Measurable Marketing

Pondering the Question of "E-Commerce and Cannibalization"...Take Two

“Does e-commerce cannibalize in-store sales?” It’s a question I was often asked years ago as retailers struggled with the decision to take their business online. Back in late 1990’s through early 2000’s, there were no shortage of studies and expert POVs on the topic.

More than 10 years later, it feels like deja vu as this question seems to be coming up again as a hot topic. This time, it’s being driven by the rapidly growing share of online commerce as a percentage of a company’s total revenue. Many companies are seeing that 10 to 15% of their total sales are coming from online – for larger retailers, that’s translating to hundreds of million a year.

What I’ve learned that that there are few hard numbers out there on this topic. Why? Because cross-channel attribution is a messy, complicated and far from an exact science. However, there seems to be some consensus around the ratio of online spend to sales influenced offline.

1. In the table below from Forrester, they estimated that for every $1 spent online, approximately $6 of offline purchase is influenced by the online channel (2010: $177 online retail, $1,069 offline retail).

2. Terry Lundgren, the CEO of Macy’s, cited in his speech at shop.org that $1 online sales influences $5.77 spent in store over the next 10 days.

3. A Yahoo! Study (pdf) for JCPenney conducted a few years ago measured the impact of paid digital media on online and offline sales – they found a 1:6 ratio between online sales to offline sales. Although I typically take publisher studies with a grain of salt, I thought I’d reference it since it does collaborate the same ratio range.

Of course, actual mileage may vary. In fact, that ratio will vary quite a bit by the nature of your business and buying behaviors. Here are a couple of data points:

• For a beauty/fragrance client, we found that for each $1 in online redemption of a cross-channel coupon there was a corresponding $8 in offline redemption (this would be attributable to fragrance as an experienced good, more likely to be purchased in store)
• Analysis of a consumables retailer saw for each $1 of online purchases, there was a corresponding $2 of influenced offline sales (this speaks to their heavy skew toward replenishment goods/supplies vis a vis researched products)

The Five Assassins of Innovation

Every company talks about innovation and recognizes the need to be innovative. But then why do so many promising ideas die an untimely death? Let me introduce you to the assassins of innovation who have your next big idea in their crosshairs:

1. Low self-esteem Larry: “We’ll never get away with it. We’re not (insert name of impossibly cool brand).” Don’t be fooled by his self-effacing facade. Larry is one of the most prolific eradicators out there. He strikes early and takes down ideas in their infancy. How to defend yourself against Larry?

Try this: A recent study from Millward Brown found that there was no significant correlation between brand or category involvement and likelihood of viewing and sharing viral video. Think about the most popular viral videos in recent years and the categories they represented: bottled water, a mobile provider and deodorant — not typically the types of things most people get worked up about. Well-executed ideas are what make a brand cool, not the other way around.

2. Benny the Brain: “We don’t have the data.” Benny’s right. Odds are, you won’t have the data to justify a truly innovative effort because data is inherently backward looking. Data can tell you the “what” but not the “why.” Nor is it about asking customers what they want. (Think back to the Henry Ford quote, “If I asked my customers what they want, they simply would have said a faster horse.”) The type of data you really need comes from talking, following and watching your customers to understand their needs, then creating a solution based on that understanding.

3. Practical Paulie: “[Insert name of brilliant idea] is just a fad.” Unlike Benny, Paulie usually has all the numbers at his disposal. For every idea, he’ll have a few stats to prove why it won’t work. The biggest issue with the industry reports and studies he cites is that they're rarely specific to your audience, category or situation. Try turning the tables on Paulie. If 25 percent of mobile phone owners only use an app once, that’s 75 percent who are using it more than once. Innovation is rarely mass adoption; it’s about seeding a new idea, reaching early adopters and gaining traction.

