August 31, 2008
Online marketers typically segment customers for the purpose of analyzing conversion rates. The industry is too new to have evolved to a point where segmentation is used to predict the future on a widespread basis.
Catalog marketers segment customers to analyze performance of catalog mailings. Catalog marketers developed clever ways to segment customers in ways that allow them to derive additional intelligence. For instance, the concept of "current season" or "current quarter" segmentation schemes allow the marketer to measure the percentage of customers who purchased across each segment.
Those of us who practice Multichannel Forensics segment customers for the sole purpose of visualizing the future. Based on what customers did in the past, we want to see how our business will evolve over the next five years.
The Web Analytics community has the biggest opportunity to embrace Multichannel Forensics. We clearly need better visibility into how different website users are likely to evolve in the future. Going forward, we're likely to see more segmentation of online visitors using Multichannel Forensics. In particular, we'll segment Google visitors apart from other search engines and customers who visit the site on their own, measuring the long-term impact of Google on our business.
August 23, 2008
Most customers understand the difference between paid search and natural search, implying that the customer is using paid search for reasons different than the customer using natural search.
Customers can be segmented by the micro-channel they use (Google Paid Search, Yahoo! Paid Search, MSN Paid Search, Ask.com, etc.).
When search is viewed from the Multichannel Forensics standpoint, you often see that Google is in "Isolation Mode", while Yahoo! and MSN are in "Equilibrium Mode". In other words, the Google customer stays with Google, while the Yahoo! and MSN customer is willing to try all search engines.
Pay close attention to the long-term dynamics of this relationship, if you experience this phenomenon. If the Google customer is less valuable, long-term, and your MSN and Yahoo! customers are switching to Google, uh oh.
Our focus will continue to shift away from traditional direct marketing, to the relationships exhibited by online micro-channels. Our databases will be able to store complex micro-channel interactions across time, allowing us to see these trends.
July 07, 2008
Now it is time to complement the veritable plethora of information provided by Web Analytics with Multichannel Forensics.
Most online marketers generate considerable sales from customers referred by Google, Yahoo!, and MSN searches.
Now let's consider future behavior. In other words, does the Google purchaser purchase again after conducting a search using Google? Does she purchase again because she becomes loyal to your website, visiting it frequently? Does she purchase again because of your catalog marketing activities? Does the MSN purchaser stay loyal to the MSN micro-channel, or does she switch to Google?
Multichannel Forensics provide answers to all of those questions.
Often, Multichannel Forensics suggest that Google is a unique micro-channel, separate from your e-commerce channel. My projects routinely indicate that Google customers have comparable future value, compared with Yahoo! or MSN customers. But subsequent behavior is fundamentally different! This means downstream marketing activities can be executed differently for the Google shopper than the MSN or Yahoo! shopper.
The Yahoo! and MSN shopper are occasionally less loyal to their portal than are Google shoppers. Loyalty to your brand may be similar, but you may find these customers elsewhere on the internet in the future, whereas the Google shopper may continue to be loyal to Google.
Results across brands are frequently unique, so it is important that you give Multichannel Forensics a try, considering each online marketing vehicle as a unique micro-channel.
October 29, 2007
Fast forward to 2015, when we'll read an article that goes something like this:
NEW RESEARCH INDICATES THAT E-COMMERCE AND HOLOGRAM MARKETING WORK TOGETHER TO FACILITATE THE OPTIMAL CUSTOMER MULTICHANNEL EXPERIENCE
October 29, 2015: A new study, commissioned by Google, Yahoo!, Shop.org, Marketing Sherpa, Forrester Research, E-Tailer and Internet Retailer indicates that "multichannel customers", customers who shop via e-mail marketing, paid search marketing, website research, social media, e-commerce and hologram marketing, are five times more valuable than customers shopping via just the hologram marketing channel.
"These results validate what we've been preaching to clients since the early days of hologram marketing ... you simply cannot dive headfirst into hologram marketing without realizing that the customer demands a multichannel experience." stated Leonard Thigginsworth, President of Shop.org, the venerable e-commerce advocacy firm. "Firms that fail to tightly integrate the world of e-commerce with the benefits of hologram marketing are unlikely to thrive in this hyper competitive marketplace. Furthermore, the suggestion that today's experienced online marketers will soon be standing in soup lines is simply premature. Online marketing skills are essential in this highly complicated age of hologram marketing." concluded Thigginsworth.
