First a little background. Five years ago a professional poker player and a chess master got together to think about the best ways to teach others how to improve their respective games. Both had been embedded in their games communities thanks in particular to the rapidly evolving social web. They quickly realised that for them the most effective learning was achieved through purposeful coversations with other players in their networks.

Dominik Kofert (centre) co-founder of PokerStrategy.com accepting the iGaming Affiliate of the Year Award 2010

Out of those conversations PokerStrategy.com was born, with the vision of creating an online community focused on helping people improve their poker skills. Today the community consists of 5 million players across 19 different language communities in countless countries around the world. The company employs nearly 300 full-time people in Gibraltar and Germany together with hundreds more freelancers spread far and wide. PokerStrategy.com asked me to come on board to assist with their continued growth in both existing and new territories and in new verticals – a new e-learning community focused on trading will be launched soon.

So, what has PokerStrategy.com done to grow such large e-learning communities? Here are some of the key ingredients I’ve observed:

1. Passion

Many larger companies take this for granted. When you are small you live on it. When you are building a community you cannot do without it. The founders of this community and every one of the first 50+ employees was passionate about poker. They liked to play it, talk about it and meet with others who shared their passion. Think about it. Have you ever been a member of a club that was filled with people who were not passionate about the thing that club was about? Of course not. Online communities are the same. The members of a community need to see that those ‘in charge’ are as passionate about the topic as they are.

Thanks to the Internet, it has never been easier to demonstrate that passion to millions of people around the globe. The one thing that your competitors cannot replicate is YOU.

2. Participation

Dominik Kofert (aka Korn) is one of those original founders of the first PokerStrategy.com community. Today he runs a multi-million dollar company and yet every day he posts and interacts with other members of the community. Why does he do that? Well he firmly believes that his and every other paid employee’s participation in the community has been central to its continued growth. A community is an organic ecosystem that is fed 100% by the contributions of each member. The sum is greater than the individual parts. But every individual contribution, no matter how small, supports the overall health of the community. The participation of paid employees is central in demonstrating continued commitment towards the community and is noticed and appreciated.

Furthermore, when growing communities, your own proximity to the community is critical in helping to quickly identify potential difficulties or opportunities to improve how things operate. Your ‘customers’ are telling you every day what they think and if they feel they are not being listened to, they will go elsewhere.

3. Locally Global

No matter what we may think, most people think locally. We are most interested in what is happening in our locality, our region or our country. PokerStrategy.com figured this from early on. Starting from within the heart of Europe this type of thinking came naturally to the founders. While the English-speaking community remains a catch-all for poker players from around the world, among the most successful communities have been those with strong leadership and support structures within local territories.

Today PokerStrategy.com is run from a global HQ in Gibraltar. Here, 19 small teams consisting of native speakers are dedicated to supporting each different language community. They both observe and participate in the communities so that they can identify new strategies for improving the experience for members in their local community. Each community has its unique characteristics and it would be foolish to think that you could bring one template to the world and expect it to work universally.

4. Less is More

Many Internet start-ups make the mistake of continually adding new features to their product offering, often in the hope that the new functionality will compensate for the under-performing existing functionality. Every man-day you invest in new features is time you lose on polishing what you already have, making 120% sure that is works for your customers. In the age of social media, mobile apps and widgets I was pleasantly surprised when I arrived at PokerStrategy.com to see that they had stuck to the knitting. To be fair, there is much more that the team would like to do in terms of features and functionality, but they have spent the vast majority of their efforts on ensuring that the core functions within their community work extremely well.

The trick is to realise early on what is the cement that binds your community. PokerStrategy.com focused on continuously improving and optimising this aspect of what they do.  If the core isn’t working, don’t hope that the fancy stuff will mask over the real problems.

5. Add Value

Every community must have a purpose. People participate in a community because they get something out of it. Education is a great way to add value and is one of the central activities in many communities or clubs that people participate in. From the start, the PokerStrategy.com community has had learning at its heart. Members keep returning since their active participation results in the improvement in their game play.

