From BusinessWeek: See how the world’s largest online retailer ensures that gifts get delivered on one of the busiest shopping — and shipping — days of the year.
Next time you go to the store and they ask you for your phone number when you’re checking out, just say “NO.”
Here’s an ABC News article to shed some light on the mess we’re in.
“The various data companies are trying to acclimate people to invasions of privacy. It started with the zip code and now it’s moved on to phone numbers,” said Chris Hoofnagle of the Electronic Privacy Information Center in San Francisco. “I’m willing to bet that retailers’ market research is showing a willingness of customers to share the telephone number, and that’s why it’s happening.”
It could open a person up to telemarketing — even if they are on the federal “do not call” registry. According to Hoofnagle, giving a phone number while making a purchase may establish a business relationship, and companies can call individuals on the “do not call” list with whom they have prior business relationships.
Susan McLaughlin, a spokeswoman for Toys R Us Inc., said its stores have asked for phone numbers for several years. She believes most customers have no problem voluntarily giving their numbers at the register — though it’s “no problem at all” if they decline. “It’s so we can send you offers, coupons, et cetera, and we don’t sell it to third parties,” she said. “I’d say the majority of people like getting coupons.”
The ToysRUs people just upset me. Next time they ask for a number, give them: 1-800-869-7787. That’s their “guest” line.
And don’t look to the government for help with privacy. They’re busy spying on you.
The answer to your problem lies outside your company. Why? Because there are more smart people outside your company than in it.
That’s the premise behind InnoCentive, a web-based community matching top scientists to relevant R&D challenges facing leading companies from around the globe.
Here’s how it works:
– Companies contract with InnoCentive as “Seekers” to post R&D challenges to the Innocentive web site
– Each Challenge includes a detailed description and requirements, a deadline, and an award amount for the best solution.
– Award amounts are determined by the Seeker and range from $10,000 to $100,000. You can view the list of previous award recipients here.
– The name of the Seeker company posting the Challenge remains confidential and secure.
– Scientists worldwide are eligible to register on the web site as “Solvers.”
– Anyone may view summaries of Challenges at InnoCentive.com. But to view detailed descriptions and actually work on challenges, registration is required.
– To register as a Solver, scientists fill out a short online form, select a username and password, and log in.
– InnoCentive has registered scientists from over 170 countries around the world.
How about that for open source innovation? Vist the site >>
Findings from a very interesting study on RSS advertising by Pheedo:
– Standalone RSS ads are far more successful than inline ads
– Placing RSS ads in every other post yields the highest percentage of click throughs
– RSS content CTR varies significantly based on day of the week
– Mid-week readership of RSS feeds highest
– RSS ads are outperforming similar Web ads
[standalone RSS ads= average CTR of 7.99% versus 20% to 1.17% CTR for rich-media ads]
– Bloglines leads RSS readers in market share
I must say I’m impressed by Pheedo.
Here are the details on their research.
Brand structure establishes the shape of how a company and its operating units and brands communicate…
also from Sense – page 9. Did I say it was brilliant?
From Lippincott Mercer:
How structural equation modeling helps drive decision-making at a theme park
[click on image to enlarge]
see page 17 from this brilliant issue of Sense.
“The days are over when a business could market a crappy product or treat their customers like marks and assume that the worst that would happen is that they get a few angry letters they could then just dump in the round file.”
So says David Kline in this post “Don’t Mess With the Blogosphere!”
Also: “How many more battered and bloody companies will have to litter the corporate landscape before business wakes up to the new, customer-empowered marketplace we’re living in?”
Good question, David.
Nielsen//NetRatings reports that nearly a fifth of the online buying population, or 18 percent, accounts for nearly half, or 46 percent, of total online spending. These buyers, dubbed “Most Valuable Purchasers” (MVPs) by Nielsen//NetRatings, spend more dollars online and make more purchases on the Internet than the rest of the online buying population.
