How Shutterfly Turns Community into Cash

Ann All

IT Business Edge blogger Michael O'Neil wrote an interesting post a few months ago in which he shared some of the debate over whether the "Social Graph," the social connections most of us make on the Web, can be monetized.


Somewhat in the same vein, I blogged about Beacon, the Facebook API that offered companies a chance to send ads to Facebook users, sell them stuff and, most importantly, reach their Facebook "friends." As an example of how it would work, eWEEK offered an application from Blockbuster via which folks could swap lists of flicks they want to see and ones they've already seen. From the article:

Think about that value proposition: Facebook lets users review and rate movies and share this information with friends, who may rent videos from the same place. Advertising and reputation are driving e-commerce.

Facebook users bristled at the privacy ramifications, however, leading the company to step back and offer users more control over information from their profiles conveyed via Beacon. (Not coincidentally, the incident also triggered a broad debate over Internet privacy.) As Fortune reports, Facebook hasn't given up on turning its users' social connections into gold. It'scounting on new COO Sheryl Sandberg, Google's former VP of global online sales and operations, to help it do so.


While Facebook and others continue to struggle with a monetization model, one community-oriented Web site appears to have nailed it. largely credits CEO Jeffrey Housenbold with figuring out ways to generate revenue from the photo-sharing site's active online community.


As the article notes, Housenbold "had the foresight to see how people's need to connect with others in personalized settings could reinvigorate the photo business." By introducing ways for customers to turn their photos into "personalized objects of expression" -- and buy them, natch -- Housenbold moved the company beyond its bread-and-butter photo printing business. And just in time, since the traditional printing business was beginning to implode, thanks to stiff competition from the likes of Wal-Mart.


Among Housenbold's strategies for fostering a sense of community among Shutterfly users: offering personalized Web pages where folks can upload photos and invite friends and family to comment on them, and sponsoring photo contests based on themes such as reunions, school spirit and pets. Shutterfly has also forged a series of offline partnerships to help promote its products and services, including one with retailer Target in which Shutterfly users can order prints online and pick them up at Target stores.


Housenbold effectively leverages the community approach within his own company. According to the article, all employees are invited to share their ideas through a simple business-case presentation. The ideas are periodically judged, and winning ideas are moved into a development phase. Housenbold says this approach "allows decisions to be communicated and buy-in to happen in a much deeper way throughout the organization."


The piece concludes with five tips for rethinking your business model, contributed by Jim Champy, author of "Outsmart! How to Do What Your Competitors Can't." It's worth a read.

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