A community-based learning environment is different to a traditional college or open-university approach where all the expertise is centralised in a few lecturers. In a community approach the expertise is decentralised and therefore teaching is democratised. I can learn as much from someone who is just a little better than me as from someone who is a full-time pro. In fact, in real life most of my learning comes as a result of my interactions with people who know just a little bit more than I do. They are often in a better position to empathise with my current learning hurdles. Furthermore, learning in community is reciprocal as teachers too learn from the self-reflection required to become a good teacher. Thus many coaches in the PokerStrategy.com community are motivated to work for free since they are benefiting from the intrinsic rewards of teaching.

Your customer is the best source of new ideas. You need to implement a strong process that revolves around continuously asking customers “What more can we do for you?”

- Terry Clune, Taxback.com

Apply this test to your enterprise. Are you making life better for people? Making something really easy and very low-cost.

Do you deserve to exist because you have a sustainable difference that adds value to customers? Know your competitors and understand why, from the start, customers choose you rather than them.

Scale and speed are the two most important things that matter. Faster, better and cheaper are the most important things online.  You can never move fast enough online. It may not be perfect, but get it out there and start transactions.

Having a high margin (94% in Stockbyte) in particular with intellectual property is a money-making machine you can scale and can facilitate lots of mistakes.

Take the easy money. Don’t be afraid of whitelabel partnerships that give you access to instant scale and give you revenues fast.

- Jerry Kennelly – Stockbyte, Tweak.com

Networks take time. For funding for example it can take many months to establish relationships that will deliver. It is therefore critical to start early and make and grow connections.

- Kingsley Aitkins, Ireland Fund & Networking Matters

Are we in a technology bubble? People are worried that we are in another 1999. However the companies today actually make money. Groupon – run rate is well over €2b. Zynga – who would buy virtual cows, peas and carrots? But they do. Facebook is a cashflow positive company.

What is the big mobile trend? 2011 is the year of mobile photo sharing. Instagram – a mobile photo-sharing account.

Where is the next Silicon Valley? LA, NY, London, Israel, Dublin? Silicon Valley has unique circumstances. Don’t create a copy of Silicon Valley, but create your own innovation hub.

Why is Quora so hyped? Wants to become the Wikipedia of Q&A. Why will people not stop talking about it? Its founder is the former CTO of Facebook. It strokes the ego – people want to be heard and recognised for their expertise. You can hear leaders talk about their companies. Its number two user is Robert Scoble.

What is the future of social media? Compare it to email, the telegraph and the telephone? It is just a new form of communication. A faster form of communication. There has never been a tool that sends as much information to more people in a shorter space of time. It is a tool.

What is the next big thing? I don’t have any goddamned idea. Don’t start a startup because it is the next big thing. Start a startup because it will make people’s lives easier.

Is anyone making money from social commerce? Check out Sociablelabs and Socialfeet. It is so early yet that the bounds have not been set.

Do not think of social media as the shiny tools. Think of it as communication. Conversations and connections with people. Improving people’s lives is what is really important.

- Ben Parr, Mashable

On brand? Do something better, cheaper, faster. We are in entertainment. Financial risk-based entertainment. It matters more if you have money on it. There is something universally appealing to taking risk. There is something universal to enjoy the buzz. We try to do that better everyday. The brand will follow.

- Breon Corcoran, PaddyPower.com

Just look at the relative strength of the ‘marketplace‘ category which is comprised of websites that facilitate individuals buying and selling to each other:

We’ve been talking quite a bit about the advent of social commerce as a relatively  new phenomenon. However the inherently social marketplace websites such as eBay, Gumtree, DoneDeal and Daft have all been around for quite a while. In reality the web has always been particularly good at facilitating commercial transactions amongst and between individuals.

We are indeed starting to see a new dimension in social commerce. The strongest trend in this market is clearly seen by the impact that the ‘group deals‘ category is having within a relatively short period (see the chart above). In large part due to the impact of just two websites – Groupon’s Citydeal and LivingSocial - both of which were relatively unknown in Ireland just twelve months ago. These websites’ ability to tap into consumers’ social tapestry (both functionally and psychologically) is surely at the heart of their ever-accelerating growth.

