The Four Most Popular MineThatData Articles In August

Each month, I will review with you the four articles that drew the most interest from you, the loyal reader. Enjoy your trip down memory lane. Here's the countdown:

The Number Four article is a discussion of optimized marketing spend. People seemed to like that a simple equation like the square root function can be used to help determine the increase in sales expected when advertising dollars are increased.

Number Three is a comparison of branding verses selling. I compared the websites of Gap and Zappos, and discussed which style yields greater sales.

Number Two is a discussion about how many times you should e-mail a customer each week. Read the article, and join the discussion about how many contacts a week you perceive to be appropriate.

And your favorite post of the month is the Four Questions Segment with Jim Fulton! This article has been very well received, literally spreading like a virus across the United States and UK, driving close to half of total page views for a two week period of time. Congratulations to Jim for his writing style, content, and as a bonus, haiku!

Don Libey on Brand Utility

Yesterday, Don Libey left an excellent comment regarding branding. I mentioned that customers do not seem to rally around a dying brand. Rather, customers tend to bury a brand when it is near the end of its life. Click here to read my post about the end of a brand.

Instead of referring you to his comment, I thought it would make sense to just include his comments as an independent post for your browsing pleasure.

For those of you who do not know Don Libey, he is quite possibly the leading Direct Marketing mind in the entire industry. Click here to read his biography:


Here are Mr. Libey's comments from yesterday:

Excellent proposition. I would add that, not only is the relationship relatively shallow, but it is rooted in "utility," the classic element of economics. If I get the same utility from a non-branded box of soda bicarbonate as I do from the venerable and instantly recognizable Arm & Hammer brand, and if the price is less, I will likely choose the non-branded product, thereby invoking the ever-present economic element of "substitutes."

If we look at strong versus weak brands, there are almost always echoes of utility and substitutes within the intellectual dialogue of the customer's decision-making processes. As a relevant example, the Ford Motor Company, in its present state of extremis, is failing to honor its extended warranty policies and, as a partial consequence, the brand has deteriorated due to a failure of utility (in this case, satisfaction). Of course, there are substitutes to that tired brand, and the marketplace has decided that Honda, Toyota, and other brands offer greater satisfaction and, therefore, greater utility.

Like the four cardinal elements in the upper right corner of the Periodic Table of the Elements, there are only four classic elements to the branding issue: 1) Utility; 2) Substitutes; 3) Demand; 4) Supply. These are a linear relationship. All demand and--as a result--supply begins and ends with utility and substitutes. For a brand to be relevant and successful, there must be--in this order--utility, satisfaction, demand and supply. Marketers within any and all channels would do well to harken back to Economics 101 and reflect more often on the concept of utility.

For the textbook study on massive brand failure, look at the entire airline industry. Brand value is almost non-existent because the entire industry is a 75-year failed experiment in transportation. There is no utility, no satisfaction, no profitability, and no substitutes; it cannot exist in its present economic structure and is, therefore, doomed to failure, bankruptcy and a subsequent re-invention of transport systems and structures. Unfortunately, because there are no substitutes, there is only demand and a poorly managed, inefficient, unprofitable supply.

If there were high-speed inter-continental rail systems, both short and long-haul, there would be a lessening of demand on airlines and the system would either crumble entirely due to effective substitutes or be scaled back to something that delivered competitive utility at a competitive price. But, nowhere in this equation does brand have any relevance.

Is it possible that we are in the sunset era of brands?

Target Audience For Catalogs

I recently had a discussion with a business leader about the relevance of catalogs to a 25-45 year old target audience. As we move closer and closer to the year 2010, it seems that marketing channels are aligning with different target audiences.

• Catalog seems to be aligning with a 45-75 year old audience.
• E-Mail seems to be aligning with a 35-55 year old audience.
• RSS seems to be aligning with a 25-45 year old audience.
• Text messaging and instant messaging seem to be aligning with an under 35 year old audience.
  

