Fast Track Interview

Adrian: Today, I’m interviewing Eben Pagan. I’ve actually known Eben since 2001. He’s been very successful in a lot of different areas on the Internet and got started when a lot of things were just beginning. I’m really excited to have him here. Eben, thanks for joining us. Why don’t you tell us a little bit about who you are and where you come from?

Eben: Absolutely. The short version is that I’m a self-made guy. I grew up poor in the woods in Oregon. I didn’t really know anyone that was successful. I had to work hard and find my own way.

I tried real estate when I was in my early 20s. I didn’t do very well at it, but I discovered marketing and sales as a result of trying to succeed in the real estate world. I realised that good marketing isn’t just about convincing people to buy stuff; it’s about communicating value.

I went on to start my own consulting business for real estate and mortgage companies where for three years I taught marketing, sales and how to build business. Then in 2001, I started an Internet marketing business by writing an e-book and putting it online. That was a game-changer for me because before that I had never built a website. I got a copy of Microsoft FrontPage, locked myself in my bedroom, and started building my website. I had to figure it all out: how to do e-mail, how to get traffic and how to take payments.

The day the website came online, I sold two or three copies of my book. I realised something big was going on, so I started to build the business. Now seven plus years later, I have a team of about 80 full-time employees. We’re probably running at $25 million a year in sales.

We’ve launched several businesses in various niches, mostly in the relationship and dating advice space as well as the business marketing and Internet marketing space. We have a coaching program where we teach others how to publish and make money by selling information products on the Internet.

Adrian: Let’s talk about the first business. Obviously, you’re the infamous David DeAngelo and this is Double Your Dating. I’ve read and studied your stuff and I think every guy should do the same. But what made you qualified to teach it?

Eben: Boy! I don’t think I would say I’m qualified at all. Here’s what I see happening right now. Modern reality is not about having letters after your name nor is it necessarily about having qualifications or certifications. Modern reality is about wanting to learn different things because your basic Maslow’s hierarchy of needs are met. I want to learn cool stuff like how to improve, how to go on adventures and how to play video games. I want to learn how to have a better relationship. I want to learn how to be healthier. All people are really going after is knowledge.

I’m no exception. I’m a knowledge junkie. I went through a phase in my life where I was single, and I couldn’t get a date to save my life. I started reading books, going to seminars and getting to know dating experts. I found the stuff others were teaching was rehashed from decades ago, seemed corny and ridiculous, was for relationships after you get a date, or was something that seemed a little manipulative or sneaky.

Then I started hanging out with guys that really understood dating and attraction; they were naturals. I watched what they did and paid attention. They were doing things that no one else I had found really noticed. I’d write down what I saw and ask questions, and then I’d go try something. I stumbled across a whole body of knowledge that other people knew about but didn’t know they knew; they didn’t know it was important.

I took that knowledge, codified it, put it into a system, figured it out for myself and then wrote a book. My “qualification” is that I can get the result. I can get the job done and show you how to do it.

Adrian: Can you talk a little bit about the model of what happens through your process and what you do afterwards?

Eben: Sure. What most entrepreneurs and newbies, who start businesses, are trying to do is just get people to buy their product. They don’t realise that almost all of the money in a business is made after the customer buys their first item and then returns to buy additional items.

When I started, it was just an e-book. Then we started offering a free e-mail newsletter. When you sign up for the e-mail newsletter, I’m going to communicate with you multiple times on a constant basis. Maybe you won’t buy today. It might take 10, 20 or 50 communications before you finally buy.

When we created our e-mail newsletter, my goal was to create the most valuable newsletter in the world on any topic and then to give it away for free because the Internet allowed me to distribute and syndicate content economically. I can sign up for an auto-responder system, load my list of 10,000 or 100,000, and email that list every few days for $20 a month. Nothing equal to this has ever been available to the average person. The closest you could get was radio or TV, which required serious money and skill; you had to be a real pro to do it. An e-mail newsletter is simple.

Now our model depends completely on the backend. We sell information products, so we’re basically selling knowledge, techniques, and systems for getting the particular results you want in life. We create a curriculum where you start with one program, then we recommend the second, third, and fourth one. We created a technology platform that automatically up-sells and remarkets other products in a certain sequence when someone buys one of our products.

Adrian: Where are you headed long-term?

Eben: Honestly, I’m one of these weird new-age entrepreneur types that actually thinks I might be able to make some kind of difference in the world in a significant way down the road. Maybe not me as an individual but as someone that influences and is connected to a lot of other people who are concerned about the bigger issues we are facing as a species and as a planet. All of this stuff I’m trying to do has helped in some way for the world to evolve and solve different problems.

I have a lot of passion around education. If you look at various problems that occur in human interactions and in human development, a lot of them stem from the fact that people don’t have access to education. My gut tells me that the Internet is a huge leap forward in being able to solve many things, such as overpopulation and disease. Ultimately, I’d love to help channel the power of technology and use it to get all of us further educated.

Entrepreneurialism is a big piece of that puzzle as well. Lately, I’ve been teaching entrepreneurs how to start businesses and teaching authors, speakers, and coaches how to publish their own stuff. My hope is to be able to combine technology, education, and entrepreneurialism while mobilising more of the people who are concerned about our planet, where we’re going, some of the challenges we face and trying to focus them on solving some of these problems.

Adrian: Why are you in the entrepreneurial world? Why not do that in a non-profit or government world?

Eben: Great question. I would love to work in those worlds, and I’ve started helping some folks that do. From what I know of government and non-profits, they’re not very good at execution or doing things in a results-based way.

Businesses have figured out not only how to execute and get results but do it in a way that creates excess value. We need to harness some of this, create strategies and systems, channel that value over into the philanthropic and government world and combine it with a little more of the new consciousness to involve everyone and give everyone a voice, but not give everyone necessarily the same voice.

In fact, seeing Bill Gates make the decision to leave Microsoft to run his foundation was a transitional moment, in a way, for this whole issue and actually maybe for our species. We have the richest guy in the world who said, “Okay, I did the richest-guy-in-the-world thing. Now, I’m going to put my time into helping the world. I’m going to donate all this money to it.” That’s huge!

Not to get too out there, but in studying developmental models of psychology and how groups of people develop, it’s only been recently that humans, in the mass, have had the realisation of “Hey, we should take care of other people outside of our group.” That just hasn’t been part of the equation before. Up until then, almost everyone on the planet was born, lived, and died in the same place and didn’t go more than a few miles from wherever it was. They didn’t even know that other cultures existed, and if they heard of one, it was in folklore.

Now everybody’s connected. Everyone has access to the Internet. You can see other cultures all the time. There’s travel. It’s a developmental process that happens in the minds of people, and these are the things that emerge. I’m pretty excited about it because it’s allowing those kinds of things to happen. We’re going to see it a lot more especially with the rise of the Internet, and the tools and processes it facilitates.

Adrian: Both you and I are hardcore Ayn Rand fanatics, and there’s a real contrast there. I’m interested in understanding your thoughts on Ayn Rand, how that has helped you, its impact and also the negative side of it.

Eben: Yes. Any philosophy, approach, paradigm or method of perspective is really technology. They can be used for good or evil. They have their positive and negative sides.

There’s a very interesting set of models that a guy named Claire Graves created. He was a psychologist, actually a contemporary of Abraham Maslow who created Maslow’s hierarchy of needs. It’s an interesting system that is like another paradigm of the hierarchy of needs. In the hierarchy of needs, Maslow talks about having the basic needs of survival, then safety, love and affection, and higher needs of actualisation and so forth.

Claire Graves had a multi-level model of how human psychology emerges and goes through roughly seven different stages. The way that he figured this out was by asking people a set of questions about their values. He tracked them through their lives and discovered that their answers followed like the steps of a ladder. They went through these processes and always went from one level to the next, then to the next; they didn’t jump or skip levels. Each one has a different paradigm that transcends but also includes the other levels. It uses them as a support.

The Ayn Rand level is level five of Claire Graves’ system and is an individual-focused level. It’s the level of independence. It’s very success-oriented and part of its value system is that “I can succeed for myself as long as I do it in a way that doesn’t really directly harm other people.” This level has led to the industrial revolution, the “me” generation and modern individuality. It’s probably the largest part of our modern western culture.

