Better Tech Dev

Insights on Technology Development from Austin Higgins

Category: Customers

3 Things We Can Learn from MoviePass

MoviePass is in trouble – again. The company has been around since 2011 but came in to the main public eye sometime in 2017 with its too-good-to-be-true promise of unlimited movie tickets for $9.95 per month.

This business comes at an interesting time. In 2017, domestic box office ticket sales hit a 25 year low. And just this past month, a new theater opened up near me with tickets priced at $19 and some change. Average ticket prices have gone up somewhere around 25-30% in the last 10 years as attendance has fallen.

MoviePass offers customers one free movie per day. The process to get the ticket is entirely too complicated. Customers receive a prepaid debit card in the mail after they subscribe. Then, they can select a movie from select theaters when they are within a certain proximity of the theater. The cost of the ticket is loaded on the debit card and the customer can go the theater and get the ticket.

Critics, investors and theaters have spoken out about the business model. The company has been hemorrhaging money and has had to raise additional capital just to stay afloat. The executive team considered raising the monthly price for their 3 million customers but instead opted to lower the number of movies customers can see from one per day to three per month.

I can’t imagine the 3 million customers will stay for long. Or that the business will survive without major changes.

As a fan of the cinema, I considered subscribing to the service. I decided against it for a number of reasons and chose to watch the company’s story unfold from afar.

Here are a few lessons we can learn from MoviePass.

1. Build easy to use products. 

The process for customers to use the service is cumbersome. A customer can’t just buy a ticket on their phone and go on with their life. They have to take 3 additional steps – including a geo-located one – just to use the service.

Customers would be better served with an easy flow and simple steps. A simple solution is an elegant solution.

When you are designing products and features for customers, focus on usability. Not just from a design standpoint but from a process flow standpoint. This may sound like it is common sense. But obviously, it is not taken seriously everywhere.

2. Don’t alienate your suppliers. 

MoviePass faced tough criticism from major theater chains like AMC during their pilot program in San Francisco as well as after the nation-wide launch. Theaters wan’t more than just ticket sales – they want to know why you are purchasing and to build a longer-term customer relationship so they can provide better experiences, ancillary sales and promotional items based on relevant data.

MoviePass cannot exist without major theater chains. Alienating and competing with your suppliers is not a good business model.

Look at the end to end value chain and supply chain for your products. Who are your partners, suppliers, vendors and impacted organizations? Competition is healthy and encouraged. But where are you alienating key partners that you cannot replace elsewhere?

3. Save the best for last. 

Anytime a company raises prices or lowers value is not a good sign for customers. Had MoviePass started with one movie per week for $9.95 per month would have been an amazing deal. If they gradually increased the number of movies, customers would have received more value the longer they were with MoviePass.

Unlimited sounds better as a marketing ploy, but if its not scalable it is really just a lie.

When planning a long-term roadmap for a product, are you increasing value to your customers, keeping the same value or (gasp) reducing value for your customers? One of these is correct. One is tolerable. One is a cardinal sin.

Coffee Holds the Answer to Your Product Questions

The average consumer has no real interest in products. Features, competitive advantage, price points, usability and delivery are all meaningless to them. When a customer is making a purchase decision they are really hiring someone or something to do a job for them. This applies in virtually every industry and product vertigal. Customers hire products, they don’t buy them.

The Job-to-be-Done framework was pioneered by Harvard Business School professor Clayton Christensen. But still, most product leaders don’t realize the motivation behind customer purchase decisions.

Why People Hire Coffee

Coffee is an almost perfect way to explain the job to be done framework. Coffee is one of the oldest beverages, consumed by most people in the world today. Yet the way it’s consumed and the reasons vary more than just how many sugars.

Coffee can have many features, competitive advantages or delivery mechanisms. Coffee can be high quality or low quality. It can be sweet or bitter. It can be cheap or expensive. It can be instant or scientifically crafted. To make it more complicated, each feature is on a sliding spectrum. There can be near infinite types of coffee.

As a product leader, how can you decide what features to focus on when developing your product? You must first consider the job for which your customers are hiring coffee.

Three People. Three Cups of Coffee.

Some people choose not to make coffee at home. Their reason for consuming coffee is really to create a break in the day. To go to a coffee shop sit and read a book or otherwise checkout for a bit. He really doesn’t care that much about cost, convenience of time, because he’s after the experience not the consumption.  

A lot of people have a deep love of coffee. They may buys high-quality beans to grinds for each brew brew. They likely own a few brewing mechanisms and can make coffee in nearly every possible way. For this person quality is important but the focus is on controlling the experience.

Many people don’t care about the coffee experience and treat coffee like a utility. Make it  quickly, drink it fast get the caffeine fix, rinse and repeat as needed for fuel each day. Instant coffee and fast-brew machines solve this need.    

