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.

Using Email and Offers to convert shoppers

A great amount of time is spent designing online shopping experiences with great emphasis on having product availability online.

Despite the best efforts of Information Architects, Graphic Designers, Marketers and yes Strategists over 70% of shopping carts are abandoned online.  There is a huge commitment issue there (which is a whole other story), but amuse yourself about thinking if that’s what actually happened at a place like a grocery stores.  That’s a lot of restocking to be done.

Email is a great mechanism to help convert that sale.  You know what the customer was interested in, and it’s inexpensive communication.  Here is an example of a recent experience I had at happysocks.com after just browsing – not adding anything to my cart.

I went to happysocks.com, browsed and not feeling ready to buy anything provided my email address to receive promotions / communications.

Exactly 4 weeks later I received the offer below – 50% off any order of 10 items or more.  A pretty good deal.  I didn't click through, but I did forward the message to a couple of people.

7 days following that I received another email, with an even more compelling offer – 50% off any purchase, no minimum.  I didn't click through – but was interested to see that they dropped the minimum order requirement

7 days following that I received another email, with their best offer yet – 70% off any purchase, no minimum.  I clicked through, found some great socks and added them to my cart.  

I was interested to see how far they would take this, so I closed my browser window after putting in some order information (but no payment)

That afternoon, I received a follow up email from them.  It noted that I had abandoned my cart (had a link back to it) and encouraged me to tell them if there was anything wrong they could help me with and included a promo code for free shipping for me to use to complete my order.

This sort of escalating follow up is a great way to see a customer through to close the sale.  They know I am interested, they know I am ready to buy.  I'm going to assume (okay, hope) they are capturing these interactions to develop an optimal communications model and offer combinations to ensure everyone wears colourful socks.

Know what your platform is capable of - and not

Meeting with someone recently they asked me what my favourite CRM platform was.  I've had a chance to work with a wide variety and what struck me about it was it doesn't matter what my favourite one is, but knowing what the capabilities and constraints of the one you are working with does.

In previous roles I've had the opportunity to be a part of the implementation teams for some large deployments, which are massive endeavours.  My role was typically to understand how the business requirements and corporate vision would align strategically to the tool being implemented. 

In the marketing and advertising world the scope is simply understanding what system you are going to be interacting with and what you'll be able to do with it.

The enterprise tools are incredibly similar in terms of capability and it would be very difficult to rank them as a lot of the factors align with their compatibility with your companies current infrastructure, and budget.

The types of tools that I like the most of those that are able to hold customer records of all (or most) of their interactions with you.  Tools like Eloqua are extremely helpful as they offer deployment and analytical (although limited) within it, where as Salesforce.com and it's integration of Radian6 offers another level of social behaviour tracking.


The trick then becomes in knowing what your tool can't do.  Sure, the sales guy said your tool "could" do triggered emails based on interactions or track Facebook posts from linked accounts - but did you buy the module?  I often find that marketing clients only remember what was said in the sales presentation, not what they bought.

Over the last couple of months I've had the unpleasant experience of finding that what a client says they can do (or data they have) is far from the truth.

Adjusting a strategy into phases to show return and demonstrate value can be tough in these instances, particularly when the client has no ability to add new functionality.  Conducting a full discovery process and objective setting can also help prevent these surprises from popping up.

Closing the Loop: Red Flag Deals new Cashback program

There are very few consumer ecosystems that are able to provide closed loop environments.  Most websites aggregate content and refer traffic without completing transactions.   Amazon led the way with having a full service and has been able to offer a whole new level of customized buying experiences and tailored offers / recommendations for consumers.

Companies like Mountain Equipment Co-op have had the opportunity, but have never capitalized on it.  Now Red Flag Deals is offering it's own rewards program that appears to have similar merits of Amazon, and it's a brilliant move.

They are historically strong as a forum for people to share deals (almost 14,000,000 posts) and a way for service providers to promote offerings traffic was referred to host sites, but now they can complete the transaction.

Users need to register, buy from partner retailers and collect cash back on a quarterly basis.  The terms and conditions are straight forward - and the learning opportunity for retailers is immense as all aspects of the transaction will happen on their site.

They have always been able to track browsing behaviour and referral path, but now they will be understand the full consumer path to purchase
What led them to purchase?
If they didn't complete, what was the last item viewed before abandoning?
What other items were viewed?

