Category: Marketing

Forget Facebook, Pshaw Pinterest, Toodaloo Twitter: Bringing Social In-house

social media thinkingDespite the pithy title of this post, I’m not actually anti social media. Nor am I in any way predicting its demise. And while I’m disclaiming, let me also say that I don’t consider myself a social commerce expert. But I have been doing retail for almost 28 years and have been involved in e-commerce for about 15 years, and I’ve learned a lot along the way.

And I don’t think we’ve been looking at social in the right way.

The numbers bandied about are spectacular and tantalizing. If Facebook was a country, it would be the third biggest in the world! Over a billion users! But if you think a little deeper about them, they don’t hold up as well. You hear over a billion users and you think that’s Super Bowl audience type numbers. But it’s really not. It’s actually more like 1 billion niche cable channels. You can’t really put a single message out and connect to all of those people in one shot.

There’s lots of talk about the average of 230+ friends each person has and an assumption that our customers will share their shopping experiences with their friends. And they do at times. But those  friends are not all equally influenced by those shares. A number of my Facebook friends are old friends from high school that I connected with once but am otherwise not highly connected. So how open are these types of friends to anything I might share?

Another of my favorites is “time on site.” The average time on Facebook exceeds Google. But what does that mean? And is that a reasonable comparison point? Google is actively trying to get people to click away from their site. That’s how they get paid.

Yet, still, there’s something there. Governments are being toppled with the aid of social media. That’s pretty powerful. So what can we do with it?

social revolution

Well, we retailers tend to be like hammers that see everything as a nail. So we want to figure out how to put a cash register on it. And we’ve seen some highly publicized Facebook stores like 1-800-Flowers and Best Buy’s various attempts. But so many of these have seemed to result in no sales.

OK. Maybe not a store. Then what?

We’ve been flailing about some trying to figure something out. We’ve asked silly questions, and people respond. We’ve tried to amp up our customer service in these channels, and that has been good for PR. We’ve tweeted lots of fun facts and tips. But Twitter is like a river, really. So much is flying past so often, I really have to wonder how much anyone really sees. We have videos on YouTube with some great content that’s fun to watch, and now we’re seeing decent action around shopping on Pinterest.

So some of the stuff we’re doing seems to have some branding value, but I’m not sure we’re making the most of it. For most retailers, orders attributed to social media as a last touch are basically non-existent. But maybe, you might say, click tracking might not really tell you about influence. OK, we asked our customers at Sur La Table. Their self-reported answers say they’re a little more influenced than click tracking would suggest, but it’s nothing to write home about.

Still, I can’t help thinking there’s a lot of power in the idea of bringing people together with the help of some social technologies.

I’m always thinking about what I call the customer engagement cycle. The last step, Referral, is really the Holy Grail. If we can get our best customers to be our best marketers and merchants, we can make that cycle much more efficient and effective. And our customers are WAY more credible than we are. A recent Gallup Honesty poll ranked Advertising practitioners BARELY higher than Members of Congress! Yikes!

Seth Godin gave an amazing speech to the music industry several years ago as the record labels were seeing their businesses tuned upside down by digital downloads – legal and illegal. People were freaking out. But he provided another avenue (one not really taken, but that’s another story) that was largely about the underlying principles of “social.”

He said, and I paraphrase:

“People don’t listen to companies, they listen to people. And, there is something magical about the connection between one person and another person.

There is a large number of people who want to be led…who want to connect…who want to join a tribe.

And you have the ability, from where you stand, to make some of those connections happen.”

So maybe the idea of social is right, but we’re just doing it wrong. Or at least we’re doing it for the wrong reasons. If we want to use social to get cash flowing into the registers, I think we need to look at the opportunity differently.

context mindset purposeI think there are three specific conditions we need to be successful: context, purpose and mindset.

I think context becomes incredibly important. All the social media channels out there have plenty of value for branding, messaging, etc. We run into trouble when we try to make them transactional. Maybe that’s not the best way to use Facebook, Twitter, Pinterest, etc. But that doesn’t mean the idea of “social” can’t benefit transactions. I think it just means we have to implement social capabilities in the right place with the right context. And our sites are different from our Facebook pages, which are different from our stores.

