Wednesday, February 16, 2005

Testing, Testing, One, Two, Three, Testing

When I’m doing a live sound project, setting up a PA system for a band or a speaker, I’ve got to make sure that it’s working right long before the show. I plug everything in where it’s supposed to go and then I turn it all on and step up to the mic. “Testing, testing, one, two, three…” Then I know it’s ready for the talent.

Your website is no different. You’ve spent a lot of time and hard work getting your site up and running. You’ve written and re-written the text. You’ve added the graphics, and placed the products. You’ve organized your internal navigational linking. You’re set! You’re good to go, right?

Well, almost.

Consider one final step, that of testing. Run your site through a few paces before you throw open the doors and let the public run rampant over it.

Your first thought might be to have mom and dad, your sibs, and maybe even your kids look it over. “Tell me what you think,” you might say. Trust me, the results of a question like that might be encouraging, even flattering, but they won’t be very useful. Because they lack direction. Their comments don’t have the focus to give you any real information. “Cool website!”, while helping you feel good, won’t tell you that certain parts of certain pages are confusing, or that the purpose of the overall site is unclear.

So, to get good feedback, you have to ask the right questions, and in the right circumstances.

First of all, gather some names of people you’d like to experience test your website. Mix them up. Male, female, young, old. Everyone can help. Find some that are experienced and web savvy, and some that hardly know what a mouse is.

Then, gather some questions you’d like to have answered about your site. Actually, a better word than “questions” is “tasks”. What do you want your audience to be able to do? Make a list of three to four specific tasks. Here’s a sample list:

· Find and buy a left-handed wind shifter
· Find and read the article on modern weather patterns
· Sign up on the weather-watcher’s newsletter list

Make the tasks very specific, but don’t include any instruction as to how to do it. Just state the task.

Also prepare some comprehension questions. When your test subjects answer these questions, it’ll tell you how well you explained yourself on your site. This is particularly important if your product or your business model is very unique. Here’s some samples from that short list:

· Tell me what you understand the overall purpose of the site to be
· Tell me what you understand about what a left handed wind shifter is and how it works.

Finally, you can prepare questions about their overall response to the site itself. Even though you can get more vague in these questions, it’s still a great idea to avoid the temptation to say, “What did you think?”

· Was it interesting?
· Did it look nice and comfortable?
· Was it easy to get around in it?

Once you’ve prepared the questions, sit one of your subjects down at a computer, load up the site and give them the tasks. It will be their job to explore the site and try to accomplish the tasks. It will be your job to shut up and take notes. Notice that I said, “Shut up.” That’s critical. Your test subject might from time to time turn to you and ask a question. What do you do? Smile, shrug your shoulders, and stay silent. The visitors, your potential customers, won’t be able to look back behind them and ask you a question.

But make a note of where they were and what question they had. That could indicate a problem area of the site.

Watch how they go about completing the tasks. Notice not only how long it takes them to do it, but also what paths they take to get there. Pay special attention if they struggle with a particular task, or a particular page in the site.

Once each tester has completed the tasks, then ask them the questions, and make note of their answers. Do this same process with each tester, and you’ll start to notice trends, bottlenecks, problem spots. Then you’ll want to fix them.

Won’t that be great? You get to know how effective your site is before you launch. You can fix your problems before the traffic comes, instead of wondering how many sales that cost you! In my latest Internet venture,, I invited people to test it who I knew were interested in the subject matter. Over thirty of them joined the newsletter for real right away! And that was BEFORE the launch date!

So, test it, check it, make it work. And then the show will begin!

Monday, February 07, 2005

Hansen’s Laws of Business

#2 Don’t ignore Supply and Demand

OK, this one really isn’t my law. But it’s one that is all too often overlooked in the real world. We often hear buzzwords based on it, like “Supply-side Economics”, or “Advertising boosts Demand”.

What does it really mean?

In a truly free-market economy, there are three elements that are inseparably connected, and those are supply, demand, and price. Let’s start by looking at each of these individually:

Supply is simply defined as how much of something is available on the market. Are there a lot of people or businesses trying to sell a product? That’s defined as the supply. That can be measured on lots of different levels. There are lots of competing toothpastes, but there’s only one Crest. When I started my first internet business, based on my wife’s rubber stamping hobby, we saw that there were a lot of other stamp companies. The supply of stamps was high. But there was only one company making stamps with our designs. So, within that market, the supply of OUR stamps was low.

Demand is very simply all about how many people want what you’ve got. If you’ve got a lot of people clamoring for what you’re selling, that’s a good thing. There are a lot of things that everyone needs. Food, clothing, shelter, etc… These things would be high demand items. So why aren’t they more expensive? You’d think that something everyone needs would be pricier, right?

Well, see the third item in that list, “Price”, is a function of the other two, “Supply”, and “Demand”. They are interrelated. Let’s look at a few theoretical examples.

If demand is high (Lots of people want it), and supply is low (it’s hard to find), then the price of that item is going to be high. Diamonds are a great example. Collectibles can also be in this category. Do you want a Mickey Mantle rookie card? Not very many of them around, and a lot of people want it. So, you’ll pay for it.

If the supply of something is high (lots of people selling it), and the demand is low (not a lot of people looking for it), the price is going to be low. This is the proverbial “selling coals to Newcastle”, or “selling snow to the Eskimos”. Look into the current market for leather jackets on eBay for another good example of high supply, low demand.

If the supply and demand are essentially equal, then the price settles into a place where it’s comfortable. Sure, we always complain about paying money, but it will eventually settle into a place where it’s all in balance. Buying gasoline is very much like this. Availability of lots of competing gas stations provides a good supply. Lots of people driving cars keeps demand high. As prices go up, people tend to drive less. As prices go down, people drive more. Supply and demand are in balance, fluctuating but also stable, and that keeps the prices pretty much in the same place.

Specialty shops thrive on products that are low in supply (hard to find), and low in demand (off-beat and unique items).

Sometimes, these things can be manipulated artificially, either intentionally, or in ignorance. There are consequences. For example, remember the gas lines of the 70’s? That was because the government froze the prices on gasoline, artificially holding the prices down. The demand stayed high, and so the supply dried up. People were waiting for hours in line to buy a few gallons of gas.

My sister hand knits sweaters from hand-spun exotic wools. It’s a very labor- and time-intensive process. She doesn’t like to sell them, because she’s afraid that she’d get swamped in orders, and wouldn’t be able to keep up. My response? “If you can’t keep up, you’re not charging enough!” Think of it. It’s the same as the gas lines. The price is accidentally deflated, and so the supply sinks into scarcity.

What if you artificially tinker with the demand? What about a company who miss-guesses how many products they’ll need and overproduces. Suddenly they’re overstocked, and they have to let the products go at lower prices just to clear them out.

Then there’s the lesson of the “Tickle-Me Elmo”. This was a toy put up for sale, and the company that made it grossly underestimated the demand. The supply ran out quickly, and suddenly the doll started appearing on eBay and on websites for hundreds of dollars more than the original price. And people were willing to pay it. Because the demand for the product was there. So, what’s the problem? Well, do you think the manufacturer was able to take advantage of the higher prices? Nope. That was all aftermarket reselling. Other people were making all that money.

How does this effect you?

Understand it, and learn how it works. That will help you more than anything else to determine just how viable a particular product line is. EBay is a particularly clear laboratory to study the law of supply and demand. The better you know it, the more you can make it work for you in your pricing.