z on life

California Golden Cookies is an amazing gyro place and bakery on Kearny St. in downtown SF and is a frequent lunch spot of mine. The food is amazing, prices are reasonable, service is given with a smile, but far and away the best part is that you sometimes get a free cookie that is amazingly tasty. The interesting facet is that you never know when you’re going to get a free cookie. I have gone about 20 times now and gotten, I’d roughly estimate, 10 free cookies. The problem is I can’t seem to figure out what variables the guy uses to determine if you get one or not. I have thought about everything and watched carefully, but to no avail, I cannot figure it out. This prompted me to think about the pyschology of giving out free stuff.

Consider three cases in which I am going to buy a gyro and may or may not get a free cookie.

1. Every other time I get lunch there, the guy gives me a free cookie.
2. Every time I go there, I get to flip a coin and if I call it right I get a cookie.
3. It is seemingly random whether he gives me a cookie or not, but so far it has worked out to roughly 1 out of 2 times I go I get a free cookie.

Notice that the expected value for all three of these is that, per lunch session at the restaurant, I expect to earn half a free cookie. So does this mean that the affect on the consumer is actually equal for all three stratgies? I say no, and here’s why.

In the first case, you have a game of perfect information and you know exactly what you’re getting. The problem with this approach is that, while people generally get excited about free stuff, you are reducing the experience down to its raw economics. The customers know exactly how much they are saving per lunch visit. Plus or minus a little added excitement, they know that if the cookie is $1.75, they are really just being given 87.5 cents back each time. This feels like a coupon. Coupons work, but it comes down to economics.

Pros

• After an odd number of visits, people will be thinking about coming back to get the next one free.
• For the store owner, this is predictable and easy to work into his financial models of sales and profitability per customer.
• If people get a cookie every other time free, they’ll probably get used to eating them and actually buy one every time they don’t get a free one.

Cons

• Some people will see it purely as a coupon and the free cookie will not have any intangible or emotional value.

In the second case, you have a game of chance where you expected value tells you you’ll earn 87.5 cents back each time, but really it is either 0 or $1.75. Some customers would probably prefer the fun and allure of this more so than just having a ‘coupon’ as in case 1, but some would also probably not like it. Some people prefer to save every penny, some prefer to buy lottery tickets. This might be a fun idea to try, and may cause the restaurant to turn into a really fun environment as the tension builds for each coin-flip and there will be excitement after wins.

Pros

• This will really be fun to some percentage of people (risk-takers).
• The coin-flips will create excitement and hooplah.

Cons

• For small sample sizes, the number of free cookies needed to be given out is highly variable so there could be inconsistencies in profit day-to-day caused by this.
• Risk-averse people would probably just prefer the coupon style.

In the third case, you as the consumer really have no idea what is going on. All you know is that sometimes you are excited about your bonus, and other times, not. The key here is that you can’t prove the restaurant owner has a systematic method for giving out the free cookies, and thus you must (or at least it is human nature to) conclude that he is actually giving you one out of kindness. When you make the decision to go to the restaurant, you will not only consider the empirical chance that you’ll get a free cookie, but also the emotional aspect of ‘wow that guy is nice, we should go back there’.

Pros

• You get the human factor of emotion and personal connection involved.
• If the owner is being secretly systematic, he can tweak the algorithm to his daily needs (ie: if there’s only a few cookies left and still many more potentially paying cookie customers to come in later, he can simply not give any more out free that day).
• Because there is no set expectation of something free, you can never be disappointed on non-free days (ie: it is easy to be mad at someone for not keeping their word, but really hard to be mad at someone for not being overly nice).

Cons

• In the case of the customer who is the utmost consistency seeker, they may react negatively to this mysterious process (highly unlikely though).

It is so interesting to see how these three economically equivalent schemes are so psychologically different and complex. Of the cases, I think case 1 is the most popular (think those little things restaurants stamp when you come in, and every 10th free or something). Case 2 is the most fun and would be interesting (I have never seen it done). But I think very strongly of case 3 above and beyond the first two.

There is something about selling the ‘hope’ of a free cookie and genuine kindness that is awesome and resonates very well with me. Of course, in case 3, the guy could really be deeply manipulative and have this complex algorithm for which he is maximizing my expenditures in his restaurant. And if that is true, kudos to him, he should be an econ PhD (or maybe he is). But, in my book, he is innocent until proven guilty and until I or anyone else can prove that he has a system, I have to believe he is genuinely just a nice guy and that means a lot. It keeps me coming back.

The moral of the story is that if you are slick about it, you can connect with your customers on a personal level in a way that doesn’t cost you anything extra. Good feelings and good relationships are huge in business, and even matter down to the level of this small restaurant. If you take a little time to think about the psychology of such techniques, you can get something for nothing, and that’s always a good thing.