And that’s because each of these environments were constructed for different purposes and as a result customers have different purposes in mind when they visit each. On Facebook, it’s more about seeing what friends are up to and maybe also engaging with some favorite brands. So while people may see our new products or promotions, at the same time they’re also looking at cute babies, political rants, and embarrassing drunken photos that never should have seen the light of day. Our messages can get obscured pretty quickly.

Whereas people coming to our stores and our sites are purposely looking for products, whether to research or buy. They’re pretty open to learning about new products and they’d love to hear about promotions. They have a completely different mindset. And that attitude and inclination can make all the difference.

The mindset when using Facebook and other social media is largely about entertainment. Keeping track of friends, seeing photos, etc. is fun and entertaining. But there’s a lot going on there, and nothing really holds your attention for too terribly long. And even though there is interactivity, it’s still largely passive. But going to a retail store or site is all about shopping and checking out the products! When customers come to our stores, they are clearly much closer to a buying mode than we could expect when they’re just being entertained by social media.

So it’s that sweet spot where that the right context, purpose and mindset meet that we might have the best opportunity to unleash the power of social media. And really, we’ve already proven that some of our best conversion tactics are rooted in concepts of social. For example, customer reviews are a very effective way for people to connect to each other. According to a Nielsen study last year, 70% of people trust customer reviews, and that trust factor is on the rise. Even recommendations are basically a form of social since they’re based on what other people have done. They’re especially social and effective when we frame them as “People who viewed this also viewed” or something similar.

So how do we take these ideas to the next level?

How can we take Seth Godin’s sage advice and find ways to connect our passionate customers from across the country with each other under our brand umbrella?

At Sur La Table, we think we can do that with something we’re calling “My Collections.” The idea is that customers will be able to create – and share on SurLaTable.com – collections of our products. In a sense, it’s a bit like Pinterest on our site. We worked with our partner, 8th Bridge, to create this fun new feature that combines the credibility of customer reviews with the discovery elements of recommendations to take the power of social on our sites to a new level. And it’s really taking off. Customers have quickly created tons of collections to share with other customers, and they’re already demanding new features like the ability to comment more on their collections and the ability to more easily find other collection creators like them. Luckily, these are features we’re already working on!

We’ve also gotten our staff involved. We employ chefs in a lot of stores, and we certainly have them creating and sharing collections. We’re going to work to involve big name chefs we have relationships with. Certainly our store associates are participating. And not only do they create content, but they also benefit from the content created by others. It’s useful for them to learn how customers are putting our products together, and it helps them create ideas for their customers.

We’re really excited about where all of this is going, and I hope you are, too.

What do you think? How are your social programs generating value for your company? Have you tried anything that worked well? Did context, purpose and mindset play a role?

 

Do we really need the frying bacon close-up?

bacon fryingThe scene opens with a wide view of Owen leaning over the stove. Next is a close-up of Owen’s face peering down at the skillet, a bead of sweat dripping from his forehead. For two seconds we see a close-up view of sizzling bacon before returning to a wide view of Owen scooping the bacon out of the pan and carefully placing it just so on a plate of eggs and French toast. Cut to a scene of Owen bringing this newly prepared breakfast to his bride in bed.

”Happy Anniversary, honey.”

The budget conscious movie producer drops the script on the table and stares at the director.

“Do we really need the close-up of Owen’s face? The set-up for those shots adds a ton of extra cost. And the bacon close-up? Really? Does that really add anything to the story? Are we going to sell even one less ticket if that shot is not in the movie?”

But the director insists, “Yes, we have to have those scenes. They add the emotion and visceral impact that is required to tell the story, to let the audience feel Owen’s love. They are as essential to the story as the dialogue. Those shots are the difference between a professional film and a home movie, and no one will pay to see a home movie. They may not list the close-ups as the reason they don’t like the movie, but trust me, they’re a much larger factor than you think.”

