Spend More to Save More

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by Rishi Shah on February 15, 2012

A few months back Threadless did a t-shirt sale where you get Free Shipping for orders over $75. I found myself looking for an extra $9.99 t-shirt to put me over the top. This is when I realized I just spent $10 more to save $5 in shipping.

Companies do this all the time. They make you think you are saving money by actually spending more.

The car wash down the street had a sign that said “25 cents off per gallon with purchase of Car Wash”. I rolled in and found out the car wash was $25. On average car washes in the bay area cost $15. I thought “whatever I’m going to save a bunch of money on gas”. After pumping some gas and doing the math I realized that I actually only saved $3 in gas.

Coffee shops are amazing at this. The small coffee (12 oz) is $1.75, the medium coffee (16 oz) is $1.95 and the large coffee (20 oz) is $2.10. I can get an extra 8oz for 35 more cents. That is a great deal. It is easy to convince a customer to upgrade and spend more money.

Service based businesses that charge on a monthly basis (like Verizon and Comcast) get their customers to pay more by offering the ability to pay yearly with a discount. Cell phone companies offer you a hefty discount on your new phone if you sign up for a 2-year plan. By getting the customer locked into to a 2-year plan it guarantees that the customer will stay on for a long period of time. A $200 discount on a phone gets you to pay about $2,000 over a 2 year period.

Behavioral Economist, Dan Ariely gave a Ted talk where he showed a copy of the the Economist pricing subscription page.

He passed out the Economist’s subscription pricing options to his students and studied the results. He first passed out a pricing page that list only two options:

Option 1: Online Only – $59
Option 2: Print Only – $125

The result was majority of the students picking option 1, the cheaper option at $59.

Next, Dan passed out a pricing page with three options:

Option 1: Online Only – $59
Option 2: Print Only – $125
Option 3: Online + Print – $125

The result was majority of the students picking Option 3, the expensive option at $125.

This is a pretty powerful example that shows you can get the customer to spend more money if they feel like they are getting a great deal. Option 3 makes you feel like you are getting the online version for free! You can watch Dan explain the study in this YouTube video around 12:30.

So next time you are trying to figure how to get more money from your customers figure out a way to help them “save money”. Do you have any examples of how companies got you to spend more money? Would love to hear about them in the comments.

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How Domino’s Pizza is taking a bite out of India

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by Rishi Shah on February 8, 2012

I was in India the past 10 days, I go about every 3 years. This time I noticed one big change: Domino’s Pizza is HUGE in India. Every few blocks has a Domino’s and the people are going crazy for it. Here are a few of the ways Domino’s has tailored their business to be more India friendly.

Things that Domino’s changed to fit India:

Veg Friendly Everything

50% of the entire menu is vegetarian. They clearly specify which menu items are vegetarian by showing you a green dot next to the item. 10% of India is completely vegetarian and 30% of India is vegetarian due to religious reasons at least 5 days out of the month.

Moped Delivery


The traffic in Mumbai (one of the biggest cities in India) is really bad, much worse than Los Angeles. It takes 20 minutes to go a mile – this is due to over population, bad roads, animals roaming the streets, and people crossing the road whenever they want. Mopeds are definitely the fastest way to get around the city because they can easily weave through traffic.

Goodbye Parmesan, Hello “Spice Mix”!

Indians like things spicy. Instead of including Parmesan cheese packets Domino’s includes an “Oregano SpiceMix”. They have also spiced up their pizza recipes to please the Indian palette. The spicy Sriracha sauce that we are all use to in America is water compared to the spice level in India. A spicyness level of 2 stars in India is 4 stars in the US.

Things that Domino’s didn’t change for India:

Home Delivery

It turns out people are lazy everywhere. Food at your door for no extra charge is a great service.

Self Service

This one was kind of a shocker to me. Indians are accustomed to being waited on hand and foot at a restaurant, you just don’t expect to have to clean up after yourself.

But Domino’s Pizza India didn’t have any servers or bus boys during my visit. All they had was a simple trash can with a “Use Me” sign. By educating and training their customers to clean up after themselves, Domino’s India can employ less people and keep their prices low. It is interesting that Domino’s decided to challenge Indian culture here even though they were willing to make a lot of other cultural changes that are outlined above.

The Domino’s Pizza Brand Name


The Domino’s brand name is strong. They have been featured in hundreds of movies and have run gazillions of TV ads. Even though Domino’s was new to India a few years ago millions of Indians heard about it before hand allowing them to have a massive launch.