Think of it this way. Consider that each of those cookies probably costs the guy, let’s say, 30 cents to make. He’s given me about 10 free. He’s lost $3 to such a business practice but just got me to blog about it. If even one reader buys one more gyro at his restaurant, he’s made that back in raw profit. Interestingly, he’s created economics that make sense for him (not even including the probably 30 people I have told about his place in conversation), but I as the customer never even thought about the economics. All I thought about was how nice the guy was.

PS: I did not get a free cookie yesterday, but I’m still happy.

I Love It
The other day my friend Arjun got me hooked on Bitstrips and after using it for a while I realized that the mechanics of the site were so good I would just have to discuss it. The basic principle of the site is that you create little characters of yourself and your friends and make hilarious comic strips out of them. The process is fun, quick, and so easy. The first time I got sent one, I almost fell out of my chair laughing. That said, I clearly liked the site a lot. The following are a number of great strategic, design, and interaction principles that totally impressed me about Bitstrips.

Effective Landing Page
The initial homepage (see above) is colorful, friendly, inviting and you just get a good feeling when you go there. The organization is actually intuitive with the full menu on the left, an eye catching focal point on the scene builder logo, the different core initial actions on the far right, anchors to the most popular or recent content, and functional boxes below. For existing users, there is a lot to do, but for new users it is also very clear how they should initiate their Bitstrips experience. These two concepts are generally mutually exclusive (unless two different pages are used), but I think Bitstrips nailed it. The best part is that, no matter what you click on, you delve into fun and action right away.

Viral Loop
The site has an immediate viral loop that comes into play when you go through the registration funnel. It lets you “find your friends” who are already on the site or invite new ones via email address book importing. I’m not a huge fan of email inviting, as the overuse of the medium across thousands of sites has strongly diluted the effect. In this case though, going through the process was actually useful, because people on the site generally have fictional personas (not many real names) so it is hard to search for friends other than via email. It was a pretty frictionless process and one that was reinforced by the banners on the site saying “It’s More Fun With Friends!!” For the first time in a while, I felt I agreed with the viral incentive. Kudos to them for making the spam useful.

Usage Loop
Possibly even stronger than the core viral loop is the number of usage loops they have created. A usage loop is like a viral loop stemming not from the invite process but from usage of the site that throws off cues for others to join. Inherently, these strips are most fun when they involve friends. So, once you make a Bitstrip you will likely send it to friends, making the core of the site an effective usage loop as the friends come onto the site to see the comic. But it goes a bit deeper. Not only can the user base spread through passing links to whole comic strips, but since you create characters of yourself and others, your friends can use your characters to make strips. When your friend uses your character in a strip, you get notified and want to come back to see what they did with him or her. This is an awesome and highly playful mechanic that sucks you back again and again.

Minimized Entry Process
One of the hardest things for web people to do that games people do so well is to not give the user every piece of functionality right away. When the user is able to do too many things at once, they get hit with a paradox of choice and/or utter confusion and leave the site. When the experience is limited and directed, they are much more likely to have fun, stay un-confused, and actually complete whatever process they were attempting. I love the restraint the Bitstrips creators exercised on the initial character creation step. Despite the fact that the characters can get incredibly rich with hundreds of variables, they limit the initial granularity with which you can edit your character to a smaller, more manageable subset of attributes. Why take power away from the user? If the user is overwhelmed and they leave, this is far worse than if the user gets through the process and generates a character at only 80% detail. If they want more, they can go back and refine later, but the initial process is smooth, quick, and fun even for the non-power users. Kudos to restraint!

Sustained Calls-to-Action
Like LinkedIn has the progress bar of completing your profile, Bitstrips has bold, colorful, simple messages telling you what is left to complete on your profile. If you don’t complete them, these huge annoying boxes stay on the page. This in-your-face incentive is awesome as a subliminal cue to make a strip, find friends, build more characters, etc. If the site can get you as a user to buy in by filling in everything in the cues, you are much more likely to stay an active user because you have fully experienced the site and have significant investment in it.

People to Media to People Navigation
An interesting facet of the site is how you find yourself navigating through it. The navigation, at least for me, worked like this. First, I would go to a friend’s page and see what their new strips were. I would view a strip, and immediately look to see what other characters were in the strip. Upon clicking one of the other characters in the strip, I would be taken to that character’s page. That page provides links to the creator of that character, and I would see who it was that made that character and view more of their strips. The interesting thing is I didn’t just move people to people (Facebook, with the exception of photo viewing) or media to media (YouTube) and instead I get this very rich experience where I am interested in people and media and consume them in parallel.

SEO Hooks
There is lots of potential for SEO-able content on the site. Every user, character, and strip has a static detail page with rich metadata that can be indexed via keywords, genres, references to people, etc. There is the ability to embed these strips on external pages, providing a great number of external hooks to come back to the site. The link structure within the site is interesting with all of the highly intuitive relations between the different types of pages (users, characters, strips, series). Finally, these things are just so playful and funny that it is the type of thing bloggers would post, people would put on their Facebook or MySpace, or and friends would email/IM around. This site has the ability to push so much content to external locations that, if done right, it could be a great SEO play.

