David's Blog

Marketing to the Post Recession Consumer

"Larry Bird is not walking through that door, fans. Kevin McHale is not walking through that door, and Robert Parish is not walking through that door. And if you expect them to walk through that door, they're going to be gray and old."

Boston Celtics fans well remember this infamous quote by tricky Ricky Pitino in March of 2000.

 

Well, a report published this week by eMarketer: The New "Normal" in Consumer Shopping Behavior provides more evidence that the old post-recession shopper who led the way out of the downturns of the early 1990's and start of the 2000's will not be walking through any shopkeeper's door this time.

While the findings are not drastically different than recently reported trends, some of the stats in the eMarketer report are stunners:

• 72.9% of polled consumers said they didn’t plan to return to how they used credit cards before the recession.
• 70% of Americans said their economic situations were the same or worse than a year ago
• 83% expect to spend the same or less on non-essential purchases in the next 12 months
• 55% of respondents to a PriceGrabber.com survey said they were spending more time shopping for and researching purchases on the internet this year, compared with 26% in 2009

These remarkable statistics indicate that this Great Recession is a game changer and consumer based businesses must take a hard look at how their customers are behaving and align their digital marketing initiatives with this transformed shopper. But what makes this recession and eventual recovery so unique and difficult to predict? A couple of reasons stick out:

A Demographics Shift

The Baby Boomer generation led us out of the previous two recessions with their trademark conspicuous spending and insatiable appetite for consumables. They won't this time. The prime earning years for Boomers are ending and their average household wealth has been whacked, down about 40%. They are approaching retirement age and the need to save will fiercely compete with their propensity to spend.

The Gen X generation is in a big spending lifestage (age 29-45) but they are smaller in number and this is the second time in their careers that they have faced a recession. With pensions a relic of the past and social security in question, they are playing without a net. I think they will spend cautiously even in these peak earning years.

Gen Y'ers actually outnumber Boomers, and because of their youth (10-28) their spending has been less impacted by these economic times. Historically this group likes to spend, especially on techie "must-haves". This group will be important when they establish their own households, but currently only account for 4% of household spending.

A Socio-Economic Shift

Oh really? OK, so you've heard this before. But it's difficult to overstate how much the economic shocks of the past two years have changed consumer and cultural behavior. We've all felt the shift from extravagance to restraint. There is a new stigma associated with spending and this will be a tough one for retailers as consumers reject impulsive spending and embrace a more thoughtful, pragmatic approach.

Consumers are tuning out traditional marketing messages, and instead are proactively researching products on-line. They're using social technologies to conduct research, get advice, read peer reviews, and broadcast their own complaints. Shoppers were exposed to an array of digital tools during the recession (mobile coupons, comparison shopping sites) and have become invested in this new shopping experience.

Clearly, the rules of the game have changed. We can not realistically expect a new spending spree to lift us out this recession as has happened in the past. Larry's not walking through that door. But today's shopper has created a new playing field for us to participate. There are new tools and opportunities but you need a game plan. Here's my starting five:

1. Know Your Buyers - With consumers gaining so much control in the shopping process, it is critical that you develop a detailed understanding of your primary buyers. They expect it! What are their goals, aspirations, background and daily activities? How do they describe your product or service? What words do they use? What media do they use? This is the first place you should start to develop relevant offers and messages that resonate with your customers.

2. Customize - As we've seen, today's consumer is purposeful and pragmatic. They do their research early in the process and have very specific needs and requirements. Businesses who try to be all things to all these consumers will fail. Consumers are not window shopping looking for ideas. They are looking specific solutions. Be clear on what you provide.

3. Get Found Online - The number of online shoppers researching products online has doubled in the past year! Many are looking for your product or service. Are they finding you? Do you have a website? Is it optimized for your primary buyers? Have you employed the keywords that your buyers use? Do you know where your buyers go online for information? Are you there too?

4. Get Social - The Internet is a free medium where you can participate in conversations with your customers and showcase your expertise. Learn where your customers go for information and engage in conversations. Start listening. Set up accounts on Facebook and Twitter. Start blogging. Your buyers are actively looking for solutions, be a resource for them!