The level beyond this, or the next level, is where you start to realise, “I thought I was just creating success for myself and not harming anyone, but I never really looked at the bigger picture and saw how it is harming other people and how there are issues with this.”

Beyond that is the level of modern social, ecological green movement or green awareness. This is when you say, “We’re all here on a round planet together and anything that I do affects everybody else. Other people are being marginalised for me to have success.”

Most businesses and most people are at the Ayn Rand level. They’re trying to create success for themselves and the rights of the individual.

The leading edge right now is this ecological, social consciousness movement where people are waking up and realising, “Wow, there’s more to this than I thought. It’s not just me.” You see it just spreading. It’s going through business with social entrepreneurialism. All of these huge companies are leading the way by donating massive quantities of money and stock to charities, and even Bill Gates getting involved with running his charity.

Ayn Rand is incredibly valuable because she has helped a ton of people evolve out of the level four into this level five, but like anything else, a set of religious beliefs that are fundamental, a set of business paradigms or even a product that you have in business, if you get too attached to it and it becomes sacred, you don’t realise that there’s another level after it. So some people get stuck, and if you get too stuck in it, it’ll become your prison.

My perspective is that too many big corporations have gotten trapped in the Ayn Rand mentality, which is profit at all cost, and turn a little bit of a blind eye to the effects they are having in the bigger picture. As more businesses wake up and move to a higher level, we’re going to see more awareness, more serving our species, and more education contribution.

As more people and businesses make that jump to the next level and use the Internet to solve lots of problems, I think we’re going to see a renaissance. We’re either headed into something really scary with nanotechnology, and it’s going to be matrix type situation, or we’re going to see a renaissance version 2.0, which is what I’m hoping to try to help create in some way. I think these evolutionary levels of psychology could help make that happen as long as we don’t get too attached to the one we’re at, always seek the next one, and help other people grow through theirs.

Adrian: Well, I expected we were going to have a conversation about marketing, maybe split-testing, and Double Your Dating. I’ve never had a conversation with anyone on these interviews about philosophy, and I think this is very appropriate; good stuff.

Eben: Awesome! I understand that most of the people that are probably going to read this are successful business people, entrepreneurs, and CEOs. If the things I’m talking about make sense, I encourage them at some point to reach out and connect with me. I always love to meet people that are interested in the same kinds of things. I also want to encourage them to keep going and fighting the good fight. Let’s try to make this world a better place.

Full Interview Audio and Transcript

	Interview Audio (61 min):	Full Interview Transcripts:
	High Speed Audio Interview (44 min):

Personal Info

This interview is one I’ve been waiting to do for quite a while. This guy is one of the most financially unsuccessful internet guys I know. At the same time he drives absolutely monster traffic and has a huge amount of influence in the internet world. For millions of people he is an absolute rockstar. His name is Andy Scorcini and his handle is Mr Babyman - he’s the number one poster to Digg, the social news site. He controls a huge amount of traffic volume and IMHO is effectively the leader of the informal network that has developed among Digg’s top users that decide which stories get posted to the site. The number one question Andy and the others is always asked - do they get paid for what they do. We discussed this in detail in the interview.

Interview Audio (84 min):
High Speed Audio Interview (61 min):
Full Interview Transcripts:

Personal Info

Fast Track Interview

Adrian: I’m really excited to have this interview with Andy Sorcini who is Mr Baby Man from Digg. Normally, we’re talking to CEOs and guys that are running big companies. Andy is someone that can drive a large amount of traffic, probably more traffic than a lot of people on the entire Internet, because of the influence he has on the website Digg.

I am fascinated by Digg, and Andy is one of the leaders in that community. Andy, do you want to tell us a little bit about who you are, where you come from and what you’ve been up to?

Andy: By trade, I’m a film editor, and I currently work for a small, independent production company in Los Angeles. Previously, I worked for 15 years with the Disney Company in pre-production and post-production animation.

Adrian: Tell us about how you got started on Digg.

Andy: I came across Digg in a roundabout way. I was a huge fan of TechTV and before that ZDTV – Ziff Davis TV, and a huge fan of the show The Screen Savers. It was a television show that was specifically geared toward the technology enthusiast and didn’t dumb itself down.

On The Screen Savers, there were several hosts: Leo Laporte, Kevin Rose, and a couple of others. TechTV essentially broke up and became G4. They dropped The Screen Savers as a show, and when they did that, all of the principals went off to do other things outside of broadcast television. What they essentially settled on was podcasts, which I continue to follow.

Kevin Rose came out with the Diggnation podcast. It was through Diggnation that I discovered Digg. I joined Digg and would just read the stories on the site. After awhile, I noticed that it was user-generated content and that anyone could participate. I started looking around the Internet for stories I thought would be interesting to the Digg audience and started submitting those. I think it was my third submission that hit the front page.

Adrian: Are you still the number one Digger?

Andy: Yes. I avoid using hierarchal terms like that because Digg itself has removed their list of Top Diggers. Technically according to their data, I still have more front-page stories than any other user, but things shift around. There are different people who have more stories per month or per week. I think I hold the record for the most of all time, but I’m certainly not the number one user on a weekly or monthly basis.

Digg has what’s known as a popularity percentage, and that is essentially the ratio of the number of stories you’ve submitted to the number of stories that have actually hit the front page. By that ratio, I have a 27 percent popularity, which means that less than one-third of the stories that I’ve submitted have actually made the front page.

Adrian: If one-third of the stories you submit goes to the front page, how do you manage to predict that with so much accuracy?

Andy: I don’t try to predict it. I just submit the stuff that I feel is the best content and the content that will appeal most to the majority of the Digg audience.

Adrian: I’ve got to ask. What’s your motivation? You obviously spend a lot of time on this. Why do you do it? I assume you’re not getting paid or are you?

Andy: No, I’m not getting paid. It’s a hobby for me, but no other hobby that I know of has the fringe benefit of keeping you so well-informed on current events. That’s the one thing about Digg and other social news and networking groups that I know of. It’s amazing how quickly the people who use those sites are informed about current events outside of the general populous.

Adrian: I’m sure you are sending around hundreds of millions of dollars worth of traffic per year. There is value to that. Have you ever accepted any kind of money at all?

Andy: No. Not for submitting a story to Digg. First of all, it’s against the terms of service at Digg in particular so I wouldn’t feel right about doing that. I personally wouldn’t feel right about doing it either because it just feels a little slimy to me. I’m not in it to make money from people giving me stories to submit.

I’m offered money all the time. A couple of times a week at least. But if somebody approaches me like that, I tell them right off the bat, “I don’t accept money for this.” I tell them, “I will be happy to take a look at your stories, and if I feel that it’s something that is appealing to the Digg community, I’ll be happy to submit it free of charge.” But nine times out of ten, it’s stuff that is some sort of marketing that the Digg community will see through right away, so I don’t even bother.

Adrian: How much time do you spend each day on Digg?

Andy: I would say between four and five hours. On average an hour in the morning, and the majority of it is at night after my wife and my daughter have gone to bed. Then occasionally during the day if I have a break I’ll log on to Digg, check my RSS feed and see if there’s anything interesting to submit.

Adrian: How do you actually digg? I’ve seen a lot of comments saying, “Mr Baby Man’s using automated tools.” There was a story posted where they were looking at the timings of some of the Digg actions being done and they were completed faster than a human could have done them.

Andy: Digg has governors in place to prevent that from happening anymore, so if you try and do that now, you’ll get a popup that says, “You’re digging too fast. Slow down there.” I’ve never seen that popup since they’ve enacted those governors, so I think I’m probably doing it at the right pace.

I do open up stories in different tabs of Firefox, which is my preferred browser, and just click through the stories on each of the tabs. Every single story that I’ve ever done has been me sitting down at the computer and clicking the button.

Adrian: How does it actually work in terms of voting for stories? Are you wheeling and dealing with guys behind the scenes to vote for each other’s stories?

Andy: No, nothing really happens behind the scenes. I have added people to my friends list. So I will go through my friends’ stories and select the ones that appeal to me or that I think would also appeal to the Digg audience, but there’s no behind the scenes, no backchannel kind of arrangements.

The other thing that’ll happen is if I am looking at the Digg front page and I notice that I’m seeing a lot of really good stories from a particular submitter, I will add that submitter to my friends list so that I will now be watching their stories as well. Then it’s basically going through my friends list.

