Saturday, November 28, 2009

Betting on Your Customers v.s. Betting on Yourself



Last week, we had two very interesting examples of companies dealing with problematic customer behavior.

The much-rumored News Corp. plan to opt-out of Google indexing. And Woot.com's new deals.woot.com site just in time for the holiday shopping season.


News Corp is the parent company of Fox News, The Wall Street Journal, IGN, and many popular online properties as well at Fox television, film, and sports.

The customer behavior:
Non-subscribers use Google to search for information and find Wall Street Journal articles. Google sells an ad on the search results before the user clicks over to the WSJ. The Wall Street Journal site is a subscription site, but they are smart enough to let users see that externally discovered article before blocking access to the rest of the site.
But since News Corp., isn't getting a cut of the search results income, that's not a desirable behavior - it would be more profitable if users started their search at a News Corp. property.

The rumored solution:
Don't allow Google to show search results to News Corp. sites without paying those sites.
Since Google won't do that, find a partner (Microsoft "Bing") who will.


Woot.com is a site which offers a new "deal" every day. They do an excellent job of reaching their customers through many channels. They offer entertainment value along with the products. They allow user to freely discuss the merits of the offer.

The customer behavior:
Seconds after a new offer is presented, users of the site scour the Internet for comparable offers and product reviews. They then rate the offer and offer "better" alternatives. Sometimes this shows the weakness of a particular offer or product and reduces sales.

The solution:
Woot built a new service allowing these users to post the "deals" they find and allow other community members to rate those offers.
They throw in a handful of clearly marked sponsored "deals" and advertise their other sites.



The Comparison:
We see News Corp. attempt to reject the existence of the Internet ecosystem. If the rumors are true, the management believes their web content is somehow exempt from the Link Economy. In monopoly situations like sports and exclusive commentary, this may be true. News Corp. is betting that their product is so unique and desirable that users will change their behavior to find it.

Woot.com on the other hand, took the problem behavior and embraced it. They figured out a way to make some income and encouraged the users to continue doing what they were already doing. They are betting their customers will reward them for offering this tool.

It will be interesting to see how these strategies play out in the coming months.




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