The study indicated that 61% of customers were "very likely", "likely", or "somewhat likely" to use old fashioned tools like Google and Yahoo! to search for products and services. These customers indicated that they spent 5.3 times as much money on hologram marketing as did customers who abandoned e-commerce in favor of hologram marketing technology from "Holo", the San Jose based brand that utterly disrupted e-commerce in 2013 with innovative "personal holograms" that manage everyday consumer tasks via simple voice commands.
39% of survey respondents said that they were "very likely", "likely", or "somewhat likely" to use promotional e-mail campaigns to facilitate searches on Google or Yahoo!, searches that resulted in customers researching products and services on old-fashioned e-commerce websites, before ultimately giving purchase instructions to their personal hologram.
Darren Manning, President of Internet Retailer, believes these results validate the need for a holistic multichannel customer shopping experience. "We all know that late at night, shoppers wearing pajamas, sitting in front of the fireplace, love to hold their notebook computers on their lap, reading promotional e-mail campaigns and researching products and services in the friendly, safe and encrypted blanket known as e-commerce. This behavior simply isn't going to change because a startup company creates a personal hologram who does menial tasks and chores for you." stated Mr. Manning.
"In addition, do you trust handing over your credit card number or thumbprint to a hologram? I don't! I trust the encrypted environment offered by e-commerce." added Mr. Manning.
The study is good news for Google, a beleaguered old-school brand who lost a third of their search market share to Holo during the past thirty six months, resulting in an 80% drop in share price.
The study is also good news for online advocacy organization Shop.org, which is struggling to stay in business in this ultra-competitive marketplace. "We strongly believe that multichannel marketing is best experienced when customers use a combination of e-mail marketing, paid search, and e-commerce websites to research products and services. Traditional e-commerce-based research drives purchases via tools such as Holo. Research indicates that up to 80% of purchases via Holo are driven by e-mail marketing, paid search marketing, and e-commerce websites. Multichannel marketing, e-mail marketing, and paid search are here to stay. Take away e-commerce, and you take away the e-commerce potential of Holo" stated Ben Morrison, President of Shop.org.
Still, there are fundamental changes in customer behavior being exhibited by "Generation Z", 13-25 year olds who are children of the non-descript "Generation X" cohort of consumers. A recent study commissioned by Holo indicated that only 7% of these consumers subscribe to e-mail marketing programs, or use paid search.
"We believe that when Generation Z become full-fledged members of the "participation economy", (a phrase jointly coined by President Jeb Bush and Speaker of the House Michael Moore), they will appreciate and fully utilize the myriad of benefits offered by a multichannel marketing experience that tightly integrates e-mail marketing, paid search, social media, e-commerce and hologram marketing." stated recently appointed Marketing Sherpa President Sarah Rogers.
September 04, 2007
Take any visitor who arrived at your website within the past thirty days following a paid/natural search via Google.
Store this fact as a Yes/No attribute on your database.
Now analyze your catalog, e-mail, online marketing, and retail marketing activities against your usual set of analysis segments --- overlaying the "Google" factor on each segment.
I promise you will learn something about your customers, and your marketing activities, that you didn't previously know.
Go ahead and expand upon this idea using other referring URLs identified in your clickstream data. Again, I promise you'll learn something actionable about your customers you didn't previously know.
Some folks are really doing sophisticated stuff with this information. We can all benefit by starting with such a simple attribute, a yes/no indicator, and then work toward complexity from there.
July 15, 2007
Let's use a parable to describe the situation we now face.
Pretend you are Eddie Bauer. You have a store in a favorable mall. Throughout the history of your business, you teamed up with the mall developer and your competitors to create an experience that was hopefully favorable to your customer. You marketed to your customers. Via your 'brand proposition', you built a loyal customer base that drove your sales increases, and accounted for your profitability.
Then one day a person set up an information booth at the entrance to the mall. This person categorized information about every retailer in the mall, including the items being sold in each store, the price of the items being sold, and any discounts/promotions that are available. If customers were displeased with their experience, the information booth documented the complaints.
The information booth never forced itself on anybody. It created a simple little sign that said 'Free Information'.
Within a year or two of setting up the booth, one out of every five visitors to the mall stopped at the booth for assistance. Visitors were free to ask any question. The information booth freely gave answers to visitors. The information booth became amazingly efficient at answering all questions, no matter how long the line of visitors in front of the information booth.
