Manhattan Marketing Maven

Synching Retail Channels : The Hard-to-Do Imperative

Sam Walton supposedly said "You have to be able to sell a customer any way, any where and any time they want to buy." According to a new study by the DMA, its easier said than done.

This simple reasonable injunction is now in the province of multi-channel integration, the official topic of the aforementioned study whose conclusion is ... retailers need to work harder at it.

And while retailers are madly embracing all digital forms of commerce and marketing, spending as much as $172 billion on direct marketing in 2007, they haven't really nailed the process of going to market with a single consistent brand or promotional voice across channels. Nor are they particularly able to track, measure and learn from customer behavior among and between the channels. Getting things in synch becomes particularly important as customers take the reins of retailing and as online-only retailers begin to play a more important role in the overall retail mix.

Websites, direct mail and e-mail are the triple threat for driving retail business and generate considerable customer data. Websites look like they are beginning to edge out brick and mortar stores as retail revenue generators. But optimizing the mix and parsing scare investment dollars is the on-going challenge.

According to the study, formally titled "Channel Integration and Benchmarks in the Retail Industry," retailers are least likely to embrace mobile media, probably because they lack the technology to optimize it and don't believe that pinging anybody's cell phone will bring them anything but grief. And while 8 out of 10 segment their customers based on demographics and 7 out of 10 look at purchase frequency and purchase details, only a third can aggregate all this data across channels to get a 360 degree picture of customer behavior, to discern cross-channel or sequential shopping patterns or to identify and super-serve their best customers.

This is the next holy grail for retailers since we all know the channels cross pollinate each other though there are no reliable rules of thumb to guide us in making smarter marketing plays. Nobody really knows which channel drives the others or which is the research medium and which is the purchase mechanism. The truth is that all three play different roles at different times for the same customers.

The absence of valid generalizations gets really interesting in larger organizations where each channel has its own budget or P&L so they use the data against each other to fight for turf, cash and the ultimate say-so. It also has a direct impact on our ability to zero-in on best customers to make them offers, to give them rewards, to keep them coming back or to convince them to refer friends and spend more.

In an ideal world, every brand communication would look, feel and communicate the same message across channels. The brand would approach promotions, sales, rewards and loyalty with enough consistency and design similarity to instantly cue customers to recognize their favorite brand and response accordingly. All the data would flow into a single system where it would be manipulated and analyzed by the biggest brainiacs who would reveal all the hidden shopping patterns and secrets that would allow us spend every penny wisely to drive 50:1 ROIs.

But that's the ideal world.

In the real world, where you sit determines your reaction to this study. If you are a senior manager, you roll you eyes and think "some day". If you are a software guy you crank up a pitch. If you're a database marketer think about divining the most insight out of imperfect information. And if you are a marketer or a merchant you structure enough tests to try to get directional ideas and cross tabulate whatever data you can to yield the poor man's version of channel integration.    

 

Want Fries With That?

McDonald's didn't invent incremental selling. But they nearly perfected it by training their cadre to utter the most profitable phrase in the English language and in so doing proved that up-selling and cross-selling can be achieved at scale.

The beauty of the phrase, and the effort behind it, lies in it's confluence of simplicity, intention, timing, and context. In 4 words an average employee can change everything. Allow me to deconstruct the process.

Timing. Mcdonald's asks in the moment; during that surge of desire and need that prompts the initial purchase. Hormones and flavor receptors are pre-emptively firing as the counter person offers gently to add to the merriment. Who can resist the promise of much more happiness for just a few more cents.

The tactic holds true for anyone. Ask when they have bought, are happy and eager to take delivery and are open to an incremental experience. It helps when the person delivering the first bunch of good news offers the second. You fed me and saved me from hunger and now you're adding another goodie to my plate. The combination of timing and casting are very hard to resist. 

Limit the Ask. The McDonald's pitch trades less than a buck for added food. The intention is to extend the experience and sell an incremental amount. Both are designed to keep you coming back and build long term brand loyalty. These baby steps keep customers relaxed because they don't trigger a negative response and they don't feel too pushy. The absolute and relative amount of the ask, in cash and in decision-power, are small and incremental. They ask for the next logical thing which doesn't multiply the cost, makes sense and is probably something you were thinking about anyway.

