sensation of sight.  Similar integration will let us “hear” things.

Imagine watching a movie on the subway, simply by closing your eyes.

To control the device, we won’t need a mouse or a touch screen or even voice control.  We’ll control these interfaces with our brains directly. This will be an extension of the research that allows amputees to control bionic hands.

These computers will be connected wirelessly to the internet and give us infinite access to data and communication.  Just by thinking…

Using these computers will not be easy at first.  It will require practice.  How will you compose a message in your head?  How will you submit a query?  How will you make a selection?  It will be like reading in the 1800’s (or using a computer in the 90’s or a smart phone in 2002). With practice, what was awkward at first will become natural.

Remember how when kids first learn to read they have to read out loud, but with practice they can read silently?  Our interaction with these computers will be like that. With practice, we’ll refine our ability to visualize and think with this inner voice.  We’ll learn how to compose messages on this inner screen and generally interact with a computers interface in our heads.  Physically typing a message on a computer will someday seem as childish as reading out loud.

Many vendors will produce these computers.  Apple will make a good one.  So will Microsoft.  Probably a new company that doesn’t exist yet today will actually lead the space.  There will be standards.  There will be apps.  The framework that’s evolved around desktop and mobile computers will be applied to this new platform.

There will be lots of protest around this implantable computer technology.  The idea that they will control us, or compromise our privacy, or have health side effects will be debated.  Thriller movies will predict that these computers are a conspiracy to turn us all into zombies and take over the world.

Regardless, the convenience, excitement and competitive advantages will be too good to resist.  How will your kids compete in school if they can’t instantaneously access their lessons via direct link to Google or Wikipedia?  How will you perform at work if you aren’t able to instantly access the data your client asks for?

At younger and younger ages, we’ll implant our children with these mind-controllable computers.  Our grand children will grow up with these devices.  Like our grand parents used to scoff at (and be amazed by) our love and savviness for video games and cell phones, we will scoff at this generations love and savviness for these implanted computers.

We’ll be the ones telling stories about “the good old days” when we actually had to memorize equations or carry around devices to call each other or read the news or get directions. Our children will laugh and tell us how they simply couldn’t imagine a world without their implanted computers.

For software going forward, help will be built into the user interface. It will be a part of the infrastructure, embedded in normal interface elements instead of being an add-on.  (via 52 Weeks of UX)

When a customer is using your website, in order of preference:

1. The customer understands everything and knows exactly what to do.  The colors, imagery and micro-text are so clear and intuitive that everything happens at the sub-conscious level.  Questions never even arise in the customers mind.  It’s as natural as walking down the street.
2. Small questions arise in the customers mind but strategically placed help links or hover text quickly answer these questions and keep the customer moving forward.
3. Questions arise in the customers mind that are not answered seamlessly.  The customer has to stop what they are doing and go to a special help, how-to or FAQ page to answer their question.
4. Questions arise in the customers mind that are not answered seamlessly and, even after digging around on the website, the customer still cannot figure out what to do.  They eventually come to the contact-us page and either email or call customer support.  (Or they just leave your website entirely).

Ideally, every interaction would fall into category #1.  However, depending on the complexity of what you’re doing, interactions in the #2 and #3 categories are probably inevitable.

Category #4  changes things though.  It’s expensive for the business and exceedingly frustrating for the customer.  It lacks elegance.  It is a hack.  Internet businesses are exciting primarily because of their intrinsic scalability. Customer service centers are not scalable like software.

Some great businesses have been built claiming their core strategy is “customer service”.  A lot of times this means they have invested heavily in a call center full of friendly, well trained customer service folks.  I wonder if once you’ve invested heavily in a customer service center, do you spend as much energy trying to perfect your design?

It’s two very different ways of solving the same problem.  One is infinitely scalable, but trickier to get right.  The other is easier to get right, but more expensive to scale.  Which solution would you choose?  Is it possible for a new company with good design to disrupt an established company with a large customer service team?

Just fantasizing about technology a bit today… Consider the following trends:

1.) The internet is coming to our TV’s.

2.) TV’s are getting 3-dimensional displays.

3.) Gesture control technology is becoming a useful interface.

Put those three together and what becomes possible? Well, lots of things, but one of them would be an entirely new e-commerce experience.

Picture mom shopping for shoes online.  She is sitting on the couch in front of your 65″ television looking at the latest shoe styles.  Except, the shoes are not just flat images.  They are visually popping out of the screen thanks to 3D imaging.  Ands mom doesn’t need a mouse or a remote or a keyboard.  With gesture controls, she is rotating the shoes so that she can see them from different angles and really get a feel for them, or waving past them to get to the next product, or adding them to her shopping cart for purchase…

Wild.

It’s probably a bit early to start building this sort of thing now, but…

This is what it used to look like:

This functionally worked fine, but a couple things always bothered me about it.

