Understanding Nothing

More braindead software alert.

Last night I was at a friend’s house and we decided to order pizza from Domino’s. I very rarely order from them, so I can never remember which pizza it is I like – it’s either the “Hot and Spicy” or the “Tandoori Hot”, but I never know which. So, as we didn’t have a menu, I decided to look it up online.

The Dominos web site is one of the most dysfunctional sites I’ve come across in quite some time:

1. They don’t have a menu on-line.

I couldn’t believe this, and still can’t. I still think there must be something I’m just missing. But I just can’t find the menu. I can find out how many calories etc are in each type of pizza in their “Food Guide”, but nowhere actually tells me what toppings are on each pizza!

2. You can’t look at the list of products until you register

You can get a list of products in the on-line ordering section – but not until you give them your postcode, house number, name and phone number (each on a separate page). [Note, as I write this I can't even get to this section as my nearest store is closed - even though you can schedule deliveries for later!]

3. You can’t see what you’re ordering

I was impressed that you can order a half-and-half pizza, each with a different set of toppings. I was much less impressed that once it goes in your ‘basket’ it appears solely as a half and half pizza and doesn’t show you your toppings. If you trust the site this sort of thing probably isn’t a problem, but when I don’t, I’m always worried that the order will just be placed like this and the store will have to ring me and ask what was on each half!

4. There’s no way to give special instructions

I don’t like onions on my pizza. I thought that the one I was ordering had onions – but wasn’t sure (see point 1!). I wanted to write in a little box somewhere: “Please don’t put onions on the Tandoori Hot side!”. But there was no such little box, and as far as I could see, no way at all to let them know this short of ringing the store after placing the order – which would pretty much defeat the point of online ordering

4b. There’s no way to give delivery instructions

Similarly there was no way to say something like, “When you deliver, don’t go the front door as we’re not in the house, but are sitting round the back in the garden”.

5. They don’t take credit cards

One of the things about ordering online is not having to worry about always having cash. Not in Domino’s case. You can say that you’ll pay the delivery guy. Or you can pay by debit card. But not credit card. Even though the store takes credit cards if you walk in or phone them.

6. The store ignores your order

One hour later, and considerably hungrier, I rang the store to say “our pizza hasn’t arrived yet”. They took my details and said they couldn’t see the order and was I sure I didn’t order it from another store. When I explained I ordered on line she went silent for a moment and then said “Oh yes, there it is. No one saw that!” Then there was some muffled mumbling and another voice came on, saying “Good evening. This is the manager, how many I help you?”

6b. They don’t know how to handle problems

I hate it when people pass you to their manager without telling you they’re going to, and seemingly without telling their manager what’s going on either. I don’t want to have to repeat myself to several people without knowing why. I hate it even more when the manager then lies to you because they don’t realise that the original person has already told you the truth. In this case the manager attempted to explain that they were having “technical difficulties” and the order had only just come through. And so she did probably the only thing that she’d been trained to do, and offered the food for free. At least I got to give my “no onions” instruction!

They may know how to do delivery on-time, but Domino’s certainly haven’t got to grips with this whole e-business thing.

Scott’s back, with a Marketing 101 piece on how Great Customer Service is Great Marketing. I couldn’t agree more.

Back in 1998, when we decided to launch BlackStar, we had $10,000 from our MusicDatabase deal with NTK. I coded the site, Jeremy designed it, and Darryl cut all the deals. We had one salaried staff member – Anni, the best customer care person in the universe. We certainly had no money for advertising for at least 6 months, and even then we could only stretch as far as ads in Empire and Total Film – hardly the media saturation we embarked on when we suddenly found ourselves with millions in VC money a couple of years later. But we maintained a 35% month-on-month growth rate for each of those first 18 months, and I’d have no hesitation in saying that our Customer Care was the number one factor behind that.

What many people seem to miss is that there are two main types of customer service – particularly in a web environment. There’s both the “dealing with customers who contact you”, and the “making it so that customers don’t have to contact you”. Amazon, who have the chutzpah to declare themselves as the most customer focused organisation on the planet, are great at the second, but terrible at the first. If you slip through the cracks of their system, they’re lost. Several times I’ve been engaged in a cycle of emails with service staff who just don’t understand my problems and assume I mean something completely different because they know how to deal with that.