If you were starting a business, marketing to a 25-45 year old target audience, which marketing channels would you explore? Would you invest money in catalogs targeted to a 25-45 year old audience?

End of a Brand

I just finished watching Andre Agassi compete in the first round of the US Tennis Open. This is Andre's final US Open, and 20,000+ spectators literally willed him to win this evening. Eighteen years ago, Agassi was not the most popular person. But this evening, with his career nearly over, people celebrated the brand known as "Agassi".

We do the same thing when a co-worker decides to leave a company. We forgive past transgressions, and celebrate all of the positives.

We don't do the same thing when a brand is tired and weak, and ready to retire. We are more likely to bury a tired and weak brand. Few people rallied to support Montgomery Wards, when it was tired and weak. Not a lot of consumers are showing loyalty to GM or Ford, at a time when they are tired and weak. With brands, we are much less forgiving than we are with co-workers. Given the amount of money that changes hands between consumers and brands, and the ways that a brand will fall on the side of "increasing shareholder value", we probably should be less forgiving.

The lesson of the past two days, for me, is that there really isn't a relationship between customers and brands. And if I am wrong, I speculate that the depth of a relationship between customer and brand is very, very shallow.

Four Questions with Allen Abbott, EVP and COO, Paul Frederick MenStyle

This week, I am pleased to share a recent interview with Allen Abbott. I believe you will find his insights to be enlightening, as he freely offers his perspective on many different issues facing multi-channel retailers.

Allen is Executive Vice President and Chief Operating Officer for Paul Fredrick MenStyle, a men’s fashion apparel direct marketer located in Fleetwood, PA. Allen has been involved in retailing for 30 years, 20 of those as a direct marketer. He has held senior marketing and management positions at Bloomingdale’s by Mail, Exposures and Day-Timers. Allen holds a B.A. in History from Lafayette College and an M.B.A in Management from Rutgers University. He resides with his wife and two sons in Orefield, PA.

Allen has been a speaker at various Direct Marketing Association events during his career. He has also served as a guest lecturer on direct marketing topics at Northwestern University and New York University.


Let's begin our interview session with Allen.

Question #1: You have the perspective to analyze how Direct Marketing has evolved over the past twenty years. What are the biggest changes you have witnessed, and what has surprised you about the evolution of Direct Marketing?

It is hard for me to define exactly what the “biggest” changes have been, but one common theme among all large changes has been that they have been enabled by technology. The Internet, of course, has been the most visible one, since it has totally changed the dynamics of both marketing and customer service. But there have been other changes in technology that have been enablers in the printing, pre-press, photography and database areas. One of the more surprising developments to me was how slow traditional data processing service bureaus were to adopt new technologies to help improve their business models. Many of them held on to the “we run the machine, you pay” models long after the price of both hardware and storage had plummeted, limiting, I believe, their ability to grow with their customers.


Question #2: Your business sells through a catalog channel and a website channel. Does a true multichannel retailer have to have an online, catalog and retail presence, and what is the brand impact of having or not having a retail presence?

When CRM became the new buzz word several years ago, I and a friend of mine, who runs a list and Media Company, banned the term from our businesses. Our thought was that you don’t really manage customer relationships, since most customers don’t really believe that they have a relationship with you. What you really do is offer great products and great service as efficiently as possible, and hope that consumers respond to you often enough to grow a profitable business.

I feel somewhat the same about the term “multi-channel retailer” as an industry buzz word, because it can take your focus away from what really matters – managing your brand. Certainly adding retail to the mix both raises your visibility to the consumer and offers opportunities to scale your business. It also requires a totally different skill set and additional resources. The question of adding retail to our distribution mix has never been a philosophical one for us. At this point we still see a lot of opportunity to grow the business within the set of skills we already possess.


Question #3: Direct Marketing and Brand Marketing can be at odds with each other. Direct Marketing is often focused on selling merchandise to a customer today, whereas Brand Marketing sometimes focuses on building a long-term relationship with a customer. How might a Direct Marketer apply best practices in Brand Marketing, to insure both the short-term and long-term health of the business?