• During usability testing, we often saw users that were creating accounts first put their email address in the field on the left before realizing that the Create Account part of the form was on the right. This was not a fatal problem, it just meant that they had to reenter their information again on the right.  It seems to me that folks in a hurry would just scan the page, see the field for “email address” and start typing it in without fully processing all the information.
• This design also seemed a bit visually overwhelming and intimidating.  There are 2 headings, 6 fields, 2 buttons and 3 bright purple textual messages.  It forces the user to think.  With just a glance, it might give the impression that creating an account is a big step, requiring a lot of information.  In reality, we don’t need much information at all.  All we’re trying to do is enable a way for users to save a design or size and access it later.

Our new design:

In the new design we only have two text fields.  Email address and password.  The idea is that – whether you are signing in or creating an account you will do the same thing to start – put in your email address.  I’m counting on users selective vision to see the fields and the button they are looking for and then interpret the form as being for the specific action they are looking for.

Once you enter your email address, we check to see if you have an account and then dull out the button that is not appropriate.

I like this effect – because I think it sort of surprises the user a bit with a “oh, they know me” sort of feeling.

If you don’t yet have an account, you would see the following after you entered your email address.  When the buttons change, you immediately are confirmed that you are taking the right action.

Regarding account creation:

• We no longer ask for name information at this stage.  We ask for the persons name later – when necessary.
• We do not ask for the password twice.  This may increase the chance that the user types the password in wrong (which I don’t think will happen all that often anyways), but we also have worked to make our reset password process much faster and easier to use (if necessary.
• We also had to take a second look at all the possible failure modes and error messages that would show.

So, this is still very new, but I think it’s an interesting innovation on a pretty standard web process.  We’ll be monitoring how well it works. For now, you can try it out at http://propercloth.com.  Just click the “Sign In or Create Account” in the upper right.

Then read the deck as if it was someone else’s and critique it as if you were evaluating an employee or doing diligence on a deal.  What makes sense?  Where are the holes?  What are the first questions you would ask?  Why don’t you have the answers?  Then redo the deck until it makes sense from both points of view.  Usually several obvious things pop out that you’ve been ignoring or missing.

It’s common for smart people to get hung up on stupid things -and I think this exercise forces you to be accountable to yourself and really apply your problem solving skills to the problems you’re facing.

Essentially, the idea is to be your own boss/mentor/critic, so that nobody else has to.

In one example:

“Members-only site Beyond the Rack offered a pair of suede Adalene pumps from the two-year-old designer label Pour La Victoire for $129, posting a “compare it” price of $275 for the shoes. Gap Inc.’s online retailer Piperlime simultaneously offered the same pumps for $149.99, but with a suggested retail price of $220.”

If you pay attention to what’s going on here you might get the feeling that for any mainstream fashion product: Today’s suggested retail prices are total bullshit. You begin to wonder if anybody is actually buying those shoes for $220 or $275.

When I see an offer like “40% off”, I like to think that through my own connections, or dumb luck of being in the right place at the right time, or willingness to buy last seasons merchandise, I am somehow capturing more value for my money.

I think this feeling comes from my past experiences.  You used to have to be something of an insider to find the “sample sales” that would pop up around Manhattan.  I remember (living in San Diego) you had to drive half-way to Palm Springs to get to the designer outlets.  If major discounting ever occurred in large city stores (or online) the inventory and size selection would be minimal.  In one way or another, getting a “deal” usually meant some extra inconvenience.

But with the recession and the online outlet stores, “deals” are becoming increasingly accessible.  Sample shopping sites such as Gilt, Haute Look, Groupon and Woot seem unstoppable.

As these deal sites scale, going from early adopters to mainstream markets, they must inevitably become less exclusive (right?).  Their objective must be to make their deals more accessible to more people – to remove the inconvenience factor.

Meanwhile the internet makes information move faster and consumers smarter.  Price checking is getting easier.

“Members only” loses meaning when everyone is a member.  “Today only” loses meaning when those days become every day.  At what point does a deal stop being a deal?

(Theoretically) when this is realized, the startup can quickly scale by “buying” more customers, making a profit on each one.

Proving that you’ve achieved this (or creating a compelling story that you will be able to achieve this) significantly increases your valuation, increases your revenues, and increases the number of  VC’s that want to take you out to lunch.

There are probably great books on this topic that I have not read, but from my own experience, this is how I see it.  (I appreciate comments to clarify/correct my approach.)  The simple way to calculate customer acquisition cost is:

C_acq = A/( T_total*R_conv)

C_acq = Customer Acquisition Cost. How much you spend to get a new customer.

A = Advertising budget.  How much you spend to drive traffic to your site to get new customers

R_conv = Conversion rate from traffic to customers. The percentage of your site’s visitors that you are able to monetize.

T_total = Total traffic to your site in some unit of time.  Let’s say, per month.