5. Be Relevant - You need to understand your buyer's "need to haves" in order to position your product offerings as relevant, responsive solutions. Think from your buyer's perspective and look for opportunities to align your services with their needs.

Understanding The ROI of Social Media Marketing

There’s a terrific new white paper published by Forrester Research that addresses the frustrating task of marketers to validate and measure their investment in social media http://bit.ly/bh2VlW. Do not, I repeat, do not be put off by the title: “The ROI Of Social Media Marketing” . This is not Professor Erwin Corey double speak.

The author, Augie Ray, delivers a succinct, insightful and refreshing methodology that considers the broad range of benefits that social media affords businesses. He warns marketers to avoid narrow ROI based performance measures, but rather develop a “Balanced Scorecard” that fully captures the value delivered by social media programs and tools.

Ray states: “A balanced social media marketing scorecard will consider and monitor effects across four perspectives that balance the short term and long term and the directly financial with the indirectly financial outcomes.”  The four perspectives are:

1. Financial. Has revenue or profit increased or costs decreased?
2. Digital. Has the company enhanced its owned and digital assets?
3. Brand. Have consumer attitude around the brand improved?
4. Risk Management: Is the organization better prepared to note and respond to attacks or problems that affect reputation?

The author discusses each perspective with concrete business examples and adds his own insights about the rapid movement of social media out of the experimentation stage and into mainstream marketing strategies.  He warns marketers not to use the term “ROI” unless specifically referring to financial returns:

"ROI has an established and understood meaning — it is a financial measure, not a synonym for the word “results.” Marketers who promise ROI may be setting expectations that cannot be delivered by social measures.”

Ray warns marketers to avoid assigning financial value to nonfinancial metrics such as followers, retweets, blog comments, and positive reviews. For example, some businesses assign a value to a Facebook fan. This is problematic because it’s what businesses do with their followers that count, not the fact that they merely have them. He states:

“A mass of followers that “like” the brand but never return to the fan page is far less valuable than a handful of followers who frequently share brand updates with friends.”

He also discusses the issue of attributing results to social media campaigns, when they are part of an integrated campaign that employs both social and traditional media. He illustrates the point using PepsiCo’s Pepsi Refresh Project. The project used television to drive awareness of the program and traffic to the Pepsi microsite.

“With offline, online, and social strategies increasingly integrated, attributing value to the “last touch” on social networks can result in undervaluing other marketing vehicles.”

The paper goes on to explain the ways to create a Balanced Scorecard Approach to more accurately define social media marketing results. The logic is easy to understand, and tackles the issues of applying traditional metrics with new evaluation measures.

 

5 Online Marketing Tips from Jason Fried

 
Recently I listened to a fascinating interview of Jason Fried, President and co-founder of 37signals. Jason was interviewed by writer-entrepreneur Brian Clark, co-founder of Lateral Action, a wonderful blog that explores the intersection of creativity and productivity. Check it out at http://lateralaction.com/articles/jason-fried/ .

Jason and Brian cover topics on the business philosophy and mission of 37signals, and also subject matter in Jason's best selling book, Rework. The interview is germane to anyone interested in the defining principles of online marketing and entrepreneurship. Here are just 5 takeaways from this interview which is chock full of business insights and marketing advice.

1. Bond with your target (annoy the others)

37signals has a reputation for taking controversial stands. When you take strong positions and express a clear point of view some people will love you and some may hate you. But that's alright with Jason because the alternative is being somewhere in the middle where people don't understand you or care about you. He believes that this is a problem with many companies today. Because they are afraid of offending someone, they appeal to no one.

2. Teach to reach

37signals has no marketing budget and does not invest in traditional advertising. Rather, they take an educational approach to marketing by publishing content through their blog, books and public speaking engagements. Much of the content is free.