I believe we sometimes confuse the concept of brand marketing with that of image advertising. My definition of brand value is the sum of every contact point you have with a consumer times the value of those contacts. Since the value of a contact can be positive or negative (think Vioxx), your brand value can also be positive or negative. Part of that brand value is certainly determined by the quality of your advertising, but that is only the beginning. The quality of your product, your customer service and your order fulfillment are equally important in determining the value of your brand. A clear, consistent brand message is critical to a positive brand value and a long term customer commitment, whether you are an image advertiser or a direct marketer.

That said, I do believe direct marketers have learned from image advertisers, and vice versa. Direct marketers are paying much more attention to the consistency of their imagery and copy across different media then we did even five years ago. In the late 1990’s catalog companies were launching websites that had almost nothing in common with their catalog execution. Today, we are paying much more attention to assuring that the imagery and copy we present on our websites are consistent with what we use in our catalog. On the flip side, more and more image advertising now carries some type of call to action for the consumer, whether it is an 800 number on an automobile ad or a URL offering recipes on a food advertisement.


Question #4: What things fascinate you about the organizational behavior of companies? During your career, what dynamics have you observed that yield a profitable business with satisfied customers and happy, loyal employees?

Whenever I am considering working with a company, I always visit their headquarters to get a read on what the business culture is like. If I see one of those lovely framed photographs with an inspirational message from Executive Greetings, I immediately turn around and leave, since it indicates to me that the company is incapable of developing any unique culture whatsoever, and probably lacks imagination in general. I also enjoy talking to random people in the company to see how they feel about their work. When a junior account manager can give me five extemporaneous minutes on how she is going to help me improve my business, that is impressive.

The dynamics surrounding successful businesses are fairly similar in my experience. First, you have to have a precise business mission that can be clearly explained to your employees, hopefully in ten words or less. I visited a database company last year whose stated mission is “100% customer advocacy.” That is extremely powerful to me, because it leaves no doubt in an employee’s mind about how he/she is to behave. Second, you have to have a compensation system that is 100% compatible with your company’s business goals. If the catalog manager and the web marketing manager spend 20% of their time debating about who gets credit for the order, performance will suffer. Third, and I think this is a subtlety that many people miss, you have to give your employees a reason to show up for work. It is not just about the money, and an employee who feels that he/she is challenged in their job and taken seriously in the company will perform at a higher level than one who comes to work just to follow someone’s instructions. Finally and somewhat related to the prior point, a performance appraisal system that supports your business objectives is a must. At Paul Fredrick, I read every salaried employee’s self-appraisal, as well as their supervisor’s appraisal, before the two actually meet. I am looking to see that both individuals have a similar position on how the employee’s goals were met during the past year, as well as that goals for the new year are both clearly measurable and support the overall company goals. If you have motivated employees with a clear business mission, you have a better chance of pleasing your customers.

Your Relationship With Brands

This article from The Onion, was found on http://www.marketersstudio.com/.

I find this brief article so funny! Those of you who know me understand that I am not a huge fan of "Brands", and am even less supportive of "Brand Marketing".

If you were to rank-order all of your relationships, from number one, to number ten-thousand, where would your favorite coffee chain rank? Do you really have an emotional attachment with a "Brand" that sells coffee?

Do you honestly have an emotional attachment with a "Brand" that sells an expensive pair of shoes?

When you visit your local fast food restaurant, do you honestly have a better relationship with the fast food "Brand" than you have with your family, your friends, or your co-workers?

If you do have a relationship with a "Brand", especially a publicly traded "Brand", what do you think the nature of that relationship is, when seen from the viewpoint of the "Brand"? How do you think the "Brand" views its relationship with you, when its objective is to increase shareholder value? Will the "Brand" act in a selfless manner with you in the way your friends or family will act in a selfless manner with you?