Don't try to ram a huge deal down someone's throat after you make a small deal. Connect the dots for your customer and anticipate what he might need subsequent to the goods or services you are currently delivering. It also helps not to switch-pitch the personnel. Have the one they love make the pitch.

Simplicity. Everyone gets it. Anyone can say it. Served up in context two beats after you make your buy, It has a tentative feel to it. McDonald's can short circuit any negative reaction because its an implied service not a real sales pitch and its easy to quickly step back from a negative response with a no-harm/no-foul attitude. And if you don't buy right now, it doesn't matter. 

The best sales happen easily, logically and clearly. Everyone knows what is offered, instantly perceives the values in-play and can react easily and simply. Structure your pitch in this context. Anything that needs a big set-up and a complex rationalization won't fly as an up-sell or a cross-sell. Also it has to be perceived as if it doesn't matter all that much to the seller. No desperate sales get made this way.

Stand-Up for Yourself. Implicit in the phrase is the understanding that McDonald's has great food that  customers appreciate along with great service, prices and the brand. The ask leverages the brand equity and the brand experience in a way that is seamless.

Don't beg for the next deal. Drive it logically out of the value you've provided and the relationship you've built. Don't be bashful or reticent to ask happy customers to buy more of the good stuff you are providing and they need.      

Superbowl Ads Are an Xray of Advertising

When the Superbowl -- our annual national TV advertising festival -- interrupted by intermittent football segments kicks off on Fox during the afternoon of Sunday February 3rd, we will be treated to a x-ray of advertising. The principal trends and tactics that advertisers and marketers grapple with will be played out in the how and when these commercial messages are shapred and presented.

A showcase for either creativity or crassness, thirty-second Superbowl spots reach the last remaining super-sized audience, 92 million viewers in 2007. The ad time in the game sells out early and usually generates as much heat, light and noise as the ultimate pigskin contest wrapped around the ads. With individual spots priced around $ 3 million each, its a high stakes game for brands seeking visibility, breakthrough awareness, rehabilitation or exposure to new audiences.

Traditionally dominated by male-oriented products like beer or cars, the Superbowl has become a platform for a wide range of brands to strut their stuff. Budweiser, with 9 spots and an investment of 18 million dollars, is, as usual, the lead advertiser. Cars.com, Audi, Hyundai are in along with car-related products from Bridgestone Tires and Nationwide Insurance. Under Armour will break its first ever spot this year and Victoria Secret will be back, it's first Superbowl ad exposure since 1999.   

And yet for all the hype, these spots and the strategies behind them offer a clear x-ray of the state of advertising. Consider these issues.

Concentration vs Fragmentation. With 90+ million viewers you can reach almost a third of the US population at one time, or at least those not out of the room or away from the screen getting munchies or using the bathroom. And yet there is rarely a mass response to ads. In fact, the number, intensity and variations of responses make watching the ads and talking about them fun.

This mirrors the perennial media debate between those seeking and favoring the efficiency of mass exposure (and yearning for the good old days when network TV dominated America) and those seeking to identify and target discrete segments. Its a Yin and Yang tension that will never really be resolved but offers us grist for a million great conversations.

Creativity. The Superbowl legitimizes advertising as art and creates a competition for the funniest, most touching and most memorable execution of a movie in thirty seconds. Careers have been made or broken on these spots and a few memes have entered the popular culture as a result. The Superbowl is part learning lab, part focus group that by inference gauges the mood of the majority.

It also gives us a face-off between creative approaches as animations, celebrity spokespeople, guys in cows suits and ethereal brand concepts compete with each other. In a good year, the choice of copy, talent, settings or spokespeople gets spiced up by some real or manufactured controversy about skin, language or politics.

Targeting. Do you go for young men, do you aim at the women who are semi-watching the game or do you use sex appeal to focus the men on the women? All these targeting approaches and more are played out in Superbowl advertising.

Spot placement is another element of targeting which seeks to match the message with the likely mood and attention span of millions during the course of a live and unpredictable event. The calculus revolves around picking your shot by placing your spot in a pod during the pre-game, first quarter, after the 2nd-half kick-off, at half-time or in the post-game show. The folks at Firebrand created a series of spots spoofing Kick-Off, Half-Time and Post-Game spots.