There’s also the recommendation engine, which I really like because it gives me the opportunity to see a lot of other submitters that I normally would never have noticed. I’ll find a lot of great stories through those submitters and add friends from within that process as well.

Adrian: What you’re saying is it’s not so much based on relationships but rather more about the content. So are you actually checking every single thing out?

Andy: Yes. Well, I’ll be honest with you. I don’t often have the time to check them out in depth, but the same things that appeal to a lot of the Digg users appeal to me, which a lot of times is a very enticing title or description.

I’ve been an active member on Digg since either late 2005 or late 2006. I recognise good content immediately. I can look at the title and the summary in an RSS feed, and I will know immediately whether that story is front-page worthy or not. That simply boils down to experience. Having done it as often as I have, I know immediately just by looking at the summary if that story is worthy of the front page.

It comes from experience and having seen enough of what constitutes good content on the front page of Digg and other social networking sites. I know what that front-page content should look like, and I know how to guide people to get that to happen. I have actually helped other people with crafting content specifically for social networks.

Adrian: Let’s talk about the controversy. There was a period a couple of months ago where everyone was calling you Mr Baby Spam and all of this anti-Mr Baby Man posts were getting voted up. You’re getting really ripped on a lot. Why do you think that so much of the community has turned against you? But yet you still remain a top user. I find that extremely fascinating.

Andy: The majority of the controversy boils down to accusations that I am accepting money for content submitted, and I have never done this. The crazy thing about this is for as many of those accusations that have been railed against me, no one has ever brought up any evidence to prove it. The evidence doesn’t exist because it just does not happen. I don’t accept money for submissions.

I think a lot of it boils down to a lot of people being surprised at how one, two or a handful of submitters can be so popular on a regular basis. I think they have a hard time figuring out why that’s possible without any sort of artificial influence.

Because the Internet is essentially anonymous, one person can say something and then you have a lot of faceless voices behind them who are like, “Alright, I have nothing to be afraid of for joining in with the criticism because there are no consequences.”

A lot of times, individual negative comments will get voted down. But a couple of times there have been whole negative stories that have been submitted about me. If those stories hit the front page, people will just dog pile on top of those stories because there’s no consequence to it.

There’s no accountability to negativity on the Internet. I think that is a huge dynamic. That is a larger problem than any individual criticism that people have against me or any other submitter. It’s the fact that there’s no accountability for being as nasty as you want to on the Internet.

Adrian: A while ago a group of top users were going to leave Digg. What was actually going on there?

Andy: There’s a great misunderstanding in what happened during that incident. That wasn’t about leaving Digg. It was about getting the staff at Digg to be held accountable to certain guidelines. The primary thing we were trying to have happen was to establish a line of communication between Digg administration, staff and users.

There had been a lot of complaints from individual users. A lot of Digg users were coming to me saying, “I’ve been having these issues with Digg. I’ve been writing to Digg and they’re not responding. They’re not communicating with me at all.” I guess they saw me as representative of the Digg community, and they felt like I have a certain amount of influence.

We outlined a series of points of things that we felt were wrong with Digg that we wanted to see corrected. Primarily, the number one thing about that, and the point that I still feel the strongest about, is opening a line of regular communication between Digg administration and its users.

Adrian: Do you have that line of communication now?

Andy: No, not quite, but what came out of that conversation with Jay and Kevin was what they call the Digg Town Hall, which was a commitment to have this open forum where they would discuss concerns that the Digg community had on a semi-regular basis. What I was shooting for, what I really wanted, was a regular forum where users can have threads open about certain issues that they have with Digg and expect a response from the Digg administration on a regular, daily basis.

Adrian: You guys made the threat that you were all going to leave the site, right?

Andy: There was a series of complaints that we had drafted about what we felt was wrong with Digg. It was me and a group of four or five other people. We had all drafted this letter of complaint with certain bullet points, and I saw a second to the last draft of that letter of complaint.

Then that letter of complaint was published. A Digg submission was made of it, and it was promoted. I never saw the published version until after it was published. That published version included the threat to leave Digg. It was essentially made like a manifesto and there was an ultimatum given.

I was not personally part of the movement to leave Digg. That all happened outside of my knowledge and after the last draft of the letter that I had seen had been approved. There are two or three other people who co-drafted the letter with me that decided they were going to add on the ultimatum, and make it like a revolt and a manifesto.

Adrian: If that threat was real and you guys did leave, what happens in that scenario? Does the site go on as normal or is there some impact on the quality of stories for awhile?

Andy: I’ve seen something like that happen. It was after Digg had banned about 80 plus users who had provided quality content to the site. For about a week after those users had been banned, the Digg front page looked pretty miserable. In fact, there were a number of stories that were clearly marketing and spam on the front page, and that was because it was the best content to promote, as all of the other sources of great content had been banned, essentially. I think the Digg process is so robust that it can survive losing a good number of top submitters. The problem, however, from Digg’s standpoint is whether that is really how you want to treat your community.

Have you ever wondered how the fortune 500 use direct response marketing? This week’s interview is with the Chief Marketing Officer of Best Buy, Barry Judge (Fortune 500 rank: 72). Barry has a $500M annual advertising spend at his disposal. Most of their marketing online is direct response driven. But one of the really interesting things from the call was learning how they track and analyze everything within each store to find out what performs best - and everything is tracked back to overall demographics via your rewards card. Its working, since Best Buy is bringing in $35 billion annual revenue.

Interview Audio (49 min):
High Speed Audio Interview (35 min):
Full Interview Transcripts:

Personal Info

Fast Track Interview

Adrian: Barry Judge, who is the Chief Marketing Officer for Best Buy, is joining us today. Barry, could you tell us who you are and where you’re from.

Barry: I’ve been at Best Buy for about nine years. I actually got to Best Buy through the Internet. At that time, everybody thought the dot-com was going to take over retail stores. We were brought in with the mandate to “blow the company up.” I like to be in a changing and fast-moving environment, and Best Buy has that in its DNA. It changes quickly, and we’re responding to the competition and the consumer almost every day. Before this, I was in a start-up company called Caribou Coffee and also worked in packaged goods with Coca Cola, Gatorade, and Pillsbury.

Adrian: I’m fascinated to see you on Twitter. What prompted you to turn up there?

Barry: What prompted me to use it in marketing is that I am trying to understand where communication, people and culture are going. I wasn’t really participating in social media at all, but our company is trying to adopt a lot of open architecture philosophies. We’re now very focused not only on “what” we do but “how” we do it.

The “how” we do it is trying to figure out how everybody in the company feels they can contribute. Everyone’s point of view is valid, so there is this big effort focused on how we use collaborative tools to facilitate that happening. Within the company, one tool is called BlueShirtNation, which we launched a couple of years ago. This is the Web site where, outside the firewall, employees can talk about whatever they want to talk about. It can be an honest and genuine dialogue about what was good or bad about the company.

We’ve got the Water Cooler, which is an online forum focused more on specific questions. Then we have the Prediction Markets, which has employees trading fictitious stocks or things happening in the company and sharing whether they are going to succeed or not. We also have The Loop, which is an idea forum where you stick your ideas out on the site, and people can add to or subtract from them. You can also invest in them with fake or real money.

All of that activity intrigued me. A couple of people, who are heavily into social media, know that I’m up for things, so they essentially told me, “You got to go out in Twitter.” So far it’s a way for me to get information I might not normally get or even get it faster.

Adrian: I see praises about Best Buy, but I also see a lot of complaints on sites like Consumerist. How do you handle the praises and complaints of the company?

Barry: We have about five hundred million transactions a year and well over a billion interactions. The chances of getting every one of those right is pretty remote. We want to make it easy for people to complain because we want to know what’s going on. We’ve gotten better, and we continue to get better.

The conversations happening on the Web are the real ones. I don’t always believe in them, but they’re out there. We encourage people to tell us what they think. As the CMO, I don’t hear the real stuff always. I wish I did. For example, on Twitter I’m finding that not only are customers telling me the real stuff of what they think but I also have a different kind of dialogue with the employees than I would when I see them in the elevator.

As a retailer in this space, it is important for people to trust us. The only way people will trust us is if we are behaving in a way that makes us trustworthy. Part of that is sharing and being honest, genuine and open about what’s good, what’s bad, what’s working, and what’s not working.

