“I love Black Friday!” Dissecting the motivation beyond the shopping phenomena

Posted on November 25, 2011 by teds

It’s somewhere between midnight and sunrise and as I pause my Black Friday research for another caffeine break [after more than a dozen destinations spanning two malls and three counties, there’s been a number of those], I’ve found myself asking one question: what is it that has propelled Black Friday to reach almost as much notoriety as the holiday it follows?

What it is that makes people line up 6, 12 even 24 hours in advance? Is it the deal? Being able to claim first in line?

Certainly price has always had a lot to do with it and even more so in this economy as evidenced by the degree of the deals being offered and the scrutiny they’re getting. But only a few get the $199 doorbuster TVs while hundreds more wait in line knowing they’ll be picking at far smaller deals – there has to be more. At the end of the day we’re talking about sacrificing personal comfort, a traditional Thanksgiving dinner [or at least a long conversation after it] for something that can often be matched online and savings that amount to just a few dozen dollars on items that are hardly necessities.

Great Deals + Sharing = The Black Friday Experience

If we put aside our brand / marketing hats for just a minute, pull out the social science degrees so many of us spent years working on, and put ourselves in the shoes of consumers I think we can see that the success of Black Friday it boils down to our social nature. No doubt the deal is essential but looking at the person to your right and left and realizing that you all share the same goal changes things from a deal into an experience, something you don’t have to quantify the measurable ROI from and are willing to do not just once but year after year. Add in the exclusivity — whether it’s a limited count doorbuster or making a “sacrifice” to just be there and it’s not surprising that many people find the whole event to be, well, fun. Seeing how Black Friday checkins, social comments and posts have grown even faster than the lines is certainly a testament to our desire to participate with others about what really amounts to nothing more than shopping.

As I talked with people tonight and heard their excitement, even saw a few faces walk out the store after hours of waiting without a purchase or disappointed look, there’s no doubt that for businesses to thrive in this market means going beyond the price war and building on the sense of adventure, chance … of the Black Friday experience. In the race for the customer, the bottom price is not where you want to try and make your stand and yet without offering anything but a deal, its where so many have ended up to the point that 30% off no longer feels special.

As Black Friday Becomes an Event, Success Will Depend on More than Price

But this year with the big transition towards 12am openings, I saw new ideas being tested out there. Best Buy ran movies at select locations; Food Trucks were called in by malls, and straight giveaways like free water are becoming more and more common. It’s personal too: I watched security guards and store employees spend hours outside chatting and standing alongside the crowd when they could have just as easily remained inside their warm stores. All of these actions speak to the link between our customers and our brands – you can call it an incentive, a hook, but the result is that its building community and giving people a sense brands are relatable.

As we see more consumers take part in this communal shopping event, more stores will get into the early openings and offers will increase making it even more important to be seen in the right light, to be more than just a place looking to take people’s money but instead offering up a little empathy, some excitement and perhaps soon a free cup of coffee in exchange for 12 hours of someone’s time.

Of course 8 hours in line are quickly forgotten as the doors open and people rush as fast as they can “walk” towards that big offer – but as I watch people filtering out of this store and back to their cars, it’s clear that the experience is as much a part of their excitement as the savings that exist at 3:30am.

Why aren’t you asking your customers why? Using dialogue beyond the obvious.

Posted on November 4, 2011 by teds

I’m on a lot of email lists, dozens, probably more and years and years I’ve collected emails from the internet 100 down to niche boutiques and specialized services, everyone you can think of and a few that surprise even me. From competition to best practices and trends, it’s a great way to see what’s going on in the industry but not surprisingly I don’t “act” on these messages very often. Still, in 5 years of collecting and tens of thousands of emails no one has ever asked me why.

Why. It’s a simple question with vast implications.

A guy starts receiving emails from Victoria’s Secret after placing a gift order – without the details what will those messages say? Are they going to assume he is a direct customer? Why tells the marketing team that instead of multiple-emails a week with personal offers, the message can shift to less frequent suggestions, gift ideas, even useful content that makes the brand useful to him to follow. And the results? Well, I don’t know about you but I don’t know many men buying products for themselves from Victoria’s Secret.

Every day Living Social plays on my Pandora stream, inviting me to become a customer… millions of dollars in ad budgets to reach people with a sign up message who are already signed up. I can close their popups but that’s the extent of the feedback… With a simple question, they could appeal to current customers with value, contextual relevancy, something that doesn’t just make them top of mind but invites consideration. And for the price of one answer, I’d get the benefit of not hearing the same boring ad day in and day out.

Why is the hardest question but digital gives us a medium to answer it every day.