1. Smartphones will be the new credit card

A new era of smartphones and tablets was ushered in at Mobile World Congress 2011

2. Consumers will grant access to more personal data

3. Location-based marketing will grow

4. Online and offline shopping will seamlessly merge

5. Mobile transactions will grow

6. Consumers will pay for more mobile services

7. Mobile will be the battle ground for loyalty

Forget dumb loyalty cards. Smart mobile apps can access customer account data in real-time. With the power of a two-way data stream at the point of purchase, imagine how retailers could start to really cement customer relationships. Imagine walking into your favourite coffee shop to have your preferred blend already prepared and waiting for you at the counter, because with one click you told them you were on your way. Or you walk into their branch in another city and they greet you by name thanks to the NFC integrated with their loyalty app.  Then simply wave your smartphone in front of a scanner and your loyalty points are updated and payment is processed automatically. Now that is a service proposition likely to WOW customers.

Many of these impacts are already being experienced by customers around the globe. It will not be long before we start to experience more of them here too. If you are interested in participating in a discussion about mobile commerce, come along to our next e-Commerce Innovation Forum which will be held sometime in early March. Join the LinkedIn group here to be kept in the loop.

Since Facebook is the gateway to the web for so many Internet users it makes absolute sense to have a strong transactional presence there. Why would you want to disrupt their browsing experience by dragging them off to a different website?

ASOS follows hot on the heals of JC Penny who launched their Facebook page late last year. The ASOS page experience is smooth, clean and offers deep integration with Facebook’s social graph. With one click I can ‘share’ or ‘like’ particular products and instantly see which of my friends have done the same.

Both the ASOS and JC Penny f-commerce integrations were developed by Usablenet, whose focus is on extending a company’s web presence beyond your own website; into mobile, apps, kiosks and onto social networks.

Often the web brings to the fore the need for greater cross-functional alignment  in developing a consistent customer experience across channels. Also, the process improvements necessary to support automated online processes can drive a re-examination of processes across other parts of the business. The Head of Online (a role that typically carries sales targets) has learned how to drive investment in technology, sometimes with more success than the CIO, by speaking in a language that ‘the business’ understands.

Towards the end of last year, consultancy house PwC released a paper which outlined some strategies for how organisations could leverage cloud technologies for growth. Buried within that report was a nugget on how to think about the benefits of investing in digital as a vehicle for organisational transformation. This chart outlines their views on the four benefits of digital transformation:

The Benefits of Digital Transformation - PwC 2010

Let’s look at these briefly:

1. Enhance customer experience - Investing in digital technologies enables businesses in the first instance to meet the expectations of customer today. Digital provides the range of sales and service functionality expected by customers, however the real opportunity is to leverage digital in order to surpass those expectations.

Tesco's Innovative Barcode Scanning App

Check out Tesco’s new iPhone barcode scanning app as a great example of a brand that is stretching the use of technologies to provide greater utility to customers than even they might expect.

2. Drive revenue growth—Digital is enabling the development of new business models and new opportunities for growth by expanding the total addressable market across existing and new capabilities.

From an Irish perspective think about how bookmaker Paddy Power has transformed itself from owning a host of local bookie shops to becoming a successful international gaming platform; at the same time as rivals, rooted in old business models are shutting their doors.

3. Reduce the cost to sell, deliver, and serve — Automation of processes and empowering customers to complete purchase transactions and self-serve all help to take cost out of operating a business today. The per-transaction costs in a digital business are generally a fraction of the costs of traditional bricks and mortar operations.

A secondary benefit of driving efficiencies by going digital is the ability to rapidly scale, either up or down, as consumer demand shifts. Many newer businesses reliant on human sales and service offerings struggle to scale; since growth is coupled with with spiraling costs while customers experience deteriorating service – both of which can ultimately become fatal for the business.

The transformation of the travel and tourism industry is perhaps the best example of a sector that was forced to turn to digital as a key plank in its very survival. Led by airlines such as Southwest Airlines and Ryanair; clearly only a few have actually managed to develop efficient digital business models and still maintain a customer-oriented service culture.