4. Helga the Historian: “It’s already been done/We’ve already tried that.” Helga lurks in unexpected places, including companies that are considered innovators by most standards. She’s the one who reminds the team, “We tried mobile back in 2002, and it was a disaster.” Let Helga know that it’s 2011 and times have changed.

Facebook didn’t invent social networking. Remember MySpace? And before that Friendster? And if you go way back, GeoCities? Sometimes it’s just the right idea at the wrong time. Other times it’s the right idea but it's executed poorly. There are countless reasons why innovations fail. The key is to learn from your mistakes and the successes of others to maximize your odds of producing a winner. Think about your most admired companies. Chances are few, if any, were the first to market. Let Helga know it’s not about being first, but about being better.

5. Big Al the Accountant: “We can’t afford it.” The economic downturn has lavished Al with a lot of extra ammunition. Companies believe they’re doing the right thing by staying with the tried and true, avoiding the risks of bringing a new idea to market. However, it’s companies that are continuing to invest in innovation during tough times that are emerging from the recession with higher growth rates. In this case, think small. Distill down a grand vision to its essential components and propose ways to execute it quickly and inexpensively.

Arming yourself against the assassins
The assassins aren't invincible (otherwise, I'd have made them superheroes). Know how they’ll attack and be prepared. To summarize, here are quotes from a couple of the smartest people I know: Sun Tzu: “Know your enemies and know yourself and you will win countless battles.” My mom: “Don’t forget to do your homework.”

Originally published by eM&C

Email Frequency: How Much is Too Much?

According to Responsys, retailer email frequency during the holidays is at an all-time high - averaging 5.6 promotional emails a week in the most recent week.

A common question I get from clients is "how often should I email my customers?" My default answer years ago used to be "once a week" then over time it turned into "no more than a couple times a week" and now I try to dodge the question altogether...

The uncomfortable reality is that in my experience, the incremental revenue gain from sending another promotional email outweighs the measurable costs or risks. "Uncomfortable" because none of us want to say that it's "ok" to pound customers with promotional messages every day. But given the volume of messages flooding inboxes these days, there's no question that the odds of your emails being seen at all are directly proportionate to your send frequency.

Regardless of whether you're an online retailer, the same context applies. There's a single inbox and it's no longer about monitoring what your "direct" competitors are doing, every company out there trying to reach that same consumer is your competitor.

I have seen very few case studies showing the positive impact of reduced send frequency (a couple mentioned in this blog - for UK version of Open Table and luxury retailer Net-a-Porter). Frequency testing is complicated, but it's the only way to truly gauge what's right for your customers and for your business, from both a near-term and long-term perspective. And don't forget to keep an eye on seasonality.

If the holiday season (or Mother's Day or Back-to-School) isn't a key revenue driver for your business, why not give yourself a break instead of trying to compete with the seasonal senders. And if it is a key selling season for you, well...you have the data points.

In Praise of the Lowest Common Denominator

A few years ago, I was flying back from a client meeting via JetBlue. By the time I boarded the full flight, many of the passengers were already tuned in to DIRECTV. I glanced around and saw that I was in the company of a refined audience. Passengers were watching CNN, CNBC, The History Channel and an occasional ESPN News here and there. A fast 90-minute flight later, I looked around again. It was a different picture. Easily three out of four passengers (myself included) were transfixed by the much less highbrow “Growing Up Gotti."

While we all aspire to spend our waking hours living the tippy-top “self-actualization” tier of Maslow’s Hierarchy, there are times when we just need a break from all that intellectual stimulation.

As marketers, you have an opportunity to make yourselves memorable by giving consumers an escape. It’s time to think beyond whitepapers and webinars and all the “good for you” stuff that you do for consumers.

Give Them Something to Talk About
We’re social animals by nature and love to share with others. Go to any website and take a look at the “Most Read” and “Most Emailed” list. I guarantee they look very different from each other. What we like to share are things that emotionally impact us in some way — whether it made us chuckle, surprised us or touched us.

