Stack Ranking Alternatives

Now that Microsoft's Stack Ranking has been uncovered as the problem behind the Zune, Windows Mobile and rising ocean levels it is time we looked at alternative management strategies. Three new options are outlined below:

The Napoleon: Pick one employee and build his/her confidence with a series of high profile, slam dunk projects. Watch as employee rises through the ranks then, drunk on success, disregards office-alliances and wages personal battles with everyone in company. Eventually exile the employee to that funky space past the bathroom where you keep the fax machine and foosball table with the broken goalie.

The Gettysburg: Based on the lead up to the Battle of Gettysburg this strategy encourages mediocre middle managers to shadow their peers, mimicking their projects in an agonizing resource depleting quest that leads to heavy financial losses. Other key elements involve depriving their teams of basic amenities, such as coffee and post-it notes, destroying morale, and putting heavy emphasis on random industry hearsay or consultants with nebulous alliances.

The Serpentine: After their initial project has failed and the "pivot" has not done any better encourage your employee to Serpentine. This involves careening from project to project in an arbitary, haphazzard pattern creating confusion and paranoia across all teams. Based on the work of Peter Falk in the 1979 classic The In-Laws.


Remember, it's not enough to merely implement a strategy. For it to be as damaging as possible it must be lived everyday.

C

InfoGraphic: Freemium Conversion Rate

"What is industry standard conversion rate from free to paid?"

On July 12th I will be speaking at the Freemium Meetup in San Francisco ( http://bit.ly/QVHOC3 ) and I may, or may not, answer this question. The question I will most likely answer is "We have built out an elaborate multi-sheet business model to get funding for our soon to be released freemium app. In Sheet 1 cell A1 should we put 50%, 5% or 0.5% as our conversion rate to the paid version?" And my answer will be...it depends. Some of the dependencies are outlined in the above infographic, which is a fabricated representation of multiple realities I have experienced over the past 12 years of working with companies that use freemium as a business strategy/tactic.

The take away here is, if people see value in your product -- if it addresses a need that has been unfulfilled or users were unaware they had -- then they will tend to convert to a more valuable version of your product at a higher rate (and lower cost). But if you have gone out and cut too good to be true acquisition deals or run wacky promotions to show hockey stick user growth to potential investors, don't bank on a measurable conversion rate. 

Evernote CEO Phil Libin has shared extremely interesting data about the value of their users http://bit.ly/LszKpv.  Tracking these user segments or cohorts (a cohort is essentially a user segment acquired or tracked over a specific time span) is critical for any freemium business. At Zone Labs we would assign unique registration codes that would track where the free product was downloaded (Web site vs. CNET vs. Earthlink, etc). We could then segment users by this code to assess the value of acquisition source. The trick is being able to track multiple segments in order to determine the ones with the biggest impact. If you have any questions or have experienced something interesting/unexpected during your segmentation testing that you'd like to share, please let me know. 


In a future post I will touch on driving revenue from free users beyond the conversion to paid model -- including pop-ads, data services, tool bars, lemonade stands and car washes.

C