The retailers in the mall were fascinated by this information booth. Seeing the potential power of the information booth steering new customers to each store, they began to give varying sums of money to the information booth. In exchange, the information booth agreed to prioritize certain bits of information favorable to each retailer. The information booth would not tell any of the retailers how much money each retailer spent. The information booth would not tell any of the retailers how it decides which bits of favorable information were prioritized over other bits of favorable information. Retailers would have to stand next to the information booth, and physically watch how visitors interacted with the information booth.
Soon, each retailer realized it had to pay this fee to the information booth. The retailer had no choice. If it did not pay this fee, then its own customers could defect to other stores in the mall, because the information booth would steer them away from the retailer not paying the fee.
Visitors to the mall realized that they were not getting unbiased information from the information booth. Seeking to help each individual visitor, the information booth subdivided into two mini-booths. One mini-booth had free information, the other mini-booth essentially had brochures of information from the retailers in the mall, with those brochures coming from retailers paying the most money on the top of the pile. Few visitors wanted to wade through the piles in either mini-booth.
Before long, the retailers figured out that it would be really nice to be included in the mini-booth that offered free information. The retailers hired special individuals to figure out how the information booth prioritized free information. Once these special individuals learned how the information booth prioritized free information, they handled day-to-day prioritization for the retailer. These special individuals stayed on top of all the changes that the information booth utilized to rank piles of information.
Eventually, the retailers in the mall figured out that they were no longer driving significant sales increases. Eventually, the competitive advantage generated early in the relationship with the information booth was offset, because every retailer paid the information booth to prioritize information. Big retailers paid large sums of money to compete in the paid mini-booth. Small retailers paid the 'special individuals' enough money to compete in the free mini-booth.
'Back in the day', retailers paid money to drive customers to the mall parking lot. Once the customer entered the mall, each retailer competed for customer loyalty.
Today, retailers pay money to drive customers to the mall parking lot. Then, retailers pay the information booth or special individuals a sum of money to enter the mall. Once the customer enters the mall, the customer has a wireless connection to the information booth, a wireless connection that further directs the customer toward the retailer that best leverages the dynamics of the information booth.
This parable illustrates the complex, necessary, and costly dance that multichannel retail will (in my opinion) partake in with Google over the next decade. When all multichannel retailers figure out how to work with Google, figure out how to optimize their website for natural search, or pay a sufficient fee for paid search, any competitive advantage will be lost. At that time, Google has simply figured out a way to extract a portion of the profit multichannel retailers used to generate.
It will be very exciting to see how we as multichannel retailers manage this evolving process. Will we further invite Google into our businesses by giving them full access to our purchase transactions (Google Checkout) and our inventory systems (Item Availability And Keyword Targeting)? Or will our profit and loss statements become challenged, causing us to identify new platforms for enabling customer search? If we take that path, will the customer come with us?
March 25, 2007
Topic #1 = Colliding Forces. There was a lot of discussion about the USPS increase, set for May 14. For many smaller online and catalog businesses, this results in an approximate 25% increase in postage. This force will cause many small businesses to reduce circulation, especially among marginal housefile and prospect names. This force will eventually collide with the inevitability of online marketing. Customers under the age of forty-five are shifting their behavior away from traditional media (television, radio, catalogs too) to online media. The colliding force of the USPS increases and customer transfer from traditional media to online media will require a change in mindset and skillset among those in attendance.
Topic #2 = Allocation Of Advertising Dollars. Those in attendance are frustrated with our new marketing world. We have more metrics than ever to measure performance with. Almost none of the metrics are relevant in telling the overall story about what caused a customer to purchase something. Ten years ago, we argued about how to allocate those pesky fifteen percent of orders that came into the telephone channel without a valid source code. Today, we realize we have no idea how to properly allocate orders, when a combination of three catalogs, six e-mails, and two Google searches and one price comparison on mySimon truly caused the customer to order. Seriously, how do you allocate this order across these twelve advertising vehicles? It was obvious that the attendees did not trust Abacus to do this for them, as some badgered the company during a presentation (I would say that Abacus has better thought leadership on this than most). This is going to have to become an organic field of experimentation --- I strongly advise non-competitive catalogers and online marketers to work together on knowledge exchange, in order to come up with allocation methods that make sense for our industry. Heck, give me a call, I'm very willing to help out on this topic!!!! Getting even more theoretical, some of the big companies are struggling with allocating orders, when not all catalog advertising produces incremental sales (i.e. a customer spends just as much online when receiving seven catalogs as when receiving ten catalogs). That's a really enjoyable, really theoretical project to tackle.