The Nielsen//NetRatings MegaPanel online retail study segmented online shoppers into four categories based on the amount of their online spending (low or high) and their frequency of purchases (low or high). The MVPs, shoppers who spent the most money online and made the largest number of purchases, comprised 18 percent of the online buyers, driving 46 percent of total online spending. In comparison, those spending the fewest dollars online and making the fewest purchases made up the majority, or 55 percent, of online buyers; this group accounted for 21 percent of online purchases.
MVPs are heavy users of comparison shopping tools as compared to other online buying segments. In addition, they skew towards a higher household income, are more likely to be connected via a broadband connection, and are heavier Internet users in both overall time spent online and time spent on retail Web sites.
Takeaway: E-tailers should focus on building extraordinary online experiences for their MVPs. Also their demand generation tactics should target the MVP crowd.
Read the press release for details >>
“Forrester Research Inc. says online retail sales this holiday will surge 25%, to $18 billion. The increasingly strong profitability of Net commerce is giving retailers the chance to experiment with a stockingful of new sales and marketing tactics. They’re tapping into technologies such as blogs, social networking, and wireless phones to draw shoppers to their sites.
“The experiments are coming from startups to Web giants alike. Yahoo! Inc. is testing Shoposphere, a networking site within Yahoo! Shopping that offers thousands of reviews, blogs, and shopping lists generated by members. Rob Solomon, a vice-president at Yahoo! Shopping, says relying on users lets Yahoo serve markets too small to command space on its front pages.
“Yub.com, a site with thousands of product reviews, offers visitors cash-back rewards of up to 10% when they make purchases at more than 60 other sites, including Macy’s and cosmetics retailer Sephora. Yahoo plans to let people earn cash for posting reviews that lead other users to make purchases.”
Read the article >
The fastest growing retail category on the day after Thanksgiving was toys/video games, with a 152 percent week-over-week growth. Consumer electronics followed close behind, and computer hardware/software rounded out the top three.
Daily Percent Change from11/18/05 to 11/25/05
Toys/Video Games 151.8%
Consumer Electronics 142.0%
Computer Hardware/Software 101.8%
Flowers and Gifts 95.3%
Home and Garden 87.3%
Shopping Comparison/Portals 84.0%
Total (across 10 categories) 38.7%
Source: Nielsen//NetRatings Holiday eShopping Index, November 2005
“You can’t recycle video and expect to create a good online user experience.”
Jakob Nielsen in his latest Alertbox:
“While I’ll surely have many more guidelines later, for now the main guideline for producing website video is to keep it short. Typically, Web videos should be less than a minute long.
“A related guideline is to avoid using video if the content doesn’t take advantage of the medium’s dynamic nature. This doesn’t mean incessant use of pans, zooms, and fades to add artificial movement. It does mean that it’s better to use video for things that move or otherwise work better on film than they would as a combination of photos and text.
“Finally, recognize that Web users are easily distracted, and keep distracting elements out of the frame of your shots. If there’s a road sign in the video, for example, users will try to read it and will thus miss some of the main content.”
Nielsen’s remains at the vanguard of user experience design. Check out his “eyetracking” chart for web video and his 1997 post: “TV Meets the Web.”
Finally, here’s an interview I did with Jakob a while back:”Creating The Loyal Customer.”
Why does shop.org do something like this? So they can sell more stuff.
Read the BusinessWeek article “Cyber Monday, Marketing Myth.” Well done, BusinessWeek.
But the Best Buy site was down:
For several years, Harrisinteractive of the Harris polling company has done an annual survey of the ‘reputation quotient’ of what it calls the 60 ‘most visible’ companies. The survey asks respondents to evaluate companies against 20 attributes ranging from social responsibility to financial performance to product quality. Each of the twenty can earn a top score of 7 and a low of 1.
Here’s what Doug Smith thinks…
William Dunk gets it.
Here’s a letter he posted on his Global Province site back in 2004.
“Basically there are a couple of ways of making sales. Either you shoot them down or they come to you. For most of the mass market era, we took a shotgun, cost be damned, and pumped lead into the skies, hoping to knock as many pigeons—i.e., customers—down as possible. Right now, as we transition out of the mass era, we are using rifles, and assuming that with careful targeting, we can hit a choice quail, duck, or wild turkey on the wing, and then send a bird dog out to retrieve. The idea is to hit many less prospects, but to hit the choice ones that count. You should understand that any form of marketing that has targeting in its name is expensive and probably a poor return on investment. Nonetheless, targeting is the craze of this moment.
