Invest in your Customers, not Discounts

The amazing thing to me about Black Friday, is why it's called Black Friday.  This annual Thanksgiving shopping frenzy typically marks the first day of the year in which traditional retailers are in the black.

Think about that.  That means they run in the red, or a deficit position, for 11 of the 12 months of the year.  What an amazingly stressful position to be in.

Deep discounting with fantastically reduced prices on key items drive the crowds on Black Friday.  Retailers are willing to take the hit on some televisions and computers to drive sales on other regularly priced products leading up to Christmas.

Love the concept, but the race to the bottom and the hysteria of the crowd is a proposition of diminishing returns.

What if instead of writing off those loss leading products, retailers invested in their customers?  Mark downs will always play a role in competing with store traffic, but think of the potential power even a small portion of that money being directed into customer loyalty / incentive programs would have.

Here is what I would do with that money.

1. Mobilize the shopping experience.  Integrating your inventory into your online / mobile experience is a must have as the smart phone has become an integral part of people's lives.  Make it a part of the in-store shopping experience.  Near field communications (NFC) and Global Positioning Systems (GPS) let us know where customers are.  Provide incentives to customers to use an app that will allow for push notifications alerting them to new information (sales, complimentary products, other customers) to enhance their shopping experience based on their physical location.  Capture their behaviour to learn what works best (and worst) in improving the experience and driving future sales. 
2. Close the transactional loop.  What makes online retailers so good at providing product recommendations and customizing offers is that they have access to all of the customer behavioral and transactional data.  This could be easily replicated for the in-store experience.  Smart shopping carts and mobile could consider in-store location, time spent in an aisle, near a category, what products are placed in the cart, and what products are purchased.  Tie individual customers to those activities through membership cards (some grocers like Sobey's are incredible at this) to create a full behavioral profile.
3. Tailor offers.  This behavioral data is critical, and if you don't have it you are not going to be engaging your customers.  Use the data to understand the needs of your customers.  Segment them, design programs for them - and market to them as individuals - like Amazon does online.  Deliver offers through mobile, email and through direct mail for certain segments.

These programs require investments from different budgets and organizationally could provide problems.  The opportunity here though is two-fold.  You can create loyal customers who don't need discounts to drive them to your store and you may be able be in the black in month one, not eleven.

Adopting Mobile; Lessons from the Taxi Industry

On my way to an appointment recently I was taking a moment to look at a building and a taxi approached me.  On it's way it gave me that familiar, brief and subtle nudge - hoping that I was in fact looking for them, and in need of a ride - a honk.

Jerking me from my momentary trance, the honk made me look, but no I didn't need a ride and I looked away.

It got me thinking about how other people and industries try to get consumers to notice their brands or services.  By shouting out their message to create awareness and hoping that we need them or have any interest.

Like the rap of the tongs on the bbq grill by the hot dog vendor, or the shaking of the cup by the guy on the street looking for change these obtrusive signals are not to far off from traditional advertising.

Shout loud, shout often and hopefully people will come to you.

The taxi industry (barring the aforementioned driver) has adapted quickly however to the use of mobile and if they can, anyone can.

Independent mobile services like Hailo let users connect with a cloud based dispatch system, that through GPS allows drivers to see available fares and claim them for their own.

Not to be overly facetious, but what a novel concept and what a rewarding experience for the customer that every industry should heed as a lesson.

Using a  mobile app to hail a taxi lets the customer identify their need on their terms, through their device, when and where they want it.  Payment, thanks and future notices all go through the device.  As a set of basic principles these should be standard to marketers and embraced through mobile.

Think of how this can change grocery shopping.  The roles of the weekly flyer driving you to your retailer and brands promoting new products on TV have well-valued, long-standing traditions that continue to drive sales.

Mobile however let's retailers know when a customer is coming to the store, when they are at the store, where they are in the store and the length of time at a particular location.  The power of this information partnered with functionality like meal planning, making your grocery lists and the checkout experience have tremendous potential to deliver the same value (and sales) to grocers.

Advancements in analytics and customer segmentation have brought customization and personalization to direct channels like email and direct mail, but there is still room for more.  Focusing on the stated need by the consumer supported by behaviour allows for more meaningful and relevant engagement.  Not shouting.

Rewarding Customers for Interactions: Dropbox

Promotions, giveaways and coupons have been standard marketing tools for decades, and will be for decades to come.  As an incentive to try a product, marketers will basically give it away.

Tried and true this technique has certainly got a lot of customers to experience new products and services, but I've never been a huge fan.  The customer has no buy in or attachment to the experience, just clipping a coupon or hunting for a deal.  As they have no skin in the game I believe they have a lower chance in converting into a repeat (at full price) customer.