Social has created a frenzy for businesses as well all vye for the customer’s attention pounding them about new products, offers and a host of other campaigns we want to see go “viral” but that’s not where it ends. Customers are ready to spill their guts… not in drawn out forms or lengthy processes but through dialogue.

Not just surveys or expensive focus groups, we can go out with messages to customers in an individualized basis and not only to ask them questions but even to show them that we are asking. And they expect it.

From optimized campaigns to operational learnings, there’s a heck of a lot of value in knowing why.

Are you attracting a Fan or a Like? The mistaken rush to buy social visibility

Posted on July 20, 2011 by teds

As the buzz around social becomes stronger, many corporations coming from the era of tv and print just finished struggling through online advertising and are now finding themselves facing something completely transformative that pushes aside the principles decades of marketing experience has taught them. This has caused a reactionary response where marketers have been tasked with hitting metrics to claim victory to the stock holders, the board or just the executive team. The buying of a like has become a quick fix.

You can’t claim engagement if you’re buying it

Whether it’s a flier in a newspaper with a Facebook coupon, a tv spot with a Twitter url for a contest or an outright offer to buy fandom with a deep discount (see “Did This National Restaurant Chain Put Too Much Love Into the Like?” by Jay Baer) the result a purchase of a like rather than a connection with a customer. As this sort of buying becomes more common place, it’s not surprising that even as brands talk about wonderful ideas like engaging and building community, research from the Get Satisfaction blog shows that 43.5% of consumers are following brands for offers — and why not, that’s what they’re being told they’ll get.

Already missing the mark on relevancy, social sites penalize poor relevancy

With hundreds of connections per user noise has become so high that systems like Facebook’s EdgeRank now exist to tune down what a user, their friends, and even the overall “like” audience see from a brand page. Even on systems like Twitter that don’t have scoring of responses, the mere amount of information makes the less than relevant disappear into the bottom of a long stream. Thus the more a brand buys it’s following, the less each follower sees, or cares to pay attention to the brand. This becomes a cold reality when you discover that some brands are suppressed to over 80% of their audience.

This doesn’t mean abandoning growth goals, but rather settingt expectations about what they lead too

A brand that decides “I’m going to go out and advertise my page to build up” is wrong to use the word engage to refer to that program. Conversation is gone and while the activity is on a social channel, it is as much broadcast marketing as an email list or a weekly mailer… Even worse with virtually no segmentation offered by social networks, the existing loyal fan base is lumped in with the prospecting effort. Everyone becomes one jumbled mess.

On the other hand, a brand that says let’s insert a flier with orders to share a comment, or posts a sign inside our stores with a mention that you’ll find expert product insights, company updates and occasional offers on their social pages is building the expectation of dialogue and is attracting loyalty and certainly customers. A discount may be associated but the qualification is that you want to be an insider, a participant first, and get a little something in return for it in access and savings.

Bigger counts do not actually mean bigger reach or results

It’s a critical realization and once you step down the paid like road it’s very difficult to get back up the relevancy ladder.

Social Media ROI does not end at new sales… Measuring the big picture

Posted on July 7, 2011 by teds

If we’re starting a brand new company and tomorrow you kicked off a TV campaign promoting the business you’d expect some immediate sales to walk in the door, you’d expect to hear about the efforts, but chances are you’d be downright surprised if you broke even on new sales. After decades and decades of advertising we’ve come to accept the value of building brand perception to grow business over the long haul. So why is it that so many companies’ measure social media only by the short term sales bump?

Just because you have data doesn’t mean you know the full story

Since the banner first hit the web marketers have been stuck in the same paradigm – the data is there so measure it. And why not, with data coming in seconds rather than days or even weeks, the temptation to assume it’s all right there is great. Yet we’ve started to learn that people are using multiple ads, are narrowing in with many searches over time and conversions are taking longer and longer as the web becomes a corner stone of shopping. Single metrics are dangerous.

The opportunity cost of using social media only to acquire

Instead digital marketing, and even more so social media, must be looked at as holistic program that is as much a necessity as creating brand awareness and consideration is.

Some 70% of Americans say they consult product reviews or consumer ratings before making a purchase, according to an October 2008 survey by Penn, Schoen & Berland Associates

One could look at driving user reviews as an acquisition effort. There’s an audience to target, an expense to drive, host and promote reviews and a lift associated with a product that has them over one that does not. But it’s deeper than that.

When the majority of your customers are seeking reviews it’s not just about what you can increment, it’s about what you stand to lose. If you opted not to push for reviews because you couldn’t justify the cost on new sales, you risk all sales, not just new ones as people turn to other sites or product lines that offer the support they’ve come to expect. That’s not captured in lift metrics.