“But then there’s catching fish. We put a worm or fly down in the water and wait for the fish to come to us. Stream fishing. It’s more subtle. Less energetic. We use the inquisitive hunger of fish to lure them into our clutches. Sight and sound and touch are compounded. This is allure. It’s very, very related to “word of mouth,” which, at the end of the day, is the most effective form of marketing.
“We think longer term that it’s time to lay down lures in the water. That will drive companies to provide horribly accurate product information that tells the user how to get good results at low cost from a product, even suggesting alternatives to their own that may work better for some applications. Straight poop becomes the strongest form of advertising.”
He’s describing double-loop marketing… read the article.
“Exaggerated motions, exaggerated smiles, exaggerated enthusiasm – they learn those things and they can get people to do what they want.” – LYNN WILLIAMSON, an adviser at the University of Kentucky, on why so many former cheerleaders are hired as sales representatives for pharmaceutical companies.
This article in the NYTimes says that drug companies hire “sexy drug representatives as a variation on the seductive inducements like dinners, golf outings and speaking fees that pharmaceutical companies have dangled to sway doctors to their brands.”
“In a crowded field of 90,000 drug representatives, where individual clients wield vast prescription-writing influence over patients’ medication, who better than cheerleaders to sway the hearts of the nation’s doctors, still mostly men.”
“But pharmaceutical companies deny that sex appeal has any bearing on hiring. “Obviously, people hired for the work have to be extroverts, a good conversationalist, a pleasant person to talk to; but that has nothing to do with looks, it’s the personality,” said Lamberto Andreotti, the president of worldwide pharmaceuticals for Bristol-Myers Squibb.”
I’m comforted to know that our doctors, with all their years of “education,” are swayed so easily… Sex still sells. Maybe we should use cheerleaders as environmental lobbyists…
November 2005 – Strategy Magazine
One is enough
Q’s and cocktails with…Neil French, outgoing worldwide CD, WPP Group
by Lisa D’Innocenzo
By now, you surely must have heard about the Neil French kerfuffle. The short version: Last month, he resigned his post at WPP because of reaction to controversial comments he made about female CDs during a Toronto event, organized by ad site ihaveanidea.org.
Strategy interviewed French a day before that fateful night and felt he made some salient points about the state of the industry, as well as what it takes to be brilliant. So, despite the fact that he called said reporter “Sweetpea,” we thought this was still worth a read.
LD: What do you think of the state of the ad industry?
NF: What in Canada? Please don’t ask me, because I don’t know. I could have got somebody to brief me about Canadian advertising. That would have been wrong, because it’s like a politician being told what to say. I don’t do that shit. I’ve never been to Canada before – what the hell would I know about Canada? I like the place – I love the weather. [Spoken on a 28 degree day in late September.]
LD: How about overall?
NF: There’s this hysteria on at the moment about how television is dead and it’s all going to interactive. That’s such bollocks. Yes, in the Western World there are a lot of computers out there and interactive thingy-bobs. But actually 90% of the population of the earth is not sitting in front of an Apple tonight. You go to some huge shack city in Brazil, or Thailand, and that light from the shack is a television. Why is everybody panicking? I remember when radio was dead. I remember when newspapers were dead. They’re fine. Now television is dead. No it’s bloody not. It’s just a lot of inept people who think that with the next thing, there might be some good ads. There won’t be of course, because they are genetically inept.
LD: What do you think of the fact that more money is going into interactive then?
NF: If you put everything into mobile, it’s going to piss people off much more than the television ads. Mostly mobile’s used by kids. They are going to make the phone calls, they are going to text their mates, they do not want to be interrupted by some jerk who wants to sell them a soft drink. So this is more likely to burn out very quickly. They will watch the stuff they want to see, and that’s when you get them. Yes, TiVo can make sure you don’t watch the ads, but if it’s a really good ad that appears during the moto racing or the soccer, you’ll leave it on to hope the ad comes on. I’ve heard people say this: “I love this one. I’m not going out for a pee.” It’s human nature. If the media buyer’s clever enough, it’s going to always be in the same program. Having your ad liked by the consumer, that’s the Holy Grail. No more conversation needed on that subject; move on.
