1. David Shepherd
Content and Platform Director, XpertHR
Reed Business Information
David Shepherd is Content and Platform Director at XpertHR, the online legal
compliance toolkit and data service for human resources professionals and small
businesses published by Reed Business Information. David was launch editor of
XpertHR in 2002 and has helped it grow rapidly into the leading online
subscription service in its market. His previous career included stints at IRS, now
part of the XpertHR Group, and Incomes Data Services, now part of Thomson
Reuters.
david.shepherd@rbi.co.uk
www.xperthr.co.uk
www.xperthr.com
www.xperthr.nl
www.personneltoday.com
www.twitter.com/xperthr
Images in this presentation are from iStockphoto.com unless otherwise specified.
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2. Follow me @oldshep, my most prolific tweeting colleague @mjcarty and the main
XpertHR Group profiles @xperthr, @tribunalwatch, @payintelligence and
@personneltoday.
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3. Many publishers in both consumer and b2b are looking to charge for online services that
were previously free, typically websites that were seen as a “value add” or brand
extension of a print product but are now in search of a more sustainable “user pays”
business model.
By contrast, my product, XpertHR, was an exclusively paid service when it was launched
10 years ago in 2002, and has spent the past five or six years moving in the opposite
direction, opening up to search engines and visitors and finding new ways to engage
with non-paying users – without dropping the paid subscription model.
I’m assuming that most people here today fall in to the former group, so why should you
be interested in our experience? After all, we are travelling in opposite directions.
The answer is that the most effective “user pays” online business models are not based
on charging for everything of value but on achieving the best balance between free and
paid.
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4. Introducing XpertHR...
• Launched 2002
• A subscription service for HR professionals
• Regulatory compliance, best practices and benchmarking
• Rapid growth in market share at expense of competitors
• Double digit growth and very high renewal rates
• Benchmarking data service and salary surveys added 2009/10
• Liveflo workflow application launched November 2010
• XpertHR International launched December 2010
• XpertHR NL launched January 2011
• XpertHR US launching 2012
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5. When we launched XpertHR it was a paid subscription service, with all content available
to paying subscribers only.
The implicit message to visitors who somehow found their way to the website was
“keep out, this is for subscribers only”. The only options offered to non-subscribers were
“buy now” or “book a demo”.
This didn’t stop us from selling subscriptions and building the business very rapidly at
the expense of our competitors, because the product itself was demonstrably superior.
But it did mean that the marketing and sales methods we used were of necessity old-
school and offline, albeit executed highly effectively.
To sum it up, we had a digital product delivered by an analogue business. Or, to put it
another way, we were “on the web but not of the web”. We were not taking advantage
of the marketing and sales opportunities that come from being a web-based product.
Taking advantage of those opportunities requires one thing above all: opening up the
service to allow – indeed encourage – engagement with non-paying users, aka
prospective customers.
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6. So we embarked on a major programme of opening up and, in effect, joining the web on
its own terms. This is work in progress for us, but so far has involved:
• A complete site redesign in 2006 (and there’s another one on the way).
• Opening up categories of content for free access.
• Search engine optimisation, including deep structural changes to retrofit SEO to our
system.
• Ensuring a free segment of all content items is in front of the subscription barrier and
hence available for indexing by search engines.
• Launch of a blog, Employment Intelligence, followed two years later with the launch
of two breakaway niche blogs, Tribunal Watch and Pay Intelligence.
• Use of the blogs to engage with HR and employment law blogging communities on
both sides of the Atlantic.
• Building a social media presence via the content team (not the marketing team),
especially through Twitter and the HR blogosphere.
• Working with our free-to-air community site www.personneltoday.com to drive
traffic .
This transformation has had many benefits, but for the purpose of today’s presentation,
the key one is that is has helped us, as an online subscription service, to match our
selling process more closely to our customers’ buying process.
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7. To make the web a place where you can do business as well as a medium through which
you deliver your product, you need to match your selling process to your customers’
buying process.
It is hard to achieve this by putting everything of value behind a paid subscription
barrier, or by expecting the first point of contact to be a completed “subscribe now”
form or a request for a salesperson-led product demonstration.
That just isn’t how most of us make buying decisions. It is asking too much, too soon,
before the prospective customer has had a chance to take the steps that feel natural
before making a decision.
