At its most profound, the Internet helps drive global change, toppling dictatorships overseas or, closer to home, assisting people to protest Wall Street’s role in the financial crisis and economic inequality.
On a less grand but just as important scale is the Web’s role changing people’s everyday daily lives. From researching medication to buying college textbooks, we do most tasks differently on the Internet.
As creators of Web services, we need to think carefully about how our services affect consumers’ overall wellbeing. A business model that provides a decent value proposition for customers and makes money for shareholders is fine. But it’s not enough. A service, even when used a lot, should cause no harm. Even more, a service should help make people’s lives better.
The need to do right is essential in my sector, online financial services, particularly when serving young or financially vulnerable customers. Offline, there’s a raft of businesses created to profit from people on the financial edge – lotteries, payday lenders and shady mortgage providers. When people use these services to an extreme, it hurts them.
Online startups, can do better. But, how do you make money online and do right, especially with people who are broke? Here are some of the principles we keep in mind:
- Charge only for value. Only charge for services that people value enough to explicitly choose to pay for. People value a movie enough to pay $2.99 to rent one. They do not value late fees and would not choose to pay them.
- Align pricing with customers’ economics. Say a typical customer’s disposable income is $3,000 annually or $250 a month after normal expenses. What portion of that is fair and reasonable to pay for the value our service provided? Is the service pricing aligned with customer reality?
- Drive behaviors in a positive way. Provide a meaningful incentive for a positive behavior rather than a fine for negative behavior. Offer points, rewards, drawings and prizes. For example, in my industry, electronic payments, debit cards can make it easy to overspend. They also can make it easy to save by automating the process and providing rewards.
- Transparency isn’t enough. Transparency is the nom du jour. But customers are busy. Most don’t read our fine print, blogs or even emails. If information is important, it’s up to us to get their attention and engage them, preferably right on the splash screen. Use widgets to take subscribers through objective pricing comparisons. Use videos to help explain any service changes that might otherwise confuse people. Techniques like these save on support costs and help increase customer satisfaction.
- Add extras. Sometimes you can partner to add extra value for customers – and give them added reason to stay with you — without adding cost to your company. For instance, at iBankup.com, we offer subscribers a card that provides meaningful discounts on medications at all major pharmacies in the U.S. at no cost to customers or our company.
- Control costs. To keep customer costs down and service levels high, we have to invest where it matters most – in employees and technology — and otherwise run tight ships. Luckily, as engineers, that comes naturally.
- Build relationships. We need to treat all customers as we do anyone with whom we have personal, long-term relationships. We should feel proud of the way our dad, college roommate or niece would experience our services on a daily basis.
These are just some of the factors to consider when creating Web services for the 90 percent of Americans, whose average income was $31,244 in 2008. A few weeks ago, the Center for Financial Services Innovation published its version, called the Compass Principles and I’m sure there are others.
How about you? How do you think about building a business that goes beyond “do no evil” to “do right”?