LD: So what does it take to make a good ad?
NF: Talk to people. That’s all it is. When Winston Churchill said: “We shall fight them on the beaches,” he was talking to one bloke. Every single person in his little house in the middle of England saw himself standing shoulder to shoulder with Winston, with a pitchfork in his hand on the seashore. And when Hitler said: “We’re going to take over the world; we’ve had a rough deal,” every soldier at Nuremberg, said: “He’s talking to me, and I must not let him down.” So good or evil, the great communicators talk to one person. That’s what advertising does – I’m talking to you, this is the right car for you, or beer, or insurance company, or whatever the hell it is. Only for you. Luckily, there are millions of people like you and they will all buy it, but you don’t say that in the ad. There’s no you plural in advertising, it’s you singular.
LD: How come more advertisers don’t get that?
NF: Because 95% of the people in this business are buffoons. They’re clowns. The creatives blame the clients and the suits, and that’s only because the suits frequently come into advertising because they couldn’t get into banking or retail, so you get an awful lot of those. But the client has every right to make his own decision on his own product. It is our responsibility to explain to him why this will work better than that, and if we fail to do that, we don’t deserve to do good advertising.
LD: What work have you seen recently that gets it right?
NF: I have to bring this one up, because it’s a great example of talking to the audience. It was an ad [I did] for [Panadol] in China. They researched aspirins and the Chinese got a bit upset that it said: “Take two,” because they thought: “It seems like such a waste, using all these aspirins up.” So they brought out the single pill.
If you want to talk to people, tell them something that’s relevant to them, and then twist it in the direction of your product. So I wrote the line of “One is enough,” and the picture was a picture of George Bush and George Bush. It was huge.
Next year’s big winner is going to be the Big Ad from Australia [for Carlton Draught]. It is the heaviest irony possibly ever used in advertising and utterly hilarious. If you look at it and deconstruct it, it’s the perfect ad for beer, without having to show a lot of people in the public going “yo-ho-ho.”
LD: Why do so many ads in categories like beer look the same?
NF: Why? I’ll tell you why, and this is where the client is to blame. He sees an ad, and says: “Oh, that’s good, can we have one like that?” And it’s the very thing he shouldn’t say. He should say: “Can we have one not like that.” Otherwise, how can a consumer, who doesn’t really care, ever differentiate? The client’s problem is only that his widget means to him his house, his wife, their kids, their education, their retirement and his funeral. Whereas to anyone in the street, it doesn’t come in the top million of things to worry about. Our job is to say: “This might be irrelevant, this widget,” but of course the client’s saying “No, no it’s really important; this is the best widget in the world.” But actually, they don’t care, mate. All we can say is: “When you need a widget, we do good ones.” So our job is to bridge the gap between the client’s enthusiasm and the audience’s apathy.
LD: How hard is that to do?
NF: It can be extremely difficult. The whole trick is to explain gently to the client why this is so. There are stupid people, but generally speaking the guy that runs the client is highly intelligent and highly motivated and a bit of a pirate. You don’t get to run a big brewery or big car company without being a little ballsy. Unfortunately for the hewers of wood and fetchers of water, further down the hierarchy, their interest is keeping their job.
I can’t remember a single occasion I’ve sold a decent campaign to anyone but the top guy. I did a campaign for Martel brandy, which was long copy and nobody had ever done long copy for brandy before. People down the line weren’t sure about it, but I made them let me present it to Edgar Bronfman, who in those days was the head of Seagram’s. The suits put me up front with great trepidation and I explained the ad. Edgar got it before I explained it to him. He understood the whole concept. He said: “Yeah, that’s great. We’ll go there. Looks like nothing we’ve ever seen before.” All the racks of suits sighed with relief because they didn’t have to make any decisions. At the end, he walked all the way down to the far end of the table, and said: “Neil, when these guys screw this up, you call me.” And I said: “You mean if?” And he said: “No, I mean when.”