At BlackStar we bootstrapped our entire system, only expecting it to actually work 90% of the time, and so we gave our care staff wide flexibility in what they could do to solve problems. Whilst it might seem that this is a very expensive approach, it actually saved a lot of money. The last 10% of any system always accounts for 90% of the development cost, so we were able to implement things in a rough and ready way, put them live, deal with the cases where they didn’t work, and only bother solving them (well, eliminating 90% of those cases) when they were happening too often. This allowed us to make changes to our site and back-end systems practically in real time, enabling us to actually grow at that 35% per month rate.

In the process we not only built the best systems around (it only ever did what we and out customers actually needed it to do – not lots of ‘cool’ functions that someone had dreamed up and spent a year designing and implementing, only to find that no-one used them), but led to an approach to customer care that led to us winning several major awards, getting tons of press coverage, and having the happiest customers in the industry, who would gladly recommend us to everyone they knew.

The systems never worked “correctly” all the time, so there was never any attempt to hide behind them. Instead everyone was trained to just do whatever it took to sort out the problem. If that meant going down to Virgin or HMV and buying the video off the shelf to send to the customer, then that’s just what we did.

If it meant giving a customer a free video each month until our credit card processing abilities could include American Express, well, then that’s what we’d do. (It cost us about £30, forced us to sort out an obvious deficiency in our system, and turned an irate customer into a fan).

If it meant sorting out a problem that a US visitor had in getting the instruction manual for their home gym that they’d bought from Sears, well, we even did do that too. (The person never became a customer, but we got a nice write up in the Wall Street Journal out of it!)

We actively saw customer care as our major marketing tool. And it worked. I think many small companies know this instinctively. Word of mouth is the only marketing they can get. Big companies seem to forget it though. BlackStar certainly has.

Michael Dubelko was founder and CEO of DVD Express, which he set up after Cannel Studios, where he was president, was sold to Fox News.

In an interview with DVD Hotseat he was asked “At what rate – compared to new releases – do people actually order backcatalog titles? Are back catalog titles dead or do they sell at a steady rate?”

Bizarrely the company didn’t know this sort of information – even though it was over two years old at the time, and had turned over $16m the previous year: “We don’t have any statistics on this, but I believe it’s over 50% at this stage.”

Is it any wonder the company couldn’t succeed if they couldn’t even tell things like this?

Reminds me of the scary conversations we had with the Founder/CEO of another big-name US on-line DVD retailer we were considering buying, who not only couldn’t answer, but seemingly couldn’t even understand the relevance of questions about customer retention, repeat purchase rates, product split etc. That company no longer exists either. No surprise there then.

According to Hoovers:

“DVD Express merged with Maximum Holdings, which included a network of gaming Web sites and GameFan Magazine, in late 1999. The company filed for Chapter 11 bankruptcy in March 2001 and sold substantially all of its assets to Express Media Group the following June. Investors include Maximum’s founder David Bergstein and other top executives, as well as DVD Express founder Michael Dubelko and British game maker Eidos.”

If I’m reading this correctly it seems that Express Media Group was basically the same people as the bankrupt company, (which at the time of the merger had been valued at $500m). (Eidos paid $55m for a 12.6% stake).

The Google cache still has the Press Release from the relaunch in September 2001:

Express Media Group, Inc. recently purchased the assets of Express.com, Inc. With new owners, a new management team, and a precisely focused business model, the company looks to be profitable quickly … DVD Express has left the dark days of e-commerce behind them, moving forward with a plan that will benefit both the Internet industry and its burgeoning customer base.

That version never survived the 2001 Holiday Season.

The new site still claims to be owned by Express Media Group. I don’t give it much chance either.

Back in the days when they were pretty good, I bought some DVDs from DVDexpress.com

Today I got an email from DVD.com claiming: “We have acquired DVD Express and will be continuing where the company has left off.”

Further: “DVD.com also knew that with the drastic changes in online retail, DVD Express had difficulties meeting the expectation and needs of its customers.”

And to finish: “With our new management and site we thought it would be a perfect time to say hello as the only true online DVD provider.”

So, who are DVD.com?

Well, from what I can discover, DVD.com always has been DVDexpress!

The Wayback Machine’s earliest snapshot is from Feb ’98, but is a surreal “Favorite Brands” site for JET-PUFFED;® Marshmallows!