The director is right. (And don’t worry, this post will eventually get to the retail relevance.)

I’ve been reading a lot about how our brains make decisions. Books such as How We Decide, The Hidden Brain, and Switch all explore the two parts of our brains that combine to formulate our decisions. Scientifically, those parts of the brain are the neocortex and the amygdala. In Switch, the Heath brothers call them the Rider and the Elephant; others call them the rational brain and the lizard brain. Whatever we call them, our decisions are the combined effort a conscious part of our brains that control our rational thinking and an unconscious part of our brains (the Hidden Brain) that controls our emotions.

Think you don’t make emotional decisions? Think again.

It turns out that without our emotional brains, we wouldn’t be able to make decisions at all. In How We Decide, Jonah Lehrer recounts the story of a man whose brain injury caused his amygdala to stop functioning. As a result, he was utterly incapable of making even the simplest decisions in life. Without an emotional brain to push him toward a decision, his rational brain simply went into analysis paralysis.

Our brains are extremely powerful, but they’ve got a lot going on. As a result, they basically compartmentalize processing power and take shortcuts when encountering situations that seem similar to past situations they’ve encountered. While this compartmentalization is generally very efficient, it has its drawbacks. Here’s how Shankar Vedantam explains it in The Hidden Brain:

The conscious brain is slow and deliberate. It learns from textbooks and understands how rules have exceptions. The hidden brain is designed to be fast, to make quick approximations and instant adjustments. Right now, your hidden brain is doing many more things than your conscious brain could attend to with the same efficiency. The hidden brain sacrifices sophistication to achieve speed. Since your hidden brain values speed over accuracy, it regularly applies heuristics to situations where they do not work. It is as though you master a mental shortcut while riding a bicycle—bunch your fingers into a fist to clench the brakes—and apply the heuristic when you are driving a car. You clutch the steering wheel when you need to stop, instead of jamming your foot on the brake.

Now imagine the problem on a grander scale; the hidden brain applying all kinds of rules to complex situations where they do not apply. When you show people the faces of two political candidates and ask them to judge who looks more competent based only on appearance, people usually have no trouble picking one face over the other. Not only that, but they will tell you, if they are Democrats, that the person who looks more competent is probably a Democrat. If they are Republicans, there is just something about that competent face that looks Republican. Everyone knows it is absurd to leap to conclusions about competence based on appearance, so why do people have a feeling about one face or another? It’s because their hidden brain “knows” what competent people look like. The job of the hidden brain is to leap to conclusions. This is why people cannot tell you why one politician looks more competent than another, or why one job candidate seems more qualified than another. They just have a feeling, an intuition.

This same “leap to conclusion” occurs when people visit our websites. They come to our sites with a preconceived notion about what a quality website looks like, and many times those preconceived notions have much to do with the types of design elements that many “rational” thinkers would equate to the frying bacon close-up described in the movie scenario above. It’s hard to imagine how a rounded borders versus straight borders might effect someone’s likelihood to convert, but it will because the hidden brain is making lightning fast decisions about a site’s credibility based on everything it sees and how closely what it sees matches up to its past experiences with what it found to be credible websites. A customer will not likely point to border type as a reason she didn’t buy; she’ll just feel uneasy enough about the site that her ultimate decision to buy will go negative.

Conversely, the right design can play a huge role in increasing a site’s credibility and turning that decision to buy in the right direction. For example, there have been numerous experiments conducted over the years that show how the price of a bottle of wine can genuinely affect people’s taste. In his blog, Jonah Lehrer discusses the wine experiments and “The Essence of Pleasure” and shows how paying close attention to the “essence of a product” or a site, like “Coors being brewed from Rocky Mountain spring water, or Evian coming straight from the French Alps” can actually lead to a change in sensory perception. This, of course, is what good branding is all about and it can absolutely make the difference between new customers further engaging with our sites or bouncing off to another site.