LD: Are presidents getting more involved in marketing?
NF: No. I wish they bloody did. The only benefit of being old and wizened, like myself, is I can generally see the top man. Because I’ve been around forever, longer than God. The guy they want to see is the superstar, somebody like Bogusky, or an old bozo like me.
LD: How do you convince marketers to take a risk?
NF: Something I say to clients a lot is: “Are you actually just spending this money to mark time, or do you really want to make a difference? And how much of a difference do you want to make specifically? How much do you want sales to go up? How much can you supply if this was successful?” Ask all those questions and then you can say: “Now I know how brave you’re going to be. Not at all or very.” And of course, all bravery is risky, and so is safety.
LD: When do you know you can’t work with a marketer?
NF: There are three things important when running an ad agency. Someone called it the three F’s: fun, funds and fame. If a client gives you money and fame, that’s great. If he gives you fun and fame, but not much money, that’s still great. If he gives you lots of money and lots of fun, that’s ok. But if there’s no money in it, and no fun, but it will make you famous, you have to think about it. If it’s just fun, then you should have left years ago. One is bad. Two is ok, three is unbearably wonderful. After all, it is your life. The client doesn’t own you; you’re not a slave; you can say uncle.
LD: Why are boutique agencies becoming increasingly popular?
NF: The boutiques are attractive to big clients because they have a personal stake in the success of this relationship. The client joins and asks a smaller agency to help them in the knowledge that there might be a few moments of stress in this relationship, but in the end they will succeed. These are the mistresses, not the wives. The mistresses get the jewelry, the wives get the washing machine. It’s sad but true.
I was once talking to a boss of another very, very big agency. And I said: “You’ve had these clients so long. How do you do it?” He said: “Because they can’t be bothered to fire us.” It’s too much hassle.
LD: Like a divorce?
NF: Absolutely. “God, this is a problem. Oh, well, stick with it. It could be worse, not much, but it could be worse.” How sad is that? There comes a time, where you’re going to say: “Actually, screw this.” Or go get yourself a mistress, for just part of the time. And that’s what these big clients do. “We’re tied up to the teeth with these people, but I hate the bloody work, so I’m going to get a babe, and go out to dinner with a babe a lot, which will be great. It’s much more fun, makes us feel good, and hey, then we’ve got to get back to the sodding wife again.”
There will be more and more boutiques. There was a point where it was just about the big, big blocks taking over, but then the big, big blocks [started] buying the boutiques. Why do they buy the boutiques? Not for the money they’re making. They buy them to give themselves a certain sexiness – a nice set of legs, or high heels.
LD: A boob job?
NF: A boob job! Very good. Absolutely. That’s exactly it. Let’s stick them on to the front and it looks like we have big boobs. It doesn’t work.
LD: Does it help to have an ego in the ad business?
NF: I taught myself self confidence in my early teens. I was very shy. Pain and agony, and beating down embarrassment, teaching myself not to blush and all those awful things. Ego is really: “Do you really believe in yourself?”
[In Canada], there’s a cringe factor. There’s the permanent apology. I mean, I love the fact that people on the street are all saying “sorry” all the time. But, come on guys. Politeness is great, but sometimes it’s not said in a politeness way, as much as a “Please don’t hit me” way. That’s sad. I remember a young guy, saying: “You’re an egomaniac. You’re all ego and no talent.” That may be true. I said: “Do you have an ego?” “No,” he says. “Do you bathe? Then you have an ego. You care about what people think about you. You take a shower, you care.”
Customer Value Engineering™ reveals what matters most, says MercerMC:
“Customers often start a negotiation by emphasizing price and product features. These things always matter, of course. But buying decisions encompass many other considerations, such as reliability, service arrangements, certainty of delivery date, and the opinions of users inside the organization or expert analysts.
“Cumulatively, these influences may account for 70% to 80% of the purchase decision. That’s why there is gold to be mined by truly understanding the customer’s world.