Jason compares this approach to a chef's. Chefs enthusiastically share recipes and ideas which builds an audience that continues to share the content with others. Chefs give something valuable to their audience. Many businesses, he points out, don't follow chefs. They fearfully protect their content. They advertise and advertising provides no value to their audience.

3. Learn to say no

This point sounds quite Zen-like to me. Focus on your point of view and learn to say no to most other things, he advises. What are your needs and problems? If you have needs, then there probably is a market with the same needs. Find that market, get their feedback. Ignore the noise of the masses.

4. Try "bootstrapping"

Jason advises small businesses not to seek investment money up front. Instead, try bootstrapping. Service companies (unlike software developers) don't have substantial upfront expenses, so concentrate on building a revenue base, customers, and a team.

This instills the mindset of a bootstrap company that has to make money, as opposed to a funded company that has to spend money. This mindset becomes habitual and cultural. It also builds your leverage with potential investors down the road.

5. On "Authenticity" and Transparency"

Jason takes issue with the terms "authenticity" and "transparency". He prefers the word "honesty". He points out that "it's none of your business" can be an honest answer. Transparency can mean that everything is your business, which is not true. You should share many things, but it would be irresponsible to share everything. Instead be honest, straightforward and clear.

So check out http://lateralaction.com/ and be sure to share it with a friend.

America's New Shopper

Stop me if you've heard this one: "Cooler Weather Hurt May Sales". As the major retailers prepare to release May sales results, headlines like this are appearing in business reports across the Internet. These reports hint that while May sales are expected to increase in the 2.5% to 4.5% range, sales across the retail sector were "erratic". No doubt we will be reminded that cool weather, a late Memorial Day, consumer sentiment and stock market volatility all tempered consumer spending.

Are you kidding me?

It's not the weather. It's not the holiday shift. It's not locusts. The economic shocks of the past two years have changed shopping behavior. Retailers may not like the looks of a new deliberate and purposeful shopper, but she's staring them down with a more thoughtful and responsible approach to buying.

Armed with a new array of shopping tools (many supported by new technologies) that emerged during the recession, this post recession shopper has learned to incorporate these tools to save time and money. She's packing comparison shopping sites (BizRate, shopLocal), community shopping sites (Groupon, Gilt, Rue La La), online and mobile coupons, and search engine shopping in her arsenal. This is not a shopper that is overly influenced by weather and calendar shifts. 

She is practical, pragmatic, and invested in this new shopping process.

So while some businesses will choose to wait out the storm, others realize that there will be no wholesale return to previous shopping patterns and behaviors. Smart retailers will adapt to the new patterns and forge relationships with customers early in the process. They will make product and savings information explicit and easily accessible across all these new touchpoints. They will ramp up social selling skills on Twitter and facebook and make sure that their brand is front and center in search results.

Retailers will develop new capabilities to better service customers through this new thoughtful approach to buying or risk being labeled a fair weather friend.

Crowdsourcing - Design by Committee?

"They sit in committees day after day. And they each put in a color and comes out gray. And we all have heard the saying, which is true as well as witty. That a camel is a horse that was designed by a committee."  - Allan Sherman, humorist

When you think of it, crowdsourcing is a very natural phenomenon in the new world economy of the empowered consumer. With traditional organizational silos toppling and businesses getting social media religion, we should have seen crowdsourcing coming. At first glance crowdsourcing drips with social media sauce: collaboration, transparency, openness, and community. It's a tasty recipe for soliciting consumer feedback and brand ownership.

But can crowdsourcing slide into the dreaded realm of design by committee? Design by committee isn't pretty. It can mean inconsistency, banality and lack of a unifying vision from marketing leaders. OK, I may be overstating my point, but it's worth taking a look at exactly what crowdsourcing means and how it is being employed by major companies.

What is Crowdsourcing?

Jeff Howe, contributing editor at Wired, coined the term. According to a recent New York Times article (http://bit.ly/9xFe7v) it means"the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call." The mega crowdsourcing success story is Threadless.com.