What You Can Do Right Now

There are a few practical steps you can take as a product leader. Realize that customer segments and demographic data is one-dimensional. Seeing your customers as a “tribe” isn’t necessarily actionable.

  1. Define your customers by job requirements
  2. Understand the motivation behind the job requirements
  3. Create hire-able and sellable solutions to these job requirements
  4. Demonstrate the solutions in a way that fits their requirements

It takes time, thought-process and energy in the beginning to do this right. If you aren’t solving challenges for your customers, what is the point?

Stop Sending Surveys

Over the last few weeks I have received a handful of surveys to fill out. I’ve asked for feedback in the past, so I usually try to provide when it is asked of me. Every survey I have looked at has a couple of dozen questions, most of which have grid after grid of radials.

I never make it past the first page. This is especially true when I see the survey has 5 or more pages. I haven’t finished a single survey yet. And I’m one of the few people that actually want to give real, constructive feedback.

Surveys only need 2 questions.

  1. Do you like our product? Yes or no.
  2. Why?

Skip the “maybe” option for whether someone likes your product or not. If the answer isn’t yes, it is no. This is especially true when it comes to products and purchase decisions. From a data standpoint, you should treat your “maybes” as a “no”.

This will increase the number of respondents as well as the conversion rate on survey results. You may think you need a more complicated measurement. 5 point likerts, dozens of questions, Net Promoter Score.

Aside from production data like revenue, repeat customers and data on usage, all you really need to know is if someone likes your product and why. And a breakout of what % of your survey respondents like your product versus not liking your product. This is just as valuable – if not more valuable – than a traditional Net Promoter Score.

Keep it simple. If you need more intensive data, run a usability lab.

Minimalism, Christmas and the Ideal Company

This time of year, and Christmas Day in particular, makes me think of my favorite style, minimalism. I love capitalism and, to an extent, consumerism. Life is all about maximizing things — compassion, experiences, giving, love, passion and plenty of other things. Material possessions can sometimes help us maximize what we love the most.

Minimalism is all about using the minimum effective dose of something to maximize the results. Minimalism is about reducing waste, not things.

I often ask myself during the holidays, what am I wasting? Time? Money? Resources? Relationships. Being mindful of waste can turn to being mindful of purpose.

I apply this same practice in business, too. When dealing with customers, how am I being wasteful? When leading a team, what activities actually drive value and what activities provide no value? How can I remove work activities or clients that aren’t essential?

The ideal company has no waste. There is no wasted money, every penny spent is spent on purpse. There is no wasted time, work is completed in the fasted way possible. There are no wasted people, all employees at all level are satisfied, growing and producing.

In Six Sigma terms, every activity should be value-add to end customers and internal customers. There should be no non-value-add activities in the values stream.

Is this possible? Absolutely. Is this probably? Unlikely.

At this time of year focused on abundance, it is important to remember in our personal and work lives this one question: what am I wasting? Identify and then correct. If something does not provide value it must be removed

The Real Language of Business

For the last few years I have been telling executives and entrepreneurs that the language of business is accounting. If you want to understand how a business operates, follow the money. It doesn’t matter the functional area or industry, money is the same wherever you go.

I believed this truth so much that I studied investment finance, accounting and valuation in grad school.

It turns out that I have been wrong the entire time. Accounting is not the language of business. The real language of business is the Voice of the Customer (VoC).

The Voice of the Customer should be the single guiding factor in making business decisions.

Marketing. How can I reach my customers and communicate to them in the way that they prefer?

Sales. How can I ensure my sales team and sales process provide value early and often? How does my customer define value?

Fulfillment. How can I fulfill customer orders in a timely manner? What are theirexpectations?

Customer Service. What are my customer’s expectations and what problems will I need to solve?

Product Development. What products and features do my customers care about? What are they willing to pay for?

VoC and Value Add Activities

The Voice of the Customer can help business executives and entrepreneurs in any industry and any functional area define what business activities are actually valuable. Every activity a business performs is either valuable to customers or invaluable to customers.

Some invaluable activities are necessary. Does payroll accounting for employees really provide any value to customers? Not at all. Is it necessary? Absolutely. There are certain activities and tasks that businesses must perform. The goal is to identify what areas of your business actually provide value and invest in that area to maximize value.

It is impossible to know what your customers care about without asking them.

Ideally, businesses should involve customer feedback at every stage. Every employee of your company – from interns to the C-suite – should be empowered to listen to customers and communicate their voice back to the business.

Idea to Action

There are many ways to incorporate the VoC to your daily operations. Surveys, focus groups and interviews all work. The most effective way is to ask one question during every customer interaction. The question is the same online or offline and the same in billing, sales, marketing, support or development.

What can my company do to provide more value to you?

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