Runsmall

Yahoo to small business: drop dead.

Recently Tim Bray sounded off on not wanting to be a sharecropper for Apple. I sympathize, but he had no intention of developing iPhone apps anyway. Come on people, it's a business decision. It's reasonable not to develop iPhone apps, if you don't want to for either business or emotional reasons. But it's also perfectly reasonable to do so, if that suits your business and/or emotional needs.

Besides, there are worse things than being dependent on Apple for the health of your business. You could be dependent on Yahoo!.

I seem to be the last person to learn that Yahoo! has raised its price for domain renewals to $34.95 per year, three and a half times what it was last year. There are comments about it here, here, and here.

Countless small business on the web owe their existence and prosperity to Yahoo!. Their business-friendly hosting services have made e-commerce possible for people who otherwise would have lacked the technical savvy. Until the launch of Yahoo's Panama search marketing platform, Yahoo! had the most small-business friendly search marketing solution. In return, small businesses have been an engine of growth for Yahoo!

Now, it seems someone at Yahoo! has decided that small business customers are chumps to be bled at will. This is a move that signals desperation. It may increase revenues in the short run, but can only hurt the Yahoo! brand in the long run.

Domain owners, of course, are free to move. Moving a domain to a different registrar is easy in principle, but vexing in practice. The only domain I have registered at Yahoo is a memorial website for a friend who died several years ago. It really doesn't matter if this site is down for a few days, so it's a no-brainer to move it. I'll save at least $25 a year by moving to godaddy.com.

Godaddy has specific documentation for transferring your registration from Yahoo. There is a "domain concierge" available by telephone, and I was speaking to a human being within thirty seconds both times I called. All this should make things easy.

But I had to shepherd no fewer than three magic numbers - a Transaction ID and a Security Code from GoDaddy, and an Authorization Code from Yahoo. I had to check whois records to make sure I was the administrative contact, and my Yahoo! account to make sure the domain is unlocked. I jumped through various hoops, then Yahoo has five days to approve or disapprove the transfer. None of this is really hard, just sort of murky and ill-designed. And three days later there is no action from Yahoo's side. I have no idea when or whether my domain transfer will be completed.

For a memorial website that's OK, but if this site were my livelihood there is no way I'd want to mess with all that. $25 a year really is a drop in the bucket compared to downtime on a commercial website. That could be Yahoo's thinking - get rid of all the small-timers who won't buy much in value-added services, and keep the customers who are locked in. I could protest that the Web is about more than who delivers the most money, but I can't come up with a reason why Yahoo! should care about that.

Is this a harbinger of things to come from Yahoo? I wonder how people who depend on Yahoo! to run a business feel.

If things do get worse for people who host businesses with Yahoo, there are a few things to keep in mind:

• The web really is an open platform. You are not really locked into Yahoo!.
• The single most important thing for you to do is ensure that all of your content is backed up in a portable format
• If you do decide to move, it might be worth trying a practice domain first. Register a new domain at Yahoo!, host a sample website, and go through the steps of moving it to a different registrar and hosting environment. This will greatly reduce the stress and uncertainty when you finally do pull the plug on your business domain.

Net promoter debunked

Small business guru Gadi Shamia has written about Net Promoter scores as a key metric for small businesses.

Net Promoter is certainly very popular. Every web survey I have seen in the last year has included the Net Promoter question - "How likely would you be to recommend (x) to a friend (or colleague)?"

Gadi explains how to measure Net Promoter very well, so I won't repeat him, but in brief, you designate one set of customers "promoters", and another set "detractors". Subtract the percent of detractors from the percent of promoters, and the result is your Net Promoter score. A third set of customers are considered "passively satisfied" and are not included in the score. "Promoters" are those who answered 9 or 10 on a 0-10 scale; "detractors" answered 0 to 6.

If you think about it, Net Promoter does three things.

• It focuses on the customers who are very pleased with your products.
• It magnifies the effect of those who are displeased.
• It ignores people who are wishy-washy.

All of these are good things. Only customers who are very pleased are likely to become loyal. Any time a customer is displeased, it is a problem. And wishy-washy customers - 7 or 8 satisfaction on a scale of 0-10 - should be ignored. Too often, they are used by the inexperienced or the biased to inflate satisfaction scores and promote complacency.

But Net Promoter is controversial in the market research community, largely because of the way its creator, former Bain consultant Fred Reicheld, has promoted it. Reicheld calls Net Promoter "the one number you need to grow". He claims it is a superior predictor of growth, and he and his acolytes seem to claim that it can [replace] virtually all customer satisfaction research.

Are you ready for a shock? There is no such thing as "the one number you need to grow". It's not enough to know how well you are doing; you also need to know why. Which parts of your operation are performing well, and which are doing poorly? What improvements would bring the lagging components up to snuff, and how can you make the best parts of your operation even better? How well are your competitors doing? Which companies in your industry are the best, and what are they doing that makes their customers happy?

Small business owners tend to understand this sort of thing instinctively, but it can get lost in the world of big-picture executives and hired-gun strategists.

There is no real theoretical or intellectual justification for thinking that a Net Promoter score might actually mean anything. Does one detractor really cancel out exactly one promoter? How? Do "promoters" really promote? When, and how often?

Reicheld's primary claims for Net Promoter have been effectively debunked. Timothy L. Keiningham and his colleagues recreated the data Reicheld uses to justify his claims, and compared Net Promoter as a predictor of revenue growth to other customer satisfaction metrics. To save you from having to wade through many pages, here is the conclusion:

We find no support for the claim that Net Promoter is the “single most reliable indicator of a company’s ability to grow” .

Digging into Keiningham's data, it seems that Net Promoter is a good measure of customer satisfaction. Good, but no better than other common metrics like a top two box satisfaction score. There's nothing magic about asking whether someone would recommend your product. In fact, in some cases the question may seem jarring and dissonant. How likely are you to recommend your toilet paper or power company to a friend?

So is Net Promoter worthwhile? I think it can be, despite all the criticism. More on that later.