Online consumers are driving changes in off-line purchase behavior

March 24, 2008

“…The sluggish economy is punctuating a cultural shift enabled by wired consumers accustomed to comparing prices and bargaining online, said Nancy F. Koehn, a retail historian at the Harvard Business School… Call it the eBay phenomenon…“

This quote is from an excellent article in the 3/23/08 New York Times. The author, Matt Richtell, sites quotes from spokes people and shoppers of stores including Home Depot, Ralph Lauren, Best Buy, and Circuit City. As well as analysts from Wachovia and Pacific Crest Securities.

Highlighted is the point that this is revolutionary as consumers shifted away from haggling as a method of conducting purchases back in the 1850’s. 

This is a great example of the consumer empowerment theme of this blog. In the ”About” section I described it further… driven by the adoption of technology and acquisition of the “perfect knowledge” typically held by the brand marketer, consumers have turned the hand of marketing teams for leading retailers. The NYT author described it as “…Savvy consumers, empowered by the Internet and encouraged by a slowing economy…”

It’s interesting to read examples of how consumers executed two key strategies:

  1. Online research -> developing a target product selection and then research prices. These prices were then used as ammo to drive sales people on the retail floor to lower their prices.
  2. Play “good cop / bad cop” with sales people.

In the end, consumers and their changing habits have changed the course for their relationship with selected brands. In this case, lowering prices.

Love to hear your thoughts -

Mark

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With every season… turn, turn, turn

March 18, 2008

A marketers’ world has typically changed with the turn of generations. However, the past 10 years have produced a chasm of change that have left many marketers reeling in their attempt to adapt.

Early on in the Internet era, people used to joke about “Internet years”, implying that time moved even faster than dog years.

The issue at hand is that online marketers built organizational structures and strategy that were built upon a premise that did not include learned marketing principle, even beyond the “dot bomb” days. Rather than focusing on targeting consumers and their needs, they focused on the optimization and development of technology or communication channels, such as email, banner ads or website.

Today, most online marketers are trying to manage systems that are not designed to address the problems of the day. The issue at hand is a massive shift in the needs and intellect of a consuming public, the developed systems view consumers as a more or less homogeneous group, leveraging the relationship with each across numerous silos. None of which can effectively leverage the learning of the other, or extend the relationship with customers beyond individual transactions.

I have to imagine that any CMO or CEO reading this blog entry would be hard pressed to support their current organizational, technology or budgetary systems as being sufficient. Hind sight is almost always 20/20. However, I wouldn’t necessarily suggest that the solution be a completely disruptive innovation.

As with most things in life, the 80/20 rule is a good approach to leading change. Start with the areas of your business that are most valuable from the perspective of the end recipient, the prospect or customer. Decompose your processes and high-value communication threads, across communication channels, and find the appropriate opportunities to continue a dialog. The solution doesn’t need to be end-to-end, especially from the beginning. Focus on the areas that are high-value and build your approach over time.

In the end, the leading issue to solve is strategic approach. Most companies have an organizational investment in channel based communications, while the solution lies in consumer based needs - acquisition, retention/up-sell.

I’d love to hear your thoughts -

Mark

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Are the problems we face really that new?

March 17, 2008

consumer behaviorI once met an old man who was the first grocery store owner to use shopping carts, in what is now a rather large metropolitan market. This conversation has stuck in my mind for many years because this person was a true revolutionary.

Today, we take his dilemma for granted, but in that time shoppers were accustomed to handing a list to a shopkeeper and for that person to collect the items. From the moment in time where he brought shopping carts in to the store and opened up the aisles for others to browse in, he both opened up a whole new chapter in consumer oriented marketing and he had to figure out how to entice his shoppers to do what might have been considered work for others to do. It was a huge hurdle to overcome.

In many regards, he faced more difficult problems than what we faced in the genesis of online retail adoption and development of marketing principles. He didn’t have to figure out how to get consumers to use a virtual shopping cart rather than a physical one, he had to figure out how to get consumers to actually learn to shop.