Going forward with social media, maybe we can start to somehow get all those conversations on our Web sites. It’s not hard for people to see what’s being said about Best Buy, both the good and the bad. Whether we want to acknowledge it or not, it’s being said, so why not make it easy.

Robert Stevens, the founder of Geek Squad who still works at Best Buy said to me, “Let’s make it real easy for customers to complain. We want to hear it. Then we can do something about it, so let’s do all we can to make it easy.”

Adrian: I’m interested in your online store. Is a large percentage of your sales done online?

Barry: In the United States, we do about $35 billion in total revenue. You can imagine that we do a lot of business online as well given the products we sell.

We are one of the largest retailers online as well as the largest offline. We’re stronger in certain categories. Part of our value proposition online is that we have stores, and the products that lend themselves to having an offline component do better online. For example, I want to go look at a television and see how it works or I want to lift up a notebook and see how heavy it is; those kinds of businesses we do better online.

We don’t do as well in businesses where you get a lot of stickiness built in, like Amazon does with the personalization and history to make their site better for you.

We don’t think stores are going to ever go away; however, we do know that the direct base selling via the Internet is going to become a bigger slice of the mix going forward. We are doing a lot to invest, not only by dot-com, but also looking at alternative brands that we can launch online with a different value proposition which the Best Buy brand is known for.

Adrian: Do you have much of an affiliate program?

Barry: We do pretty good business that way. We’re spending a lot more time thinking of how to make our Web site more relevant and shoppable. Even though we already sell online, the bigger impact for us is how the Web site actually impacts in-store sales. We spend a lot of time building up our future site online so we can help our offline business. We do a decent business in affiliate marketing. Most of the time, however, we spend on ways we can actually help you figure out what you want to buy in our stores.

Adrian: How does direct response marketing fit in with Best Buy?

Barry: I would say 25 to 30 percent of our mix is in direct marketing. We have 29 million people in our rewards and loyalty program. Over 50 percent of our sales are run through using our card; that is a tremendous source for understanding consumers. In addition, we recently launched the silver tier within our rewards program. We are building into it experiential benefits, return policy differences, a special phone number to call us on, and guaranteed access to certain kinds of short inventory products like Nintendo Wiis. A lot of direct marketing goes on within that.

In addition, we’ve built different models that are very predictive in terms of who will respond to direct marketing offers and who won’t. During the year, we do about eight programs where we invite people in for sales. It is based upon understanding the future value as well as who will respond to direct marketing.

We do a number of trigger programs as well. Once you buy product “x”, such as a flat panel television, we know the kind of purchase pattern you’ll have and the products you are likely to buy in the next 12 months. This is based on the history of other people who bought that product. We’ll send that email or direct mail inviting you to buy the product that you are probably going to want.

Adrian: What sort of patterns do you end up seeing with the card tracking purchase behavior?

Barry: First of all, we understand how much a customer is worth to us. That’s important because it helps us understand more customer-specific investments versus mass investments. We can spend more money on retaining this actual customer versus another customer that might come in once, twice or three times a year.

Additionally, we use it to understand not just frequency of purchase but profitability. With our entire customer database, we’ve been able to essentially assign profitability to every one of them. We break them into three levels: best sales, top best sales, and bottom best sales.

The top best sales are interesting because they are the most profitable people. The bottom best sales are also interesting. First, we lose a lot of money at the bottom best sales level, but they’re not necessarily bad customers. They’re actually good customers. They are buying all over the store, and end up buying things that aren’t profitable for us. The opportunity with them is trying to figure out how to put more profitable ideas in front of them instead of the ones that cost us money.

It helps us understand customer-specific investments. Since we have an understanding of what people are doing, we can do more effective direct marketing. Lastly, it helps us understand when our sales are up or down in a particular business or geography. We can then understand who we are up or down with. That helps us fine-tune our promotional strategy, even on a mass basis.

Adrian: Although you talk about your marketing mix, in fact, a Best Buy store is like a little direct marketing test pool where you’re testing all the time to see what works.

Barry: Yes, exactly. That’s kind of what I talked about earlier when I mentioned creating an open architecture culture. It’s not my responsibility to come up with all the marketing ideas. If we can truly enable a culture where people believe and feel accountable, then they need to come up with their own marketing ideas. All of a sudden instead of 25 people in the Marketing Department trying to come up with ideas, you have 150,000 people across the company trying to come up with ideas. If every store has a plan, then they get some things from the corporate office, but they also have the responsibility to come up with things that the corporate office can’t see.

Adrian: But then you have to do that while still protecting the brand and the customer interest.

Barry: You do that by providing bumpers. We’ve got a brand idea, and we’ve broken the brand idea down into five ways that it’s brought to life. One of our promises is called “Never Leave You Hanging.” We are trying to get better at never leaving the customer hanging. As the store takes that as our mantra, they can act in a moment and a way consistent with that. Everything happening in a retail store is in that moment. If they can remember these broad-based principles in their head more often than before, they can make the right kind of decision.

Adrian: What you have told me about the card is very interesting. With the card, you can look at member data and see which are the more profitable lifetime customers. Then when you understand who they are, you can target your outbound advertising in both branding and direct marketing to attract those people, can’t you?

Barry: We can understand profitability by customer. There’s a stat that we are actually making too much money on the customers that are most profitable. We should be investing more in them and hopefully making them more loyal with how we are investing and experiential improvements, like the return policy, rather than trying to figure out how to make the people who are draining dollars more profitable. Then we spend less on the middle people because they are not contributing much at all.

Adrian: You’ve almost taken it too far.

Barry: Yes, exactly. You need to make sure that the people who are the most loyal don’t go anywhere. Make sure you invest in them because they are going to drive your business going forward. You can’t lose those people. If you lose one of those customers, you need to get 80 new customers. You shouldn’t just treat them like everybody else. You treat them differently, and then you have a better chance of holding onto them.

Adrian: Some Web sites love branding campaigns from a company like Best Buy. They can have a certain number of CPMs, stick them up on the site, and they’ll burn through them quickly with no real perceivable returns. You don’t particularly look for a call to action or anything like that; you just want the banner in front of people. How does the advertising and branding work for you?

Barry: We use advertising for different purposes. Some purposes are that we want people to click, and we’re trying to drive engagement during that moment or within a seven-day period. Other times, we’re trying to drive an impression.

With the products we sell, we are also trying to get top-of-mind awareness. For example, you might not be ready to buy a television today when you see an ad from us. However, three months later when you start thinking you want to buy a television, we want to be there in your head.

In mass media, we try to be more general and talk about Best Buy the brand because most people aren’t interested in buying a specific product next week. There may be people who are ready to buy a product, but the percentage of people who want to buy a PC is only 10 percent. The people who want to buy a TV are another 10 percent.

If we get really specific in mass media, then we’re turning off everybody else and just focusing on the 10. If we can land the brand idea, we can bring all of the people thinking about buying whatever it is they are thinking of buying.

Online is more targeted. Typically, there’s less awareness building stuff online. We actually are trying to drive an action to our Web site. About 90 percent of our online focus is based around action. Specific sites can give us an idea that people are in a certain mindset. Typically, we are trying to get them to do something, although it isn’t always buying.

We want to move them through the purchase funnel. If you’re just thinking of what to buy, we might get you to the next phase, which is “I want to buy versus I have to buy.” The typical thought process of buying a television takes six months from idea generation of “I want to buy a television” to actually buying one. During that time, people are thinking about what they want to do for a while. They research and study. We’re just trying to move them along at whatever stage they are at.

Judge guides the brand strategy for the company, drives the development of new marketing capabilities and empowers marketing innovation as the company transforms to put the customer at the center of its business model.

Judge joined Best Buy as a member of its e-commerce team in November 1999. He played an integral role in the 2000 launch of BestBuy.com and helped pioneer the company’s multi-channel consumer marketing and direct marketing efforts. In 2006, his role as senior vice president of marketing expanded to include oversight of the company’s customer research and development capability to facilitate increased ingenuity in service of customers and focus on growth. He also gained responsibility for marketing communications, internal communications, public relations, public affairs and promotions at that time.

He began his career at The Direct Marketing Group and has held positions ranging from marketing assistant to product group manager with Young & Rubicam, Coca Cola USA, The Quaker Oats Company and the Pillsbury Company. He also served as vice president of marketing for Caribou Coffee Company.