Since customers won’t generally be able to tell us about specific design elements that are causing them discomfort, we need to use various techniques to help us get to the heart of the truth. Multivariate testing can be a great way to understand the immediate value of different designs. Combining multivariate testing with a predictive voice of customer methodology like the ACSI methodology used by ForeSee Results (shameless plug) can really help us understand the long-term brand impact in ways that simply multivariate tests alone cannot. It’s critically important to understand our customers’ perspectives on design in context with their overall future intentions in order to get to a truth of design’s impact that even the customer could not tell us directly.

Metrics and methodologies can point us in the right direction, and then we need to hire and trust talented, professional designers to do their thing. In the end. high-quality, professional design speaks well to the hidden brain and leads to enhanced credibility. Enhanced credibility facilitates a better selling environment. So, yes, we really do need the frying bacon close-up.

What do you think? How is design treated in your organization? What tips do you have? Or are you not buying it?

Don’t let your brand go LeBron

In case you missed it, last week NBA superstar and Cleveland-area native LeBron James elected to leave the Cleveland Cavaliers in favor of the Miami Heat. He announced his decision midway through an hour long, nationally televised special conceived by his team of personal advisers. It all came across as incredibly self-absorbed and spectacularly anti-fan as he essentially broke up with Cavaliers fans in front of a national audience. He repeatedly referred to his decision as being about “business” and hoped his fans would understand.

But they didn’t understand.

When shown an image of fans burning his jersey, James seemed temporarily startled before stating that he couldn’t “get involved in that.” His Sports Q rating, which determines an athlete’s popularity and advertisers use to determine whom to endorse , was the highest in the NBA pre-announcement, but it’s sure to take a hit now. In fact, this post calculates a drop in Q score could cost him as much as $150 million.

But what does this all have to do with retail?

I think there’s a lesson we can all learn about dangers of making business decisions without fully considering the effects of those decisions on our customers. After all, our businesses wouldn’t exist without our customers, and we continue operations at their pleasure.

We’ve probably all been in those meetings where a suggestion motivated by self-interest groupthinks its way into a spectacularly anti-customer business decision. I imagine that’s the type of meeting that occurred with LeBron and team when they hatched the national TV special idea.

A retailer colleague of mine recently told me a story of such a session at his company. The head of the call center was complaining about volume spikes that kept hitting the call center. Her call center operations were deemed a cost center, so the metrics she used to measure her operation were all cost related. These spikes in volume were jacking up her costs, and she was making a lot of noise about it. My colleague noted the spikes in volume were following promotional email blasts that were widely considered very popular because they drove a lot of sales. No one would even consider stopping those emails, so the group began to latch on to the idea that they simply close the call center on days when the promotional email went out. Seriously. Luckily, my colleague was able to pull the group back from the brink and save them from going LeBron. But it was close.

We have to be careful that we don’t get so caught up in our own perspectives that we lose sight of our customers’ perspectives. Because we have direct control over the experience we provide, it’s sometimes easy to let that control be dominated by our own needs without considering the needs of our customers. When that happens, we’re seriously in danger of going LeBron.

Consider a few potential scenarios:

Does your company’s loyalty program makes its rewards intentionally difficult to redeem in order to reduce costs? If so, you might be going LeBron.

If your return policies make your job easier while making your customers’ returns a lot more difficult, you might be going LeBron.

If you promote a sale of up to 70% discounts and bury only an item or two at 70% off within a sea of items that are less than 20% off, you might be going LeBron.

If you choose to leave in place an onerous process for customers to check the status of their orders because it saves you time and money, you might be going LeBron.

Whenever our needs get way out of line with our customers’ needs, we’ve got a business problem that could be deadly. We provide products, services and conveniences that our customers value enough to give us their hard earned cash in exchange. But the relationships we have with most of our customers are somewhat fragile. When we make business decisions that are primarily motivated by our own self interests (especially those motivated by some subsection of our businesses and driven by short sighted personal motivation), we risk potentially fatal damage to many of those relationships. We don’t want be caught startled that our customers are burning our jerseys. We don’t want to go LeBron.