It’s precisely these types of stories we need to remember when we feel we don’t have guiding innovators, or that we have insurmountable problems. In fact, many of the principles we use today in online marketing are directly parallel to what these same retail grocers and consumer packaged goods manufacturers faced well over 60 years ago: how do we differentiate a product, who is the target audience, and how do we affect or aid in the transition of consumer behavior?

I’d love to hear your thoughts -

Mark

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The changing consumer -> the adoption of technology -> the changing role of a marketer

March 11, 2008

consumer marketing evolutionRecently I read that a kid entering middle school today has been subject to more information than a scholar of the late 19th century. Information and commercial communications are bombarding consumers at an unheard of rate, and it’s only escalating.

The adoption of technology, specifically the Internet, has empowered consumers who are now able to amass the “perfect knowledge” previously thought to be held by brand marketers. In the past, these marketers would gather this information and then sift it through their “brand filter” to distill the appropriate message, shining a kind light on their offering for their target audience. Today, these same consumers have access to the “unfiltered” information and a marketers job is forever changed.

Consumers now have the ability to transcend traditional boundaries of geography, time, and communication channel to gather their own impression of a marketers offering. This empowerment has increased their savvy, creating less patient consumers who simply expect more from their trusted brands.

This consumer transition can be viewed as a parallel relationship between the adoption of technology and both the increase of visitor knowledge and the inpatients it has rendered to consumers. Through this transition, consumer reaction to and consumption of traditional communications has dropped. The really unfortunate thing is that marketers have reacted to this by doing more of what was becoming less efficient, trying to beat their message into the minds of their target audience. In turn, this increase in the communications drum beat is further deafening the ear of consumers. Making the whole issue even worse.

I’d love to hear your thoughts -

Mark

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Customer voice… or is it a scream?

March 11, 2008

Social marketing, customer voiceMuch has been written about the groundswell of participation in social commerce initiatives. This technology has become a new channel of communication for many organizations, providing a great way for their consumers to contribute content for their peers consideration and a great way for marketers to hear how well they’re doing in their relationship with their customers.

I have to ask the question… is this really what consumers see this functionality as? I don’t think so. My belief is that consumer participation in social commerce initiatives is more an indicator of their core need to see relevant content. They feel so strongly about this need that they’re willing to write the damn content themselves.

Years ago the web promised to be the relevant content that consumers were going to flock towards, yet to this point, most of the relevant content on the web has either been delivered via a self described need on the part of the consumer (i.e. search engines - enter a keyword, get relevant content), or consumer generated content (i.e. social commerce or networks). So, where have the marketers been in this equation? On the sidelines..social commerce, customer voice

Regardless of whether or not my point is accurate, the cat is out of the bag. Consumers have a ton of control over the success of marketing initiatives and marketers are left trying to figure out strategy in a new world of consumer empowerment.

Love to hear your thoughts -

Mark

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Personalization versus targeting

March 10, 2008

website personalization, dynamic targeting

I’ve read articles and blog replies where others try to distinguish between the terms personalization and targeting, referring to personalization as one-to-one and targeting as one-to-many. As a person who has actually created terms and pioneered strategy in this marketplace, I see the two as more or less synonymous with far fewer distinguishing dimensions than others see.

While trying to create a communications strategy for Kefta’s multi-channel personalization solutions, we determined early on that we wanted to distance ourselves from the failed software based personalization solutions of the late ’90s. They were an expensive, IT driven failure. The key failure was that they were too “heavy” a solution to ever get off of the ground. From a marketing strategy perspective, they were a failure because they relied upon users to self express differences before they could start targeting content, and they simply served a different message, as if that was supposed to be better than the original message.

Targeting became a term that was descriptive yet avoided a reference to the prior perceived failures of what was called personalization in the late ’90s. Using this learning as a guidepost, we landed on ”dynamic targeting”. Prior to our use of this term, little was used with reference to targeting and no one in the online marketing space had ever used the combined term “dynamic targeting”.

Today, few people use the term personalization as a description of a type of technology. It’s more frequently used as describing a type of experience, leveraging the term personal. Beyond that, personalization has been a dead term and trying to describe it beyond it’s prior history is futile.