This brief story in The Onion exaggerates the relationship we humans have with "Brands". And yet, there is a fundamental truth in what they wrote. The National Football League begins its season in two weeks, and I will choose to not visit church on Sunday morning, so that I can watch a 10:00am football game featuring the Green Bay Packers. I will set my relationship with God aside so that I can have a relationship with the "Brand" known as the National Football League. At some point, all of us put a relationship with a "Brand" above other more important relationships.

All of us who work in Marketing, and even folks like me who specialize in Database Marketing, work hard every single day to "drive our Brand". And by doing so, we unintentionally create false relationships between "Brands" and "Individuals", relationships that sometimes take priority over the relationships we humans have with family and friends. We cause our customers to feel that they actually have a relationship with a "Brand". We then cause customers to unintentionally choose the brand over actual human relationships.

When push comes to shove, the "Brand" will abandon the customer whenever it benefits the "Brand". "Brands" will close stores when they cannot make a profit, disappointing the very customers who had a relationship with the "Brand". The "Marshall Fields" brand will be sold to another brand, and the "Marshall Fields" brand will be converted to "Macys". How important is the relationship between customer and "Brand", in that instance?

At the end of the day, marketers need to simply sell a quality product at a fair price, providing the best customer service possible, replicating perfect transaction between "Brands" and customers over and over and over. That's all that really needs to be done. It isn't easy to do. But in the long run, the "Brand" cannot possibly hope to have an intimate relationship with a customer. In the long run, the "Brand" must make decisions that are not in the best interest of the customer. By focusing on quality product, sold at a fair price, offered with great customer service, the "Brand" can hope to survive as long as is possible. And that is really what a "Brand" needs to do.

How Do Your Customers Use Your Website?

When analyzing the traffic that visits this website, I am continually amazed by how users consume the information on this website. Here are a few factoids:

• 42% of visitors arrive at the website with no referring URL. Many have AOL as their ISP.
  
• 20% arrive via a query from a search engine. Almost all search traffic comes from Google.
• 18% arrive via links to my website on other blogs.
• 29% arrive via RSS subscriptions or Feedblitz subscriptions.

Here is where visitors land, when they get to the site:

• 39% arrive at my homepage.
• 61% land on a specific permalink for one of my posts.

Let's think about these numbers in the context of your business.

Assume twenty percent of your traffic arrives via a search engine. You have essentially given control of one-fifth of your business to Google, Yahoo! and MSN. How do you feel about that? I'm pretty certain Google, Yahoo! and MSN feel good about it. How do you regain control of your business if that percentage significantly increases, or if the search engines decide to use an algorithm that sends less traffic to your site? Online retailers need to think hard about how much control they have ceeded to search engines. On the surface, the traffic that comes from search engines seems like it is all incremental business. I highly doubt that it is.

Three in ten visitors come via an RSS or Feedblitz subscription. These visitors seldom, if ever, get to my homepage. They go to a permalink, or they simply read a post via e-mail, without ever visiting my site. Are there ways that your online business uses technology, so that your customers are interacting with your business, without ever visiting your website?

Nearly one in five visitors come from a link on another blog. These are similar to the affiliate programs that drive business for many online companies. Are there other websites that have a similar demographic/psychographic with your website, websites where co-branding opportunities exist?

I cannot track where four in ten visitors come from. This creates problems for me, since I cannot identify why forty percent of my traffic chose to visit me. How do you deal with an inability to identify where your online visitors are coming from?

My visitor statistics illustrate how business has changed over the past decade. Ten years ago, catalogers drove their business via catalog titles, catalog frequency, and customer acquisition via purchased lists, exchanged lists and compiled lists. Five years ago, multichannel marketing began its ascention as customer migrated from the telephone/catalog channel to the online/e-mail channel. Today, technologies like RSS and Feedblitz transform the visitor experience, while search engines have inserted themselves into our business models, with and without our permission.

Where do you think all of this is heading?