Topic #3 = Strategy: I saw this repeatedly at the conference. Attendees were asking so many questions about the first two topics that true business strategy was rarely, if ever, discussed. I heard several CEOs discuss the problem of having a unique merchandise assortment --- that as soon as a unique and creative product is created and marketed, folks like Target (and even small competitors) can create their own product, with equal quality, at a lower price. Since there aren't a whole bunch of new, original ideas just laying around out there, it makes "staying alive" very challenging for the smaller online/catalog business. This is one place where online marketing and catalog marketing can make a significant difference. E-commerce is a TERRIBLE storytelling platform. However, blogging and cataloging are BRILLIANT storytelling platforms. There is a lot of opportunity to morph the catalog into the primary storytelling vehicle, as a way to keep paper viable.
Topic #4 = What Happens When A Catalog No Longer Exists? This was the question I was asked the most, during the conference. Folks wanted to learn, in detail, what happens to the online channel, and to catalog customers, when paper is taken out of the mail. Having lived through the experience during the past three years at Nordstrom, I have a unique perspective on the topic. Obviously, I can't be liberal in my discussion of those events. That being said, folks were VERY interested in hearing what happened to employees who spent their lives growing the catalog business at Nordstrom. Attendees wanted to know if these people were able to move into online marketing, if they were laid-off, if they became disgruntled and quit, or if they happily made the transition. Obviously, all of those things happened. It was the most fascinating and painful experience of my professional career, I wouldn't trade it for anything. The experience will allow me to help others as they go through this process.
Topic #5 = Google Is Getting Too Much Credit For Online Orders: This came up over and over again, and is closely tied to Topic #2. In an instance where a customer receives three catalogs, six e-mails, conducts two Google searches, and does one shopping comparison on mySimon, why should I pay Google twice for sending the traffic to my site? There's no doubt that Google and mySimon are partners in this process. However, the catalog/online marketer is now forced to pay for three catalogs, six e-mails, two paid searches and one shopping comparison affiliate commission. Ten years ago, three catalogs would have sufficed. In the next ten years, you will see an evolution in how Google and affiliates get paid. Search and affiliate marketers have taken advantage of the ignorance of all of us who have a catalog heritage. It's time to make things more equitable, and this can only begin to happen if non-competitive catalog/online marketers band together as a unified force.
Topic #6 = "Multichannel" Doesn't Mean Executing The Same Across All Channels: The vendor-speak and pundit-speak of the past eight years (all channels should execute the same) has been rejected by those actually practicing multichannel retail. While everybody generally agreed that items should be the same price across all channels, the attendees generally agreed that the strengths of each channel should be readily exploited. If one wants to do free shipping in an e-mail and not in catalog, then by all means, do so --- but be willing to honor the promotion in other channels. If one wants to keep clearance items off the internet, go right ahead! If a brand wants to have a different look and feel in advertising, creative execution, merchandise assortment, you name it, go right ahead and do so. There was an absolute groundswell of consensus on using each channel appropriately, so that the customer ultimately chooses our brand over somebody else's brand.
Topic #7 = E-Commerce Is "Cold", Catalog And Retail Are "Warm": This was the first time I've heard multiple people tell me that they are frustrated with the lack of warmth in E-Commerce websites. Many felt that the E-Commerce experience lacks humanity, is clumsy, and often breaks down from a technological standpoint. Marketers must take their most important marketing vehicle, a website, from the information technology folks that currently dictate what gets done in online development, and dictate when things get done. If you are a fan of the catalog advertising channel, this is your chance to create great creative execution via print --- your chance to show others how to market with warmth, and in the process, win over some of your marginal customers.
March 22, 2007
A couple of memorable things from the Small Cataloger Panel
- Jim Ruma, Ruma's Fruits and Gift Baskets ... "A lot of sales cover a lot of sins".
- Peggy Glenn, Firefighters Bookstore ... "Sales were down in 2001. You have to remember, I lost 345 firefighters / best friends on 9/11".
Industry legend Tim Litle hosted the lunch discussion, talking about the sixty year history of NEMOA. When we think about tricks for measuring things, we sometimes forget our history. Tim spoke of putting mail orders (the orders that came in envelopes in the 1970 and early 1980s, with a check inside the envelope) on a scale. The weight of the envelopes was directly correlated with the sales expected for that day. Wow.