Make Them Laugh
Speaking of laughter, if blender companies and insurance companies can be funny, you can too. If all else fails, make fun of yourself. Talk about the “unspeakable” and, if you’re brave enough, embrace the “ewww.” Check out Nasopure, a company that makes nasal wash devices, for an example of the latter.

Surprise Them With a Gift or Gesture
Who doesn’t like presents? Nothing makes an impact like a random act of appreciation. It can be as simple as mailing out a little “thinking of you” trinket (preferably without your logo on it) or a handwritten note to thank your customer for their business.

What are you waiting for? Channel your not-quite-so-evolved self and bring a “Growing Up Gotti” moment of pure delight into your customers’ lives.

Originally published by eM&C.

What "You're Not Being Strategic" Really Means

Strategy is one of those words that sounds very smart, definitive and meaningful until you realize that it means something different to everyone. In my mind, the definition of strategy is simple. It means understanding available options and identifying the one that best gets you to your end goal.

But when I’ve heard the phrase “you’re not being strategic” what it usually means is one of three things: 

1. Knowing: You haven’t done the fundamental exercise of understanding what are the options and what path should be chosen.  
2. Showing: You know what’s important but you’re not doing a good enough job of showing how connecting it to the tactics.
3. Doing: You know what’s important but the work you’re doing has nothing to do with it.

So what aren’t you doing?

How to Design an Irresistible Offer

I'm putting together a presentation on best practices in designing an offer and thought I would share a quick check list.

• High (Actual or Perceived) Value - If you have something that's of high monetary value to put out there, all the better. If not, perception of the offer's worth can be just as good as reality.
• Relevant to Emotional or Rational Need of Target - The key is "relevance." If there's a choice between emotional and rational, always go with the emotional. Rather than cold hard cash, consider indulgences and experiential benefits that has an emotional payoff.
• Associated with the Key Benefits of Product/Service - This one is about brand building, but also pre-qualifies your audience. The downside of an offer with high appeal is that you may be attracting a lot more than your desired target.
• Guaranteed Benefit (v. Sweepstakes) - Sweepstakes are not a bad way to go if your budget is tight, but do consider alternatives that are a guaranteed payout even if it's something as simple as a coupon/discount.
• Immediate or Near Immediate Gratification - Don't make your customers wait. Think about incentives that can be delivered electronically and if that's not doable, at least make it as fast as you can.
• Keep It Simple - This one speaks for itself. A good rule of thumb is thinking about your conjuctions - there should be one or fewer "and" "or" "but" in the description of your offer. If you need to brush up on your conjunctions, here's a link to the lyrics of the beloved Conjunction Junction.

Is Data Paralyzing or Inspiring You? (Depends on How You Define "Data")

I was reading a Fast Company’s article about Google and was reminded of Douglas Bowman’s blog post on the day he resigned from Google. “Data eventually become a crutch for every decision, paralyzing the company and preventing it from making any daring design decisions.”

Clearly what he's referring to is the left brain, linear, logical, sequential side of "data." And in that definition, I am in complete agreement. Data can tell you what worked and what didn’t and lead to incremental optimizations. If you’re lucky, it may even point you toward at a larger opportunity. But the key shortcoming is that data is backward looking – and with it comes limitations to moving forward boldly.

But I subscribe to a broader definition of "data" to encompass more than hard numbers. The real breakthroughs come when we embrace the squishy, messy, right-brain aspect of data gathering -- beyond the 1's and 0's. That's where you can really get beyond the “what” and into the “why.” There's no spreadsheet or algorithm for it. Messy means getting out there and talking to your customers and ideally following them around in their daily lives to get a deeper understanding of what delights and amuses as well as what frustrates and frightens them.

It's not an either/or decision, and it's not about villanizing the quant and to glorify the qual (or vice versa). I embrace them both equally. It depends on what you're solving for. But when it comes to finding the game changers, the only way to go is to roll up your sleeves and get your hands dirty.

