A Convenient Truth

Easy buttonConvenience. We value it more than I think we sometimes realize. We’re willing to pay more for it, and we’re willing to sacrifice quality in exchange for it. So it stands to reason that delivering convenience for our customers can lead to a pretty profitable equation for retailers.

Consider the convenience effect of some of the more popular innovations in recent years:

  • Mobile phones. We love our mobile phones,  even though they’re more expensive and of significantly lesser sound quality and reliability than land lines. And now we browse the web on our tiny smartphone screens.
  • Digital music. While it’s getting better, the sound quality of digital music is not as good as CDs (and some people say CDs aren’t as good as LPs). And we happily listen to our iPods over poor sound quality earbuds because they’re a lot more convenient than bulky headphones.
  • Camera phones. Digital photography with nice SLR cameras is finally nearing the quality of film, but cameras on phones have a long way to go to get to that same level of quality. But it sure is easy to post photos on Facebook and Flickr from a camera phone.
  • Diet pills.  OK, these aren’t as widely adopted as the previous examples (yet), but they’re the easy way out for weight loss even though there are some less-than-pleasant side effects. (Hint, you don’t want to sit next to an Alli pill taker on a long flight.) Of course, if you’re not into pills maybe you can still avoid exercise and get some six-pack abs with the Vibro-Belt.

I would be remiss if I didn’t mention the immense convenience of e-commerce and the effect it’s had on retail. But we cannot rest on our laurels as the desire and demand for convenience knows no bounds.

The threshold for inconvenience continues to get ever lower. We often complain about how many clicks it takes to get to what we’re looking for on a web page. Think about that for a moment. The energy required to cause our index fingers to press a button too many times is irritating. Some might say it’s not the energy, it’s the time. OK, fair enough.  Then the “waste of time” threshold starts kicking in when we are forced to wait three to four seconds for a page to load. We’re busy! We haven’t got that kind of time to waste!

My favorite example of the power of convenience is the Kindle. Amazon managed to make the paper book seem inconvenient. If that doesn’t tell you that just about everything can be made easier, I don’t know what will. People (and I’m one of the them) are willing to drop hundreds of dollars for a book reading device that still doesn’t format as well as a paper book. But it’s so light and so much easier to hold in one hand than a hardcover book. You can lay it flat on the table. You can carry lots of books around easily, which is very nice for a traveler like me. And you can get books in an instant with the wireless connection, which is soooo much more convenient than plugging the device into a PC for a sync. I sometimes feel ridiculous saying things like that, but I’m not going back.  And I’m not alone; people write long blog posts professing their love of the convenience the Kindle brings.

But this post isn’t a social commentary. It’s about recognizing an opportunity to make money.

So, how can we focus our businesses on the convenience opportunity? Here are three places to start:

  1. Start with website usability
    We should start with our sites because they are the low hanging fruit. The promise of convenience with e-commerce is high, but all too often we put obstacles in our customers’ way, many of which I’ve written about previously. Where are we causing customers more clicks than necessary? Why are we requiring all those clicks? Is it a lack of planning on our part, or are we putting our immediate priorities ahead of our customers’ needs? Have we overwhelmed our customers with choice? How can we make narrowing our selection easier and quicker? And let’s not forget site performance. How fast are those pages loading?
  2. Re-examine the store experience
    We need to continue to think about how our in-store experiences can be easier and more convenient for our customers to shop. Paco Underhill provided some great tips in his book,  Why We Buy. We can also look to a cross-channel strategy to allow technology to provide some conveniences. How can we bring customer reviews and recommendations into the store? Is “buy online pickup in-store” a desirable convenience to offer? How about accepting payment via mobile phone or PayPal in our stores?
  3. Consider our customers’ lives – what could make those lives more convenient?
    What’s life like for our customers? If she is a busy mother of young children, can we do more to help her easily put together some nice outfits for the kids (or herself) to free up time for answering emails, paying bills, or maybe, just maybe, giving her time to relax in the bath? Does it make sense to give our customers the ability to automatically replenish certain items at certain intervals? If we think hard, we can probably find ways to improve certain tasks that don’t currently seem difficult. If the book can be made more convenient, there are no limits.

Sometimes I think we get so caught up in our metrics and the particulars of our businesses that we forget about our customers’ needs. After all, retail is really a service business. Customer convenience can and should be a key part of our value proposition. When we find ways to make our customers’ lives easier (even by just a little bit) we are providing services and products our customers will be willing to buy — and at prices that are nice for our bottom lines.

What do you think? Is customer convenience the right strategic target for us? What ideas have you implemented to improve convenience?