This will also provide them with new services to companies looking to test products will increase their leverage with suppliers.

Increasing Relevancy in Email

Consumer behavior has changed, and email needs to adapt to it.  Email today is being viewed under the consumer lens of 140 character micro-blogging and 5 second video clips that are highly entertaining and engaging.  The volume of digital messages is constantly increasing, and to the consumer email is just another channel.  Conversion rates are down 0.25% over the past two years on email, but through its ability to deliver customized messages, email can be extremely effective when used properly.

With the rise of mobile it is critical to ensure that marketing programs can be properly experienced through mobile devices.  The use of Mobile devices is exploding across Canada with 67% penetration in 2012. Mobile is also the preferred device for looking up information on the go, and the primary device for checking email.  As a device to access the Internet, mobile usage grew 28% in Canada in 2011 and is trending to include half of the population by 2016.

Conversely, the cost effectiveness of email has allowed marketers to become lazy, and email performance has suffered. Some of the basic practices for email have been forgotten.
 
To make email relevant again marketers need to look at email as a critical digital engagement channel.  How?  Make sure that the basics are covered and then apply these 4 new principles.

1.    Increase relevancy in subject lines

The subject line is the first barrier to getting your email opened.  Use all the information you have available on the recipient to communicate the value and importance of the product / service or information that you are offering.

2.    You have the data, improve customization

Based on what you know about your individual target and what they have done with you in the past, what can you do to make email content as engaging as possible through customization?

3.    Design for mobile

50% of consumers use their mobile device to first scan the email then open later.  Does your target skew even more towards mobile?  If you are linking out from your email in your call to action is the destination viewable on a mobile device?  A typical subject line is 55 characters, however most smart phones show only 35 characters.  Make sure that you are getting your point across quickly and effectively.

4.    Deliver based on the best time for your customer

Inboxes are getting crowded with messages and setting customer expectations with a consistent schedule is more important than ever.  To do so think about when you would like you customer to act, or when they are able to.

Marketers can also create their own best practices to retain within their organization.  Documenting specific campaign performance and creating corporate memory will allow them to understand how to best apply these practices to their specific program target.  Looking for commonalities within their customer segments and industry trends will deepen this knowledge.

Fantastic example of personalized content

Getting people to test drive a vehicle is one of the major hurdles in the automotive sales cycle.  Getting people to picture themselves having a dream car may be a new step.

At the end of July Pfaff Porsche upped the game in delivering personalized content to people by parking a new Porsche in their driveway, taking a picture and printing a customized brochure for them on the spot.

I love this on a number of levels.

1. Personalization - it may be creeping the lines on trespassing, but being able to see what a Porsche looks like in your driveway is a great way to get people thinking about buying.
2. Targeting - A lot of people would want a Porsche, but not everyone can afford one.  This was done in areas with higher income levels (I hope no current customers though)
3. Tracking - Household level tracking becomes a reality where you can see exactly where this was effective, or not
4. Cost Effectiveness - With the margin of a single vehicle sale being high (typically around 15k for a premium vehicle) this is a very low cost way to generate interest
5. Scalability - While all manual, it is relatively low effort and could be easily scaled with a couple of extra cars and some additional man-hours

When I steal this idea for another client though I am going to try to add some additional elements to increase the sharability of reach of this type of work.

Make it digital - include a link on each of the brochures to a customized url that includes a sharable photo so the event can be shared with friends and family.

Make it global - coordinate in advance with Google Streetview to time when they are going to be around (it can happen) and park the cars in advance to allow the event to be experienced with everyone.

Design for your Customer, not Tactics

Building a strategy?  Please don't build it around a tactic, or start talking about tactics until you understand your customer.

Start by thinking about your customer and the benefits of your magical widget to them.  Whether a product or service, you should be able to gain some insights when thinking about the emotional and functional benefits.

Emotional benefits?  How it is going to make them feel.
Functional benefits?  What they are going to be able to do.

Understanding how to apply those benefits to customers through tactics can be done by knowing more about your customers.  They are out there, but you need to identify some simple things;

What channels are they interacting in?
How are they using those channels?
How can these benefits intersect with that pre-existing behaviour?

This customer centric approach will produce a more engaging and effective program.