Ecommerce Hiearchy of Leads

If you havent already read about Maslow hiearchy of needs, I suggest you go and read about it. It talks about basic needs of human beings and what motivates and incentivizes people to do certain things more than others. It provides interesting ideas for managing people in your teams. Since the time he wrote, many other similar theories have been written, but most of them have been adaptations of this basic idea. 


I recently attended a conference where the speaker, who was Professor from Boston university, was talking about incentives and highlighted a very interesting parallel with science. He pointed that for those of us who have studied basic science (physics) would know that heat is lowest common denominator (something that is most abundantly available) of energy. All other forms of energy ultimately disipate as heat if they cannot be converted to anything else. And so he said, just like heat is for energy (the lowest common denominator), money is for incentives. 


If you cannot motivate people on any other higher levels, you motivate them by money. So its is not always the best form of motivation, but something that works with most people. Most great personalities are always driven by a higher source of motivation than just money.


This prompted me to translate it into something more closer to what I do - internet e-commerce. Buying ads from Google and Facebook gives you a sureshot way (or at least pretty good way assuming you have decent conversion page) of buying leads. It is like money (or heat) and acts like lowest common denominator of buying traffic. Because just like no great man has only been motivated & driven by money alone, no great internet business has solely been built on buying internet traffic [yes i don't think highly of the groupon model but then maybe in a perfect world without any competition, they probably wouldn't have to do so much advertising and could have spread just by word of mouth] 


So what if we extend this theory a little further and think of all the ways one can use to bring traffic to their website and form a similar triangle in internet space for bringing traffic to ones website. For lack of better word, lets call it the Ecommerce Hierarchy of Leads Triangle.

Brand Recall - This is the space where the giants operate. Google, Facebook are clear winners. Most people (like me) now do not search for books on Google but directly go to Amazon. As Reid Hoffman says, there are 7 plus/minus 2 websites that any internet user can usually remember. If you operate here, you have a very clear advantage. Other examples can include newspaper sites, airline and movie bookings etc.

Referrals - The best referrals are ones without incentive. But you can incentivize these as well. For example Paypal, Dropbox n others pay you (and joinee) bonus credits or space for referrals. This has been a major way for their spread. Nowadays this also includes social media chatter (Twitter, FB etc).

SEO - Spend money once and enjoy a more or less perpetual source of traffic. As long as your website is generating good quality content, certain amount of genuine backlinks are guaranteed and this is likely to give top search rankings.

Email Newsletters - Easier way to bring back existing users to the website but you'll gave to pay monthly subscription to business (like Mailchimp or Get Response) for every subscriber.

PR - Some businesses such as Apple generate large amount of Press which provides them a higher brand recall amongst users. You can also engineer it by planting more stories. More likely to work if you are a big business otherwise most media houses won't really give you a prime spot for long

PPC - Easiest way to generate traffic for your website. It can also be a great way to make money in a direct response business if your acquisition cost is clearly lower than price of first product. Many million dollar businesses have been created of this approach (Mind Valley) and many million dollar businesses have been busted also of this approach (acquiring expensive users hoping they would come back and pay because of customer lifetime value).