(This is an extended version of an email I wrote to one of the local tech mailing lists here in New York, in response to a developer's question. It seemed generally useful enough that I'm reposting it here.)

A very common design problem in web services project these days is the issue of user search. Most web services now involve pools of data that are far too large to be entirely "browseable", even if we're only talking about finding another user on the service. Very quickly you start to see a specification develop of increasing complexity, involving boolean ("AND/OR") concepts, keywords, and all kinds of other demands targeted at extremely precise results tailored very exactly to the knowledge domain or data set. What's the best way to go about building this user experience?

If you own or manage a small-to-medium-sized business with a somewhat web-savvy customer base, you’ve probably already thought about using Twitter to promote your offerings. I’ve talked with a number of small business owners who started Twitter accounts for their companies but were disappointed with the results. Here’s a few suggestions on how to improve your success with Twitter, and some issues you should consider before putting time into Twittering.

(This is a continuation of my series on understanding and analyzing web service and software businesses. If you'd like to start from the beginning, go to part one, "Core Value Proposition.")

User Acquisition

For a web services business, user acquisition is the "input" to the machine you've built by creating appropriate value proposition for users and monetization for the business. I'm covering acquisition last for a number of reasons:

• Without value for users and monetization, how many users you can acquire is irrelevant
• Acquiring traffic is easy, assuming you can spend money on marketing -- it's converting those leads into revenue that can then drive further traffic acquisition that's difficult

(This is a continuation of my series on understanding and analyzing web service and software businesses. If you'd like to start from the beginning, go to part one, "Core Value Proposition.")

Monetization

If you've created a service that has a compelling value proposition, and delivers on that promise for its end users, you've succeeded at the most difficult part of building a growing online business. Turning it into a profitable online business, however, takes more than simply making users happy. You have to find a way to generate revenues from your users that doesn't unnecessarily compromise that core value proposition.

There are two primary ways of generating revenue from an online service:

• Direct service charges
• Advertising revenue

This is an extension of an earlier post, which covered how one goes about calculating customer lifetime value (CLV). In this series, I'll be examining the key levers you use to maximize your business, seen through the perspective of CLV.

In my previous post around customer value, I reduced the CLV equation down to two key components:

• How much profit you make off each transaction with the customer - i.e. monetization
• How many transactions you get with the average customer - essentially, retention

To transition this a bit more to a customer-centric, rather than monetization-centric, view, your typical business has three key components:

1. The core value proposition to customers - what do they expect to get out of interacting with the company, service or product
2. The monetization of that interaction - how does the company make money off of delivering the core value proposition?
3. Customer acquisition - how does the company find and acquire new customers that find its value proposition compelling?

I'd argue that for most web businesses, it's all about these three components. Everything else is a support function. Any successful business will have to necessarily address all three of these, at least implicitly - you may not have an active acquisition strategy, for example, but that just means you're implicitly depending on word of mouth or another passive method. If you don't have a value proposition, well, that's somewhat more troubling.

I'll cover these each in separate posts. I'm going to start with value proposition, because not only is it the heart of the business, but it's also the one component you can't take a passive approach to, whereas there is at least (some) argument that you can leave the mechanics of acquisition or monetization until after you've solved the central value proposition question.

A week ago I posted about trying to jump completely over from client-based email to only using Gmail's web interface. In particular, this was prompted by the recent availability of offline mail reading for that interface, which made it unnecessary to have Thunderbird downloading copies of all my email so I could work on reading and answering messages when not connected to the net.

Now that's the kind of conversion rate I wish I could achieve more often. Based on a Google Website Optimizer run on one of my sites from January 14th to today, February 3rd. And the best part is that the aggregate percentage has been rising steadily over the past week, which means that the current effective conversion rate may be 5 to 10% higher than this.

My first experiences with email were all server-side applications. Bulletin boards, Compuserve and dialup Internet, then the Athena Unix terminals of my years at MIT. At the time, it made sense - modems were slow, downloading messages took time, and there weren't attachments.

In the interim, I've been a die-hard user of desktop email clients. At my old finance job, I regularly received 100-150 emails a day, which sounds like a lot until you realize that if you're working on 10-12 projects or pitches, that's only 10 emails between team members per day. (Bankers tend to use CC: reflexively, but you are expected to be up to speed on all the threads even if you're not the direct recipient.) I was an Outlook power user by day and a Mozilla Thunderbird wonk by night, plus I carried (and still carry) a Blackberry that gets checked compulsively. (The dog, mind you, gets jealous about how much attention the berry gets.)

Even when not connected to the net, I want access to my email - it's not just a communications tool, it's also a major database of filed information I need when working. But with the addition of offline Gmail access via Google Gears last week, the final issue tying me to desktop clients has been resolved - I can now read and write emails on flights and away from wifi using Gmail.

For the next week, I'm going to try using Gmail's web interface exclusively when at my computer, a MacBook. I've removed Thunderbird from my application dock so I don't open it by mistake, and I've installed Google Notifier in my menu bar so I can see when a new message has arrived. There's a printout of the cheat sheet for Google Mail keyboard shortcuts and I'm going to to my best to force myself to use them so I can get up the learning curve faster. And I'm going to see how using a web-only interface to my email box works out.

I'll admit I'm skeptical... I have a hard time seeing how a web-based app can outperform a "sovereign" application like Thunderbird or Outlook. (Although I was never really happy with the keyboard shortcut support in Thunderbird, relative to Outlook.) But there are a lot of obvious benefits as well, including the ability to get the same interface wherever I can access a web browser. I'll post in a week how it's been, and whether I'll be able to remove Thunderbird from my MacBook permanently.

After reading Amy Iris's post on encouraging retweeting, I wanted to add an option for users to easily retweet posts on this site. Unfortunately, the method that Amy's recommending is very manual, and I'm a little bit lazy about things like that (especially anything that makes it harder to post something to the site, and won't work for automated posts from services like Posterous and Flickr.)