There are no longer channels, even tactics outside of marketing, must complement to earn a sale

Your investments into all forms of media drive people back to you or your partner’s digital properties for research. Just like with reviews, if someone who uses Twitter sends a message for pre-sales questions and gets nothing… not a customer support message, not a suggestion of a peer to peer area, just silence. That speaks volumes about what your brand will be like after they buy.

This extends to all channels… after being intrigued by a radio spot and going a company’s website a user who discovers a blog about the culture and expertise becomes a great choice, even a premium value, while the other company that just promotes their tradeshow booth feels empty, or “salesy”. Customers don’t care which channel gets attribution for the sale, they simply look for validation – a good buy or a bad one.

Let’s not forget the brand awareness opportunity either

This isn’t just about tactics that support a product purchase on the front end either. Just like TV is run on a negative upfront ROI basis to produce over the long haul, a social campaign can have the same value.

750 million people on Facebook outrank major sports events, dramas or reality tv, and they’re around just about every day. So if a customer goes knocking on your Facebook page and it isn’t there, or isn’t doing a good job of holding their attention when they “fan” up, that’s a wasted opportunity. But with social this isn’t just prospective awareness, this is true engagement opportunity where a good program can have that person showing affinity and even spreading it. How does that factor in to upfront sales?

Measure but measure the right picture

By no means do I advocate stopping or backing off on measuring your campaigns but instead it’s about making sure you understand their full impact and measure that. The problem with data is that we tend to focus on what we have easily available, and that’s new customers who come in directly or old ones who stay attached… but engagement, validation, cross-channel sales, and many of the other components of social are not easily studied and thus they are skipped and that not only short changes your programs but opens the door to cutting something that’s far more important than you may realize.

Calling all daily deal sites! Can I please get an offer I’m actually interested in?

Posted on February 23, 2011 by teds

Today I’m on a mission this morning, a hunt for something very illusive, something which millions of my fellow citizens are also hoping for – a daily deal I actually want to use. While Groupon, LivingSocial, and all the other standalone and integrated daily deal sites compete fiercely over membership growth and media attention for having the most impressive features and biggest deals, I can’t help but wonder what happened to a much simpler, and yet far more profitable concept – offers that people really want.

Example Offers as Seen on Groupon's San Jose Page

From the analytics I saw floating around last year it would appear that daily deal sites are hovering somewhere in the 10-15% activation rate (10-15% of sign ups have actually bought a deal) and if this is hugely understated and 35% of sign ups have activated (30MM deals sold, 29MM users, 3x deals each =35% of users ), it’s still a huge opportunity (and probably why Groupon is hiring a Director of Customer Activation with double digit growth goals – sweet job too).

Looking at data from the other side, in a recent blog post, Jeff Bussgang, cites a rumored 3-4% CVR for Groupon. As a leader in the field Groupon should have one of the higher conversion rates as they certainly have many of the top offers and a huge core of interested customers (66% read deals daily!). But unlike a traditional eTailer where a 4% conversion rate is accepted because the vast majority of the 96% remaining users are considered potential future customers (they came to your site for a reason), with daily deal sites, there’s a huge issue – relevancy – which is to say that the traffic is all coming for diverse reasons and, without relevant offers, there’s little reason for conversions to take place.

So cutting to the chase, the issue I see, and keep seeing is the range of those offers. Groupon, Living Social, Yelp Deals, Daily Steals, they can all rake in users with the same deal types (follow a few of the sites and you’ll see businesses recycling old offers as they try different audiences, fee structures) but if what they offer back doesn’t relate to the customer, they leave huge dollars on the table every single day.

Living Social Offer I'd Be Signed up for Twice -- No Wonder Why it's Featured on their Site

Take Living Social’s Amazon $20 for $10 offer that generated over a million sales. The next day my offer was for some sort of premium spa service. I just went from something I really wanted to something I had little affinity for (not knocking spa’s, I just don’t buy their services frequently). To me this is like my sister logging into Amazon and having the entire homepage be filled with table saws – not very useful in her completely managed and very new NYC apartment even if she could use one now and then.

If you look at the demographics of either of the leaders what you see is opportunity. Deals tend to be for health & beauty services, fine dining, and the monthly car wash with an occasional outlier which ranges from exotic dance lessons (demotargeted female of course) to flying lessons. Problem is it’s not just one user type: on LivingSocial (probably thanks to the Amazon deal), 40% of the users are male and on Groupon it’s still 26%. Add to the age – users are young (68% of Groupon is under 34, 36% of LivingSocial) and single (49% of Groupon, N/A by LivingSocial).

Combine these all together and what you get is a dilemma – relevancy vs frequency.