The Success of Threadless.com

Threadless is the online teeshirt producer that lets customers select which designs make the grade. Their community of artists submit their designs daily and about 12 of the most popular are released to the public for purchase. Threadless sells about 15,000 of these originally designed tee shirts each week generating $38 million in sales annually. They staunchly protect the artists' copyrights and have nurtured an online community that is the envy of the fashion world. Trust, collaboration, and partnership with the artists and the buyers is the business model, one that is projected to grow 40% this year.

Then There's HTC

But the model is not always so pure. In a recent blog post, Abe Sauer of brandchannel takes mobile phone manufacturer HTC to task for their online voting promotion (http://bit.ly/bBpH9w). "Crowdsourcing also is being used to generate new products and direction for brand identity and, at its worst, create brand collateral such as logos, taglines, etc., such is the case with HTC crowdsourcing the name of its next device." Abe states: "A brand that presents a huge, undefined group with a few directions and lets them fly off in all directions is not doing itself or its core customers any favors." Something to think about. Here's a screenshot of the HTC poll:

Poll

View Results|

Invite Friends To Vote

5284 votes

The guys and gals in the lab are working on something new and we want you involved in the process. We are looking for a name that is playful and full of youth. If you were to choose one of the following names for a new phone, what would it be? Here are the options in no particular order:

 HTC Jovi

 HTC Zeal

 HTC Wildfire

 HTC Festi

Publish this poll!   Report this poll

      Results

So what is it? Is crowdsourcing a natural extension of the principles of social media: trust collaboration and real partnership to advance the brand, or is it a shortcut that tempts brand managers to abandon conviction and appease the masses? As always, the devil is in the details.

Post Recession Retail Strategies

While we all wait on official word that this lousy, stinking recession is over, retailers had better not wait to apply lessons learned during the recession and adapt to the changed consumer and marketplace.

A new, insightful report by PriceWaterhouseCoopers and Kantar Retail : The New Consumer Behavior Paradigm: Permanent or Fleeting?  identifies important consumer behavioral changes and suggests that this recovery will be significantly distinct from the prior two. There are many important takeaways in this report and I think that several of the main points align smartly with the new tools and opportunities afforded by social marketing.

Practical Consumerism

Going forward, according to the report, consumers will purchase more deliberately and with purpose. They will take a more thoughtful approach to buying and will utilize new shopping techniques and tools discovered during the recession.  Post recession shoppers will display a “conscious and practical consumerism” very different than the conspicuous consumption of Baby Boomers after the post-dot.com bust at the start of the decade.

ROI: Return on Involvement

Shoppers will become even more involved in the process and start the shopping process with specific products in mind, rather than browsing retail stores and websites. Shoppers developed new skills and techniques during the recession, utilizing technology to manage spending and maximize savings. Shoppers invested their time learning and using list making and meal planning tools, online and mobile coupons, opt-in emails and comparison shopping sites. The time and money saved through this new involvement in the shopping process the report dubs: “Return on Involvement”.

SEO, Thought Leadership, Content Contribution, Social Networking

Retailers better have done their SEO homework to make sure they have a fighting chance to rank in these targeted searches by this involved consumer. Clearly the retail companies that have already earned authority on the web as industry experts by consistently providing relevant content to their customer base will stand out.

The retailers that execute a marketing continuum rather than marketing campaigns will be better prepared to service this involved shopper. This consumer will buy deliberately, only when she is ready, so retailers need to engage in ongoing communications with her, delivering a consistent value message. Twitter updates, Facebook conversations, mobile messaging, and opt-in emails all need to be integrated into the retailers’ marketing mix. Again, companies that have already established trust relationships with consumers have gained significant competitive advantage.

Bye Bye Boomers

The report also discusses important demographic changes that will have great impact on the recovery. It’s fascination stuff but this post is way long already. Download the report at: http://bit.ly/b7kohm to learn why retailers better tune up their understanding of Gen X and Gen Y shoppers.

