Supernatural Agency: Online business tales

“We could have put those resources into advertising. Instead, we wanted to work on getting people back,” Hsieh says. “We believe that the way to build a long-term, growing business is to focus on how to get repeat customers back to your site and purchase more often.”

That’s Tony Hsieh, CEO of Zappos, the online shoe retailer, explaining one of the ways they grew their business from $1.6 million to $800 million is seven years, in a current Marketing Sherpa article (the article expires as a free version on August 14th- I recommend you sign up for a free sub to get more of these great pieces on lead gen, CS, direct and other marketing issues).

As you monetize, you must retain and resell or all your efforts are doomed to endless repetition with slow growth. Repeat customers tell others and spread viral referrals. Keeping them happy is critical yet many affiliate sites and ad-supported sites do little more than place a ‘Join Our Email List’ form on their pages to capture return business.

Here are a few things you must consider to build a happy and growing database of repeat customers:

• Provide compelling, current content that is frequently refreshed. Include email and RSS update options.
• Do the Amazon thing: Create lists of ‘Customers Who Bought This Also Liked This’
• Have an application on the site that solves a time-related problem for your users so they give you permission to contact them on a predictable basis
• Amazing customer service. Affiliates may say: ‘we don’t do customer service’ but the fact is they are your customers. Find ways to get them to return to you rather than the merchant site.
• Reward referrals. Offer points, giveaways, free shipping, etc., for legit referrals.
• Don’t work with marginal merchants or advertisers who are not very specific to your site subject. Having a high quality central resource on a subject including great merchants and advertising that directly addresses my interests will encourage me to come back- it’s all content and should be vetted by the same standards used for your editorial content (if you have any!). Those Hormel Spam recipe ads I get in my Gmail account really don’t help the Gmail cause…

How valuable is a repeat customer? You don’t have to constantly market to replenish the one-timers, they will refer, they will buy again and again. $$$ and they represent a major business asset which greatly increases your value should you want to sell.

If your site doesn’t lend itself to encouraging repeat visitors and a loyal fan base I’d suggest you’re doomed to small time status. It’s time to change your plan.

SupernaturalAgency develops media sites and web-based applications that help people take full advantage of those sites. These are not ‘mission critical’ sites or applications in that, their failure, accidental or otherwise, won’t bring down the wrath of our users. This is an intentional decision on our part, reinforced this week by the inexcusable breakdown of a major San Francisco data-center that hosted, among others, craigslist.org and SixApart’s Typepad blogging service. These services were out of business for hours which means that many of their users, who use them to run their businesses, were also temporarily out of business. It was a classic cascading effect that never should have happened.

Both of us worked for a company that provides a mission critical service to hundreds of thousands of small to mid-sized businesses. They use a co-location in a major data-center and have their own data-center with a significant investment in redundant power back-ups. This is a huge responsibility and one that can break a company should there be a failure.

As I’ve mentioned frequently in describing our company, we’re in this as a serious but fun experiment in making a successful business without a huge amount of stress. That’s why we’ve chosen a fairly lightweight, consumer focus and a problem whose solution will make people feel good about themselves. When we provide this solution there is a time element involved but a slippage of hours or even days won’t materially affect the desired outcome for either ourselves or the user. Two weeks might be a problem, but if our hosting partner is down for two weeks there is probably something much graver going on, something that eclipses the importance of anything we’re doing.

The Scalability Issue

Some of the potential investors we’ve spoken with, particularly those with tech backgrounds, have questioned our ability to scale with a host and also expressed concerns over our data assets being in ’someone else’s’ hands. Our response is this:

• This isn’t do or die stuff. If we don’t have five nines of up-time the sky won’t fall.
• We are in no way qualified to run even a small data-center. It’s simply not our core competency.
• The available large scale hosting vendors are proven and include names like Amazon S3 and Google Base. We are currently testing Media Temple.
• They have set up virtual servers that can scale extremely quickly. This is important because one major media story about our project could mean a huge spike in users virtually overnight. We don’t want to be that company that ran around all night borrowing servers because Techcrunch or Digg sent them link love.
• The database can easily be backed up locally- and will be.

We don’t even know anyone we could borrow a cup of server goodness from.