How the US Open was like a retail promotion analysis

Last week’s US Open golf tournament had a surprise leader going into the final round in Ricky Barnes, who came out of relative obscurity to record the best 36-hold score in US Open history, beating out golf greats like Tiger Woods and Phil Mickelson.

The media played it up, talking about Barnes as finally coming into his own and really blossoming. Was he the next big golf star? From CBS Sports:

“Until this week at the 109th U.S. Open, keeping up with the big boys has always been difficult prospect (for Barnes), full of disappointment, figurative bloody noses and scabby knees.

‘I know he hates losing,’ brother Andy said. ‘Maybe because he did a lot of it when he was younger.’

And more than a bit as a young adult, too, which is what made his record-setting start at Bethpage Black all the more surprising. In a field full of the household names with whom Barnes has been so desperately trying to compete, he’s finally atop the leaderboard.”

As Barnes faltered during the final rounds and Woods and Mickelson improved, it was all about who was handling the pressure well and who wasn’t. Barnes’ score dropped off significantly over the final two rounds while the bigger names improved.

Was it the pressure? I would argue that what we really saw was what statisticians call a regression toward the mean (or average). Basically, Woods and Mickelson began the tournament with rounds that were well below their averages, but with each round they began to score closer to what they would normally be expected to score. Barnes basically did the opposite. When continuously measured over time, Tiger Woods is still clearly the world’s top golfer. This can be clearly seen in the world golf rankings where Woods is #1 and Barnes is #153.

So, why is this like a retail promotion analysis?
Because we retailers have a tendency to look at each short term promotion result in isolation and then make concrete conclusions and kick off immediate modifications. Come Monday morning, we’re looking to see how the weekend sale did, and we’re ready to change next weekend’s sale if this past one didn’t perform to expectations. We don’t take into account the possibility that we might have witnessed an outlier result that is not really indicative of the actual effectiveness of the promotion but is actually just the result of random luck — good or bad. After a single test, we could be ready to declare the promotion equivalent of Ricky Barnes the world’s greatest and the promo Tiger Woods an also ran. And the next time we run the Barnes promotion and it’s a dog, we’ll revert back.

An old colleague of mine used to call this the “full accelerator, full brake” syndrome. The net effect of all of this short term measurement and immediate reaction is a steady reduction in the average effectiveness of our promotions.

Instead, we should measure the effectiveness of promotions over a much longer period of time and over many instances. Because of the massive amount of variables that can affect a promotion (including the obvious and more visible variables like weather and road construction and the less obvious and invisible variables like an unusual number of people happened to plan family picnics at the same time and therefore didn’t shop like they normally would have) we simply cannot count on a short term measurement to provide the accuracy we need to make a wise decision. Short term, sometimes the promotions will show improvements and sometimes they won’t, just as Tiger Woods does not win every golf tournament he enters. Over time, though, we will come closer and closer to determining their true value.

This requires patience and courage that will be difficult in the fast paced retail environment, especially for public companies. However, it will produce a lot less churn and increase efficiency and effectiveness overall. And in an economic time when we’re trying to maximize the effectiveness of the staff we have left, less churn can go a long way.

What do you think? How are promotion analyses handled in your company? Do you measure over the long haul?



The World’s Greatest Marketer

The greatest marketer any of us could ever have is a happy and talkative customer with lots of friends. Of course, any one customer’s reach is pretty limited compared to a TV spot, even in today’s 500 channel, multi-tasking, timeshifting, DVR world.

Wom However, she’s also infinitely more credible to her audience than any TV spot, display ad, print ad, website or sponsored search term will ever be.

When we retailers focus on the customer engagement cycle, which I’ve always defined as Awareness, Acquisition, Satisfaction, Conversion, Retention and Referral, we often spend the majority of our time and budgets on the first stages of the cycle and hope for the best on the Referral stage.

But I think there are at least two steps to actively drive the Referral stage:

1. Provide the right products and service to ensure we have incredibly happy customers
2. Ensure our happy customers have great and easy-to-use tools to tell the world about us

The good news is that the web provides us a fantastic foundation to create these tools, and some of them are so simple you can get them going in no time.

Here are a couple of quickies to start with:

Send To A Friend
Many sites have a Send to a Friend capability somewhere on the site. However, the vast majority of these capabilities are severely understated text links that are hard to find or notice. And worse, the actual email sent is almost always a boring text based email with no branding and compelling content whatsoever. Even though as the sender I’m often asked for my name and email address, the actual message frequently comes from something like sendtoafriend@company.com instead of coming from my full name, which would be far more recognizable to my friend and far more likely to be opened (I hope).

Why not outsize the Send to a Friend capability on the site itself with a fully designed email box with a sender, recipient and notes field and copy that encourages our happy customers to share our products with their friends?  Here’s an example from my past at Borders that worked really well:

Sendtoafriend

And when we send the email, why not create a nice, branded HTML template that compels our friend to click though? Why not put as much time and effort into this email template as we regularly put into our weekly marketing emails?


Social Network Sharing

Most news sites have long since added buttons to their articles that allow readers to post their articles to Facebook, digg, del.icio.us, Twitter and other social network options.

Social

All of our products should have these options as well. It never fails to amaze me how much people want to talk about products, and this is a great way to enable them to talk to all of their friends at once though social networks. These have much better reach than Send to a Friend capabilities, and the resulting post can then spread even deeper through other networks.

Those are two of the simplest ways to very quickly, with limited technical effort, give tools to your customers to help them be our best marketers. In a future post, I’ll discuss some more technically complicated but even more powerful options.

What do you think? What ideas do you have to create tools for your customers to be your best marketers?



Does the World Really Need Another Blog?

Before I started writing that was my main question, and I obviously ultimately answered in the affirmative.

Here’s why I’m writing:

1. I took a new position as Vice President of Retail Strategy at ForeSee Results, and I felt writing a blog would be a good way to formulate and disperse my thoughts on retail strategy, retail trends and other issues retailers face on a daily basis.

2. As I looked for blogs that discussed retail strategy from the management/executive perspective, I was surprised by the relative dearth of blogs on the topic.

3. I hope the conversations here will help me stay tightly connected to the retail world and will help us all connect with each other on the challenges we face day in and day out.

Shaken-not-stirred-copy Why Retail: Shaken, Not Stirred? Because I hope to shake things up a little, and if this blog discussion could be half as good as some of the conversations we’ve had over drinks in bars at various conferences, I will consider it wildly successful. 🙂

While I’ll discuss customer satisfaction and other related metrics at times, I will not do so because I work for Foresee Results (and certainly promise not to make sales pitches) but because I passionately believe successful strategies strongly consider customer value and customer input and are built on learnings from solid, statistically significant data. In fact, my passion for building quality retail services for customers based on direct customer input and my general data geekiness are some of the primary reasons I decided to join Foresee Results.

Topics I’m planning to cover in the coming weeks include:

  • Retail innovations
  • Usability mindset
  • Tools to make your customers your best marketers
  • Business math and KPIs
  • How to communicate metrics throughout the organization
  • How to communicate new ideas to upper management
  • Hot retail trends
  • The value of Voice of Customer
  • Twitter – does it have value for retail?
  • Facebook – what is the value for retail?
  • Cross-channel strategies
  • Cross-channel organizational design
  • Business book reviews

I’m looking forward to some robust discussions.

How do you like my suggested topics? What else would you like to see discussed?

Retail: Shaken Not Stirred by Kevin Ertell


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