I've worked in a variety of new-ish industries and old world industries lately. One distinction strikes me between them -
With many an old world industry, people already know they want to buy. Thus, it's about maxing dollar per sale.
With many a new world industry, people don't know what you're offering. Thus, getting a larger percent of people to try your product/service is a bigger deal.
Take a restaurant. Everyone in a restaurant goes in with cash already. Maybe they look at the menu first, but probably they just sit down. And when they sit down, they're buying something.
Thus, the restaurant business is about getting people into the restaurant and then maxing out the good experience and dollar per sale. Designing your menu so the high margin items "pop out" and get chosen more often, training your wait staff to be very cool and professional and to upsell drinks/desserts/wines/whatever.
It wouldn't surprise me if 90% of people who walk into a restaurant buy something. So getting the foot traffic, quality of the food/atmosphere/service, and dollar per sale up is where it's at.
New industries, the wallet isn't already out. People are like, "What the heck is this newfangled technology thing?" For them, the difference is between getting 1% of your visitors to buy vs. 0.8%. Interestingly, 99% of people who come to your site might never use your product, because they don't buy it. So, as important as product quality still is (word of mouth, reviews, repurchases, etc) - it's even more important to get the right marketing messages, to split test the hell out of everything, and to get people to take their wallet out. That's going to require educating them a lot - in many times, they can't even use your product until they take the wallet out, and they're not sure if they'd want it.
Old world industries: People get it. People get food or furniture or whatever. So max foot traffic, quality, dollar per sale.
New world industries: Educate, educate, educate. Get them to get the wallet out. Also max foot traffic, quality, and dollar per sale (these are good ideas) but getting the conversion rates is probably the single most important variable for your success. Getting 20% more per sale is straight up domainted by getting 100% more sales, which can be done with better layouts and better presentation of benefits.
For a moment, before reading, I thought this was going to be an observation I've made several times..
Namely, the people in a grocery store who roll their cart up to the checkout, stand there idly while the cashier rings them up and bags their groceries for them, and then seem surprised when it's time to pay and embark upon a mission of discovery to find their wallet. Drives me crazy.
But your post was good, too :)
I. This post outlines Patrick McKenzie - a brilliant technologist and entrepreneur - how he's done such amazing things and learned so much, and why he's getting drastically underpaid and how it's his own fault. This post will be most valuable for technologists who underestimate themselves and undervalue themselves.
II. Hacker News is the best tech community on the internet, and patio11 - Patrick McKenzie - is the best contributor there. I don't even think that's controversial, I think it would be near universally agreed by the HN crowd that Patrick has made as many or more important contributions as anyone.
If you're from Hacker News, you know Patrick already. But for my readers that don't know him, let me give you a quick overview.
III. Patrick is a multi-faceted genius, and I don't throw the word genius around casually.
Patrick McKenzie is many things - he's an expatriate to Japan, he's a talented coder, tester, metrics/split-testing/analytics user, a great writer, extremely modest and helpful. He can recruit people, evaluate talent, and manage people well. He understands ROI very well and is good at purchasing advertising. He's good at customer service. Outsourcing. Automation. Coding. Ecommerce.
I've long considered myself a fantastic buyer. Notice I don't say shopper - that alludes to a hobby or form of entertainment. To me, buying is serious business.
Even before I had any serious degree of financial success, many people assumed I was rich because of my material posessions. I guess most people could pull that off by maxing credit cards, but I was actually socking money away for later.
How do I do it? Read on...
The most important thing to remember is value. Sounds obvious, but nearly everyone ignores value on a daily basis. Value means that you're getting the most for your money - not that you're saving the most money necessarily. A Rolex at $1000 might be an incredible value, but a Timex could be a rip off at $150.