“The Customer Value Engineering approach goes beyond market research to uncover what customers will value and actually pay for, link these insights with the economics of the business, and create a process for building consensus and driving rapid implementation. It combines four capabilities:
– Uncovering the drivers of demand
– Segmenting customers in a smarter way than traditional categories of size or demographics
– Modeling the drivers of business economics to determine whether a given move will make or lose money
– Creating dynamic, robust modeling of the strategy that can evaluate “what if” scenarios and rapidly turn strategy into action with a minimum of risk
Download the article >>
Take a look- Google Analytics gives you a free ride into the world of web behavior, and it’s integrated w/ adwords.
Here’s the pitch:
“Google Analytics tells you everything you want to know about how your visitors found you and how they interact with your site. You’ll be able to focus your marketing resources on campaigns and initiatives that deliver ROI, and improve your site to convert more visitors…. blah blah blah
So what’s really going on? Here’s what: Microsoft used to own your desktop, but Google will own your universe. Google will learn how users behave across websites, beating Alexa/Amazon.com at its own game and setting the stage for the final fight with Microsoft.
Every website manager will sign up for free, and Microsoft can them make them part of their network- from Adsense, to Adwords, to the applications which will replace Office.
BTW, did I forget to mention that Google is also buying cable companies? I’m sure Microsoft is freaking out right about now. This is going to be a war.
MEMO to Microsoft: guys, open up!!
On the privacy front:
# We may use personal information to provide the services you’ve requested, including services that display customized content and advertising.
# We may also use personal information for auditing, research and analysis to operate and improve Google technologies and services.
# We may share aggregated non-personal information with third parties outside of Google.
# We may also share information with third parties in limited circumstances, including when complying with legal process, preventing fraud or imminent harm, and ensuring the security of our network and services.
# Google processes personal information on our servers in the United States of America and in other countries. In some cases, we process personal information on a server outside your own country.
Do no evil, Google.
“Fundamental Shifts in the U.S. Media and Advertising Industries” – a report from the New Politics Institute.
• Extensive audience migration across and within media formats is driving major shifts in advertising spending, benefiting formats with targeting ability
• Advertisers are shifting ad dollars to digital media slower than they should given the cost and effectiveness of digital media
• The most innovative advertisers will utilize sophisticated direct marketing techniques (e.g., segmentation, targeting, etc.) and will adjust the digital marketing vehicle mix for each customer category
• Effectively creating “at scale” digital campaigns and integrating them into traditional marketing requires direct marketing skills that traditional marketers, particularly brand marketers, often lack
• Commercial advertisers are rapidly shifting dollars to internet advertising, in particular internet video, and are aggressively experimenting with new formats such as wireless and videogame advertising
Sears, Roebuck and Co. this week launched what it is calling its first fully integrated campaign in years. The effort, “Wish Big,” includes television and print advertising, event marketing, in-store signage and cross-promotion activities, in-mall advertising, direct mail, online programs and public relations. [in Brandweek]
Maybe they need to just work on their strategy. Here’s what a recent article in the Chicago Sun Times had to say about that:
A Wall Street analyst gave voice Monday to rumors that Sears’ ballyhooed strategy of building new stand-alone stores is in trouble.
Sears is counting on its newest store, Sears Essentials, to compete with big-box rivals such as Target, Kohl’s and Wal-Mart, while also selling refrigerators, treadmills, lawn mowers and patio furniture.
Sears has denied reports that it is slowing or halting its plans to convert 400 Kmart stores into Sears Essentials stores within three years — at a cost of about $3.5 million per store. But Sears hasn’t yet announced how many Sears Essentials stores it will open in 2006.
Furthermore, two top Sears executives integral to the strategy have left or are leaving the Hoffman Estates-based retailer, Gregory Melich, an analyst at Morgan Stanley & Co., said in a note to investors Monday.
Catherine David, a former Target executive that Sears named to oversee Sears Essentials and two other stand-alone stores, left the retailer in September.
Sears hired David in July 2004 to turn around the struggling Great Indoors home-decor chain, which Sears had downsized a year earlier to 17 stores.
Sears also is losing Luis Padilla, another former Target executive and a merchandising whiz credited with putting the “chic” in Target’s “cheap chic” reputation. Padilla is leaving at month’s end, following Sears Chairman Edward S. Lampert’s decision to install his own top strategists.