Placement is a function of price. Each time slot and each placement within each pod has a different price and is viewed differently; often based on the action on the field. Add to target selection, the choice of a straight pitch, the time-sensitive offer or the deal tactic.

Superbowl ads reveal the collective psyche and the full alchemy of advertising. They display our greatest hits, some of our greatest talent and all of our greatest anxieties. Tune in.

      

The Universal Marketer's Fantasy: Unleashing The Next Big Thing

Every marketer fantasizes about initiating the next hot thing. Much of our experimentation with MySpace and Facebook and other social networks are attempts to unleash the next viral wave that creates  overnight worldwide awareness, excitement, sensation and demand.

As a fantasy its a good one -- meaty, excruciatingly difficult to do with an outside shot at success --  since no one has really defined or benchmarked how a single meme spreads exponentially and engulfs the mainstream like a virus or a forest fire. In fact many of us suspect that the big hits we've witnessed were random lucky events, like a lightening strike, rather than planned campaigns following a formula for success. The randomness of the intermittent and disproportionate smash hit makes the fantasy richer and stokes our jealousy for those who actually bring the world something new or different.

Yet according to Clive Thompson, writing in the February issue of Fast Company, the "Tipping Point" notion authored by Malcom Gladwell and extended to online and social network marketing to Influentials by Ed Keller, currently President of the Word of Mouth Marketing Association, and Jon Berry is being directly and seriously challenged by statistical analysis done by Duncan Watts, a former Columbia University sociologist now consulting with Yahoo. The debate and the reportage of the debate challenges some of the new orthodoxy among web marketers in search of the next big score.

Gladwell's theory is that when enough cool people embrace an idea it reaches the "tipping point" and gushes into the mainstream like a virus. Keller and Barry built on this idea and argue that if you zero in on Influentials-- well networked opinion-leaders and taste-makers -- and sell them first or capture their imaginations they'll spread the word for you faster and wider than you could do yourself.

Watts mapped influential networks to try to understand how these people operate and what exactly they do to persuade others. Having looked across campaigns, he argues its all random. That while Influentials may extend an idea or a campaign farther and faster than the average audience, they have no special or incremental role as initiators of a new idea.

Instead, on the basis of a bunch of experiments, he thinks that its not who starts or who blesses a trend, but rather its the receptivity of the network or the audience to the idea that creates a significant take off. His analogy is the forest fire. When the forest is very dry, when the winds are right in direction and velocity, when the fire starts in the right place and when fire fighting efforts are slow, stymied or ineffective, a small fire becomes an inferno. In other cases it burns itself out quickly. The critical element is not the transmission system, its the underlying conditions that prepare the ground. In case of humans, community sensibilities, readiness, genuine needs and openness to a new thing accelerates awareness, acceptance and pass-along.

His experimental data suggests that these are random events with no discernible pattern or reproducible formulas. It happens when it happens. There are no identified ways to artificially make it happen. "Its less a matter of finding the perfect hipster to infect and more a matter of gauging the public's mood,...The network effects in society are too complex - too weird and unpredictable - to work that way. If it were just a matter of tipping the crucial first adapters, why can't most companies do it reliably?" Watts is quoted as saying.

This shifts the marketers burden away from carefully targeting the network of influentials in favor of better understanding and tapping into the consciousness of the moment. This validates the gut hunch theory that has sustained the careers of a zillion traditional ad guys who are fighting a rear guard action against the data wonks of online marketing who are successfully eating their lunch. And it will kick the wind out of PR guys pitching corporations to give endless amounts of swag to Hollywood starlets in the hope of prompting global monkey-see/monkey-do buying sprees.

The 64 million dollar question is: Can you reproduce a hot trend? Can a marketer devise a series of activities to create, ignite and accelerate massive uptake of an idea, product or service? 

Watts thinks so and is working and consulting with clients for big bucks on a formula that looks n awful lot like mass advertising + targeted segments + viral idea = campaign. Not exactly the marketing equivalent of Einstein"s Theory of Relativity. Much more like the combination of tactics everyone is grappling with.

And yet this debate is comforting in an odd way. We still have our fantasy and our holy grail. These contentious theorists are exposing different facets of a problem we can all continue to try to solve in the fervent hope of accidentally starting a tidal wave that turns into the next big thing.