Judge has a bachelor’s degree from Brown University and a master’s degree in marketing from the J.L. Kellogg School at Northwestern University.

Fast Track Interview

Adrian: I’m here with my friend, Brad Geddes, who used to be at Local Launch. He is now launching his own private company around Pay per click (PPC) called bg Theory. Brad, tell us a little bit about your background and what you’ve been doing up until now.

Brad: Sure, I started in Internet marketing about a decade ago. I consulted for a number of years on usability, SEO, PPC, media buys, and integrated marketing sales force. In 2004, I joined Local Launch. At first, I ran the Professional Services Division, which again was PPC, SEO, and media buys.

We then started productizing so we could empower other newspapers and yellow page companies that had a sales force but didn’t have digital or interactive marketing. We made an entire platform and created products that had simplified sales pitches and good ROI for the advertiser. We built a system where we could create an effective PPC account with thousands of keywords and hundreds of ad copies in a matter of minutes.

When I left Local Launch in July 2008 to start a new company, I sat back and thought, “What do I want to do?” I love watching a small business or a public company try something new and get the input, the skills, and the technology they need. I want to empower these companies to succeed. If it is a small company that doesn’t have the revenue to pay for a lot of expensive in-house consulting, we can put on seminars. If it’s a large public company with an entire in-house marketing team, we work closely to train other individuals on PPC, SEO, social media, or even usability.

Adrian: Can you take us through the entire process for a Pay per click campaign?

Brad: The first thing you need to do is examine the search process you’re trying to fit your marketing into. For example, someone has an idea or something they’re thinking about; they want to find the cheapest computer or the best new LCD monitor. They go to Google and convert their idea into words they type in, and then the ads come up. Right away, the ad has to be synergistic to what the consumers are looking for in their idea. Having a close match between the ad and the idea is important, and ad copy serves as the bridge. That is what entices someone to view your site, which then gives them information, converts them, or whatever actions and goals they are looking for.

Your keyword research and ad copyrighting need to be tightly formed together. It’s common to see an ad group with 2,000 unrelated keywords within a single ad copy. From a consumer standpoint, those two aren’t closely related. You can’t have keywords that mean nothing to the consumer who just did his search. The biggest thing is to break those keyword standards on very tight groups.

Adrian: Are you manually or automatically auto-inserting keywords and page text to make pages more relevant? How do you do that efficiently?

Brad: From a keyword standpoint, you could use a source such as Speed PPC to build this keyword list pretty fast. However, you still want a human eye to take a quick look at it to make sure it all makes sense together. Once you have those tightly formed ad groups and have ad copy that completely reflects that, it’s easy.

It’s probably most scalable to use some sort of automation when creating an account with hundreds of thousands or millions of keywords whether it’s in a toolset, using Excel, or building a tool that looks at the keywords and your ad copy. Then it’ll write some more formulated-based ads.

This next step in the campaign process is asking, “What’s the return we’re getting by ad copy and by keyword?” You want to combine this with doing some ad copy testing. Write a few ads and look at what’s working. It is also just as important to know why it’s not working. If the keywords aren’t working, it’s not that you should delete them but rather it is asking, “Is there a reason it’s not working? Is it that this ad isn’t right? Is it that the landing page isn’t right?” Asking these questions and making sure of certain things gives the keywords a second chance. You can verify whether it really cannot convert or if it was just a flaw in the setup.

You also want to determine your goals for the campaign. If you’re a publisher selling CPM ads, your goal is probably to maximize traffic at certain revenue per visitor. Other e-commerce companies want to get 200 percent ROI. Without a goal in mind, you do not have a way of making changes to meet that goal.

Once you list those goals, you’re going to look at your metrics to measure those goals. You’re going to run a report that looks at what is and isn’t converting and how much everything is costing you compared to its goal size. Those reports can be run within the AdWords interface or another system you’re using if you built an API on top of it.

Once you can see those metrics, it becomes pretty easy to start tweaking. For example, this is working and we get fantastic returns here, or we’re only in position three or four, let’s move that up a bit, or these words aren’t working for us but they’re high volume words; I really like them, so let’s create a special landing page for this set of words to see if we can make them convert.

It is looking at your metrics and making decisions. If you’re not making decisions on your metrics, you’re not doing anything. You are simply looking at metrics, which doesn’t get you anywhere. Once you get to the point where you can look at your ROI per keyword or how much you’re making then every time someone does a search, you can look at that by keyword and ad copy and see all the intersections. Then you can make some really solid decisions about how to change your bids, remove bad copies completely, change new paths, or work on your landing page. It becomes a circular process.

One other thing, you need to keep on top of the jargon and new keywords developing in your industry and what people are searching for; then continue to refine those keyword sets. For example, in the medical industry, something new is always coming out. In other industries such as real estate, there is not a new keyword at all. It makes sense to look in your industry, understand how fast or slow it moves, and what can be done from a conversion standpoint to bring that whole cycle together.

Adrian: How do you take this to your SEO site once you’ve done this through a couple of cycles?

Brad: Once you have done this a few times, you understand what words convert the best. That is where you are going to start your SEO: what words have the highest volume that you can’t make perform on PPC. Some words might have so much volume with them that you get some conversions but you can’t keep paying those conversions. With the higher search volume comes higher competitive keywords, but in that case you want to put those in your SEO effort because SEO is “free” once it’s done. It takes time, so you have to determine how much time your SEO’s costing you. You probably even want to take your highest converting words and highest volume words and start your SEO from there.

Then the same goes for looking at SEO. If you have words converting extremely high in SEO that may not even be in your Pay per click campaign, you would want to switch those around. There is definitely an incremental value of being in the top positions unpaid and the top positions on the SEO, which is the natural, organic side. The consumers having a higher confidence of seeing your site listed twice.

Adrian: Can you explain some of the more sophisticated tricks and things happening in the Pay per click world?

Brad: The biggest issue people are having is the ubiquitous quality score. Let me explain. When you think of your placement and your Pay per click campaign, it’s a pretty simple formula. It is the maximum cost you are willing to pay times your quality score factor. This determines where you’re going to show up on a page. If you have a really high-quality score you could essentially bid a lot less and appear higher than your competition. The problem with quality score is it continues to get more sophisticated by using multiple factors.

Basically from a search engine’s standpoint, quality score is their measure of relevance. For a moment, put yourself in a search engine’s shoes. Someone comes to your site and does a search. The search engine’s job is to send them away from their property, which is opposite of every other site’s job. Every other site wants to keep them in their property. The goal of the search engine is repeat visitors. In other words, they want someone to find what they’re looking for so they will return and do another search.

Essentially, relevancy is what keeps someone returning to a particular search engine. They want to make sure they’re giving their consumers, people who search their site, the best possible results from a paid and a free, organic standpoint.

Adrian: How do they define relevancy? Is this something that’s done by hand or with technology?

Brad: Obviously some hand reviews occur. However for the most part it is done with technology. They take their spider and look at a page and the overall site. They ask, “What’s the relationship between the keyword search queries.” Of course, when someone does a search query on Google, Google knows what they search for. If they turn around and search for something else right next to it, they probably know those two terms are related. They could then search the database to understand how all of these different keywords are actually related.

Adrian: What are some other techniques to guarantee you have a high-quality score?

Brad: The most important things with quality score are the keyword, the ad copy, and the landing page. Those three things are very closely related. Landing page load time is now used because in a high broadband world where everything moves fast, we want information quickly. Clickthrough rate is also used in quality scores.

There are certain times when Google is famous for other relevancy factors. Some of that goes to local search queries. For example, if you do a search for a New York dentist, they are going to look at an individual’s campaign asking, “Is this person geographically targeting just New York or are they targeting the entire United States?” It is probably not quite as relevant to target the whole United States as someone who is just targeting New York for their query. Geographic targeting is another good way of becoming more relevant, especially if you have a landing page that has a New York dentist in that instance.

The last one is they have their minimum bids right now. Minimum bids are tougher to deal with because some people can see it when you log in to your Ads account. Let’s say you have a minimum bid of one dollar. Some people consider that to be bid guidance. It’s like Google is saying, you bid a dollar. Really, that’s the lowest you can bid and have a chance to appear in search. That’s one way for those looking at your keywords and at minimum bids to see how relevant you are. If you have a minimum bid of a dollar, obviously you are not that relevant. That’s another quick way to look at how relevant my keywords are because Google thinks they are.