4. Shift the balance from compliance to competitive advantage — This is perhaps the most interesting benefit outlined in the PwC framework. Businesses today operate in evermore regulated environments. While the regulations are generally in place to protect consumers; they tend to have a direct negative impact on customer experience. As regulators impose more protections for customers, businesses introduce more small-print to ensure that they cover themselves. This presents an opportunity for clever customer-focused businesses to develop better ways of dealing with compliance requirements.

Think about how heavily regulated the financial services sector is today. Rightly so, given many of the sharp practices that have been exposed over the years. However, anyone shopping for insurance knows how crippled online sales processes are with assumptions, terms and underwriting conditions. In the UK market this created an opportunity for aggregators, such as comparethemarket.com and moneysupermarket.com, who came along and make shopping around easier for customers. In the Irish market, when I worked in FBD Insurance we tried to tackle this problem for customers by developing far more customer-led sales processes – explaining things in plain English and changing the order of things so they were less internally focused.

What do you think? Four pillars is over-simplistic but it does offer an interesting way of articulating benefits from technology investments. Can you think of other exemplar brands who have realised some of these benefits?

Here is an alternative way of thinking about your ‘social’ customers’ journey:

Consider –  Customers commence their purchase journey with a list of  brands and products that are in their consideration set. Generating awarness amongst potential customers traditionally focused on establishing brand recognition through advertising and PR activities. These are still valid activities but increasingly the power of word of mouth is being tapped into with brands using social media tools to enable both employees and existing customers talk about and promote their offerings.

Research – Next, customers proactively research product and brand options in the marketplace, using the range of search and consultative tools now available to them online. To support the research step, marketing managers need to focus on search engine placement, visibility on comparison websites, specialist product review sites and blogs, affiliate marketing and increasingly the questions customers are asking within and through their social networks. Brands are added and subtracted from the consideration set at this stage.

Decide – This is the moment where customers actually decide where to purchase. Their decision will be 30% rational and 70% emotional. While price or value may be the trigger for arriving at a particular website or store, there are a wide range of other factors that convince, including; brand perceptions, demonstration of expertise, trustworthiness, service reassurance,  a compelling proposition and of course the views of other consumers. A merchant’s challenge is to present all of the information and reassurances that a customer needs in once place; incorporating rating and reviews and seamless integration with the key social networks.

Act – Having decided where to purchase the customer now proceeds to complete their purchase transaction, in the manner and at a time that suits them. The purchase decision can quickly unravel if the customer is not facilitated with an easy, fast and convenient transaction process. Channel managers must use all of the analytics and customer feedback mechanisms at their disposal to continually optimise conversions.

Enjoy – Having purchased a product or service, customers receive, use and hopefully enjoy their experience. Early interactions are key in confirming satisfaction with the purchase and will drive future brand engagements. What was the delivery experience like for the customer? How was the product packaged? Did the product function as expected? If there were problems was the support adequate? Were there staff experts available to assist or was there a peer support forum made available where other customers could offer their tips and advice? Were customers’ expectations actually met and did you manage to surprise them and make them smile?

Refer – Consumers have always talked about their experiences, both good and bad. Thanks to social media, each individual customer’s voice is greatly amplified. Clever marketing managers are both listening to and engaging with customers’ conversations about their brands. They are effectively  managing customer service issues seeing negative feedback as opportunities to demonstrate their responsiveness and committment to customers. But they are also encouraging, faciliating and even incentivising positive social referral; rewarding both the referring customers and their referred friends.

Repeat – Astute sales managers understand that sustainability is created through repeat purchase, renewal and recurring income. Think about it. You already know a heck of a lot more about your existing customers than prospective ones so you should be in the amazing position of being able to talk to them in a relevant and timely way about new product offerings. Furthermore, with existing customers you can bypass those expensive Consideration and Research steps by bringing them directly into your purchase funnel. Develop an integrated CRM strategy which rewards loyalty and offers a deeply personalised customer service experience.