 

CMOs Whining & Dying

Reading the Marketing Outlook for 2008 from the CMO Council convinces me that they ought to change the organization's name to the Dead Men Walking Society.

The report based on a survey of 825 senior marketers, half from businesses grossing $100 million or less and half from bigger firms with revenues up to and beyond $10 billion, reveals that 54% of CMOs aren't measuring the impact or ROI of their marketing spend and 53% see quantifying and measuring the value of marketing programs as a "key challenge" yet 79% think they are making significant or reasonable progress in improving the perceived value of the marketing function.

Who are these guys kidding?

They don't track what they do and can't show how it impacts the business but somehow management is convinced that marketing is worth the strum, drang and cash? I wanna work where this kind of thinking flies!

The CMOs surveyed seem to be cryogenically frozen in 1999 trying to figure out how to structure their organizations, improve marketing accountability, figure out how the web works and allocate marketing resources efficiently. And they are investing but still bedeviled by e-mail campaign management, SEM, CRM, dashboards and working closer with the sales department. It's embarrassing how little progress top marketers are making against these issues.

And through it all 45% percent expect to ace their agency, as if this is the silver bullet. I get the impression that the survey respondents, those guys with a job tenure of 22 months or less, think they are suppose to posture better rather than actually contribute something to the bottom line. They report being frustrated by organizational culture, senior management mindsets and having more to do with less in an environment where 75 percent of all marketing budgets will vary less than 5 percent from 2007.

The plight and problems of marketers are perpetuated because they mostly talk to themselves. The top reported trusted sources for insight, information and management practices are their peers; the same clueless guys who are dazed, confused and probably on the way out. Nobody seems to rise to the creative challenge of spending less better, to getting fewer players to make a bigger impact sooner or to using digital technology to test-learn-measure and tweak the messaging and the media. Even fewer seem to want to mess with the politics and the plumbing which basically rule every enterprise.

Bottom line -- don't expect any new tricks or any startling results from CMOs anytime soon. 

The Promise of Help Vs Genuine Help

The promise of an answer is much less engaging than an actual answer. When you contact a web site publisher or an online merchant, the quick no-answer answer leaves me feeling unhappy and unloved. I don't want a vague pledge of interest, especially if I've taken the time and made the effort to enroll and use the service or even more paid for the privilege of doing so.

I sent Plaxo an e-mail. And got an auto-generated promise of help in 2 business days. . But not before they interrupted the e-mail sending process to offer FAQs and to generally try to dissuade me from actually contacting them. When I read the support e-mail it indicated that if I was a premium user and presumably a premium payer, I'd get attention in just 24 hours, I guess it's good that I don't need Plaxo desperately because I could be dead and gone in 24 hours or 2 business days.

You have to wonder what they were thinking when setting up this CRM approach.

Do they have so much traffic and are they so busy that every agent is engaged to the max thereby delaying the response to a simple question by 48 or more hours? With 2.5MM page views a day, according to Alexa, its doubtful.

Do they feel that what they offer is so valuable and vital that customers ought to be eager to wait for an extended response? It is a calendar and an address book basically, so probably not. Or have they just cheaped it out on systems and people and are hoping to mask this with some fast-acting prose? It's anyone's guess.

Effective customer service and support is about creating a psychological mindset conveyed through an interactive experience. It's about giving the customer a sense that you care about them and that you will take care of them. And frankly FAQs and extensive online help centers don't get a brand across that psychological threshold.

Here's the ugly truth: To make people feel genuinely taken care of you have to do the work for them not just point them to the answers.

FAQs are just one element. If you invite customer interaction, the implication is you are ready, willing and able to provide it in whatever form customers want it. You have also signed up to deal with customers in their moment of need. That's why smart players offer 800 numbers online, IM capabilities and even live chat interactions to catch customers in that moment of need; that golden moment of angst and frustration -- that convoluted instant when interest, desire and confusion mingle with each other. That moment frequently decides a brand's fate. In a nanosecond you win or lose brand loyalty and advocacy or win or lose repeat business and referrals.

With loyalty and life-time value at stake can anyone afford to wait 2 business days to respond?