Today's badge of honor goes to Laura Wojtalik of Abacus. She spoke about developments at Abacus surrounding the allocation of orders to the advertising path that led to a customer purchasing merchandise (frequently referred to as a 'Matchback Analysis').
Laura exhibited a tremendous amount of professionalism, following her presentation in front of a standing room only crowd (and the term is appropriate here, there wasn't a place to sit in the overcrowded room). Many in the audience peppered Laura with "what if" questions that were theoretical in nature, questions that don't necessarily have (and may never have) straightforward answers.
The audience had every right to ask the questions of Laura. It is not easy to measure the vehicle that drove the response when a customer received three catalogs and six e-mails in a twenty-one day period of time, and yet purchases following a search on Google on day twenty-two.
In today's world, Google gets paid for this --- yet online and catalog marketers are aware that the three catalogs and six e-mails played an equal or greater role in driving the order. I think the audience wanted a definitive answer on how to quantify this in a way that makes the audience feel comfortable. I don't think a definitive answer will ever happen, it is part of our new reality. When Laura gave honest and fair answers, some in the audience weren't thrilled.
This is yet another reason I harp on online businesses and catalogers getting in too deep with Google. I don't think Google is trying to be evil. But we pay them anyway for actions/purchases they didn't fully cause, because Google takes the credit for the last action in the "path to purchase", as coined by Coy Clement of Clement Direct.
March 17, 2007
Victoria's Secret is a gigantic multichannel mega-brand that runs free shipping promotions from time to time.
So when a customer uses Google to search for "Victoria's Secret Free Shipping", why doesn't Victoria's Secret appear in the top ten results, but The MineThatData Blog appears in the top five?
Does the customer who conducted this search want to know about the actual free shipping promotion, or my opinion about a free shipping promotion?
Multichannel CEOs and CMOs: Stop arguing about the USPS and proposed postage increases. Start challenging Google to provide relevant search results. Is Google your friend? Is Google actually a competitor of yours, one that is blocking traffic that should be going to your site? Or does Google make a lot of innocent mistakes, like the rest of us? I'd put my money on the latter --- I would also challenge you to start challenging Google the way you challenge the rest of your trusted vendors, folks you've worked with for decades.
UPDATE 2007.03.18: Here's a couple of searches that produce similar results:
Neiman Marcus Blog
March 12, 2007
Online marketing ends that wonderful fairy tale. Take paid search. You pay for a keyword. Customers click on your link, and hopefully purchase merchandise.
Who clicked on that link? Existing, loyal customers? Inactive customers? First time purchasers?
Multichannel retailers with good customer databases know the percentage of paid search respondents who are existing customers. The greater the percentage, the less effective paid search might be over time, as you simply pay Google to steer your existing customers back to you.
More important, however, is the loss of control over the growth of your online channel. With catalogs, you set aside a portion of your circulation for prospecting purposes. You strategically determine the long-term growth rate of your business. With search (especially with natural search), you don't control the long-term growth rate of your business. Google determines the long-term growth rate of your business.
Multichannel CEOs and CMOs: Your task for Tuesday morning is to sit down with your analytical folks, and learn if Google drives existing customers to your site, or new customers to your site. If Google is used by your existing customer base, you have the potential for long-term growth problems, as you may not have a healthy source of new customers to prospect to. If this is the case, today is a good time to start considering how you will find new customers.
March 11, 2007
One such trick is to create "grids" that explain how online and offline marketing drive sales. A "grid" is a simple 2x2 table that shows the impact of two factors on sales volume.
The tables at the end of this post illustrate how a multichannel retailer might use a "grid" to measure the combined influence of Google, and a Catalog mailing.
In this simplistic example, the multichannel retailer observes a positive impact on conversion rate due to catalog mailings, and a positive impact on conversion rate due to a customer referred via paid and natural search at Google.
