Box. The Marketing Model for the Next Wave of Internet Success

I recently tweeted about how Box saved me a good couple of hours by erasing my mistake of overwriting an earlier version of a presentation that I did not want to.  I simply right clicked on my file in my Mac Finder, selected Dropbox, and it gave me a list of all previous versions.  I then downloaded the version I wanted and voila...problem solved.  The experience did get me thinking about how impressed I was with Box from start to finish.  I recalled that this model is not a new one...but the experience was always clunky, prone to errors, and generally frustrating.  Remeber X Drive anyone?  

Not only does Box do a phenomenal job in what it was designed to do, provide reliable backup and storage, but they also do a great job from a marketing standpoint.  Particularly their business model being completely intertwined into new customer acquisition and customer retention.  

Allow me to explain...

simplicity

Everything about Box is simple.  The interface, well, it's about as clean as you can get.  The value propositions between the consumer, business, and enterprise are clear and easy to understand.  It also integrates directly into my experience on my Mac and also gives me the flexibility to 1-click into the web experience for a more granular view of file versions, sharing options, and more.  From a usability standpoint, the fact that I have no complaints is a sign that they are making a lot of great steps.  Everything from sharing folders to obtaining previous file versions is one click away.

it's contagious

Not only does Box do a phenomenal job delivering on their value proposition, they have successfully integrated a referral mechanism into their value proposition.  There is nothing simpler than setting up a  folder to share with colleagues, friends and family.  Every time you do that, the generous folks at Box provide you with more storage space.  Not something they have to do, but it is definitely an example of "delighting the customer".  Nothing makes customers happier than a company that goes above and beyond to the customer's benefit.  In the process, Box has probably generated at least 20-30 new customers from me just based on this feature.  So if it cost Box $100 to acquire me as a customer, the effective cost is now roughly $4 when you factor in the other customers I've generated (assuming they were not already loyal customers themselves).  Not bad from a business model standpoint.

it's predictable

By providing the value that they do, Box has a predictable revenue stream.  They create a high level of dependency (now that I can't live without it), the monthly subscription price is reasonable but it can add up to quite a bit over time, and the cost of providing the storage services should go down over time.  Having worked in the online dating sector where a subscription life closely resembles single life....you subscribe for a few months, then you meet someone and pause your subscription, then it doesn't work out, then you are a subscriber again.  That translates to a pretty rocky subscription life and tough to predict the future against.  Also, if the online dating service works as intended, then you will eventually no longer need to be a subscriber.  Obviously, Box carries the advantage of subscription life and predictability both for their internal forecasting but for their employees and shareholders.

freemium...perfectly executed

Box offers a 5GB version of the service for free.  While that size constraint does not satisfy the storage needs of most, it definitely can give a great taste of the value.  For me, it was enough for me to sync some files between work and home.  I was in the position where I was addicted to Apple's iDisk, which they killed in the iCloud transition.  Once it was close to the kill day, I need another solution and the Box free trial provided a great chance to try the service.  I can assume that this 5GB offer has very little negative effect to Box's profit line and it is enough of a taste to showcase the value.  Overall, it is a nice addition to the marketing model

In summary, Box executes all of the best practices of an online subscription service flawlessly.  It has also ensured that the value proposition ties directly into their growth and customer satisfaction.  While that seems logical, there are businesses that run counter to perpetual growth (Groupon???) 

Well played Box.

Advertisers...Understand Your Options With Tracking

While I would not consider myself a technical wizard by any stretch, 14 years in digital advertising has forced me to get my hands dirty and understand methods of tracking online users.  This to ensure that the brands I have represented are aware of issues near and dear to consumer privacy advocates.  

Recently, the FTC settled with online advertising company, Scan Scout, regarding their use of Flash cookies.   While Flash Cookies may carry more nefarious aliases such as “zombie cookies” or “super cookies”, they are essentially data files associated with Adobe Flash, the popular web multimedia platform which is typically associated with web video, animation, and interactive applications.  These data files act like standard cookies, but since they do not live in the same location as standard cookies, they are not removed either manually or automatically by typical web browser controls.  They can also be utilized to spawn standard cookies that have been deleted at some earlier point.  It is only a recent development that web browsers have been able to identify and manage these in a similar manner to standard cookies.

In non-technical speak, flash cookies enable advertisers, networks, and tracking mechanisms an ability to follow online users without much control of the user to control their privacy by limiting the online user’s ability to remove the cookies.  For those that see the situation as such…it’s the equivalent of putting a “kick-me” sign on somebody’s back and then that somebody wonders why they’re getting so much attention.  I speak for many when I say, that just ain’t right and it’s not good for our industry.

While Adobe has been making strides to resolve this use of Flash, there are always going to be those who continue to push the envelope on tracking methodologies, which ultimately are not in the control of online users.  This type of behavior is what will continually push legislators to take a more heavy-handed approach to regulating online privacy.  In essence, the cops will break up the party before it even gets off the ground. 

An example is the utilization of fingerprinting.  Fingerprinting leverages information published by the browser such as IP address, browser version, time zone, etc. to create a “fingerprint” of the online user machine with the intent of re-identifying them at a later date.  To be fair, this methodology seems like a challenge and I respect the technical prowess of an organization that can deploy this methodology in a scalable form and accurate format.  I have heard arguments from both sides pertaining to the accuracy or inaccuracy of fingerprinting, especially accuracy over lengthy periods of time.  So, I feel the jury is out on this methodology from an accuracy perspective.

In my mind, regardless of the level of accuracy, you are essentially tracking consumers without their permission or ability to opt out.  As the information is based from standard communications between the web browser and the website, the user will not have control over this information (at least easily) and it will force similar resistance from consumer advocacy groups, thereby leading to either legislation or the elimination of passing information from the browser to site.   Now, the issue with the latter is that websites would no longer know browser type, location, OS, etc. and thereby present a very impersonalized experience to users.  That will not make a web operations group very happy.

As an advertiser, it is imperative that you request documentation from your partners on how they collect information on users and what users are able to do in order to opt out of tracking.  If it appears that users do not have control over the tracking, it is best to error on the side of caution.  Why?  Do a search on Google for “flash cookie lawsuits” and that should be all of the evidence you need.  While some of these cases have fallen apart, it is nevertheless bad press for the advertisers.

Lastly, it is imperative that advertisers realize that the digital world is not 100% trackable.  By that line of thinking, the end solution will likely encompass standard tracking but also quantitative approaches (similar to media mix modeling in the traditional media world), to ensure that the “untrackable” is accounted for.  This obviously makes the end solution less simple to construct as the skillset becomes highly specialized.  However, user control of their privacy is paramount and advertisers have the responsibility to drive their dollars towards providers utilizing responsible tracking mechanisms.

If you are an advertiser, be wary of “too good to be true” tracking methodologies that are outside of the average online user’s control.  Either the leak will be plugged up at some point or worst-case scenario…you could be seen as an advertiser uncaring of consumer privacy.  In the court of public opinion, the “I was not aware” defense does not carry much weight in the area of consumer privacy.