Instead, we can best succeed by regularly considering our customers’ needs and desires when making business decisions. Such consideration will help us maximize the customer engagement cycle and lead us to solid and profitable growth.

What do you think? What examples have you seen of companies going LeBron?


Bought Loyalty vs. Earned Loyalty

Earned loyalty vs Bought loyaltyAcquiring new customers is hard work, but turning them into loyal customers is even harder. The acquisition efforts can usually come almost solely from the Marketing department, but customer retention takes a village. And all those villagers have to march to the beat of a strategy that effectively balances the concepts of bought loyalty and earned loyalty.

I first heard the concepts of bought and earned loyalty many years ago in a speech given by ForeSee Results CEO Larry Freed, and those concepts stuck with me.  They’re not mutually exclusive. In the most effective retention strategies I’ve seen, bought loyalty is a subset of a larger earned loyalty strategy.

So let’s break each down a bit and discuss how they work together.

Bought loyalty basically comes in the form of promotional discounts. We temporarily reduce prices in the form of sales or coupons in order to induce customers to shop with us right away.

Bought loyalty has lots of positives. It’s generally very effective at increasing top line sales immediately (especially in down economies), and customers love a good deal. It’s also pretty easy to measure the improvement in sales during a short promotional period, and sales growth feels good. Really good.

And those good feelings are mighty addictive.

But as with most addictions, the negative effects tend to sneak up on us and punch us in the face. The 10% quarterly offers become 15% monthly offers and then 20% weekly offers as customers wait for better and better deals before they shop. Top line sales continue to grow only at the cost of steadily reduced margins. Breaking the habit comes with a lot of pain as customers trained to wait for discounts simply stop shopping. Bought loyalty, by itself,  is fickle.

But it doesn’t have to go down that way.

We can avoid a bought loyalty slippery slope when we incorporate bought loyalty tactics as part of a larger earned loyalty strategy.

We earn our customers’ loyalty when we meet not only their wants but their needs. After all, retail is a service business. We have to learn a lot about our customers to know what those wants and needs are so that we align our offerings to meet those wants and needs. Which, of course, is easy to say and much more difficult to do. But do it we must.

To earn loyalty, we have to provide great service and convenience for our customers. But we have to know how our customers define “great service” and “convenience” and ensure we’re delivering to those definitions. Earning loyalty means offering relevant assortments and personalized messaging, but it’s only by truly understanding our customers that we can know what “relevant” and “personalized” mean to them. And a little bit of bought loyalty through truly valuable promotions can provide an occasional kick start, but we have to know what “valuable promotion” means to our customers.

We earn loyalty when the experience we provide our customers meets or even exceeds their expectations. As such, our earned loyalty retention strategies have to start before we’ve even acquired the customer. If we over-promise and under-deliver, we significantly reduce our ability to retain customers, much less move them through the Customer Engagement Cycle we’ve discussed here previously.

But earned loyalty can’t just be the outcome of a marketing campaign. It’s much bigger than that, and it doesn’t happen without the participation of the entire organization. Clearly, front line staff in stores, call center agents and those who create the online customer experience have to be on board. But so too do corporate staff, including merchants for assortment and marketers for messaging. And financial models for earned loyalty strategies inevitably look different than those built solely for bought loyalty.

Since customer expectations are in constant flux, we have to constantly measure how well we’re doing in their eyes. Those measures must be Key Performance Indicators held in as high a regard as revenue, margins, average order size and conversion rates. (Shameless plug: the best way I know to measure customer experience and satisfaction is the ACSI methodology provided by ForeSee Results). Our customers’ perceptions of our business are reality, and measuring and monitoring those perceptions to determine what’s working and what’s not is the best way to determining a path towards earning loyalty.

Earning loyalty requires clear vision, careful planning, a little bought loyalty, lots and lots of communication (both internally and externally), and some degree of patience to wait for its value to take hold. But when the full power of an earned loyalty Customer Engagement Cycle kicks in, its effects can be mighty. The costs of acquiring and retaining customers drop while sales and margins rise. That’s a nice equation.