Domino’s India is ran and managed by an Indian based company called Jubilant Foodworks. The best decision Domino’s made in their India strategy is understanding that they are not an expert in India, so they partnered with a strong team that truly understands India to help grow their business there.

Here are 3 things I learned from Domino’s India:
1. Tailor your business based on the countries’ culture (I know obvious!)
2. Keep your brand identity
3. Don’t do it yourself – Find someone amazing that knows the country to help you run and manage the business abroad.

What could Domino’s do in your country that would make it thrive? Let me know in the comments.

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Simple Messaging – The Lemon Juice Bottle

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by Rishi Shah on January 15, 2012

My favorite thing about grocery stores is looking at product packages. These products have decades of marketing testing behind them and they really know how to get their messaging right. My favorite this grocery trip was lemon juice. No need to say anything – the packaging makes it so obvious of exactly what it is and what you are going to get.

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The Art of the Downsell and Why CostCo has big screen TVs at the entrance

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by Rishi Shah on January 11, 2012

$10 for a big bag of berries – no problem that’s cheap!

$15 for a big bag of spinach – sounds pretty affordable to me!

Everything seems like a great deal at CostCo!

As soon as you walk in to CostCo you see the most expensive items on display: LCD TVs. This sets up your frame of reference for all you will see next. After seeing a $1,500 price tag, a $10 bag of spinach seems really cheap.

Free Trial and the Buy Now Button

Why buy something when you can get it for free? I’ll take the Free Trial please. The “Free Trial” button seems more appealing to click on when it is right next to the “Buy It Now” button. All of a sudden the “Free Trial” looks like a great deal and something worth doing. In a recent case study done by Visual Website Optimizer and GetResponse.com the number of “Free Trial” sign ups increased by 158% when placed next to the “Buy Now” button. Best of all, the total number of “Buy Now” sign ups didn’t even decrease.

Show Your Top Package First

Almost all service professionals do this. Internet SaaS companies, wedding photographers, consultants, upscale restaurants, and anyone else that knows what they are doing when it comes to sales.

For SaaS companies they first show you their highest paid package first. SaaS companies will show you their highest priced plan on the left hand side of the page (in the USA people read from left to right so the left-most package is naturally read first).

I recently went to a nice restaurant and they had 2 options. The full dining experience for about $100 or an a la carte menu where you can pick and choose what you want (and get something cheaper). I wanted to get the $100 deal but it was to steep for my budget.  So I didn’t feel so bad when ordering $60 worth of a la carte items. But I probably would have spent more like $30 if I hadn’t seen the $100 option.

Get The Customer and Start a Relationship

What I’ve learned the most about down-selling is always try to please the customer. Sometimes they really want to use your services but they just can’t afford it. The goal is to get a new customer in a budget that works for them. Offer high but let them go low ;)

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Launching an Internet Startup with No Coding Experience

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by Rishi Shah on January 4, 2012

This is a guest blog post by Nate Yu, the non-technical business savvy founder behind Seek and this is his story of starting his internet startup and getting his first customers.

When I met Rishi for the first time, it almost felt like I was being set up on an awkward blind date. All I knew about the guy was that he was the cousin of my good friend, Jamie, and was supposedly some sort of startup/marketing wünderkind. Or as Jamie so eloquently put it, “the type of guy that just gets. shit. done.”

Started with a Romantic Meal

As we shared a romantic meal for three (his business partner Robert also joined us) at Sunflower Vietnamese Restaurant in the Mission, Rishi and I started talking about a project I was working on based around the concept of supper clubs.

For those of you who are unfamiliar, let me start at the beginning. My introduction to the world of supper clubs came when I volunteered at a dining event. It was held at a secret location that was only privately revealed a day before the event. The location was a mansion in the South Loop of Chicago, where I shared an evening with twenty strangers over seven courses meticulously prepared by chef Efrain Cuervas. While it had the feel of an intimate dinner party hosted by a close friend, the food was on par with Chicago’s most celebrated fine dining restaurants. Simply put, it was incredible.

Dining Experiences are Hard To Pull Off

As memorable as these dining experiences are, however, they’re deceivingly difficult to pull off. Logistically, it’s a handful for one chef to manage: beyond the monumental task of cooking and entertaining 15+ guests, there’s website creation, newsletter management, ticket/payment processing, publicizing your events, securing a venue, and a whole slew of other operational hassles. Further, there is a major communication disconnect between chefs and patrons; unless you subscribe to their individual newsletters or hear about events through word of mouth, discovering and booking seats to these extravaganzas can be quite a challenge.