Another way that is very useful is in Google’s keyword toolset. You can have them spider a Web page to tell you what they think the keywords are on that page. You can place your URL in the List URLs page, hit submit, and Google will crawl that page to find what is relevant.

It will say, “We think this page is about these keywords.” If those keywords are exactly opposite of what your keywords really are, you have a problem. If they’re all relevant, then you’re in good shape. It’s also a good way to research your competitors. Put in your competitor’s URL, and see what Google thinks those pages are about; then you can see how relevant you are opposed to them.

Another big thing is if you can connect consumers to the local area. Everyone is very tied to where they live. If you live in New York and talk bad about the Yankees, you’re going to get stared at. If you go to Chicago and talk good about the Bears, the people are going to like it more. They identify a lot with geographic areas.

You can put information about geography in the ad copy. For example the phrase “located in the Triangle” means nothing to most people, but it’s really talking about downtown Pittsburgh. Consumers connect to it immediately because you are using their local language. In any campaign, regardless of topic, using some of that local information ties the consumers right to the ad copy.

With the web, we tend to forget people still search by physical location; they still live somewhere. They are searching at a certain time of day; they are searching in a certain city, even a certain country. Think past the Web to the physical person you are trying to connect to. What other factors are going on there? Put that in your ad copy or in your landing page and you’ve really drawn someone into your marketing. You could often use some very interesting things and see some much higher conversion and clickthrough rates.

Adrian: Is there anything we haven’t talked about that you’d like to mention?

Brad: When you think about digital marketing, the most important thing is to think about the consumer. How do they search? How do they shop? Once you understand your customers, you can determine how the Web site and marketing should lay out. A marketing plan is looking at the entire sales cycle and understanding how to make sure each part of the sales cycle reaches a consumer in the way they want to be reached.

Fast Track Interview

Adrian: Today I’m talking with Anne Mitchell from the Institute for Social Internet Public Policy (ISIPP). We are going to talk a little bit about the state of e-mail today and some of the things Anne has seen happen in the trenches of getting e-mail through. Anne, if you could tell us a little bit about yourself and your background, and then we’ll discuss the e-mail issues.

Anne: Well, Adrian, thank you so very much for having me. I currently run ISIPP. We have an e-mail accreditation program called SuretyMail, which we use to help ensure that legitimate e-mail senders are able to get their mail through to the in-box. This was born from my original roots on the anti-spam side of the e-mail industry. I was initially in-house counsel and the Director of Legal and Public Affairs for the very first blacklist known as the MAPS RBL.

My background is in helping to ensure ISPs don’t have to deal with e-mail that people have not requested; also known as spam. In the course of my work, I have become extremely involved in assuring that legitimate senders are able to get their mail through to the ISPs.

I was one of the original founders of Habeas, which was started as a company intended to distinguish spammers from legitimate e-mail senders and then sue the spammers using Copyright and Trademark Law. I left Habeas in 2004, which was about a year after it was founded.

Adrian: Habeas was just bought by Return Path. What does this sale mean?

Anne: Up until the recent sale announcement, three primary, full-service e-mail accreditation companies were in existence: Habeas, SuretyMail, and Return Path. All three companies were offering the same kinds of services.

Let me explain what I mean by e-mail accreditation. At SuretyMail, we work with an e-mail sender and vouch for them to the ISPs and spam filters. We say, “These are good guys. They’re doing the right thing. They’re not sending spam. They are sending mail that’s been requested, and you should deliver their e-mail to the in-box.” The ISPs appreciate that because they don’t have to churn resources checking this segment of mail by running it through their whole gamut of spam filters just to determine it is not spam. With this method, they are able to deliver the mail right to the in-box and devote their resources to dealing with the real spam.

By full-service, I mean we work with all the different ISPs, and we offer a suite of various services related to e-mail deliverability. We provide delivery in-box monitoring, so you can see whether or not your e-mail has been delivered into the major ISPs. We offer e-mail client rendering, which means you can take your creative you’re about to send and see how it will be rendered by 20 different e-mail clients. You will know how it will look when someone using AOL, Outlook, or Hotmail reads it and how it appears on different mobile devices.

Adrian: Innovation is on the rise in the e-mail space with SPF and Domain Keys. How important is accreditation given all these other types of protocols coming along for authentication?

Anne: There are some promising authentication mechanisms out there, but there is by no means widespread, let alone, universal adoption for any of them. SPF has been around for how many years now, and we have people come to us every single day applying to be accredited, who not only aren’t publishing SPF but have no idea how to set it up and had no idea that they ought to be publishing SPF. Fortunately we offer a service to help with that, too!

There are huge ISPs that are unlikely to accept your e-mail if you are not publishing with SPF or Domain Keys. At best you’re going to get into their junk folders. The publishing of SPF or Domain Keys is extremely important, but the message and the adoption just haven’t followed. The technology and these innovations are important, but they do not obviate the need for accreditation.

Adrian: If they’re not adopting free things like SPFs and Domain Keys, why would they be more likely to adopt authentication in paid services like yours?

Anne: Because we would take care of everything for them. The typical e-mail sender really doesn’t know how to go about fixing the problems they have with deliverability. For example, they don’t know how to set up their SPF. They especially don’t know how to develop the relationships they need with their counterparts within the ISPs and most likely are not in a position to do so. Whereas the e-mail accreditation programs already have this relationship with each of the ISPs.

For example, if you woke up tomorrow and found that all of your e-mail had been blocked at AOL or Yahoo or started going into junk folders, would you know what to do? People want someone who already has the contacts and knows how to do this for them.

Adrian: Something else we should talk about is that you’re a lawyer, and you’ve been involved with the legal side of CAN-SPAM. Some changes are happening in that law with regard to e-mail. Can you tell us a little bit of what’s happening there?

Anne: There are four primary new changes to the law. One of the things about CAN-SPAM was that it required you to put a physical mailing address in each and every bulk or commercial bulk e-mail you send. When that was first enacted, we had people coming to us very concerned because they wanted to know, “Does this mean we actually have to put the physical address of where we sit in our office or is it okay to use a legitimate post office box where we really get mail?”

Our advice to them at that time was, “If you’re doing everything else right, and you choose to use a post office box as your mailing address in your CAN-SPAM compliant mailing, then the FTC is not going to come after you for that.”

One of the clarifications it made was that you may use a post office box as long as it really is where you exercise control, and it is where you go to check the mail. It basically confirmed what we had already told people.

You’re also required under CAN-SPAM to remove an e-mail address from your mailing list within 10 days of receiving a request to opt out. We tell people to remove it immediately when someone says they don’t want your mail. What this new rule clarifies is that the act of opting out must only take a single action.

For example, when I click on the link in your e-mail that says “unsubscribe,” it must take me immediately to the unsubscribe page. We would argue to the “You have successfully unsubscribed” page. We counsel senders that they should not be asking for a password. You definitely shouldn’t put an intermediate page that says, “Are you sure you want to unsubscribe? Here, let us tell you all the reasons why you shouldn’t.” Arguably, it shouldn’t even be a page that says, “You are about to unsubscribe. Do you want to confirm?” Ideally, a single action means when I click unsubscribe on that e-mail, I’m taken to a page that says, “You have been successfully unsubscribed.” Now that page can say, “If you didn’t mean to, click here.”

The third clarification to CAN-SPAM is perhaps the most confusing, confounding, and impenetrable piece of legislation I have ever seen. Perhaps the best way to explain it is to explain what it is trying to avoid.

Let’s say you get an e-mail from suretymail.com. You look at the sender and say, “Ah, SuretyMail is sending me e-mail.” Then you open the e-mail, and the only thing in that e-mail is a big advertisement for FedEx. Maybe FedEx paid us a bunch of money and said, “You guys ensure mail gets delivered to the in-box, and we positively get real packages delivered overnight, so there’s a synergy.”

Who do you think the average end users are going to try and unsubscribe with? Do you think they’ll know? Do you think they’ll look up at that header or are they going to see FedEx? This new rule with CAN-SPAM helps address the confusion that can be caused from things like this.

Here’s the rule: if you send e-mail that contains advertisements for entities other than yourself, such as one or more third-party advertisements, you must also include some sort of advertising text for yourself in that same e-mail.