Their November 1998 site is the DVDexpress site. It’s branded as such, and is how I remember DVD express. I assume it was simply a server alias.

By October 1999 it has been developed into its own distinct information site – but still with the DVDexpress logo at the top, and credited at the bottom as “A DVD EXPRESS information source”.

By March 2000 DVDexpress has rebranded itself simply as Express.com, and DVD.com follows suit uses the new Express.com logo. But it’s still obviously the same company.

In March/April 2001 the DVD.com information site seems to have disappeared, and merely redirected people to the Express.com home page.

By May 2001 it was a server alias again, showing the Express.com site, as it continued to be until earlier this year, when Express.com and all its various domains shut down.

So what’s going on?

It seems to me that DVDexpress, which struggled over the last few year years, and seemingly collapsed in January, has decided to try to relaunch itself. It probably has indeed got new management. And quite possibly new investors. But instead of being honest about what’s going on, it’s tried to disguise it as a take-over by DVD.com, who are obviously meant to sound like a bigger, stronger, player.

Not a very promising restart in my books…

Out of curiosity, I tried to set up a hotmail account yesterday. They really go out of their way to make it difficult for you to sign up for a free account. Firstly, they told me that “Microsoft® .NET Passport no longer supports the Web browser version you are using. Please upgrade to a current Web browser, such as Microsoft Internet Explorer version 4.0 or later, or Netscape Navigator version 4.08 or later.” (I was using Mozilla 1.0RC1).

I switched to IE, and tried to register, only to be told that my surname wasn’t valid, and to please choose a different one! So, I made up some details, and got through the first part of registration.

After giving them your basic details they take you to a page where they expound at length on the benefits of a £19.99 account, and present a large button to “continue”. As it appears to be the only link on the page I clicked it, but was then expected to give them credit card details. I hit back, and then spent several minutes trying to discover how to get the free account. Eventually, I found a small link at the bottom of the “About MSN Hotmail Accounts”, immediately after dire warnings about how all your e-mail, addresses and folders might be deleted, saying, “Click here to sign up for a 2 MB account.”

[Oh, and having told them that I was in the UK, with a time-zone of Belfast, they then proceeded to tell me that my fees would include Irish tax ...]

As soon as you log in you get a usage bar showing that you’re already using 1% of your total space. I was initially puzzled, but then discovered this was the welcome message. I tried to view it, but every time I clicked on either the inbox button at the top of the page, or the inbox text link in the left hand column, nothing seemed to happen. I eventually had to switch back to Mozilla (with which you can apparently log in just fine – just not register!), and open the message there.

If I was more paranoid, I’d think that the free account is deliberately set-up to be harder to use. But then reality kicks in and I remember that this is Microsoft, and that all versions are probably really difficult.

Ebay’s latest financial reports reveal that:

• over one and half million new items get listed every day
• these generate almost $2.5m per day revenue
• on top of this they earn about another $10m per month from third parties (advertising and other services)
• they spent almost $25m in the quarter on the development of the software behind site and seller tools.

I’ve never really understood how companies like this spend quite so much money on “product development”. The last time I added it up (about a year ago), Amazon had spent over $1bn on this (although they include content licensing costs in theirs). Ebay’s run to date is coming up on about $200m. From what I can see this doesn’t include costs for hardware or hosting etc (other than for equipment used for development) – the majority of it is staff and contractor costs.

$25m/quarter pays for the equivalent of 1,000 developers at $100k/year each. Take off even a sizeable chunk for their equipment, and make some of them managers and support staff, and you still have a ludicrously large team. As I don’t believe they have anywhere near that many developers I can only assume that a huge chunk of this is going on software licenses.

Amazon announce last year that moving to Linux saved them around $17m in technology expenses in the quarter. At BlackStar we managed to keep lots of our costs very low by building everything around a LAMP platform. I think some other people need to learn these lessons…

In Q4 2001, Amazon managed to save $22m in costs by tweaking its fulfillment operations. As well as the obvious fine tuning of its predictive software, it seems that one of the most effective changes was to rearrange the layout of their warehouses to make it quicker to pick goods that often get ordered together. I’m not sure what percentage of that the $22m that accounted for, but even if it was 10%, that one piece of software will save them somewhere in the region of $10m in a year.

Nice return for a fairly simple idea…