A Business Idea After a Brainstorm

After brainstorming with my chef and foodie friends, I set out to create a platform to ease all the pain points that were preventing chefs from throwing these events and diners from finding or attending them.

Like many new entrepreneurs, I had an idea I was passionate about and one, at least from the early feedback I was receiving, that would actually be useful to chefs and adventurous eaters. This, did not however, mean I had any clue on how to build it.  Enter Rishi.

Start Small and Build It Today

While I debated several options, like partnering with a programmer, hiring a freelancer, or sucking it up and enrolling in a ruby on rails class through Code Academy, Rishi’s advice was this: “Start small and build it today.” {tweet} And by today, he meant, literally today. Like immediately after lunch.

Rather than building my site all at once, Rishi suggested that I focus on one chef at a time, building individual landing page for them to host their very own supper club.

Immediately, I thought of my friend Alia, a recent culinary school grad who had just started her own catering company. We’d already been tossing around the idea of hosting dinners as a fun side project and way to get her name (and amazing vegetarian cooking) out there, so I decided she’d be perfect as the first chef for my site!

After lunch, I headed up to Rishi’s office and dedicated the next couple of hours to seeing what I could build with the meager programming knowledge I was equipped with. To my surprise, it was way beyond what I had expected.

After Several Hours… I Had a Functioning Site!

After several hours of tinkering and leveraging tools like Weebly (for web design) and Eventbrite (for payments and ticketing), I had a functioning site. Albeit, a pretty ugly functioning site, but at the very least an easy way to test out the concept and see if something like this was actually helpful to chefs.

I spent my remaining days in SF working on the site design, asking friends and family for feedback, exploring other useful tools like MailChimp and ChartBeat, and eventually presented it to Alia. When I returned home to Chicago, we made the exciting decision to use the site to launch Seek, a vegetarian supper club with a focus on whole, natural ingredients.

Success!

As we were both in uncharted territory, we weren’t quite sure what type of response we were going to get. To our surprise, however, within a few days of bringing the site live we were picked up by a food blog and had hits from total strangers, who signed up for our newsletter and even booked seats to our first dinner! Additionally, we received a request to host a private corporate event. Soon after, we put together our first e-mail newsletter and sent it out to forty of our closest friends and family members. To our delight, our first dinner sold out by lunchtime.

I’m super excited to be hosting our first dinner in two weeks and can’t believe how much I’ve learned and accomplished since that lunch at Sunflower. So my thanks to Rishi for his invaluable advice to ‘start small, and to start now’. Looks like Jamie was right about Rishi after all.

If you are interested in a eating the best meal of your life, please sign up for Seek’s newsletter here to learn about their next events in your area.

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3 Free Tools That Changed Everything For Me

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by Rishi Shah on December 28, 2011

I rely on 3 tools to help me with my job. Each one helps me explain things faster, easier, and better. All tools are free and I promise you will love them after you use them.

Tool #1 Skitch

What is it?

Skitch makes it easy to take screenshots and write in fun colors on top of them. I use Skitch on a daily basis to help show people exactly what I’m talking about. I use it to point customers in the right direction on Flying Cart, visualize new features with my team, and on blog posts like this one.

Here is a 90 second video of Skitch that I made:

Tool #2 Rapportive

 

The days of not knowing who emailed you are over! You can now be the creepy guy that knows everything about all the people that send you an email. I like to use Rapportive to stalk anyone that emails me (customers, friends, and even family!)

What is it?

A free Gmail Add-On that shows you social media information of the person that emailed you. It shows you their Twitter, Facebook, and LinkedIn data. This allows me to send super personalized emails!

One of the coolest things about Rapportive is the picture aspect. It humanizes my emails, some days I’m going through 30+ emails and they all start looking the same. Seeing their picture makes me work harder on making sure my emails are friendly and to the point.

39 Second Video Tutorial of Rapportive:

Tool #3 Screenr

 

What is it?

Screenr is the easiest tool to make short screencasts. You can record your computer screen and upload the video to YouTube. No installation required.

Simple screencasts have cutdown my support emails tremendously. 40-step tedious written tutorials are now replaced with a quick 5 minute step by step video. My customers love pausing and following along. (A side benefit to uploading a video to YouTube is for SEO – Google loves videos and it will improve your search ranking – just remember to include a link back to your website!)

I hope you enjoy these 3 tools as much as I do. They have changed my life for the better. All screenshots were made with Skitch. All Screencasts were made with Screenr, and if you send me an email – all know what you look like.