If you are sure to include the text for yourself in the body of the e-mail, you become what is known as the designated sender, so this is called the Designated Sender Rule. You then are the designated sender for handling opt-out requests. If you fail to include something about yourself in the body of the e-mail, then every advertiser who has advertised in that e-mail is on the hook for handling opt-out requests.

The fourth clarification was a reiteration to whom CAN-SPAM applies, which is any and all commercial bulk mail. This includes e-mail for which a primary purpose is to feature or sell your own goods or services even if you don’t send that e-mail yourself.

Adrian: If you send an e-mail from your server to AOL, Hotmail, Yahoo, or Gmail, what are the current checks an e-mail goes through to get into the in-box?

Anne: The first thing that happens is that their receiving server will make note of the IP address from which you’re connecting. Then, it’ll do a series of checks on that IP address. The first thing it will do is look it up in all the different blacklists and see if you’re listed there. The second thing it may or may not do is look you up in the various accreditation services such as ours to see if you’re listed with us.

Now I’m sort of aggregating, so this is a combination of all the various things different ISPs do. They will check to make sure you have RDNS, which is Reverse DNS, set up. This means taking your IP address and seeing what domain it says it services. It will check to make sure that your IP address resolves back to, for example, adrianbye.com. Then it will look at the headers of your e-mail to see, “Okay, this IP address says it is adrianbye.com. Who does the e-mail say it is from?”

It’ll check to make sure that the mail is coming from your domain. For example, if your mail is claiming to be from adrianbye.com, but the IP address actually resolves to example.com, the odds are good that your e-mail is either going to get bounced, blocked, or go to the junk folder.

That all happens before their server ever accepts your e-mail into their mail server. Once it passes all of those checks, it goes into content filtering. The spam filters are all looking at what’s in the text. That can mean the actual words and phrases you’re using. It can check to see if you have links to domains that might be on blacklists. It checks everything from the headers down to the bottom of the e-mail.

It is looking at the URLs and the domains advertised in the text of the e-mail. It is looking at the “from” address and even the “to” address. It is looking at the subject line and the overall content of the body. It is looking at the HTML-to-text ratio. It is looking at the image-to-text ratio. It is looking at the size of the font in the HTML, and it is looking at all the words in the body of the e-mail. All of those things can determine whether your mail gets delivered to the in-box or to the junk folder.

We have an e-mail deliverability blog at GettingEmailDelivered.com where we talk about the things to do right and the things that can be done wrong, which can affect and impact your e-mail deliverability. There was a recent post about how the content you choose can either cause your e-mail to be delivered to the in-box, as it should, or go straight into the junk folder.

Adrian: If an e-mail is accredited, would it then bypass a lot of the content checks?

Anne: It all depends on the spam filter or the ISP and to what extent they dispense with all the other checks. In some cases, it doesn’t go through any of the other checks. As soon as they see that your IP address is listed with us, it goes straight to the in-box. In other cases, they see you’re listed with us, and then they look at all the other things.

Some ISPs are very careful and say, “We really trust SuretyMail, but we’re still going to check to make sure that the content doesn’t look too spammy. If it does, then we are going to look a little more closely at it.” Because of the weight they give us, the odds are good that it will still go to the in-box, but that’s why I say it really depends on the ISP or spam filter. They all do it differently.

No one can guarantee that 100 percent of you e-mail will always go to the in-box because the ISP and spam filters change their algorithms daily and sometimes hourly. If you’re accredited with us, your e-mail will go to the in-box; if it doesn’t, we are going to go to bat for you to rectify the situation and make sure it goes to the in-box.

Adrian: If someone wants to sign up with your service, how might they do that? How much is the cost?

Anne: We have many free resources available at suretymail.com. You can also go to ISIPP.com. We have a unique pricing structure because we wanted to make sure everyone could afford this. Rather than basing the pricing on volume, which other places may do, the cost really depends on your business model. That way, it’s affordable for everybody.

Fast Track Interview

Adrian: Today I am talking with Tony Hsieh from Zappos. Tony, we’ll talk about how you became involved with Zappos and where the company is today, but let’s start by talking about your company LinkExchange.

Tony: In 1996, I co-founded LinkExchange with a college roommate, and we grew the company to 100 employees. It was basically a cooperative advertising network. We provided free advertising services to about a million different Web sites in our network. In 1998, Microsoft bought the company for $265 million. They acquired it to access the small businesses on our network as they launched their small business initiative.

After that, I formed a small investment fund called Venture Frogs with Alfred, who I had worked with previously. We invested in 20 or so different Internet companies. Zappos happened to be one of them. Over time, it became evident that Zappos was the most promising and the most fun. Eventually, I decided to join the company full time, and I became the CEO.

Adrian: How did you go from investor to full-time employee?

Tony: Initially, we thought it would be fun to be involved in a lot of different companies. What I found was that I missed being a part of the creative process to help grow a company. When you invest in companies, you put in the money and occasionally are an adviser, but you’re not really involved in the day-to-day.

There wasn’t a day where I just suddenly transitioned into Zappos. I ended spending more time with the company. It wasn’t something that I forced myself into. Instead, it was something that seemed like it made sense to everyone involved.

Adrian: How did Zappos start?

Tony: In 1999, all types of different Internet companies were being started. At the time, shoes didn’t sound like a great idea to me, but I learned that in the United States it was a $40 billion market and five percent or $2 billion was being done by paper mail-order catalogs. It definitely seemed the Web would be as big as paper mail-order catalogs.

Over time, customers found it was very easy to purchase from us. We started adding more customer-friendly services. For example, we offer free shipping both ways, which removes a lot of the risk of buying shoes online. We started extending our return policies from 30 days to 60 days to 90 days. Today, it’s 365 days.

We hadn’t planned all of those things from the beginning. However, we found that as we put more into the customer experience and customer service, it helped fuel our growth of repeat customers and word-of-mouth. That’s how we started with zero sales in 1999. This year, we are on track to do a little over a billion dollars in gross merchandise sales. Long term, we want the Zappos brand to be about the very best customer service.

Adrian: Zappos was started in the Bay Area, but now you are located in Las Vegas. What prompted the move?

Tony: Our customer loyalty team, which is our call center, was our fastest growing department. In San Francisco, it’s really hard to find people who want a career in customer service. Vegas is the 24/7 city, and we run our call center 24/7. It’s also much more affordable than San Francisco, and a place where customer service can be seen as a career.

We didn’t want to open a call center in Vegas and then keep our headquarters in San Francisco. If our brand is about providing the very best customer service, then customer service needs to involve the entire company not just the department. We all needed to be located where the customer service happens.

Adrian: How do you run things internally to guarantee your focus on customer service works?

Tony: We do a number of different things. Some of it is our policies, such as the free shipping. Some of it is showing that we truly want to talk to our customers. For example, on most Web sites, it can be difficult to find contact information, especially the phone number. Our 1-800 number is at the top of every single page of our Web site.

Most call centers measure how many customers the reps talk to in a day, which translates into how quickly you can get the customer off the phone. We do not view this as good customer service.

We don’t even measure call time. All we care about is if the rep went above and beyond for the customer.

For example if the customer calls us looking for a specific pair of shoes and we’re out of their size, we will research at least three other competitor Web sites. If we find it there, we will direct the customer to the competitor. Yes, we’ll lose the sale, but it is better customer service. It’s making sure every interaction we have with the customer results in them saying, “That was the best customer service I have ever had.”

Adrian: How do you handle extreme situations when customers try to take advantage of your policies?

Tony: If customers are clearly abusing our policies, we’ll call the customer. For example, we’ll let them know that returned shoes need to be in new condition. For example, they cannot use the shoes for hiking and then return them. If those situations happen repeatedly, we will disable the customer’s account.

We are not trying to be all things to all customers. For example, we want customers to come to us for the best service and the best selection, but there are plenty of customers that are simply looking for the lowest price. We’re not going to make those customers happy because we don’t offer coupons or blanket promotions.

In other words, we do not compete on price. We want customers that value better service and are willing to pay a little more for that. If the customer wants to shop somewhere else because of a lower price, then they are not the right customer for us.

The initial reason a lot of customers first try us is because of our selection. We have a much larger selection than you’re able to find in any brick-and-mortar store. Our warehouse, which is two buildings, is the size of 17 football fields with a little over four million items. We work with over 1,500 different brands. You’ll find more styles available on Zappos.com than you would in any specific brand’s own store.