Put the customer journey at the heart of your marketing and sales activities. Start by developing  a deep understanding of the journey your customers take.

Their activity was to identify customers who checked in on Foursquare or mentioned on Twitter that they were flying with KLM from a particular airport. KLM staff then used the customer’s social media profile to find out a little more about them in order to present them with small appropriate gifts.

This is a clever way of joining the dots – recognising and rewarding loyal customers in a tangible way. These customers almost definitely will go on to talk even more about their positive experiences with KLM. It is not a terribly sustainable activity for KLM and some people think it verges on stalking, but there is something compelling about the activity that could be transferred into other sectors.

Thanks to the nice folk at BespokeWithDirection for bringing this to my attention today.

Tablet computing marks a step-change in both media consumption and consumer purchasing

1. Getting More for Less – The overwhelming consumer purchasing trend that we can expect to see continue through 2011 is the hunt for ever better value. Consumers today have less purchasing power but they are certainly getting more bang for their buck. In Ireland last year the overall value of retail decreased, but the  volume of purchases actually increased (pdf link). Economic times may be the driver of consumers’ hunt for value, but digital will most certainly be the facilitator. Many of the other consumer purchasing trends listed below are being driven in large part by the growing thriftiness amongst consumers.

2. Daily Deals – At this stage nearly everyone has heard about daily deal sites such as Groupon/CityDeal and LivingSocial. They exploded onto our consciousness in 2010 and given the level of interest in this phenomenon by Internet giants such as eBay, Google and Amazon we can be assured that this phenomenon is not going to disappear any time soon. Expect more local versions (BoardsDeals, Gruupy) and expansion beyond spa and restaurant deals to emerge in 2011. We can probably expect a shake-down in what is already a very cluttered sector. Retailers themselves look set to bypass the poor margins available from these sites and bring their own daily deals to customers directly through their own websites.

3. Group Purchasing - The daily deals space is sometimes called ‘group purchasing’, but in my mind this is an inaccurate description and real group purchasing has yet to mature. Strictly speaking group purchasing is where consumers group together to identify a product or service they wish to purchase and then go and negotiate with suppliers to get the best rate. TogetherWeSave is a new Irish venture that is making some headway in this space – I saved a few quid on my home heating oil with them recently. In the U.S. there are a number of underdeveloped offerings however none that have yet made a real impact anywhere.

4. Mobile Shopping - Mobile is still suffering from the disappointment around WAP back in the early years of the new millennium. However there are few today who will argue that mobile commerce has not come of age. The ubiquity of Internet-enabled smartphones means that consumers can undertake more complex tasks on physically smaller devices at a time and place that suits them. 2011 is the year to invest in mobile web and app services and in new, more efficient processes that can support the expectations of mobile customers.

5. Tablet Computing – It is hard to believe that it was only in April 2010 that Apple released the iPad. 3 million iPads were sold in the first 80 days, highlighting not only the level of consumer passion for any Apple product but also the fact that Apple are onto something. Tablet PCs have been around for years, but Apple brought a level of design and usability that marks a step-change in both home and business computing. Media consumption will increase as iPad penetration grows (based on a sample of one household) and so too will consumer purchases. Unfortunately some e-commerce websites just don’t work on the iPad, placing the onus on merchants to ensure that they are fully optimised for the range of devices consumers are using. Check out the iPad’s main rival the Samsung GALAXY Tab and expect a new version of the iPad as soon as April 2011.

6. Digital Content – On December 27 last Jeff Bezos announced that the third generation Kindle e-book reader replaced Harry Potter and the Deathly Hollows as the best-selling product in Amazon’s history. Be it books, music, movies or games; consumers are migrating from purchasing physical content products to digital. Watch out Easons, HMV, XtraVision and Gamestop – your existing business models are quickly becoming obsolete. Is it already too late to adapt? 2010 was the year when ChartBusters closed its doors for the last time. Who will be next? No conversation about digital content would be complete without mentioning the newsprint industry. As circulation continued to decline in 2010 the major titles started to see some light as digital revenues increased.