I have always preached that brands need to exchange value with customers to build any relationship.  This is not a rebate, or added service at no charge.  This is a tangible item that they otherwise would have otherwise had to pay for.

Social makes this easy for marketers to do as bringing an influencer strategy down to the everyday user is very powerful motivation for consumers.  Tweet, share, repost and I will give you something for it.  That something needs to be more than "free upgrade" or "be the first to know".  It needs to be something that your company values, and by providing it to your customer demonstrate that you value their time and effort.

Kellog's executed a great campaign this summer using this approach with their Tweet Shop program.  A storefront with Kellog's products was setup and customers could "buy" items in the store by tweeting it out.  Obviously this isn't sustainable in the long term, but I'm sure they easily exceeded their campaign goals.

Dropbox does an excellent job of providing tangible, continuous value to their customers in exchange for their activity.  While their basic service (3 GB of storage) is free, premium accounts (100 GB +) are available on a subscription basis.  You can however access additional free storage through a number of simple activities. 

Connecting your Facebook account?  125 MB
Connecting you Twitter account?  125 MB
Writing feedback to Dropbox about why you love their service?  125 MB
Tweeting that feedback?  125 MB
Referring a friend (who then signs up)?  500 MB

Some math can tell us what the monetary value of that service is.  The premium account is available for $99 / year for 100 GB.  That makes the tweet (125 MB) worth $0.12.  This is a very easy cost for Dropbox to absorb and is relational to the effort taken by the customer.  Real value, for actions that have limited intrusion and are completely optional, in exchange for service.

As savvy customers start breaking this down new competitors may emerge and discover a whole new service offering.  Not to be confused with offers and product constructs like in credit cards.  This is a free service that provides additional free service for your effort.

Now, if you all rush out to sign up for Dropbox send me your email address, I could use the 500 MB.

Generating Leads online for Small Businesses

Digital and social are fantastic ways to generate leads for your business.  The problem for a lot of small businesses becomes where should they focus first, and why?

That of course is a complicated question - or series of questions.  A better approach is to think about two pragmatic ones first.

1. What do you want to achieve?
2. What are you able to do?

Understanding what your short and long term business challenges and objectives are will let you answer question one.  Looking within your company to know if you have the time, budget and will to do anything or everything is question two.

I recently had a chance to conduct a digital review for a small business in the Business Intelligence and Analytics space.  Their current website was well designed and generating a lot of traffic for them.  As a smaller player in their field however they have a common challenge of not being well known to their prospective customers and were not generating any leads from their digital efforts.  They had also invested a fair amount of money into their current website and wanted to keep any changes (even improvements) at a minimal cost.

Here are three recommendations I made to help generate leads.

1.  Give content away
Within their service areas and industry vertical sections they had provided some limited examples of their work.  Most of these examples however were password protected and as a technique to generate contact you needed to connect with them to get the password to view more.

I believe that before you can ask a prospect to take that step, you need to show them true value.  My recommendation was to provide a single, solid example of their work within each area and vertical.  No passwords and no hassles for prospects.  Within each example I would also recommended providing a clear call to action to see or learn more by contacting an Account Rep to arrange for an online demo or access to other examples.

2.  Testimonials

No eye rolling here, as this is not news, but is an essential piece of content that helps provide credibility.

For each example of their work my recommendation was to contact the customer who that work was for and ask them to write a recommendation for it.  For this particular case I suggested that they may even write it for them to start and to focus on explaining a) why they chose to use their service and b) what they got out of using it.

No one wants to be the first customer.  People want to know that the tool / service / approach that they are considering is tested and true.

Some new businesses do not have case studies to demonstrate their work, which is a whole new challenge.  Delivering a proof of concept for prospective customers at no charge can help overcome this barrier.

3.  Lead on LinkedIn

LinkedIn is the leading professional networking site and can be very valuable for companies to create awareness, whether you're a massive multi-national or 2 person shop.  Company Pages and Discussion groups are a great opportunity to connect with like minded people, participate in discussions and demonstrate leadership.

The employees of this company had incomplete profiles that linked to the company page, and even then the description of their jobs was not consistent.  Cleaning that up is easy.

My recommendation to them was to dedicate time and energy into leading conversations and establishing credibility through discussion groups.  Identifying groups that their customers (current and prospective), competitors and peers were involved in and joining in the conversations is the start of that.

Starting conversations topics and leading discussions within those groups to get their point of view out is the next step.  This company has a treasure chest of content around their ideas and approach on their website.  By using this content through LinkedIn they can easily get more mileage out of it.

From a budget point of view, none of these recommendation cost very much.  This to me seemed more like an exercise in understanding what the true business objectives are and thinking about how to best achieve them.