The Real Problem with Facebook Advertising: Extreme Engagement

What do you do when you go on Facebook? You're probably checking out everyone else's status updates, getting in some FarmVille playtime, liking or commenting on a post, chatting with a friend, writing a clever update for your own profile, watching a video, or maybe even tracking down an old friend. Facebook is a virtual amusement park with no shortage of options. It's no wonder we spend an average of seven hours a month on the site.

In the midst of this pandemonium is the lone voice of your sponsored ad, app or brand page. Guess who wins?

The real problem for marketers is that unequivocally all-consuming, immersive Facebook experience. The issue isn't exclusive to Facebook, however. It's any media placement where the site you choose turns out to be your biggest competitor. In other words, reach doesn't equal impact. 

Too much focus on reaching the 'right person'
We've all been collectively oohing and aahing over the cool (or creepy) technology that promises to find our target consumer wherever he or she roams. There's no shortage of companies with proprietary algorithms and models at the ready to help you find her (and, in turn, further ruffle the feathers of the privacy police, but that's for another post). In this scenario, the Facebooks of the media world will always turn up on top, because that's where everyone is. 

But by only focusing on reaching the "right person," you're underestimating the more qualitative and definitely more hairy problems of the "right message" and the "right time."

It's a matter of context
Of this marketing trifecta, the least talked about is the right time. Unlike the right person and right message aspects of the equation, this is the one where marketers have the least amount of control. It can turn into your biggest enemy. 

The core issue is the inverse correlation between immersiveness of an experience and receptiveness to marketing messages. This finding has been confirmed across all media types, including television, websites and print. 

One of the most interesting studies on the topic was related to Super Bowl advertising. The researchers compared ad recall among three groups: those supporting the winning team; those supporting the losing team; and those who didn't have a favorite team. It turned out that ad recall was highest for those who were neutral and not emotionally involved in the game. It didn't matter if your team was winning or losing, the fact that you had a team meant you were focused on the game and not the ads. However, those who were less immersed in the game were willing to listen to your pitch. 

Sure, you can fish where the fish are, but there are no guarantees they'll bite. So what's a marketer to do?

Steer clear of competitors for mind share
Marketers don't typically think of media placement as a form of competition. The rule of thumb had been the more engaging the site the better, when in fact the reverse is true. It's counterintuitive, but as the Super Bowl example illustrates, you want your audience involved, but not too involved. 

Your audience can be focused on a particular task, so long as the task isn't all consuming. For example, if they're quickly checking on the weather or a sports score — these are in-and-out activities — you can be there as they check out. I've seen a lot of success with campaigns on these quick-reference sites in the past. 

Thinking beyond targeting and messaging
So, there you are with your exquisitely crafted message and flawlessly calculated targeting, but are you taking into account what the consumer is doing, thinking and feeling at that moment?

The problem of immersion isn't limited to Facebook. It just happens to be the perfect embodiment of extreme engagement. The same issues would hold true for other high-involvement sites and channels such as video, in-game and mobile. Ultimately, this is all about knowing your audience. One man's diversion is another's obsession.

Originally published by eM+C

LivingSocial's Amazon Promotion - Deal of the Century?

LivingSocial made big news with its $20 Amazon gift card for $10. The dust has now settled and the numbers are in. 1.4 million cards and LivingSocial's best sales day ever. The promo definitely garnered a ton of press attention, social media buzz and a lot of new registered customers. Clearly, customers made out well - but was this a deal for LivingSocial?

Let's say they paid Amazon $5 for each card (Amazon has already invested $175 million in the site, so what's another $7 million among friends, right)? And we'll optimistically say that 70% of those 1.4 million sales are to brand new unique customers. That's just over $7 for a new customer - not too shabby when you look at the straight math.