Multichannel CEOs and CMOs: Our multichannel marketing environment has grown more complex. Industry pundits tout the advertising vehicle they support, for obvious reasons. It is important for your staff to demonstrate to you the combined impact of online and offline marketing activities. Start your week off on the right foot, by spending a few minutes with your analytical folks. See if they can produce the following table for you:
Here's the table:
|Number of Visitors|
|Catalog = Yes||Catalog = No|
|Google = Yes||25000||75000|
|Google = No||125000||350000|
|Catalog = Yes||Catalog = No|
|Google = Yes||5.3%||4.1%|
|Google = No||3.7%||1.4%|
|Average Order Size|
|Catalog = Yes||Catalog = No|
|Google = Yes||$150||$140|
|Google = No||$175||$160|
|Net Spend Per Visit|
|Catalog = Yes||Catalog = No|
|Google = Yes||$7.95||$5.74|
|Google = No||$6.48||$2.24|
|Catalog = Yes||Catalog = No|
|Google = Yes||$198,750||$430,500|
|Google = No||$809,375||$784,000|
|Percent Catalog Influenced||28.3%|
|Percent Google Influenced||45.4%|
February 19, 2007
Do this simple Google Search: Neiman Marcus Event Marketing
A person who is interested in this topic finds the Neiman Marcus website listed at the bottom of the first ten results. More problematic for Neiman Marcus is that my blog is listed sixth.
Of course, Neiman Marcus pays for their brand name, and is prominently listed in the paid search section of the page.
Multichannel CEOs and CMOs: If Kevin Hillstrom at The MineThatData Blog can outperform your megabrand on simple search terms like Neiman Marcus Event Marketing, you have problems you need to address:
- Take ownership of your brand. A good way to do this is to have staff write content that is search friendly, so that your customers will find your website when they search Google. Too much energy has been spent on e-commerce --- this energy caused us to not focus enough on owning our brand. The solution could be to follow Google's rules, and manipulate them for your own benefit.
- Is Google your friend or foe? In this case, Google's algorithm somehow finds me more relevant than the brand equity Neiman Marcus spent decades building. Google likes you if you follow their rules. What is your plan for addressing Google's partial ownership of your brand, especially going forward? What do you do when Google gets bigger, and more influential? Do you trust a partner that ranks The MineThatData Blog higher than your own website?
February 16, 2007
Is Wikipedia valuable? Did Google hijack half the value of the Wikipedia brand? Or did Google double the value of the Wikipedia brand?
I wouldn't be comfortable with a situation where half of my traffic came to me because of a gatekeeper who I didn't have any control over.
Thanks to the folks at Hitwise for the information.
By the way Google, thank you for driving a full one-third of my daily blog traffic, and about sixty percent of my RSS readers courtesy of Google Reader. Thank you for managing more than one hundred and fifty of my favorite RSS feeds. Thank you for being my primary search engine of preference. Nope, Google isn't controlling my life.
February 06, 2007
Toward the end of the survey, the person asking questions queried me regarding what the first thing is that I would purchase if I had an additional $100,000.
I told her, "A Highly Talented Analyst". Her response to my proclamation was "That's what every respondent says."
Somewhere between the strategy our leaders ask us to implement, and all the tactics we employ to drive sales and profit, we have a gaping pothole on the multichannel marketing turnpike that needs to be filled with an immediate infusion of talent.
We give Google responsibility for driving fifteen percent of our online business. In the process, we give all the intelligence of knowing why our business works to Google. We hire internal staff and vendors to be subject matter experts at manipulating Google.
Half of UK businesses fail to adequately measure the performance of their e-mail campaigns.
Maybe it's ok that we don't measure the ROI of e-mail campaigns, given that the performance of e-mail continues to free fall. As mentioned yesterday, we celebrate a medium where we sell something to one customer in five hundred. My father sold vacuum cleaners door-to-door in the 1960s. Do you think he would have celebrated one sale in five hundred visits?
In the past ten years, I observed at least three trends that resulted in a dearth of talent.
- Demographics: There are far fewer thirty to forty year old employees than there were ten years ago, as Gen-X moves into their prime earning years.
- Algorithms: We learned how to manage computers, or we learned how to manage businesses that managed technology. We spent less time understanding why our businesses worked. We spent more time managing the technology that made our businesses work. Now, we're a slave to technology. We need to be slaves to understanding why customers purchase from our businesses.
- Strategy vs. Tactics: The time we spend on tactics, especially those tactics that allow us to manage algorithms, takes away from the time we need to spend developing strategies. Take an honest look at the company you work for. Can you identify the three strategies your company is working on in 2007 --- and do you know which tactics you can use to make your strategy happen?
We need to spend time developing humans (not algorithms), teaching the skills humans need to be effective in a world dominated by real-time algorithms.