We will encourage customers to order two sizes if they are not sure whether a size 8½ or 9 will fit best in a particular brand. They can return the size that does not fit. It’s free shipping in both directions, which is convenient and risk-free for the customer.

Adrian: What percentages of the shoes are returned?

Tony: It varies by brand. For some brands, the return rate might be 20 percent; other brands might be 40 percent. The more expensive shoes are most likely to be returned. In some cases, the returns are because the shoes do not fit.

Adrian: What percentage of people place orders on the phone versus online?

Tony: Roughly five or six percent of the orders are placed through the phone, but most of the phone calls are not customers placing orders at that moment. On average, every customer will contact us by phone at least once in their lifetime. They could need shopping advice. It could be that a customer needs help with going through the return process for the first time. Right now, we receive about 5,000 phone calls a day.

Adrian: Do you ever get on the phones yourself and take calls from customers?

Tony: Yes. It’s not just me though. Everyone that is hired in our Las Vegas office goes through a 5-week training program. During this program, we review the history of the company, the importance of customer service, and the focus on company culture. Each new employee also learns how to use the customer service tools. For example, they take customer service calls for one of the weeks in the training program. Then we’ll send them to our warehouse in Kentucky where they will do all the different warehouse functions: picking, packing, shipping, receiving, and such. After that, they start the job for which they were hired, whether it is as a lawyer or accountant, for example.

We believe very strongly that customer service needs to be understood by the entire company. If a software engineer doesn’t make it through that 5-week program, then we won’t hire that person. It gets everyone on the same page in terms of our culture and our customer service focus. The other nice aspect is that during our busy season in the fourth quarter anyone from any department can jump on the phones.

Adrian: How did you learn the call center business?

Tony: We learned and worked things out as we went along, and all of our call center software is built in-house. It has been a constant evolution. We add features almost on a daily basis as a result of feedback from our reps and customers.

Adrian: What are you doing about international orders?

Tony: Long term, we plan on expanding into different countries, but for now we’re focused on North America. We have so many other opportunities here in terms of product categories. Also a lot of people in the United States have never heard of Zappos. Rather than spread ourselves too thin by trying to be in a number of countries at this stage of the company’s growth, we have decided to focus on North America and do the best possible job we can here. Once we have accomplished that, we will start expanding into other countries.

Adrian: How do you acquire customers? Is it through referrals, viral marketing, affiliate programs, and media buying, or do you only focus on word-of-mouth?

Tony: No, we do have paid advertising; most of our paid advertising dollars are spent online. The top two forms are buying keywords and our affiliate program. We have an account on Commission Junction, and anyone can sign up for our program as long as it’s an appropriate fit. We pay a straight percentage. Right now, our affiliate program payout is 12 percent of the net sales that happen within the first 90 days of driving a customer to our Web site.

We don’t exactly have an advertising budget. We think of it more in terms of a ratio. For every dollar we spend in advertising if we get so many dollars in sales, it’s going to pay for itself on the first order. While we could spend as much money there as possible, there is a limit to how much we can spend while still meeting that criteria. That’s why we have decided to focus on trying to drive word-of-mouth and repeat customers.

Adrian: Are you testing landing pages, split testing, doing e-mail sign ups, and sending updates to convince people to buy?

Tony: Yes, we do a little bit of those things. Different keywords will have different ROIs associated with them, and we will look at that as well. The main focus of the company has been and will continue to be on what we can do to make the customer service and customer experience better.

Adrian: And your reason for that focus is to keep the value high so customers are happy and will return to buy more shoes?

Tony: Yes. Then over time customers will slowly learn we also sell clothing, handbags, and items from other product categories. It will take some time for our customers to think of us beyond shoes.

Adrian: Where are your future key products?

Tony: In the long term, the Zappos name will be about the best service. We’re already selling handbags and clothing. We just recently added electronics, cookware, luggage, linens, sporting goods, and watches. We’re open to experimenting with a lot of different things. Then it will depend on what customers gravitate towards. The direction we can go is limitless.

Adrian: How profitable is the company?

Tony: For the last several years, we’ve been running the company close to breakeven. Basically, any money we made has been put back into the customer experience. For example, we used to ship everything ground. When we could afford it, we surprise-upgraded people to three-day shipping. Then we surprise-upgraded people to two-day shipping. Now we surprise-upgrade everyone to overnight shipping.

Last year was the first year we made a significant profit. It was roughly a five percent operating profit off of our net sales. We plan on continuing to grow the company and run it profitably. This isn’t a company we’re trying to grow and sell. We definitely are thinking in the long term.

Fast Track Interview

Adrian: Today I’m talking with Matt Moog from Viewpoints Networks. Matt was the former CEO of Cool Savings and helped drive that company through a lot of its changes. Matt, tell us a little bit about your personal and business history before we talk about what you are doing at Viewpoints.

Matt: I was born in upstate New York and lived all over the East Coast. For the past 14 years, I have lived in Chicago. I went to college at George Washington University in Washington, D.C. After college, I started working for Microsoft.

After four years in business-development roles, which included working on both the launch of MSN and their Internet platform, I left Microsoft and joined a couple of entrepreneurs who had launched a company called CoolSavings.

I was at CoolSavings for 10 years and was the Executive Vice President of Sales and Marketing when we went public via a traditional IPO. Six months after we went public, I took over as the President and COO. Six months after that, I became the CEO and ran CoolSavings as a public company for five years until it went private at the end of 2005. In mid-2006, I left CoolSavings and started a new company called Viewpoints Network.

At Viewpoints Network, we have a ratings and reviews platform, which you can see at viewpoints.com. We’re building our own destination Web site and co-brands for our partners, and we are licensing that technology.

While the site’s only been live for six months, we’re already at a half a million users and growing. We’re expecting to break into several million this year, and our goal is to have over 10 million users.

Adrian: Can you talk about why CoolSavings went private in 2005?

Matt: When the bubble burst at the end of 2000, CoolSavings was in the extremely difficult position of being near bankruptcy and insolvency. We brought in a strategic investor called Landmark Communications, which bought more than half the stock. Over the years, they continued to buy the remaining stock to the point where such a small amount was outstanding, and it didn’t make sense for us to be a public company. Landmark Communications is a multi-billion dollar, privately-held media company, and we were a public entity sitting under the private corporation.

In my opinion, the expense, the time, and the distraction of being a public company are not worth it. You have all the regulatory, compliance, and disclosure issues that make it difficult to get things done. If you’re anything less than a $100 million business on a fast growth pace to be at $250 million a year, I don’t think it’s worth being public unless that’s the only way you can raise money. In my opinion, you’re better off staying private and raising money from other sources.

Adrian: Can you tell us about Viewpoints and what it does?

Matt: In the middle of 2005, I started looking at companies that were either very new or growing quickly. At the time, it was companies like MySpace, Craigslist, and Flickr. I was amazed at how quickly these companies were growing based on either user-generated content or social networking. Most importantly, they were not paying for all the traffic but getting it organically through viral marketing or SEO.

I started thinking about ways CoolSavings could get into that business. Since I had worked with advertisers in the past, I knew they wanted consumers who were actively considering a purchase, have high click-through and high conversion rates, and would become loyal customers. That’s how we struck the idea of building a ratings and reviews platform that would be both organic and viral in its nature.

Overall, I saw an opportunity to create a new reviews platform that is both wide and deep. It is wide in that you can review any product, service, or business. It is deep because you develop very rich profiles of the reviewers. Ultimately it leads to an extensive viral and community-oriented experience.

Adrian: What kind of methods are you using to drive traffic on the site?

Matt: At CoolSavings, I learned there’s never a single silver bullet. Instead, it’s every tool that’s available: SEM, SEO, viral, word-of-mouth, affiliate marketing, CPA, CPM, and CPC.

We also have forward to a friend, post to Facebook, and RSS feeds. We integrate with social networking sites. For example, you can easily drop your own feeds directly into Facebook. As a result, all of the reviews you write on Viewpoints will appear in your Facebook feed.

Adrian: Oftentimes companies don’t have enough dollars behind the business model to be able to do both viral marketing and media-buying. It sounds like you’re doing both?

Matt: Yes. Reviews are an unusual type of viral content. They are actually the most popular form of user-generated content. If I talk to you about a party I went to last night, th