User Experience meets the bottom line

Earlier this week I read a post on Read/Write Web about “The New Face of Amazon” and how the company has been introducing a steady stream of Web 2.0 features to enhance the user experience and presumably their bottom line. The article effectively showcases the various innovations Amazon has launched in the last year, but more importantly points out that WallStreet hasn’t flinched. I’ve been thinking about this over the last few days because it raises the same question I’ve often faced at work: Can improvements in user experience push the bottom line?

The answer must be ‘yes.’ After all, it was the better overall user experience of WordPress that prompted me to pack up my Blogger blog and move it here. But is that making WordPress any money (which begs the question, does bring in revenue?)? The point is that if WordPress were in some way monetizing it’s free blog hosting service, there’s no guarantee that additional blogs or incremental traffic generated through those blogs would yield incremental revenue. The additional subscribers and traffic do, however, almost always yield incremental costs.

In my role as a Product Manager at eBay my job is basically to understand how to improve the overall experience for buyers while squeezing more revenue out of the machine. We often encounter situations where our onsite A/B test results don’t corroborate the promising results seen in usability studies. In other words, while version A.1 may provide a better user experience than version A.0, in practice, A.1 does nothing to improve our top line metrics.

So what about Web 2.0? There’s a line in the referenced Amazon article that sort of bugs me: “is the fancy web 2.0 technology Amazon is introducing not going to impact their margins that much?” The idea that the Web 2.0 -ification of a business should undoubtedly have an impact on a company’s margins seems somewhat absurd to me. Features like tagging and wikis and blogs drive a great deal of community generated content (i.e. free labor) that can directly and indirectly generate more site traffic, provide detailed classification data to feed search & recommendation engines, and serve as the foundation for entire businesses (e.g. Yelp). However, slapping some Web 2.0 onto a business as complex and evolved as Amazon (or eBay) hardly makes a dent. It may generate more traffic and provide more content… but monetizing that added potential requires additional steps (ads, content syndication, intelligent merchandising, etc.).

I guess there’s a somewhat bitter undertone to this post. Between blogs and the torrent of email eBay enthusiats generate, I see a dozen feature ideas a week that could be applied to eBay. But one of the disadvantages to working for a multi-billion dollar online behemoth is that even very small changes could have unanticipated outcomes and result in millions of dollars of missed revenue. Everything is heavily scrutinized. Even simple UI tricks that could make the site more “slick” often have to earn their way to the forefront… and sometimes it’s just hard to make the case.


3 Responses to “User Experience meets the bottom line”

  1. 1 Yet Another Product Manager February 2, 2007 at 4:41 pm

    The last paragraph of your blog pretty much sums up the entire discussion. Large companies find it hard to justify small changes in the UI. As such the UI goes neglected for a long time and the change is only deemed necessary when an internal feature improvement mandates a UI change.

    There could be two ways to justify the UI improvements
    – Include it as 30% of maintenance/engineering/baseline changes necessary to sustain the product over a 5-year plan.
    – Measure the UI improvements in terms of lowered costs to support, lowered costs to maintain documentation, lowered costs to escalations etc.

    The latter is hard to do and quantify.

  2. 2 Shripriya February 7, 2007 at 4:34 am

    It’s a tough balance. I agree with you that slapping on any Web 2.0 idea is silly and given the development cycle and process at eBay, also hard to justify.

    However, I do think there has to be a slot for innovation and incorporating ideas into the main site. And most importantly, the way you measure impact has to change.

    For example, allowing the community to blog – would it have increased revenues? No. Would it have cost money? Yes. Would it have increased the feeling of community? Yes. Would it have improved eBay’s presence in natural search? Absolutely.

    However, an idea that was proposed in 2003 has yet to happen. To me, that’s a shame. It wasn’t implemented because compared to US Core revenues or a new feature, it is less than a drop in the bucket. But then, you are not valuing customer loyalty and stickiness and all those things that actually do have value. Large companies have to find a way to measure these things.

    Btw, I like your product posts a lot – nice job! :)

    [PS: Can you get the “subscribe to comments” plugin? That way if there is a followup, the commenters will get an email –

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