Love to hear your thoughts -

 Mark

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Relevance, like beauty, is in the eye of the beholder

March 10, 2008

Behavioral decay, behavioral targeting

“Behavioral decay” is a term I’ve coined to describe the lifespan that behavioral data maintains from the perspective of the recipient, the end user. That is, consumer actions that are made today will likely be relevant tomorrow but less relevant over time, and at some point will become irrelevant. This is a concept similar to diminishing returns, in that the use of a lever becomes less valuable, in this case, over time.

Behavior, like beauty, is in the eye of the beholder. Those who conducted a specific behavior are the ones who will also judge its’ importance and act upon your consumer-centric programs, or not. They will remember the targeted behavior only for a period of time. The exact period of time and the rate of decay will depend upon many situation specific issues.

This is an important consideration when developing a consumer-centric marketing strategy. To understand the impact on your programs, develop measurement and analysis components that allow you to test the amount of time that behaviorally targeted messages hold as relevant for your customers. This will allow your team to optimize the program response, and ROI. This could be as easy as creating a report that groups actions based upon the number of days since the targeted behavior occured.

 Love to hear your thoughts -

 Mark

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E-Commerce News: E-Commerce: Enthroning the E-Shopper

March 6, 2008

In a recent article on E-Commerce news, Enthroning the E-Shopper, Paul Korzeniowski brought up some great points about the value of personalization in the e-commerce world. Specifically, he identifies the youthful state of the approach, its’ ability to increase customer loyalty, and he details several personalization opportunities and functionality. He summarizes the situation very well… “Building brand loyalty has become a struggle for retailers; however, personalization has the potential to help them to enhance customer allegiance and differentiate their products in highly competitive markets. Though in an early stage of evolution at the moment, customized shopping experiences are expected to become more common as the e-commerce market’s ongoing maturation continues.”

Etailers have historically been slow adopters of new technology, preferring to watch for success at competitors before dipping their toe in the water. Examining the evolution of dialog in this industry, just recently simple testing scenarios were all the rage and today we’re hearing this great dialog about targeting consumer needs… this is a huge shift in thought and a wonderful thing to see! In some regards, this is probably an evolution from consumer generated content, more than a shift from testing to personalization, regardless I love it!

One area I would like to elaborate upon is the forms of personalization he details:  from targeting online behaviors to physical goods. The point I would like to make is that these really shouldn’t be viewed as separate efforts, rather, a continuation of a strategy to learn more about prospects and customers and start servicing their needs. That is, if you’re going to manage a program for customization of physical goods, say jeans, why would you not augment that with a program to reinforce those expressed needs when a user comes back to a homepage or receives an email?

Using this example, when a consumer designs a personalized pair of jeans, how much more successful would the campaign be if the ensuing communications on the website, email, and direct mail offered a coordinated communications effort focused on: showing matching accessories and additional fabrics that fit the same genre of jean, then later, as the seasons change, offer different styles and fabric weights that are appropriate for the temperature.

Creating additional sophistication in this campaign, consider the efficiency a retailer could generate if they were to track the responses of this consumer, as they respond to the different communications channels. Over time, one could determine more than just the relevant message, but also, the preferred methods of communication.

It’s the same customer. They have the same needs regardless of product or communications channel.

Yes, there is a lifespan associated with behavioral learning, relevance decays rather quickly. These types of campaigns are most successful if the retailer can generate a response in the first few weeks. However, the reality is that the rate of decay is very specific to environmental variables associated with each use-case. This decay should be a part of the measurement and analysis process so one can optimize their program over time.

Wrapping up my point, focusing on single slice of your relationship with your customers and producing a personalized communication is a great start but must be seen as the first step of a larger program. Learning from consumers that cross your path, storing that data in a central data database where future programs can consume and contribute visitor level data, is the single largest key that a marketer can build into their strategy to increase relevance.

Personalization campaigns must transcend individual contact points - web pages, emails, banners, and even physical goods.

Love to hear your thoughts -

Mark

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