What do you think? Have you seen effective retention strategies that build on both bought and earned loyalty? Or do you think is all just a crock?

The iPad: A Retail Revolution?

There I was standing in line at the Apple store at 8:30 on the morning on April 3, waiting to pick up a brand new iPad. My mission? Check out this new device to see how retailers might use it to get ahead. Yeah, OK, and I really wanted one for myself, too. But I was legitimately interested in playing with it to determine good retail uses. And I definitely think there are some potentially revolutionary ways retailers can take advantage of the iPad.

Yes, it’s really something profoundly different

Understanding the value of the iPad starts with understanding why it is truly different than anything we’ve seen previously. Many of the attributes you might use to describe it have existed previously, but it’s the combination of those attributes that truly represents the revolution. The fact that it’s self-contained, light weight, and unburdened by a keyboard and a mouse means that it’s easy to hold and carry around. And it’s easy to share with others. It turns on instantly, and the battery lasts for a long time. The touch screen interface feels natural and intuitive. The apps it can run are powerful and capable of more functionality than most web pages. The combination of these attributes provides a powerful platform for retailers to leverage.

Here are just three ways retailers can leverage the power of the iPad:

Take catalogs to the promised land
For years, we’ve had visions of using technology to take catalogs to a new level. But online versions of our print catalogs just haven’t really taken off. Sure, we’ve added hyperlinks to make them interactive, and some have even incorporated multimedia elements, but the online versions really haven’t bested the old fashion print version. I believe a main contributor to the lack of the online catalog’s success is the fact that it’s just not comfortable and cozy to flip though an online catalog. Viewing on a computer screen using a keyboard and a mouse is not comfortable and convenient. The extra benefits of the interactive nature lose out to the lack of comfort in browsing.

But the iPad brings the comfort. It’s easy to sit on the couch and flip through pages with your fingers. It feels pretty natural. It doesn’t get hot, and it’s easy to just turn it off when little Suzy needs help with her homework and instantly turn it back on later with a single press of a button. Interactivity and personalization are possible with an internet connected device, of course, so catalogs created for the iPad can be extremely relevant, fun and informative. And they provide a direct connection to purchase capabilities. It’s really a beautiful thing. I believe catalogs that take advantage of these capabilities will be a huge hit with consumers.

Sales floor assistant
Part of the dream of true cross channel integration is the ability to bring the advantages of technology into the physical store in a way that can improve the shopping experience for our customers. Initially, some retailers used kiosks or POS-to-web integrations to provide these experiences. Lately, we’ve had lots of discussions about providing these capabilities to the mobile phones our customers carry with them into the store.

With the iPad, a sales associate can carry with her all the product data, the customer data, and the recommendations available online. Because the device is so easily shareable, she can easily pull up recommendations and hand them to the customer. She can show the customer how the brown lounge chair he’s viewing in the store would look in the red color that’s available via special order and place that special order on the spot. Or she can play a demonstration video of the food processor that struck the customer’s interest and easily show customer reviews. The possibilities are endless.

Virtual planogram and visual merchandising guide
Many retailers are still creating giant visual merchandising and planogram books, printing and binding them, and snail mailing them out to each store. It’s a costly process and not very flexible or efficient. Last minute changes mean reprints or sloppy additions to the original book.

With iPads at each store, we can send full color, highly customizable guides that are custom made for each store, if desired. They will be easy to carry to the racks, and they can even have built in check boxes to help track when the work is done. Efficiencies abound.

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Of course, there could be s significant capital investment to stock each store with set of iPads, and some of the consumer catalog capabilities I mentioned will not bear much fruit until the iPad is more common — or until the inevitable stream of competitive products hits the market and reduces costs. But there’s little doubt these types of devices will become fairly ubiquitous. And when they do, the retailers who are ready take advantage of the capabilities will be the retailers who come out ahead.

What do you think? Do these ideas seem nutty? What ideas do you have?


Retail: Shaken Not Stirred by Kevin Ertell


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