Daily Deal sites have made a promise to deliver something every single day which means rain or shine, good or bad, that offer comes and while anyone can go to the spa or eat a nice meal, the overwhelming focus of the deals are to the same demographic – female, couples, older and for the same types of services (I dare a newly dating, 24 yearold guy to pull out a Groupon code when the check comes and then suggest the same restaurant again for next week). The deal sites know this, Mashable even wrote about it last year: Groupon Eyes Further Growth with Personalized Deals; < http://mashable.com/2010/07/29/groupon-personalized-deals/> but knowing and truly solving are very different as my inbox so aptly shows this morning.

So where do we lie – with opportunity of course.

The daily deal site that gets this first stands to win a lot. Sure the offers they have now may appeal to the majority of their core audience but the majority of their core is already being marketed too left and right by competing services; the generic offer is commoditized. So the site that broads up, ropes in more sales from its younger women (Groupon is doing more and more of this as told to me by several female friends in SF), parents, guys, and even their core demographic who is still seeing many off target offers, the more they stand to capitalize on their existing investment – that giant email database each company has.

If I was sitting in a corner office of one of the independent deal sites right now I’d be pretty concerned about how to up relevancy, and not just to a few major demographic groups but real niche relevancy with offers based on interests (some of us like to read, some of us like to get shot at with paintballs) and the ability to rate ads (oil changes are only for people with cars) and some friendly user reviews (better businesses sell more) to create something like the Facebook feed, but in deal form.

After all, there are a couple competitive businesses – namely Google and Facebook who have expressed great interest in the deal category and have business rolodexes so deep it resembles the size of most company’s consumer database… If they figure it out first you can bet it won’t be hard to get a lot, an awful lot, of businesses churning out relevant offers giving consumers a lot more reason to check with them first.

To sum it all up, daily deals are clearly a huge hit and have brought in revenue at a rate that seems to be unmatched, well, ever. But in a field of competition this fierce there’s a lot of value to users in jumping ship, playing the field, and any other ‘cheating’ metaphor you can come up with. While growing the core, picking up more users and delivering to more locations are all clearly going to help these businesses propel, lifetime value is a win that trumps all other and as Amazon has shown so well, LTV comes best from having something everyone wants, and helping them get right to it time again and again and again.

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As a side note, there there’s a flip side to this for businesses outside the core of the daily deal sites – easy opportunity. While I’ve become less and less diligent about reading my daily deal emails (they all get sorted and put in a folder), an offer outside the box is going to catch the attention of a lot of people who haven’t bought recently, if at all. Perhaps that’s why my local rock climbing gym and the nearest paintball fields are such fans.

Web Analytics – Why you need to pull in net cost, promotions & all the other hidden “goodies”

Posted on March 9, 2009 by teds

Every day you’re measuring your ecommerce sales, optimizing campaigns and getting just the right offers in place to beat this economic gloom. Things seem good, the boss is and all is going well until the end of the quarter hits and John finance comes running into your office screaming about how you’ve sunk the company with horrible bottom line sales? Ok, that may be a bit of a stretch but the issue is no laughing matter – analytics are something almost every ecommerce site has learned to take seriously and for good reason yet many marketers still look at the top level only leaving a great many unknowns until the books are closed hours, days or even weeks later.
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Understanding your customer in the new world

Posted on January 27, 2009 by teds

It’s easy to blame economy for decreases traffic, leads and sales but is that really a fair assortment or are you missing the bigger picture and perhaps the opportunity for growth? There’s no doubt that consumers are spending less these days and no doubt that their cut backs have impacted both the offline and online worlds but the economy is not the only thing changing and impacting spending and for many companies it’s time to face a reality that’s a whole lot scarier than an economic downturn – it’s time to realize the model has changed. Whether sales are falling down or rocketing up, it’s time to understand your customers in a way you may not have done before. It’s time to make decisions based on the reality of the new world and not just assume that a greater impact is at play in changes.

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Growing your community – Features that set you apart part II

Posted on November 2, 2008 by teds

Last week I talked about the importance of developing new and unique features to make your forum community stand out above the crowd in order to win & retain visitors. But the story doesn’t end with adding features, there’s a lot on off the shelf forum software to customize and customize it you must. In the second part of this series I explain a few of the prime areas to change because at the end of the day to win the user over your site needs to get them back.

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Do you know why people are at your website? Analytics by segment.

Posted on October 2, 2008 by teds

1-3%, that’s the typical first-visit conversion rate most websites see. Whether you’re at the high end or the low end or even if you have twice the top rate you’re still looking at more than 90% of your visitors not converting. Not converting more than 90% of people who come to your website? That seems bad but if that’s all you’re looking at that number and that number alone you’re kicking yourself in the foot; 90% not converting? Maybe they are, you’re missing the customer’s goals.

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