If you want to use your website as a selling medium, why not think of it as a shop? I’m
not thinking here so much about retailers’ websites, which are in a different category
from information and data services, but more about the ways retailers match their
offline selling process to their customers’ buying process.
We can learn much about buying and selling from the world of retail.
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8. They invite you inside and make you feel welcome.
They display their wares attractively and encourage you to pick them up and inspect
them or try them on.
They make you feel that you’re in charge and everything is laid out for your convenience.
They give you the sense that, as a customer, you have the power and you make all the
decisions.
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9. The best shops go even further.
This is Whole Foods Market, Stoke Newington Church Street, London on Saturday 11
February 2012 (my photo).
On that day they had two tables of produce that customers could try for themselves. As
well as the cheeses, pictured, there was a table with oatcakes near the biscuit shelves.
Personally, I would have liked the cheese and biscuits tables closer together, and
perhaps another table nearby with small shots of an appropriate wine, but you can’t
have everything.
At this store they always have tables of produce that shoppers can try for free. It looks
friendly, inviting, confident.
People love to try before they buy.
It’s a great example of matching selling process to buying process.
(I go to that shop most Saturdays. The only downside is how crowded it gets – but I
don’t suppose the owners see that as a problem.)
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10. If the retail analogy hasn’t convinced you about the importance of matching buying and
selling processes, I’d like to offer another one.
I find the dating analogy is also a useful way of looking at these issues.
Jim Morrison could get away with a declaration of love to a stranger – but he was the
original dionysian rock god. He could also get away with shoulder length hair, a bare
chest and tight leather trousers, but I don’t recommend this as a fashion look for most
men.
For us mere mortals, telling a stranger you love them before you know their name feels
wrong, not in tune with the way lasting relationships evolve.
But isn’t this the same as asking a first-time visitor to a website to fill in a form to
subscribe now or request a salesperson-led demonstration? That’s the equivalent of
popping the question on five minutes’ acquaintance: rather inappropriate.
Whatever happened to getting to know each other?
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11. How about a coffee? Let’s take this a step at a time. Get to know each other. No
commitments beyond an hour or two in a cafe. If we want to meet again, we will. If not,
we won’t. Who knows what may happen, or may not happen?
What’s the online publishing equivalent of this kind of first date? It could be:
• consuming some free content on the website,
• downloading a white paper, video or podcast,
• following the brand or one of its representatives on Twitter,
• subscribing to an email newsletter, or
• registering for free credits to view subscription content.
But whatever else it is, it will typically be free, without any major commitments, and
very, very easy to do.
Where there is a transaction, it is typically not financial but involves the user providing
some personal data (name, email etc) and a willingness to receive marketing
communications in exchange for access to content or parts of the service.
Thus as publishers we provide a more human and natural way for users to get to know
us better. But importantly, we also gain the ability to get to know them better – allowing
the relationship to develop in a more natural way.
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12. So far we have looked at one half of the equation: providing opportunities for
prospective customers to get to know us better. The other half is just as important: how
we get know our prospective customers better. Of course, as we might expect from the
dating analogy, these two sides of the equation are very closely connected.
We can find out much directly and indirectly from social media conversations and
debates. But we have also put in place tools, such as Eloqua, to enable what in the
jargon is sometimes called “closed loop marketing” but which at RBI we tend to refer to
as lead nurturing.
By offering a range of free options for visitors to sign up to and use, we can:
• discover user interests and preferences,
• refine messages and content based on this knowledge,
• generate deeper user engagement,
• gain even more knowledge of the user,
• refine again, and ...
• … and so on, in a virtuous circle (or “closed loop”).
This approach is enormously powerful and we are getting great results.
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13. A “closed loop” process could being with a campaign, such as this one, to get users to
sign up and download a single piece of content, in this real-life example a model policy
on personal relationships at work.
We have had much success with these. But there is an inherent weakness. Such
campaigns are based on offering users a single piece of content to download. What if
the user is not interested in this topic at this time?
It is much more powerful to offer people a choice – just like Whole Foods Market offers
a choice.
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14. If someone were to offer you a strawberry cream or nothing, it may be the perfect
choice or a useless one. Personally I can’t stand them. So much better to be offered the
box and allowed to choose.
The same applies to sample resources offered by subscription websites. Why not let the
user choose for themselves?
Better to offer a choice of several white papers or other resources on a variety of topics
than to offer just one white paper.