Where you can, spend more money developing your employees, and spend less money outsourcing your key functions to vendors. Obviously, there is a balance to be achieved in outsourcing key functions. Where possible, invest in your own people.
Use today to develop tomorrow's leaders.
January 28, 2007
Within a year, we had individuals focusing on internet marketing. If I remember correctly, we called the channel 'I-Media'.
Our Vice President of Marketing would kid our 'I-Media' person. "How many orders did we get yesterday, six or seven?" he would joke. The 'I-Media' person would just plug along, doing work that none of us really understood.
Six or seven orders a day became an annual total of $65,000,000 three years later. Vice Presidents paid attention to that number. These sales appeared to be largely 'free'. We didn't have to spend $10,000,000 marketing to the customer to get these sales ... at least on the surface, it didn't appear that way.
In 1999, I was Director of Circulation for a $500,000,000 catalog business that was stumbling along. Sales were no longer increasing, in fact, catalog demand was decreasing year-over-year, on a comp basis. But we had $65,000,000 of 'I-Media' demand. What's not to love about that? The P&L looked great. We earned nice bonuses.
By late 1999, the 'I-Media' channel was garnering attention at Eddie Bauer. The E-Mail and 'I-Media' folks were moved to another building, to focus on growing sales in the online channel. The rest of us were sequestered in our building, trying to figure out why we couldn't grow sales in the catalog channel anymore, in spite of the fact that 'customers buying from multiple channels are the best customers'. If those customers are the best customers, why do they keep spending less and less in catalog? Today, we know why. Back then, it was a bit of a mystery.
I don't know if these trends happened at other companies. What I do know is that, in many cases, the internet marketers and e-mail marketers developed their analytical tools, marketing strategies, and a network of co-workers/friends outside of the regular processes within our businesses.
While the rest of us tried to maintain a robust profit and loss statement by cutting costs, circulation and pages --- by shifting management of customer acquisition to businesses like Abacus, the online marketing folks were frequently off in their own world, building relationships with CheetahMail, Google, AOL, Yahoo! and MSN. They literally built their own businesses, independent of the core business.
Over the past five years, there has been an enormous focus on integrating the internet channel into the rest of the business, across all of our multichannel businesses. Our failure to integrate the business sooner caused us to spend too much time developing skills in our specific niche. We didn't build enough skills across functions or channels. Couple this fact with an ever-decreasing number of 30-40 year olds in our businesses, and we're now heading for talent trouble.
The only folks who tried, in some way, to integrate business units were merchandisers. Customers liked buying merchandise online, in catalogs, or in stores. The merchandising folks, keenly aware of the importance of growing sales, probably did the best job of understanding how merchandise sold across channels. They didn't understand how the channels worked together, but they did get to see how merchandise sold across channels.
The rest of us were busy tackling unique issues that caused us to not have the skills necessary to lead a business in the year 2007.
Catalog folks focused their energies on a dying business model, trying every technique possible to improve efficiency and profitability, becoming more and more like a fossil in the process.
Retail folks feared that the online channel would cannibalize their sales, and viewed the internet as an enemy, never understanding that so many of their customers were researching merchandise online before coming into the store.
Online marketing folks, never knowing the pain of having the distraction of managing a downturn in business, integrated their businesses with Google, to a point where they depend on the search channel for between ten and forty percent of their sales. More on that in a future post.
Like everything else in the first decade of the 21st century, we fragmented ourselves into targeted niches. Not enough of us built General Management skills to manage a fragmented, multichannel business, in the year 2007.
The result is an utter lack of General Management talent in the multichannel retailing industry. There simply aren't enough people who know the entire business. There are plenty of people who know one specific aspect of the business.
A decade of focusing on keywords yielded thousands of talented individuals who know exactly how to work with Google. These folks have not been given the experiences to manage anything outside of a relationship with Google.
A decade of writing copy that is search friendly yielded thousands of talented individuals who know exactly how to write copy that is appealing to Google. These folks were never given an opportunity to write copy that romanced a customer.
A decade of writing catalog copy that romances the customer yielded thousands of talented individuals who know nothing about writing copy that is appealing to Google. These folks were cut off from the future of the business, and failed to acquire necessary skills for the future, through no fault of their own.
A decade of reducing catalog expenses yielded thousands of talented individuals who know how to communicate to Abacus what type of model they want built for catalog customer acquisition. These folks don't have the tools necessary to understand what type of customer they are acquiring with their catalog mailings. They are giving up management skills, in exchange for the skillset of working with Abacus.