Good so far, but we should also consider that a site typically gets traffic from a variety of sources each having different costs and effects. For this post, I want to focus on how viral sharing affects customer acquisition cost, so I’ll introduce the following variables.

T_base= Traffic that comes to your site from organic search, press coverage, bloggers, gift guides, product directories or really any other links to your site that you don’t need to pay for.

T_paid= Traffic that comes to your site as a direct result of your advertising.

C_pc= The effective cost per click you spend by advertising.  Advertising may be purchased as CPM, but you can still calculate the cost per click by dividing the amount you spent by the number of clicks that resulted.

T_wom= Traffic to your site as a result of ordinary users sharing it with their friends (word of mouth).  They find it interesting and email a link to someone, post it on their Facebook or Twitter profiles or mention it to someone at a bar.

Based on these new variables, define the following:

T_paid = A/C_pc

T_total = T_base+T_paid+T_wom

Furthermore, seeking a better understanding of of T_wom, we would see that it is probably a function of how many visitors our site has and some viral coefficient “V”

V = Viral coefficient.  Practically speaking this is the average number of additional visitors that each visitor recruits.

T_wom= (T_base+T_paid)*V

Solving for Total Traffic, we get:

T_total = (T_base+T_paid)(1+ V)

Thus, solving for Customer Acquisition Cost, we could say:

C_acq= A/(R_conv* (T_base+T_paid)(1+ V))

Identically:

C_acq= (A/(R_conv* (T_base+T_paid)))*(1/(1+ V))

Now – that was a lot of math – but if you think about this equation a little bit, you can see the huge value that customers word of mouth brings to the table.

Suppose you have a viral coefficient of 1, meaning each site visitor recruits just one additional visitor. The result is that you cut your customer acquisition cost in half.

IN HALF!

(*Note1: This is even before we take into account the second order effects of referred people referring even more people.  A viral coefficient greater than 1 would theoretically result in a naturally exponential growth – so called “viral growth”.  Depending on the time delay between referrals, and your target growth rate, this could potentially drive your customer acquisition cost to zero. )

(*Note2: You might point out that this equation calculates “average” customer acquisition cost, rather than your marginal customer acquisition cost.  This is correct, as you scale up advertising, T_base+T_paid will approach T_paid, so you could calculate marginal costs this way to be more precise.)

(*Note3: Please excuse the implication that R_conv is a constant.  I realize that it tends to vary widely depending on the nature of the traffic and corresponding intent.  However, for this exercise let’s assume a general, mass-market conversion rate.)

It can come down to pennies per customer, but for many startups this can be the difference between having an exciting, scalable startup and a failure.

Just 5 years ago (ok maybe 10), Word of Mouth for most people meant sending an email or actually mentioning something face to face.  A good analytical marketing person might have even ignored the T_wom component because it was so small – better to just consider it a nice little bonus.

However, things are changing.  With the growing influence of social networks, this viral coefficient is becoming increasingly significant.  It’s increasingly convenient to post things on Facebook and the average person’s number of friends and followers is also growing.  We may be more choosy with what we share to our friends, but with more followers, an AVERAGE person’s post on Facebook or Twitter can now generate your site hundreds of additional visitors.

Two recent startups that have shown explosive growth: Groupon and Zynga are great examples.  While their ability to monetize customers is itself very awesome, without a doubt they are relying on fairly large viral coefficients to keep their average customer acquisition costs low.  If you’ve played with their products, you’ll see that they aggressively push you to refer additional people to their services.

Of course, we cannot forget about SEO, press, usability design, conversion funnels and optimizing ad campaigns, but I predict that increasingly this viral coefficient will be the metric that startups rely on to justify the economics of their businesses.

Fundamentally, for ANY product or startup idea, there is someone who will pay it.  People are just that diverse.  We come from different backgrounds.  We have different financial resources.  We have different hobbies.   We have different value systems.  It is highly likely that somewhere out there, some group of people that are faced with the problem your product solves, have been unsuccessfully looking for a solution and are willing to pay you real $$ for your product.  Just consider the $14,000 coffee machines, and $10,000 scooters.  There are markets for these items.  That doesn’t make them good business ventures though.

The right question to ask, is more complicated.  “Are there enough people that would pay for my product, and do I have the ability to reach them cost effectively?” Not as simple to answer.  This is why understanding your total addressable market size is so important.  It’s also why you want to really understand your customer acquisition cost.

Things are never as black and white as we like to make them seem, but it’s human nature to be drawn to extremes.  There are benefits to telling a story that takes a strong point of view.  It makes information easier to process and remember.  It makes us feel like we know what’s going on. We over simplify things all the time.  Either a person is good or bad, a price is a good deal or a bad deal, the economy is growing or shrinking.

Problem is, it’s not true.  For a lot of things in life, it’s not that big of a deal.  But when your startup’s success depends on it, you better understand the issues inside and out.