Taco Bell and Social Media

By now, you've read the interesting story of how Taco Bell offered Facebook fans a free taco.

A full 3% of fans took advantage of the free offer.

Social media advocates offer excuses for why this didn't work, or blame the brand/victim for failing to implement social media best practices.  Social media critics blast this as a epic failure of the medium.

The reality, of course, is that this isn't a success, and it isn't a failure.

It just is.

There are no shortcuts.  The internet era, the search era, the social era, and the now burgeoning mobile era all promise shortcuts to success.  Just employ a channel, and sales will naturally follow.

In the meantime, we've forgotten how to build a brand.

Honestly, I cannot even believe that I'm saying this.  If only you could have seen me in the 1990s ... I struggled with brand marketers, folks who I perceived wasted other people's money trying to "build a brand".


The importance of creating a reason for a customer to shop with one of our companies seems to have been lost in the channel-based get-rich-quick easy-ROI climate of the past decade.


There has to be a reason why the customer would choose our company over numerous competitors.


Now, if you want to have some fun, ask a member of your Executive team a question today ... ask them to, in one sentence, describe why a customer should buy from your company instead of any of a thousand competitors without using the words "quality", "value", or "service".  If they can do that, quickly, then they have a good feeling for what your "brand" is.


Facebook + Free does not equal Success.

Dear Catalog CEOs: Overworked

Dear Catalog CEOs:

We expect you to be overworked.  If you're working 8-5 every day, somebody is going to pin a random business issue on the fact that you're not fully committed to "the brand".

Now let's take a look at that random marketing director of yours.  You remember this person, he was a promising manager back in the fall of 2007.  Then the economy collapsed, and you decided to collapse three or four departments into one, offering the whole shooting match to this person, promoting the individual to director without an increase in salary.

Today, this person is doing three jobs ... and has 70% of the staff that existed in 2007.


And you want to know why your marketing team fails to answer a single strategic question you have?


It's time to invest in people, once again.  

After all, you happily funnel a half-million dollars to Abacus each year ... have you seen improved performance from Abacus over the past four years?


You can't outsource everything ... when you do that, you outsource intelligence.  Intelligence is your competitive advantage.  These days, so many catalogers outsource intelligence to the vendor community, bankrupting their own brand of profitable ideas.

Change this trend.

Crutchfield Attribution: Re-Visited

Last week's "Crutchfield: An Attribution Nightmare" was one of the three most popular posts of 2011, and for good reason.  The text of the post outlines a shopping experience where attribution becomes challenging, even overwhelming.

I received a lot of feedback, via comments, via email messages, and via Twitter.  You don't get to view a full picture of reader feedback.  I do.  So it's time to share some of the feedback, and my reaction, don't you think?

Question:  Kevin, you clearly doubted your purchase, or you would not have waited a month to place your order.  Nobody waits a month to buy an item without advertising playing a major role in the purchase.

Kevin:  Oh boy.  In the article, and multiple times in the comments, I noted that the only reason the purchase was delayed was to make sure that delivery would coincide with a window in which my builder could install the television.  It's that simple.  If you choose to not believe me, well, then that's your choice.  I'm being 100% honest.

Question:  Kevin, marketers who think customers will find you without advertising will lose market share.  Focus on last click attribution or fractional attribution, ok?

Kevin:  Oh boy.  Have you ever conducted a test?  Hold out catalogs for three months, and hold out e-mail campaigns for three months.  Do sales decrease by 99%?  No.  Anybody who has analyzed a mail/holdout test knows that customers will find you without advertising --- and the stronger your brand is, the more likely the customer is to find you without advertising.  We're attribution professionals, and yet, we fail to execute Attribution 101 --- simple mail/holdout tests.  If your attribution professional fails to recommend mail/holdout tests as the cornerstone of a proper attribution algorithm, go find yourself a new attribution professional.

Question:  Kevin, marketing clearly played a role here, you said so yourself when you decided to search for a lower price.

Kevin:  I purposely placed this comment in here, because quite honestly, this is the only place where one can logically suggest that price comparisons played a role.  If I had found the item for $350 less with comparable shipping, sure, I may have made a different decision.  Why almost nobody talked about this is beyond me.  This is the essential piece of the attribution solution!  I literally told you that nothing influenced my decision, I literally told you that I did execute a search, and yet, the feedback focused on how to parse shopping cart abandonment emails into the attribution routine, or how to parse the gift with purchase into the attribution routine.

