the power of customer misbehavior - akf partners

ABBOTT, KEEVEN & FISHER PARTNERS

PARTNERS IN HYPER GROWTH

1

The Power of

Customer Misbehavior

Mike Fisher

Marty Abbott



About Us

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Marty Abbott

Tom Keeven

Mike Fisher



Books

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Other Publications

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Our Business – 10 Countries & Growing

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The Power of Customer Misbehavior

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Growth is Good!

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For Profit Businesses:

• Higher Valuations

• Greater Access to Capital

• Larger Profits

• Higher Employment

• Better Able to Contribute Socially

Not For Profit Businesses:

• Greater Social Impact

• Better Network Effects

• Better Access to Funding



Viral Growth is

Better!

© AKF PARTNERS 2013

Viral Coefficient (Cv) = Fan Out * Conversion Rate

Viral Growth = (Cv * Retention)Frequency

Cv > 1

In order to achieve viral

growth the viral coefficient

must be greater than 1

Viral Growth with Low

Retention is still better than

non-viral growth.

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Comparison of Social Networks

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Founded by Jonathan Abrams and Chris Emmanuel in 2002 in Mountain View, CA

Live in March 2003, adopted by 3 million users within months

Total funding $48.5M

Pages eventually took up to 40 seconds to load

Hired four CEOs in three years

In 2009 sold for $26.4 million MOL

Founded by Mark Zuckerberg and fellow Harvard students in 2004

Initially restricted to college students (.edu email)

500 million users by 2010

Only $40.7M invested by 2007, eventual total investment $1.49B

IPO raised $16B valued the company at over $104B



Social Networking for Pets

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“These are fakesters, they're not people. This is

supposed to be for actual people, so let's get

them off of there.” – Jonathan Adams

By 2012, there were an estimated 22.9 million

misclassified accounts including millions created

for pets (Kelly 2012). A Facebook executive

observed, “I still run across occasional people

profiles that are actually of their cats or dogs or

something like that.”



College Parties

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Friends

Groups

Events



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How Do You Achieve

and Sustain

Viral Growth?



Technology

Adoption S-Curve


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Introduced

Neal Gross and Bryce Ryan

Uses

Explained adoption of hybrid

corn seed as a social process



Technology

Adoption Lifecycle


Introduced

Rogers, Beel and Bohen in 1957

paper Validity of the concept of

stages in the adoption process

Uses

Provided psychographic profiles

of adopters at each stage.

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Technology

Acceptance Model


Perceived

Usefulness

Perceived

Ease of

Use

Attitude

Toward

Using

Behavioral

Intention

to Use

Actual

System

Use

Introduced

Fred Davis 1989 MIS Quarterly

paper Perceived Usefulness,

Perceived Ease of Use, and User

Acceptance of Information

Technology

Uses

Single user / single technologies

like ERP, CSM, and email

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Viral Growth

Model


TAM

Combine TAM with Viral

Growth factors

Perceived Ease of Use and

Perceived Usefulness

Positively Impact Viral GrowthGrowth

Perceived

Usefulness

Perceived

Ease of

Use

Fan Out

Retention

+

++

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Users Help “Create Value”

Co-Creation Co-Production

“the process through which inputs used to

produce a good or service are contributed

by individuals” (Ostrum, 1975)

Creating social media accounts for pets

Adding hashtags to find updates

Using a product in new, innovative and

unforeseen ways

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“the act of interacting, creating content

or applications by at least two people”

(Trogemann and Pelt, 2006).

The contributions of users to Wikipedia

are typical examples of co-creation.

Posting status updates, pictures, sharing

links, etc. through user generated content

(UGC)



The Virtuous Cycle of Misbehavior:

Co-Creation Leads to Co-Production

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Use/

Co-Create

Misbehavior/

Co-Produce



Virtuous

Misbehavior

and

Collaboration

Growth

Misbehavior

Drives Growth


Perceived

Usefulness

Perceived

Ease of

Use

Fan Out

Retention

Co-

Creation

+

+

+

19

+

Co-

Production



Virtuous

Misbehavior

and

Collaboration

Growth

But What Drives

Misbehavior?

Perceived

Usefulness and…


Perceived

Usefulness

Perceived

Ease of

Use

Fan Out

Retention

Co-

Creation

+

+

+

20

+

Co-

Production



Virtuous

Misbehavior

and

Collaboration

Growth


Perceived

Usefulness

Perceived

Ease of

Use

Fan Out

Retention

Co-

Creation

+

+

+

21

+

Co-

Production

Self-Identity“Even those who deny any interest in

how others view them actually do

care, if only by making sure that

everyone else understands that they

don't. The way we dress and behave,

the material objects we possess,

jewelry and watches, cars and

homes, all are public expressions of

our selves” - Donald Norman,

Emotional Design (2007)

Self Identity

Voyeurism

Exhibitionism



Simplified Model with Feedback Loops

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Identity

MisbehaviorUsefulness

Ease of

Use

Growth



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Be Open to Misbehavior

the power of customer misbehavior - akf partners

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