7. F-Commerce – Since Facebook is now bigger than Google and is the effective gateway to the web for millions of consumers AND it has proven to be a place where consumers are happy to spend money, it makes absolute sense for merchants to make their products and services available through the Facebook platform. In 2010 major brands such as Delta, 1800 Flowers and JCPenny added shopping carts to their Facebook pages. The level of integration with Facebook is still relatively light, but watch in 2011 as investment in this space by both merchants and Facebook is set to increase greatly.

8. Social Shopping – We’ve always enjoyed shopping with friends, but thanks to the mass adoption of social networks, in particular Facebook, we can now actually shop online with our friends. TripAdvisor’s deep integration with Facebook earlier this year is a great example of how to crowd-source while shopping. Cloud Shopper is a new service that enables you to ask your Facebook friends to review products you are interested in purchasing. Expect to see more of them and similar services emerge in 2011.

9. Subscription Shopping – In October this year I met Andrew Draper of Manpacks.com, a website that enables customers subscribe to automatically have a new set of underwear delivered to them on a quarterly basis.  Sounds crazy right? Well no actually as the model is working quite nicely for the company. They bring both convenience and value to consumers and they generate recurring income which means that the business run more comfortably. JewelMint is a celebrity-endorsed jewelry subscription service that raised $15 million in funding in 2010. You can be sure that new verticles will emerge in 2011.

10. Multi-Channel – In the past many retailers have developed separate strategies and propositions for online customers. Increasingly however they have begun to realise that customers do not actually operate with a single-channel mindset. They expect to  be able to easily transition between web, phone and outlet. And now mobile is most definitely in the mix. Customers want to research online and pick up in store or order by phone. They want to try on in store and buy online at a later time. Merchants such as JohnLewis and Argos who make it easy for customers to transition seamlessly between channels will succeed in 2011.

11. Location – If Foursquare passed you by, don’t worry as Facebook Places is where you will be making your investment in 2011. Geo-based services are coming of age and you just need to think for a few minutes about the possibilities of what you could do if you knew when your customers are near your stores. For example, you could do what Starbucks do and reward regular visitors OR follow McDonalds’ success and encourage new ones by offering exclusive offers. What about if you could integrate location services with your CRM system and invite your most loyal customers who are passing by to pop in for something special just for them? Location could facilitate some very big innovations in 2011.

Confused? Well there is a bit in this so let’s take an example. A 16GB iPad (retailing at €499) is up for auction on a particular penny auction site. The current bid price is €12.45 and the auction will end in 60 seconds. If I place a bid, the bid price increases by 1c to €12.46 and 20 seconds is added to the clock. The auction will now end in 80 seconds. If mine is the last bid when the clock counts down to zero I am deemed to have won the auction and I can buy the iPad for €12.46. That’s some deal. So how does the auction site make money on this. Well, if each 1c bid costs 50c then the auction site has actually generated €623.00 (1,246 x 50c) in revenue.

Betbidder.com - an Irish gaming innovation

There is a significant element of gamesmanship in winning at penny auctions as you are essentially playing against others (with hard cash) in order to win the auction. Now a new (Ireland-based) penny auction site has seized on this gaming component and developed a proposition that will appeal to punters with an appetite for sports betting. Betbidder.com combines penny auctions with a bet on the outcome of a sports event. So instead of betting with a bookmaker on the outcome of a horse race or football match, you can bid here to win a cash prize (the penny auction bit) if the predicted result is achieved (the betting bit). Furthermore, the odds you get from Betbidder (effective odds) are typically much better than the market odds you’ll get from a bookmaker.

The Betbidder team is based here in Dublin, in Sandyford, but have their sights set on international markets. Enda Morgan, formerly head of financial market distribution with ABN AMRO, heads up the team and this week he announced that they intend to grow their team significantly from the existing fourteen. This is great news and it is also good to see further innovations in the online gaming sector coming from Ireland.

Disclosure: I’ve been working with the guys in Betbidder for the past few weeks helping them figure out a few things. The site is live and several auctions are taking place each day but the team are hungry for feedback, so if you have any please send it on.