3 steps to a more effective retail Facebook presence

Amidst the many clouds of uncertainty surrounding retail use of social media, a few key strategies are starting to emerge. Three recent studies, including a white paper written by yours truly, have examined customer interactions with retailers via social media. Encouragingly, all three studies (Emarketer recently summarized the findings from studies by Marketing Sherpa and Razorfish) have very similar findings regarding customer desires in their social media interactions with retailers.

While the percentages varied slightly, all three studies found customers who “friended” or followed retailers said they were interested primarily in learning about new products and new or exclusive promotions. How great is that? I have to admit I was a bit surprised to see these results because it seems like current conventional wisdom says to avoid being promotional on sites like Facebook in deference to its more personal nature. In hindsight, that conventional wisdom seems a little questionable since it’s unlikely customers are going to interact with retailers like their friends. They know we’re about selling to them — we’re retailers!

More good news: It appears that the customers who follow retailers are really the best, most engaged and brand committed customers for those retailers. I suppose that’s not terribly surprising, but it’s certainly valuable information. Since our findings were part of a larger customer satisfaction study, we were also able to determine that site visitors who also interact with a company on a social media site are more satisfied, more committed to the brand, and more likely to make future purchases from that company than customers who don’t follow those retailers. Our study also found that 61% of people who follow retailers follow less than five retailers. That’s further  indication that people are really focused on their absolute favorite retailers.

We also found that more than 80% of shoppers who use social media list Facebook as a site they use regularly, which makes it the overwhelming social media leader. YouTube came in second place with only 31% of shoppers.

So, to summarize, our best and most engaged customers like to interact with us on Facebook (an incredibly viral platform) and want to hear about new products and promotions. This is a great foundation for a successful strategy!

Without further ado, here are three steps to a more effective retail Facebook presence:

  1. Focus on best customers
    Rather than trying to build our fan base to the highest possible numbers, let’s focus on getting as many of our highest value customers as fans on Facebook. They’re the most likely to become our Facebook fans anyway, but they’re also the most likely to recommend us to their friends. Facebook’s viral nature gives us the opportunity to put our Word of Mouth Marketing on steroids, and developing messages for our best customers gives us a clear focus. We should reach out directly to our best customers via targeted messaged and encourage them to join because we…
  2. Give ’em special promotions and news about products
    These are our best customers. Let’s treat them well and make them feel special. Let’s give them exclusive offers and early notice on cool new products.  Victoria’s Secret does an excellent job here, and it shows. Of the Internet Retailer Top 40 retailers’ Facebook pages I looked at, Victoria’s Secret has by far the most fans at almost 2.7 million at the time of this writing. Clearly, they are delivering on customer expectations, and they’re being rewarded for it by attracting lots of really engaged customers.

    My good friend Adam Cohen, partner and social media lead at Rosetta and blogger at a thousand cuts, (and my go-to guy on all things social media) correctly cautions against too many rich, exclusive promotions as they could be unsustainable as the fan base grows. This is particularly true if the offers start to attract deal seekers who are not our best customers. Good warning from Adam and in line with the excellent old adage “everything in moderation.”

  3. Leverage Facebook viral features
    We’re giving great, exclusive offers and product news to our best customers. Those best customers are the most likely to recommend us to their friends. Let’s encourage them to do so. It could be as simple as letting them know an exclusive offer can be shared with their friends by simply hitting the “share” link.  There are lots of Facebook applications and other techniques that can be used, but I would personally just start simply and go from there.

(Bonus tip) Make sure your page can be found in Facebook search.
This isn’t really one of my key steps, but during my research I was surprised by how poor Facebook’s search is. For example, I searched for “LL Bean” and found nothing. Then I tried “L.L. Bean” and again got nothing. Their page is actually entitled “L.L.Bean” with no space between “L.” and “Bean.” Facebook’s search will only find it if you search for it exactly as it’s titled.  So, my tip is think about how people might search for your brand and then name the page with the most common search term.

————————————————

Three separate studies have all found that customers who friend or follow retailers in social media are most interested in learning about promotions and new products. That’s some mighty strong corroboration, and it’s incredibly great news. Judging from the large percentage of retailers with little-to-no Facebook presence, I’m guessing many have been holding pat waiting for a clear direction on how to best leverage social media. While this information may not give the clearest direction for all social media channels, it certainly provides some clarity on today’s biggest channel, Facebook. Different social media channels require different strategies and tactics, and in the end it’s still important to learn more from our customers about their specific needs and desires and then work to satisfy them.

In the meantime, let’s build some really great Facebook pages for our best customers and give them some exclusive offers to enjoy. Please let me know when you’ve got your page running so I can become a fan!

What do you think? What have you learned about Facebook? What tips do you have?


You ARE a technology company

In this day and age, pretty much every company is heavily dependent on technology to operate. But if you have an e-commerce operation (or really any sort of transaction website), you are a consumer technology company. The sooner we recognize and accept this fact, the sooner we can get on with leveraging it to our competitive advantage.