Unfolding a Lawn Chair

If there ever was a sucker for a quick fix it's a golfer. Golfers constantly tinker with their grip, stance, back swing, and follow through desperately looking for that one magical tip that will transform their game. They fall prey to snake oil salesmanship, buying into every "revolutionary breakthrough" in equipment, teaching aids and swing guru DVD's. It's enough to make you feel like an unfolded lawn chair:

Unfortunately, quick fixes don't work. They don't work in golf and they don't work in business. And despite claims by some self proclaimed geniuses who allege to have purloined the secret Google algorithms, they don't work in marketing 2.0. But consistently creating remarkable content online for a targeted audience and earning their trust over time does work, as demonstrated by Mike Pedersen.

Mike Pedersen is a leading golf fitness training expert who runs golf-trainer.com, an online golf fitness training site that offers products to help amateur golfers maximize their game. Mike believes that many middle aged golfers, who are passionate about the game, perform poorly due to loss of strength and flexibility. I get the feeling that Mike "feels" their pain and frustration.

He offers fitness training products and exercise instruction to this targeted group and employs the fundamentals of inbound marketing to a tee (sorry) to do his selling. Mike expertly executes tactics to:

1. Define a Buyer Persona - Mike has a deep understanding of his buyer, a middle aged amateur golfer, passionate about the game of golf, with declining physical skills. Mike communicates their problems and offers specific solutions with targeted content.
2. Create Remarkable Content - Mike has built and impressive body of work over time. His blogs, videos, and ebooks provide fitness and flexibility regimens to the targeted buyer. New content is posted daily which drives traffic to the site and furthers his reputation with the search engines.
3. Give Free Content - Mike provides free, relevant content to everyone who visits the site. Watch a video, browse through articles, download an ebook. This is the good stuff, not throwaway teasers.
4. Create Clear Calls to Action - Every page on the site includes links to free content and the product pages. This attention to detail fosters deep engagement and creates multiple opportunities for conversion.
5. On-Page and Off-Page Optimization - The website, blogs and articles rank near the top of Google's organic search results for golf fitness, training and exercise. The website, golf-trainer.com, has over 5400 inbound links demonstrating the site's relevance to Google's users.

So in addition to learning some great techniques to shave strokes off your game, there's much we can learn from Mike Pedersen's implementation of inbound marketing best practices and his commitment to earning on-line authority over time and resisting the quick fix.

...now maybe if I move my grip a little to the left...

Once Upon a Tweet

Recently, I invited my twenty something nephew to open an account and follow me on Twitter. He sent me an anti-spam-like reply: "Sorry Dave, I draw the line at Twitter." Well alrighty then. So how do you explain the value of Twitter to a skeptic? I like to tell my Laura Fitton story.

"Sorry Dave, I draw the line at Twitter."

Laura Fitton and I follow each other on Twitter, but otherwise don't know each other. Why would we? Laura is a prolific speaker and entrepreneur in the social media space. She founded Pistachio Consulting, co-authored Twitter for Dummies and recently launched the startup http://oneforty.com, a comprehensive directory of web based mobile, desktop and miscellaneous platform apps for Twitter. I am an occasional Twitter user.

               

Laura was on a national tour last November promoting Twitter for Dummies and oneforty.com. Scheduled to fly from Orlando to Denver for an 8pm dinner/booksigning, Laura's flight did not take off due to mechanical problems. She tweeted the twitterverse at 4:15pm seeking alternative travel suggestions. Having lived in Denver, I remembered some flight info and jumped in.

Laura while deplaning (4:15pm): "Wondering most expeditious way to rebook on a different flight to Denver ASAP. Any ideas? In Orlando now about to deplane."

Me (4:19pm): "Frontier Airlines has a flight at 5:01pm."

Laura (4:21pm) "What's their #?"

Me (4:23pm): "800-432-1359"

Laura (4:32pm): "Holding a ticket for the 5pm Frontier flight. Twitter I love you excessively. @davidfrawley I owe you one!"

Laura, now boarding (4:35pm): "You are awesome my friend. Thank you VERY much."

Amazing. Made my day. Screw my nephew.