Question:  Kevin, if activities correlate with an outcome, it's probably a good idea to participate in the activity that causes a correlation, right?  So if a shopping cart abandonment email is highly correlated with a purchase, we should execute shopping cart abandonment emails, right?

Kevin:  Let's view this from a different angle.  Let's say that you send two email campaigns per week.  By doing this, all purchases are correlated with the activity of sending email campaigns to a customer.  Therefore, all purchases should be allocated to email marketing campaigns, right?  You'd never agree to this if you were a search marketer, a television advertiser, a catalog marketer, or if you had retail stores and you saw that email campaigns took credit for all store purchases.

Question:  How did you know that Crutchfield offered free shipping?

Kevin:  I've been a customer since the 1990s, and I recall purchasing speakers in 2008.  So, obviously, there is some brand loyalty, prior e-commerce activity, and decades-old catalog activity that fueled my knowledge of the brand, coupled with email campaigns over the past three years.  That being said, you don't allocate today's sale to email campaigns mailed three years ago, do you?

I'm not saying I have any answers, other than to execute some mail/holdout tests, and to not discount the impact of search in the purchase process.  I am saying, however, that we, as attribution experts, have clear biases that result in us giving disproportionate credit to the marketing channels that we align with.  And that's the important thing to take away here ... execute some tests, minimize biases, and always remember that a significant portion of purchases (in spite of what some say) happen because of brand loyalty, and not because of marketing activities.

Customer Acquisition

In so many ways, we're suffering from a hangover.

Back in late 2007, we retained maybe 40% of last year's buyers.  And we did a reasonable job of acquiring new customers.


Then the economy collapsed.  Some of us retained 37% of last year's buyers.  Some of us retained 31% of last year's buyers.  Almost all of us took a hatchet to customer acquisition activities.


Today, retention rates have largely recovered.  In many cases, we're between 90% of where we were, to 5% or more above where we were in late 2007.


And, yet, sales are lagging in some cases.


In many ways, we're in the hangover stage, now.  The customers we chose not to acquire in 2008, 2009, and 2010 are not available to pay the bills in 2011.  Be honest, you've run your file forecasts, and you know this to be true.


The economy isn't going to change.  We're stuck in whatever we're in.  So it is time to protect our future.


Go out there today, and find yourself new customers!  Our future depends on it.

Dear Catalog CEOs: 35%

Dear Catalog CEOs:

35%

That's a pretty important number.

If 35% of your direct-channel sales come from the mail/telephone channel, the average age of your customer is probably greater than fifty-five years old.

The rules of time seem to bend if your average customer is over the age of fifty-five.

• Search is less a way to acquire customers, and more a way to identify a forgotten URL.
• E-Mail marketing is seen as being a bit modern.
• Facebook is a way to connect with friends and children, and is less a channel of commerce.
• Customers are passionate about the content in a catalog, customers are likely to hold on to a catalog for more than three days.  Page counts reflect the breadth of your assortment.

Marketing seems to be moving in a couple of different directions.  

There's an under-40 audience.  This is the audience that you read about on Twitter, or in Trade Journals, or you learn about from Bloggers.  There's neat stuff happening there, of course ... there always is.

Then there's the 40-54 year old group, a segment of the population that's caught in-between eras.  This audience will shop online after receiving a catalog, and will give "f-commerce" as shopping via Facebook is called a try.  This demographic is willing to do just about anything.

The 55+ audience is different, willing to try new channels, but largely a creature of habit.  What worked in the past still works with this audience.  Some will have huge opportunities as demographics shift into the sweet spot of the brand.  Some will struggle, as customers age into retirement.

So many of you ask me "what happened" over the past decade?  You tell me you followed the multi-channel formula that should have yielded success, and yet, it did not yield the success promised to us.


In so many ways, a shift in demographics happened to us.  We applied our craft to our audience, and our audience aged as we aged.  In so many ways, our craft cut us off from a younger audience.  That is what happened to us.


You can tell if you cater to a 55+ audience.  Look at the percentage of sales that are sourced over the telephone, or through the mail.  If 35% or more of your sales come from those channels, you cater to a 55+ audience.

Dealing With The Trends

I've shared these trends with you, many times previously.

Outside of a few folks nitpicking the results ("my twenty-four year old daughter just picked up the phone and shopped via a catalog, so you are wrong"), you aren't disagreeing with the thesis.