We often talk about focusing on our “core businesses” at the expense of everything else. At a conference I attended last week, I heard a number of speakers and attendees reference Amazon as a “technology company” as sort of a dismissal. They were basically saying, “Yes, Amazon has lots of great features and functionality and people rate their experience highly, but they’re a technology company. We’re retailers. We can’t compete on that level with them.” This type of statement draws the obvious retort: “So, then, on what level do you plan to compete?”

While Amazon does generate some revenue from selling technology services, the vast majority of their revenue comes from retailing products. Their financial statements look pretty much the same as most retailers (except they have much bigger numbers and growth rates). But Amazon and other pure play online retailers are not burdened with the type of legacy thinking that exists in a lot of multichannel retailers. They understand full well the value of creating a quality online experience, and they understand that technology is part of their core business.

Competing with Amazon is clearly very difficult for a variety of reasons (price being high on the list), but how many business elements can we abdicate to them before our very survival is at stake? Shifting our mindsets regarding our sites is one key way to claw back into the game.

Our websites are consumer software applications, in many ways like Microsoft Word or Quicken. And this means that online our business is technology.

People use our website applications to accomplish tasks like buying our products, learning more about our products or getting inspiration. Their perceptions about the quality of our applications can absolutely make the difference in whether or not they complete their tasks and whether or not they return to use our applications again.

And their perceptions of our brand can also be influenced by the quality of our site experiences. A study by ForeSee Results on the Internet Retailer Top 100 sites found that people who were satisfied with the online experience of a retailer were 44% more likely to purchase offline. That indicates significant value in making sure the website is a quality software experience.

Our websites are also an opportunity to differentiate from our competitors, particularly if we’re not selling proprietary products. If consumers can buy the same North Face jacket or Nikon camera from a variety of different retailers online, the quality of the online experience will be a contributing factor in the decision.

Let’s do what it takes to include the quality of our site experience in our value proposition.

Here are 3 ways to get started towards becoming a consumer technology company:

  1. Organization
    We will likely need to make organizational structure changes to support a consumer technology focus. I previously made a case for changes in E-commerce IT organization that goes into more detail, but suffice to say the technology strategy and the business strategy need to be not only aligned, but integrated.

    Furthermore, we need think about different types of roles. Software companies have product — not project — managers and product teams who are dedicated to building customer focused product strategies and life cycles. A quick check on the Amazon careers page reveals many product management positions. Do you have product management positions in your organization?

    Check out a typical set of responsibilities from Amazon’s Baby Registry product management gig and note the mix of business and technology functions and responsibilities:

    • Research and identify opportunities for Amazon to further distinguish our Baby Registry offering.
    • Define a long-term product roadmap, including technical, business development and marketing initiatives.
    • Develop new strategic partnerships ad drive day-to-day partner relationships.
    • Conduct business and financial analysis, including forecasting, monitoring, and reporting.
    • Define requirements, and drive customer experience projects and work with all relevant cross-functional areas and our technology teams to guarantee smooth, efficient implementation.
    • Manage bottlenecks, provide escalation management, anticipate and make trade-offs, balance the business needs versus technical constraints, and maximize business benefit while building great customer experiences
    • Work cross-functionally with designers, software development engineers, salespeople, product managers, and other internal partners.
  2. Budget/Investment
    How might our current budgets change if we considered ourselves  technology companies? Maybe not at all, but we should nonetheless re-examine our customer investment strategy in such a light. At the very least, we might consider revamping our budget processes to accommodate a fast moving, highly innovative competitive marketplace where the features and functionality of our website “product” are key parts of our business strategy and our ability to differentiate from our competitors.
  3. In house or outsource?
    Often we decide to outsource technology (and other elements of our businesses) because they are not “core” to our business and other people can do a better and more cost effective job. How does our thinking on outsourcing change if we consider ourselves technology companies? We might still legitimately consider outsourcing or licensing third party software, as many software companies do. However, we might also consider building up true competencies in at least some areas of software design and development because of the need to differentiate and deliver quality branded experiences for our customers.

—————————————————

Recognizing and accepting the fact that developing an e-commerce operation puts us in the consumer technology business is an important first step to successfully competing in the online marketplace. Once we’ve achieved the consumer technology mindset, we’ve got to take steps to create an organizational structure that executes like a consumer technology company. Without such steps, we will fall further and further behind the companies who are leveraging their technology focus to create the positive customer engagement cycles I discussed in my previous post.

What do you think? Do you think being in e-commerce means you’re in the in consumer technology business? How is your company organized?

Photo credit: Sebastian Bergmann


Retail: Shaken Not Stirred by Kevin Ertell


Home | About