Furthermore, Sears is investing less than its retail rivals in its stand-alone stores, and has cut its advertising by more than 40 percent, Melich wrote.
More than 50 percent of Sears Essentials stores are within five miles of a Target, a Lowe’s or a Home Depot, giving them tough conditions under which to compete, he said.
Other analysts have questioned the Sears Essentials format as unfocused and underwhelming.
“The store seems a hodgepodge of everything, and there’s no clear message to consumers about what to expect,” said Kim Picciola at Chicago-based Morningstar.
Maybe they need to outsource their management…
Most companies assume they’re giving customers what they want. Usually, they’re kidding themselves. When Bain & Company recently surveyed 362 firms, they found that 80% believe they deliver a “superior experience” to customers. But when they asked the firms’ customers, they found that only 8% are really delivering.
Talk about delusion. Why this huge discrepancy?
The folks at Bain found two reasons for the gap:
“The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth-a loyal customer franchise. To increase revenue and profits, businesses do things like raising transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core.
“The second is that good relationships are hard to build. It’s extremely difficult to understand what people really want, keep your promises and maintain a dialogue to ensure you meet customers’ changing needs. Even initiatives to “better understand” customers can backfire, drowning firms in a sea of data.”
I’ll give you the third reason: management confuses actions and activity with outcomes. Just because you have a customer feedback program in place, doesn’t mean it’s effective. The appearance of virtue is not virtue.
More from the report: “Even initiatives to “better understand” customers typically backfire. A company can get so engrossed in collecting and sifting through data on patterns of use, retention, purchases and other transactions that buyers become numbers rather than people, segments rather than individuals. Companies become deaf to the real voices of real customers.” [emphasis added]
Download the report here.
Yahoo and Compete, Inc., recently announced key findings from a new study which tracked Internet search and transaction activity specifically related to retail apparel Web sites over one year.
The study found that search was used by 20% of the 25 million unique monthly visitors engaging in apparel activity on the sites Compete tracked.
For the study, “Search and the Engaged Customer: An Apparel Study”, Compete analyzed the online shopping behavior of its panel of two million Internet users and conducted a survey of over 400 apparel shoppers who used search, visited one of 49 apparel retailer or manufacturer sites and subsequently purchased apparel offline. The study observed both Web search and sponsored search activity across Yahoo!, Google, Ask Jeeves, MSN, Lycos and Hotbot.
Key findings from the study include:
Search Influences Offline Purchasing. According to the findings, 78% of people who purchased apparel offline after using Internet search reported that search influenced their store visit and purchase. Nearly half (47%) of these buyers have also purchased apparel online and spend 26% more on apparel annually than those who do not use search.
Apparel searchers are highly engaged shoppers. The study found that, over a 60-day shopping period, apparel searchers spent more than 30% more time when visiting retail sites than non-search visitors and were more likely to engage in site activities such as customizing a product image, viewing shipping methods or return policies and submitting an email name. The research also showed that apparel searchers were also more likely to make a purchase (online or offline). Apparel searchers generated an average online conversion rate of 21%, compared with the 18% average conversion rate generated by non-search users.
Consumers use search throughout the buying cycle. Consumers conduct multiple searches and use search throughout their purchase decision, with 21% reporting they use search to find out about new styles and brands, 27% using search to find out about sales and deals and over 50% using search to find a store address, phone number or website.
“It’s clear from these findings that consumers are using search for multiple objectives throughout their apparel shopping process,” said Diane Rinaldo, retail category director, Yahoo! Search Marketing. “Search provides retail marketers a way to reach their customers in a comprehensive manner that allows them to effectively tie together their online and offline sales, enhance brand awareness and increase market share.”
Hmmm. All roads lead to Google. It’s funny, but I’m beginning to feel sorry for Microsoft.
For every automobile, and maybe every product, there’s a threshold beyond which your ad budget is wasted.
That’s the premise of this startlingly clear analysis from Evan Hirsh and Mark Schweizer from Booz Allen Hamilton’s Cleveland office. They ask:
“…What if there was an optimal level of advertising spend for any given product — beyond which the money was completely wasted?”
