hi, my name is ethan. i post here my random thought of the day.

Posts tagged strategy

Apr 23

Microsoft and Lendingtree

Today I came across this article on GigaOM on how Microsoft came to dominate the various industries it was in back in the Gates days, and this passage stood out:

In a way that Apple never got prior to the second coming of Steve Jobs, Microsoft always saw developers as core to their success. The company worked tirelessly to ensure that developers had: A) The tools that they needed to succeed; B) Economics that warranted a singular embrace of all things Microsoft; and C) The marketing programs and sales channels required to successfully penetrate all levels of the market.

Switch up a few words and this could apply to any industry. For example, thinking about my work at Lendingtree, we need to execute the same plan, but instead of doing it for the developers, we do it for the lenders:

  • Provide them with the best tools to monetize our leads
  • Understand their economics on our leads so it’s a win-win for both parties
  • Have products for all levels of the market and being able to drive sufficient volume to meet demand

Essentially, we need to think of ourselves as a platform to connects consumers and lenders. Consumers should view us as the destination to get mortgage-related information, and lenders should look at us as the best place to get leads that helps them make money.

Dec 8

Acer New Strategy

We will shift our strategy to improving profitability from pursuing market share blindly with cheap and unprofitable products — Acer CEO

Who knew selling stuff that makes money is a business strategy?!

Dec 7

Customer Lifetime Value

Knowledge@Wharton has a good article today on the thinking behind lifetime value of a customer (CLV). It’s a great read on why Amazon is willing to lose money on its Kindle Fire to drive sales.

Basically it’s the concept of “getting the customer in the door” at a reasonable cost, and make money off him/her over a period of time. It’s been practiced forever (think free printers but $50 cartridges, Sony losing money on PS systems but earn profits from games), but now with Internet-based businesses there is the added ability to track data. With that, these companies can estimate your worth, what you like and tailor their offerings to increase the CLV. Calculated correctly after adjusting for churn, I think this Value can be applied in most industries.

I think there is a missing piece from this though - the fully-loaded cost of customer acquisition. For example, in insurance, there are the cost of marketing lead programs (mail, TV/radio/newspaper advertising, SEO, etc), call centers, agent offices, years of agent commissions, etc. 

Once you have both, it’s a simple comparison. Which one is greater?