Problem is, this is a tough act to follow. How can LivingSocial possibly sustain that level of interest and sales momentum? When you dangle a pretty sizable carrot like a 50% Amazon discount, you're acquiring customers that probably won't be too receptive to the standard fare of oxygen spas and Day-Long Ice Climbing and Mountaineering Trips (the latter is LivingSocial's day-after-Amazon deal).

There's a standard rule in direct marketing: "Retain as They Are Acquired." That is, the initial acquisition source or offer will be a strong predictor of what the customers will respond to (and expect) in the future. So will these customers ever buy again? Some will, my prediction is that most won't. Perhaps that $7 per customer isn't quite the deal it appears to be. 

Showdown of the Holiday Gadget Wish List: Man v. Marketer

The holiday shopping season is in full swing, and it’s make-or-break time for the hottest category this time of year — consumer electronics. As always, there will be no shortage of choices. Store aisles will be jam-packed with bright, shiny contenders, all competing for a place in your shopping cart.

I decided to field a survey to find out which gadgets will earn a much-coveted spot in all those stockings hung by the chimney with care. To put a twist on things, I wanted to compare the responses of average consumers versus marketing professionals. Survey respondents included 100 consumers randomly selected from a survey panel and 100 traditional and digital marketing peers.

Most coveted gadgets: the winners
Want to know what to get your favorite marketer this year? The iPad was the hands-down winner among marketers, chosen by one in five respondents. But the iPad isn’t getting the same amount of consumer love — it ranked seventh in a list of 10 items we asked about, with only 8 percent of consumers including it on their wish lists.

What’s on top of consumers’ lists? Flat-screen TVs rule. Maybe those savvy consumers smell a deal? Last year wasn't a banner year for TV sales, and the inventory glut is leading to heavy price reductions. According to CNN, the average price for a 32-inch LCD TV is just $374. Quite the bargain when compared inch-for-inch against the 9.7-inch iPad screen.

Life beyond Android and iPhone: the surprises
With all the talk about convergence devices that do it all, I didn't expect to see a decidedly old-school, not-so-one-stop-shop entry in the top three of both the consumer and marketer list — digital cameras. It’s a reminder that there’s still a lot of demand for specialized, single-use devices.

When it comes to mobile, the iPhone was the most mentioned smartphone for both marketers and consumers, fueled by its heavily anticipated arrival at Verizon. Android phones were rock bottom on the list among nonmarketers, with a mere 2 percent hoping for one this holiday. Smartphones (non-Android or iPhone) made a surprisingly strong showing among consumers, tying for third place with the iPhone. In the iPhone- and Android-obsessed world of marketers, it’s easy to forget that there's a lot of other options out there.

We're not our target customers: the not so surprising
Over 90 percent of the marketers surveyed labeled one or more of the items they were asked about as a must-have for their holiday wish lists. One in 10 even included additional candidates, including GoogleTV, Xbox with Kinect, Roku and the latest iPod. But the average consumer is definitely less smitten by gizmos and gadgets — over 50 percent said none of the items we asked about will make it onto their holiday wish lists.

The reluctance among consumers to indulge in pricey electronic goodies is consistent with the grim predictions of 2010 holiday spending, such as the recent finding from the NPD Group that “consumers who were considering just cutting back on [consumer electronics] purchases are now not planning to buy anything at all.”

Holiday 2010: the takeaways
While 2011 is shaping up to be the year the iPhone hits mass adoption, there are a lot of other smartphone choices out there. This doesn’t make things any easier for app-slinging marketers, who will have to prioritize the platforms they want to serve.

iPad envy aside, there’s a lot in common between marketers and consumers. For now, most of us are favoring the familiar over the newer-to-market indulgences. Emerging technologies such as 3-D TVs, tablets and e-readers may dominate headlines, but it’s the established devices such as digital cameras and flat-screen TVs that will continue to capture wallet share this holiday season. 

As for my list, I'm hoping to get something (or someone) to help carry around all the gadgets I already own. What’s on your wish list?

 

Originally published by eM&C