“Economists often speak of “price elasticity”: When prices rise or fall, consumers respond by changing their purchase strategies. That is why price increases do not automatically lead to equivalent rises in revenues. The same kind of elasticity exists with advertising. For any given brand in any given market, there is a saturation point for advertising spend. Up to that point, increases in the ad budget will generate results; but once the market for a product or service is saturated, no matter how much a company spends on advertising, it will not produce enough added sales to justify the cost. The best possible budget places just enough ads to reach the saturation point, and not a dollar’s worth of advertising more. Companies that follow this principle will optimize their overall profitability because they will spend on advertising only what they can recoup in revenues.”
An important wake up call for marketing and advertising strategists everywhere. Download here >>
I keep getting emails asking me how “Double Loop Marketing” works. Here’s a quick explanation.
Let’s say a company like Texas Instruments wants establish itself as a thought-leader in the RFID marketspace.
In the traditional PR world, they could issue a few press releases, give a few speeches, write a few whitepapers, and then hope the media would cover them.
But what if TI decided on a “Double Loop Marketing™” approach?
What if Texas Instruments brought together its partners, industry thought-leaders, R&D professionals, VC shops, and senior executives in an online thought-leadership-based “double-loop” site to:
– Learn about the latest trends and technologies in RFID
– Define and understand the specific factors that contribute to improving strategy
– Develop recommendations for creating a RFID management discipline within your organization
– Present sample business justifications supporting strategic and learning investments in RFID
– Foster discussion of lessons learned from early adopters
– Disseminate news, events, and thought leadership articles on a monthly basis
– Create a framework for measuring performance and ROI
– Build a worldwide community of interested senior executives and target them w/ e-mail bulletins that include messages from TI and its partners
– Develop industry-specific campaigns promoting the community – including offline events, publications, and more.
– Build a members-only community of practice around the gurus and leading implementors
The site would include blogs as well, from industry experts and TI subject-matter experts.
Of course the cost of something like that is far higher than funding a blog or two, but its impact on the marketspace is far more potent.
By building a thought-leadership hub on RFID, TI establishes itself as “the one to learn from” and as I like to say: moves from “mind share” to “wallet share”
Blogs on the other hand are better suited to the voice of an individual. So if TI doesn’t have the resources to build the “big” site I mention, they can still play by allowing one or more of their subject matter experts to start blogging on the ins-and-outs of RFID.
Of course, great care must be taken to make sure that the expert actually does have something to say, and is not the mouthpiece for a veiled PR initiative. Scoble at Microsoft and Schwartz at Sun come to mind instantly, right?
Not enough? Here’s a slightly longer explanation of Double Loop Marketing.
Kathy Sierra’s blog post should make you think twice.
Even someone as mainstream as Sergio Zyman says: “The problem in marketing today is that we spend 95% of our time and money on advertising and 5% on the rest of the stuff. What I propose to you today is to flip it around: Spend 5% of your time and money on advertising and 95% on everything else. If you do that, you’ll sell a lot more to your customers.”
I agree. That’s how I discovered Double Loop Marketing.
Apparently “employee discount pricing” isn’t exactly helping GM, Ford, and DaimlerChrysler.
Forbes reports that “the ultimate result of the promotion was the widening of an already-existing gap in perceived quality between Detroit’s Big Three and their Japanese counterparts.”
“After spiking during the summer, sales at the Big Three tumbled in September. Also falling were consumer scores for brand image, quality, credibility and perceived resale value, among other attributes, according to Brandimensions. GM and Ford, in particular, saw sales growth lag behind Toyota, Nissan and Honda by an even greater margin than they did in the spring, before employee pricing was implemented. Sales at both automakers dropped more than 20% from their September 2004 levels, while the three Japanese carmakers increased their sales at double-digit rates.”
Note: The promotion hurt GM the most as the leader in starting the program… ouch!
John Hagel talks about the auto industry on his blog: Delphi, Detroit and Dead-Ends.
Good news for Toyota and Honda. Hybrids, anyone?