Have any free tools changed your life? I’d love to know, let me know in the comments.

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Amazon’s Secret to Building Products: Start with a Press Release First

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by Rishi Shah on December 20, 2011

Amazon Prime Ad

I found this gem on Quora by Ian McAllister.

Question: What is Amazon’s approach to product development?

Answer:

For new initiatives a product manager typically starts by writing an internal press release announcing the finished product. The target audience for the press release is the new/updated product’s customers, which can be retail customers or internal users of a tool or technology. Internal press releases are centered around the customer problem, how current solutions (internal or external) fail, and how the new product will blow away existing solutions.

If the benefits listed don’t sound very interesting or exciting to customers, then perhaps they’re not (and shouldn’t be built). Instead, the product manager should keep iterating on the press release until they’ve come up with benefits that actually sound like benefits. Iterating on a press release is a lot less expensive than iterating on the product itself (and quicker!).

Read the full answer on Quora.

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TaskRabbit – What Craigslist Should Have Been

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by Rishi Shah on December 15, 2011

I had no time and desperately needed to get my laundry done yesterday (I was down to my last pair  of underwear!). So I do what I always do when I need some extra help, turn to Craigslist.

I went to the Craigslist section and all of a sudden finding someone to do my laundry became a daunting task. Writing out the job description, figuring out how much I should pay, and then also picking the right person – after all, I wanted to avoid all the weirdos that want to sniff my underwear. Luckily I remembered a friend mentioning TaskRabbit to me.

TaskRabbit is one of the best web applications I have used in a really long time. They made the entire process a no-brainer. Below are the details of what they did exceptionally well.

1. TaskRabbit already knew the top things people ask for. They made it really easy for me to select “Laundry”.

2. Next they answer all the questions I have before I even asked them.

3. This was probably my favorite thing: They show me how much I should pay. I really had no idea how much money to offer. (I decided to pay $41 because I was desperate).

4. I didn’t have to actually write any instructions. TaskRabbit allows you to use other peoples instructional templates and modify them to how you want. Luckily I didn’t even have to modify anything.

5. In minutes of posting my laundry job, I got an email from TaskRabbit saying a guy named Joel is willing to do my task! I was able to check out his profile and reviews to make sure he wasn’t a weirdo. I decided to give him the job (all it took was one click) – an hour later he was at my door… 5 hours later my 3 loads of laundry were clean, folded, and at my doorstep.

TaskRabbit really understands me. They know how lazy I am (for example I don’t even want to do my own laundry!) and so they make it just a few clicks to get the job done. I hope this post inspires you to look at your own company and strive for making it brainless easy.

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Image: Building or The Biggest Billboard Ever?

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by Rishi Shah on December 12, 2011

Office Building + Advertisement = Really Big Billboard

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Millions of Users for Everyone!

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by Rishi Shah on December 6, 2011

Photo Credit: El Marto

Worried about competitors? Don’t be.

There are literally millions of internet users for everyone!

There are Billions of people that go on the internet! That is a big pool of people to have access to.

Source: Internet World Stats

Yes, another social network can exist!
Yes, another hosted email newsletter service can exist!
Yes, another Google can exist!
Yes, another [insert any web company that is already huge] can exist!

Why? The Internet is MASSIVE. Tons of potential customers still exist for you!

To prove my point. I’m going to share a few companies that are all sort of doing the same thing and have millions of users.

The best example is Hosted Email Newsletter companies (all doing easily $1M+ in revenue)
MailChimp
iContact
ConstantContact
CampaignMonitor

Web Based BackUp Solutions (all doing really well for themselves)
Backupify
DropBox
Carbonite

Super Simple Blogging Service (all have loads of users)
Tumblr
Typepad
Blogger
WordPress

Super Simple Web Publishing Service
Weebly
Homestead/Intuit
 Jimdo

Project Management Tools 
37Signals
TeamWorkPM
Pivitol Tracker

Social Networks
Google Plus (~50 Million Users)
Facebook (~700 Million Users)
Twitter (~100 Million Users)

Of course each company is slightly different when you look at on a granular level. But most of the companies can be easily grouped together when you take a look at their core mission.

Here is my point: DON’T BE WORRIED ABOUT COMPETITORS. There are millions of customers that want to use your product even if it similar to some thing else. Just stay focused on finding customers, serving them well, and your internet business will thrive!

PS: Yes, I do think another Facebook can exist :) Let me know what you think in the comments!

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