But even better than that to offer metered access to the entire service, or large parts of
it, so people can really make an informed judgment on whether or not what you offer
suits their needs, by viewing X items of their choice, out of thousands, for free.
Does this latter approach open up the prospect of “freeloaders”, coming back for the
good free stuff but never subscribing? I don’t that’s a helpful way of looking at it,
especially in a b2b context – and I dislike the word freeloaders almost as much as I
dislike the paywall metaphor to describe paid online services.
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15. By providing valuable resources for free, it is entirely possible that you will attract many
users who consume the free stuff but do not go on to subscribe to the full paid service.
They keep going round the free loop.
This is not a problem. These are people who like you, they like what you do and they
keep coming back and consuming what you make available for free. In dating terms,
they want to be friends but they may not be ready for a relationship.
Is it good to have friends? Better than not having friends. So best not call them nasty
names like “freeloader”.
This is especially the case in a b2b context when the decision to buy may not rest with
the individual user. The user may want to be more than just friends but, to take things
further, they need their boss to sign the cheque.
Far from being a “freeloader” such a person may be your brand ambassador, lobbying on
your behalf with the powers that be in their organisation, going round the free loop
while waiting for the day they can branch off towards your paid services.
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16. This example illustrates the point.
I have doctored this tweet to alter the details. There is no Twitter user called HR_Person,
or at least there wasn’t at the time I made this illustration.
But there was a real XpertHR user last year who tweeted her distress at her company
not renewing its subscription. She later tweeted that she had a cunning plan to get the
sub reinstated. And a little while later she tweeted that she had been successful.
Fantastic.
Of course we absolutely love this kind of commitment from our users. And while we
would soon go out of business if we gave our product away, we have every interest in
providing as many touch points and means of engagement as possible for users who, for
whatever reason, do not currently enjoy the benefits of a paid subscription.
So how does this picture of the reality of growing an online subscription service fit with
the metaphor of a product behind a “paywall”? Not very well, in my opinion.
Can I ask you to visualise what the image of a wall means to you?
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17. Walls are bad.
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18. All in all, walls are bad.
(Especially metaphorical ones.)
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19. Smashing down walls with a sledgehammer is good.
So can we come up with a better metaphor than “paywall” for the business model
behind our paid online services?
I’m going to have a go. But before that I’d like to take a step back and think about exactly
what it is that we are asking customers to pay for.
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20. Are we simply asking customers to “pay for content”?
There is some truth in this, but it is no longer the whole story – and never has been for
XpertHR. Increasingly we are selling functionality too. The medium through which the
content is delivered is a key part of the value.
What’s interesting is that, as you step up the value chain, the functionality becomes an
ever more important part of the proposition.
At the top of the value chain, at least for our kind of b2b information and data product,
is integration into the end user’s workflow. And this is an area where content is not king,
or at least, if it is still king, enjoys a kind of joint and equal reign with Queen
Functionality.
Thinking about different value delivered by different kinds of information, data services
and functionality leads to a more nuanced view beyond a simple binary distinction
between free and paid.
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21. Here I have defined five value steps for an online information and data service.
Broadly speaking, the higher the step the more value is being delivered to the customer.
The next view translates the descriptions to content types.
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22. This particular schema works for the HR market and for other regulatory markets, but it
is not universally applicable.
News is relatively low value in our market and tends to be free. But in other markets,
actionable news has great value, especially when delivered very quickly and used to
inform pricing and trading decisions.
But the principle is the same everywhere: different elements of our online products
deliver different amounts of value to our customers and entail different costs, and hence
should be priced accordingly.
The hill-walking image is a little abstract, so I have also created a more literal illustration
of how the schema could translate into payment options online.
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23. I created this imaginary matrix as it might appear on a website. It shows the five content
types corresponding to the five value steps illustrated in the previous slide.
The “free” column denotes open access but registration may also be free or available at
a lower price point involving free or paid credits, for example.
Whatever the details, the key point is that options are presented to the user with pricing
corresponding to value – from free to fee. There’s something there for everyone and the
choice is theirs to make.
I do not think it appropriate to describe this as a paywall. On the other hand I accept
that “pay matrix” isn’t going to catch on, so how about ...
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24. Emphasising the wall focuses attention on what keeps people out.
Emphasising the gateway focuses attention on what lets people in.
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