Timeless Principles and Social Media

As traditional businesses grapple with the new realities of the empowered consumer and social media, we should not overlook the fundamental business principles that make these advances so valuable.

Great communicators in the social media space like Seth Godin, Chris Brogan, Julien Smith and David Meerman Scott write about the importance of trust, openness, and collaboration in our web enabled world. Their insights ring true because they purport timeless principles. Principles that thought leaders in business management have been chewing on for decades.

Tom Peters has been challenging business leaders with passion and conviction for 40 years. Take a look at his recent video post below where Peters reminds us of "things you've known for years and years".

"The problem is never the problem. The response to the problem is almost always the real problem." states Peters. Examples supporting Tom's point are everywhere.

Example:

On February 13th Southwest Airlines enforced company policy on Actor/Director Kevin Smith, requiring him to purchase a 2nd seat because of his size. The flight was full, so Smith could not purchase an additional seat and he was forced to take another flight.

Let the tweakout begin! Smith began an escalating conversation on Twitter taking the airline to task and warning would be flyers. So if the response to the problem is the real problem, how did Southwest respond? A recent post on Mashable (http://mashable.com/2010/02/24/social-media-trust/) points out that Southwest's response was immediate:

I've read the tweets all night from @thatkevinsmith - He'll be getting a call at home from our Customer Relations VP tonight.

11:14 PM Feb 13th via TweetDeckRetweeted by 51 people

Southwest confronted the problem head-on via Twitter, as if Tom Peters was advising them to make the response "positive, quick and overwhelming".

Management Best Practice + Social Media Best Practice = Truly Effective Communication.

Social media tools like Twitter provides businesses new capabilities to demonstrate their principles, like building trust, and forge powerful relationships with their customers. Companies that recognize this elegant alignment of fundamental values and new social communications are quickly getting found by the empowered consumer.

Miracle on 34th St. 2.0

Watching "Miracle on 34th Street" (1947) last night, I was struck by the similarities between the radical marketing ideas of the main character, Kris Kringle (Edmund Gwenn), and the new marketing strategies of web 2.0. 

You've seen the movie. Macy's Marketing Director, Doris Walker (Maureen O'Hara) hires Kris to play Santa Claus during the big Thanksgiving Day parade. Kris is a big hit, but the snow hits the fan when Santa (Kris) uses marketing transparency and open, customer first tactics as spokesperson for the Macy's store. 

If you remember the plot, after Kris' smashing success at the parade, Doris hires him as the official Macy's Santa for the holiday season. One of Kris' responsibilities of course is to meet with the kids (and their moms) in the shopping crowd and ask them what they want for Christmas. One of the kids asks for a pair of ice skates, but instead of directing the mom to the skate department at Macy's, he suggests going to competitor Gimbel's because they sell skates that are a better fit for the customer. Is it just me or does this sound familiar?

• Marketing Director Doris panics because she is losing control over tried and true marketing tactics... This sounds a lot like some marketing directors that I know (including me a few years back).
• Toy Department head (Philip Tonge) also panics when he learns what happened, despite the fact that the child's mother (Thelma Ritter) is delighted and professes a new loyalty to Macy's...I love merchants: "I don't care if you're happy, what about my margins?"
• Marketing Director Doris does the only logical thing: fires Kris for causing such unabashed customer glee...This reminds me of the great story told by David Meerman Scott http://www.webinknow.com/ about getting fired from The Thomson Corporation.

My point is that in today's web enabled world, the more things change the more they don't have to stay the same. Smart businesses know that customers are the new marketing medium. The Thelma Ritter character in Miracle on 34th St. doesn't have to wait in line to find the right gift, she goes on-line. She routinely uses search engines,  social media sites, online peer groups and YouTube. She spreads the word through amazingly efficient word of mouth networks unimaginable in 1947 or even 2007.

So it's time to get on board. 2010 will be a year that rewards progressive marketers and businesses that learn and implement the new techniques of inbound marketing and web 2.0. Remember, Doris and Kris both received a big Christmas bonus from Mr. Macy.