It’s Just Fun!
When it comes down to it, I really do just love the product as it is inherently fun for me. What I think is more neat is that the product really provides something for everyone. The achiever persona can focus on racking up points, views, laughs, and favorites. The explorer has a huge array of people, characters, and strips to dig through to find funny stuff. The socialite can leverage the platform to flirt with, poke fun at, and harass others and try to incite reactions from their friends or enemies. The builder has an obvious method of achieving satisfaction in the extremely rich tools they can leverage to create some really cool, detailed comics. I think what’s best is that they have really nailed a casual, fun, social interaction where there is something for everyone no matter what type of person you are, or if you’re a power-user or newbie.

Some Subtle Nice Touches
I wanted to close with two little things that impressed me regarding the level of thought put into the site. First, instead of the boring, played out, not-fun positive and negative ratings of “thumbs-up” and “thumbs-down”, Bitstrips uses “laughs” and “groans”. Subtle cues like these indicate to the user that the ability to rate the strips isn’t just a bland feature, it’s a fun social stimulus. Second, in the address book importer, it defaulted the pre-@-symbol portion of my email address to my Bitstrips user name. While this guess could have been wrong, for me it was right and ended up being hugely influential (not sure why, subtle psychology is in play) in me actually going through the import step. From experience with analytics of viral invite processes, I can’t stress enough how important “all the little things” are. Even “little things” can make single or double digit percentage gains in success rates through a viral funnel. I love the attention to detail here.

So that’s it. Go make some Bitstrips!

When you’re creating a web property that you intend to ‘go viral’ with, whether it be a Facebook app or full-blown destination site, you’re going to have to meticulously track the growth to understand how you’re doing, where improvements can be made, and so forth. Tracking the growth correctly is actually very hard and even the most rigorous analytics can sometimes fail to reveal the true growth rate.

There is one easy trap to fall into, and it’s one that I just did, so I thought it would be good to talk about. The trap is in not understanding that you may be locally viral, where being ‘local’ is defined relative to some super-specific demographic, or user-behavioral context. In English? You may only be viral for some small set of or narrow type of users that will quickly adopt whatever it is that you’re making. However, if that demographic isn’t sufficiently sizable, you may burn through all of those people and be left with no new users to acquire.

The worst part about this is that, early on, you may see excellent growth. My roommate/coworker Aman Gupta and I recently released the ‘Hotter Than’ Facebook app as a pet project. It took a few hours to build and was a fun experiment (it’s not by any means our day-job). When we opened the floodgates, we saw in the first week a doubling day over day. If you study viral, recursion, and logistic growth from a mathematical perspective, as long as the remaining population of potential users is large compared to the amount of current users, your growth per new user on day N should be a good indicator of growth per new user on day N+1.

So have we continued, then, to double day over day? No, in fact growth has slowed to basically nothing. Why is this? Well, from looking through the raw data logs, we can see that during our growth phase we had spikes of users in very specific demographics. Moreover, it is fun to look at who was actually sending out invites. It turns out invites were sent mainly by a few categories of users: older, international, small friend networks. Now certainly, there are plenty of older people and international people on Facebook, many with small friend networks, so shouldn’t we have spread like wildfire through these huge demographic categories?

Interestingly, no, and here’s why. We thought a bit deeper about this and it turns out these were all indicators of being a newbie Facebook user. The average Facebook power user is something close to a United States college student with tons of friends*. The farther outside of this age, location, and dense friend networks you get, the less savvy the users likely are. We were way outside of this.

So what does that tell us? What we actually probably got were users easy to trick into viral invite processes, and thus, our invite scheme was not effective, logical, and enticing enough to hit the mainstream. Thus, we prayed on a few ‘fish-in-a-barrel’ types for whom this was likely a very early application install in their personal Facebook lifecycles. These people were most likely not aware of the ramifications of spamming friends and were thus much easier to convince. We burned out those users quickly and eventually there were no new accessible users who would succumb to the virality. After day 7 or 8, the growth halted and the usage flat lined.

Moral of the story, you need to understand exactly why people are taking the bare and sending your invite. Is it appropriate only to a certain culture, age, or interest group? Or can it be generalized to the mainstream? Hopefully, when all is said and done you’re not just tricking newbie users like we were. If you cannot generalize to the average user, then you’re early growth may not be any indicator of future growth so don’t get excited until you have a diverse set of users who have proven acquirable across enough of the spectrum to make the pool of potentials huge enough for a macro-success. It’s crucial to know where are you viral? Is it local, or is it global?

*note: This definition of an FB power user isn’t backed up by any data and is more by ‘feel’. Thus, the reason for our failure is still a hypothesis, not proven fact. The point here isn’t to know exactly what users we attracted, but to understand that those initial users were not normal and their affinity for our viral hooks was not generalizable over the whole population.