A decade of managing open rates, click through rates, and conversion rates yielded thousands of talented individuals who know how to send an e-mail that converts a customer to a sale today. These folks were never given an opportunity to build something that lasts, something that customers save --- as evidenced by the fact that 75% of people don't even bother to open a marketing e-mail.
Because merchandisers had to sell product across all channels, we now focus our leadership opportunities on these folks. Leadership jobs in the multichannel industry are likely to go to merchandisers over the next five years.
Our businesses must do a better job of cross-training our highly talented online marketing individuals, so that they can assume leadership positions in our multichannel organizations.
If we don't do this, we simply yield more control of our business to algorithms, Darwinian-style evolution of merchandising strategy, Abacus, and Google. At some point, we must grow our talented online marketers, giving them broad cross-functional opportunities to become leaders. If we don't do this, we're subject to a world where merchandisers tell us to tell Abacus and Google what to do. We won't be left with a meaty, meaningful job.
Multichannel marketing is moving ever-closer to an algorithm-driven business that lacks warmth, humanity, and gut instinct. We need to begin adapting to this trend now, and need to begin developing marketing leaders capable of doing more than working with Google and Abacus.
January 23, 2007
For those of you who spent your formative years in the catalog industry, you know the vital importance of a partnership with the USPS, with your merge/purge house, and with your printer. Without these partners, your catalogs didn't get delivered to the homes of your loyal customers. If the catalogs didn't arrive, you didn't generate sales.
Today, the e-commerce ecosystem has replaced the USPS, Experian and Quad Graphics with your ISP, a myriad of e-mail vendors, and Google.
Do you view your ISP, e-mail vendors and Google as strategic partners? Do you apply the same level of pressure on them that you applied to Quad Graphics about image quality, Experian about duplicate names, or the USPS about delivering your catalog two days late?
Can you prove that 194,381 valid customers clicked on your sponsored link on Google? How do you hold Google accountable? How could you ever hold Google accountable?
Does the Direct Marketing Association lobby as hard for your online issues as they lobbied for postal reform?
What are your thoughts? Are you letting Google and others off the hook, compared with the other vendors you work with?
November 28, 2006
Earlier this year, Google released Google Checkout, a method to make checkout easy for customers shopping your site. Google charges a fee of 2% of the order size, plus a $0.20 flat fee per transaction. In other words, Google picks up the charges associated with the credit card order, and keeps a small fee for themselves.
The list of participants is a who's who of online merchandising.
So, my dear online marketers, database marketers, and multichannel marketers. I have a few questions for you.
Question #1: Did you receive incessant and passionate feedback from your customers, begging you to add this service to the array of checkout options you already offer?
Question #2: At what point do you, as an online marketing executive, finally stand up to Google and say "No thanks, I'll manage the rest of my business on my own?
Think about it. A portion of your customers fail to recognize your brand, and instead type BLUE NILE into Google, resulting in a click-through to your website. Worse, the click-through may be the result of the customer clicking on paid search. In this case, you pay Google because you haven't trained your own beloved customer to bookmark your URL.
So, you pay Google to get your own customer to visit your site. Next, you pay Google to facilitate the transaction on your site. You use Google Analytics to analyze how effectively Google managed your purchase consideration process. You enter key metrics into the documents and spreadsheet application Google hosts. Then, you blog about the process with Blogger, so that your customers can read the content, search for your URL on Google, and start the process all over again.
Will you let Google manage your distribution center one day? Will you let Google staff your contact center for you? Will you let Google run your finance department, or human resource department?
Maybe I'm just paranoid. You tell me. It's your turn to participate in the discussion.
November 12, 2006
Try this Google search: eddie bauer jeans style # 5318. Which site shows up #1 out of 741 on November 12? Oh, it is The MineThatData Blog. And the person doing the search clicked-thru to my website.
Do you think the customer had my site in mind when s/he searched this phrase?
Eddie Bauer does win the paid search battle. Thing is, I've trained myself to not even look at the paid search results, so I didn't notice this fact until the third time I looked at the results.
As we continue to hand over a portion of our businesses to the folks at Google, Yahoo! and MSN, we need to hold them accountable for producing accurate search results. Or, we need to figure out how to make our website pages search friendly, so that this doesn't happen.