So, what do you do about it? 

First of all, recognize that the multi-channel mantra of one solution fitting all is not relevant in 2011 ... it might have been relevant in 2001 when all of this stuff was beginning to evolve.

Be honest ... if all of the multi-channel stuff really mattered, we all would have doubled or tripled the size of our multi-channel businesses over the past decade, right?

Now, the cataloger faces challenges.  

Customers age 55+ are still responsive to catalogs, but productivity will inevitably decline as the customer retires from the workforce.


Customers under the age of 45 are harder and harder to acquire via a catalog.  In fact, these customers are largely the reason for declining response rates and declining file sizes ... they are not easily acquired via catalogs.


Your co-ops respond to this by optimizing their lists based on response ... so the customers that you acquire tend to skew to 55+ rural customers.  This creates a self-fulfilling prophesy ... the customers we acquire are increasingly older.


So we have to identify audiences, based on behavior.  We have to reduce catalog mailings to customers who exhibit behaviors similar to the under-45 audience.  In many cases, we can mail more catalogs to customers who exhibit behaviors similar to the over-55 audience.  Yes, more catalogs.


When we reduce mailings, we have a choice.  We can mail fewer catalogs.  Or, we can mail smaller catalogs.  And as postage increases and the cost of paper increases, we'll get to fully explore these topics, in detail, won't we?


Over the next five years, we're going to deal with this constant cycle of "optimization", using the organic percentage to figure out where to make reductions.


Most important, we're going to figure out how the heck we sell merchandise to customers under the age of forty-five.  That may include a catalog, that may include online marketing, or mobile, or social, or Hologram Marketing in 2016, or whatever.  But we're going to figure this out, aren't we?

Crutchfiled: An Attribution Nightmare

Attribution experts express confidence in their ability to parse an order across the activities that caused the order.

Oh boy.

Let me explain an attribution nightmare, courtesy of Crutchfield.

I was about to purchase a new television, a 46 inch model.  I decided to purchase the television from Crutchfield, because I knew I would get free shipping.

I made this decision on or around May 1.

In the first week of May, I received a small page count catalog from Crutchfield.  I looked through the catalog.  My television was not, to my knowledge, featured in the catalog.

In the second week of May, I researched the television I wanted to purchase.  I used Google.  I visited Amazon.  I visited J&R Music World.  I visited Best Buy.  I found the television I wanted to purchase.  I compared prices across brands.  I then visited Crutchfield.  The television I wanted was available.  I placed the item in my shopping cart.

In the third week of May, Crutchfield sent me an e-mail marketing message ... and surprise surprise, the television I wanted was featured in the e-mail marketing message.  Who knew?!  It's almost like Crutchfield scanned my cart and then advertised the item to me.

Late in the third week of May, Crutchfield lowered the price of the television.  Good for me!

Early in the fourth week of May, while reviewing my shopping cart, Crutchfield made me an offer.  They offered to give me a soundbar/subwoofer system, valued at over $300, for free, if I purchased my television.  Wow.  I added the soundbar/subwoofer to my shopping cart.

Midway through the fourth week of May, Crutchfield sent me an abandoned cart e-mail message, reminding me of the items I wanted to purchase.

In the first week of June, I added a mounting bracket to my cart, and I added a separate item not related to the television purchase to my cart.  I placed my order, saving about $50 on the television, obtaining a soundbar/subwoofer valued at over $300 for free, and getting free shipping as per standard marketing practices at Crutchfield.

Ok, attribution experts.  Tell me what caused this purchase?

• What impact did the mailed catalog have, given I already decided to buy the television prior to receiving the catalog, but given that the catalog was mailed a few weeks prior to buying the television (hint --- this is the crux of my stance on the "organic percentage").

• What impact did the first e-mail marketing message have, given that it featured the television I already placed in my shopping cart?

• What impact did the price change on the television have on my purchase?

• What impact did the offer of a free soundbar/subwoofer have on my purchase?

• What impact did the abandoned cart e-mail message have on my purchase?

• What impact did free shipping as a standard offer have on my purchase?

• What impact did Google have on my research?

• What impact did the fact that I already decided to buy this item before the marketing began have on my purchase?

• How would you, the marketing/attribution expert, parse this information without knowledge of the fact that I made up my mind on the purchase before any of the marketing activities were initiated?

Discuss.  Remember, I decided to buy a television from Crutchfield before any of the marketing activities mentioned here were initiated.