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The Retail Advertising, Marketing and Promotions Blog

Gaps Closing Between Cross-Channel Consumers and Retailers


As a follow-up to last week's multi-channel retailing blog post, I found a couple more Sterling Commerce surveys which show that while consumers are looking for seamless shopping experiences and want to get more value from retailers through multiple shopping channels, retailers are still working on closing the gap between these expectations and their abilities to deliver a great shopping experience.

For example, on the consumer side:
  • 56% of US consumers want to be able to choose after purchasing an item online whether it will be delivered to their home or available for in-store pick-up
  • More than 80% want to be able to return merchandise to a store even if it was purchased online or over the phone.
  • 70% consider it important for store associates to be able to find an out-of-stock item at another store location or distribution center and arrange for the product to be held for customer pick-up or shipped to their home. 
  • Two-thirds want to be able to order an out-of-stock item at an in-store kiosk, over the phone or on a PC.
  • European shoppers expressed an even higher demand for multichannel shopping features.
Bottom-line re: consumers: "The Internet has caused shoppers’ cross-channel expectations to escalate dramatically, especially when it comes to convenience and availability. Shoppers see retailers as one brand - they don't think in terms of multiple channels. (They) don't care how difficult or challenging it is for retailers to organize their companies to meet their needs."

While 98% of polled retailers agree that "a retailer's inability to meet its customers' cross-channel expectations threatens customer loyalty and competitive advantage in the marketplace", only:
  • 81% are fully or partially integrated across all of their sales channels (e.g., store, call center, Website, kiosk, catalog).
  • 87% are or will be able to provide the ability to track order and shipment status in the next 12 months through the purchasing channel, and 77% will be able to provide that capability via any combination of channels.
  • 43% have a process that allows customers to pick up their orders in the store regardless of the purchasing channel.
  • 48% have an automated process that allows customers to return their orders to the store regardless of the channel through which it was purchased.
  • Two-thirds will have in the next 12 months the ability to view on-hand, in-transit, and available-to-promise inventory at each location via a single mechanism.
  • 60% will have in the next 12 months a process that enables store associates to find an out-of-stock item at another store location or distribution center and arrange for the product to be held for customer pick-up or shipped to their home.
Bottom-line re: retailers: "...Retailers without cross-channel execution plans already in place will soon be left behind. But, there are opportunities to leapfrog the competition by automating cross-channel processes and achieving global order, shipment, and inventory visibility across all channels."


Posted by Universal Ad

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Which Retailers Are Best at Marketing?


A couple of quick links today (after all, I need to balance out yesterday's extra long post...)

The first article covers a CMO Council survey that studied the marketing messages of 25 brands across different channels. The results - while it did not finish first in any of these channels, The Home Depot came out first in terms of the consistency of its messaging across all touch points. Top ranking brands included Southwest (Web), American Airlines (call center), Allstate (advertising and collateral) and Dell (in-store). The lowest ranked brands were Comcast and DirecTV.

The second article covers Cannondale's PoweRanking survey which gave top honors to Wal-Mart (same as last year and several years before that, but with lower ratings). The survey ranks companies for "retail marketing competence on the basis of a number of  criteria, including clear company strategy, most innovative consumer marketing, and best store branding." Wal-Mart at #1 was followed by its rival Target in the 2nd place and by Kroger in the 3rd place (up 5% from 2007).

The results suggest that "Wal-Mart’s low price strategy is resonating with consumers and manufacturers," and that "Kroger’s strong showing in targeting its shoppers and shopper segments is paying dividends.” Also, “retailers that excelled...have completed their own customer segmentation and begun to develop alternative store formats and merchandising platforms to address newly identified needs.”


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Catering to Multichannel Consumers


The issue of multi-channel shopping is become more and more important for retailers of all sizes and across all verticals --- cross-channel buying is expected to more than double by 2012, with nearly 40% of retail sales influenced by the Web and by cross-channel at that point. In light of this trend, several reports have been published lately about shifts in consumer channel use patterns and how retailers are addressing these changes in their operations.

IBM's Multi-Channel Retailing report, explores "the features and functions consumers value while shopping, and the reasons why (they) are quick to shift their loyalty to specific retailers across multiple channels," and aims to help retailers "maximize the multi-channel experience and build customer advocacy so they can successfully evolve with customers' needs over time."

The IBM research team found that:
  • Consumer electronics purchases are the most frequently shopped product category among multi-channel shoppers, followed by apparel, accessories and footwear, home improvement, DIY and appliances.
  • Apparel, accessories/footwear and grocery have the greatest % of impulse purchase decisions per basket in the US.
  • The grocery market had the highest number of impulse purchase decisions per basket, as well as the largest percentage of impulse shoppers, in the UK.
  • Over 75% prefer shopping "Online to Store" followed by "Store to Online" (7%) and "Online to Call Center" (3%).
  • US consumers spent the most on purchases made between the "Online to Call Center" channels, while UK consumers spent the most between the "Online to Mobile" segments. 
  • The 18-24 year old group in the US and the 25-34 year old group in the UK have the most multi-channel shoppers. 
  • 46-50% of shoppers switched loyalties to retailers as they shopped across different channels, with price as their primary motivation for change, followed by convenience and product availability.
A few more relevant consumer surveys should be mentioned, showing that "offering products through multiple channels was key for online retail success":
  • According to PriceGrabber, 38% of US online buyers shopped both online and brick-and-mortar stores, using both channels about the same amount. From the rest, 31% preferred shopping online while 27% preferred physical stores.
  • A Piper Jaffray report says that "offering products through multiple channels was key for online retail success." While no single e-commerce platform dominates, US online consumers prefer fixed-price third-party sales most, followed by going directly to a retailer’s Website, then search, auction and comparison sites.
  • The e-tailing group reported that "the in-store experience is still far more robust than what one finds comparably online when stellar store associates are part of the equation." When they compared the experience of finding product information at multi-channel retailers’ bricks-and-mortar locations vs. their online shops, physical stores scored a 3.98 out of 5 across the 50 items evaluated, while online stores averaged 3.05.

So what can retailers do to act upon these findings and move themselves more quickly towards the inevitable multi-channel future, where consumers are able to use all channels interchangably for all their needs?

Starting off, obviously, with a few articles from Multichannel Merchant magazine, although the writers don't completely agree. On the one hand, the first article explains why retailers should create an integrated multi-channel organization, especially on the marketing side. In fact, studies have shown that "once a customer responds to, and orders from, more than one channel, that their subsequent lifetime value increases significantly" (50-100% gain in lifetime value for two-channel buyers and even more for three-channel buyers!)

On the other hand, the magazine also published two articles that present a different side to this argument. One article claims that "the conventional wisdom that single-channel customers should be encouraged to order from additional channels is flawed," and that  the multi-buyer status "is responsible for the superior performance of multichannel customers, not the diverse channel preferences they have displayed when making their purchases." (The second article provides some analytical results that back up these assertions.)

(Another interesting two-part article over at ClickZ - Understanding Multichannel Dynamics and Analyzing Multichannel Dynamics.)

Internet Retailer provides a few examples of best practices for multi-channel retailers. The basic rule is that "retailers that sell in multiple channels should tie those channels together as much as possible." For example, AE.com uses the same media as its core shoppers do, while letting them share information across channels. The site allows visitors to select an item and text information about the item to a friend or a family member’s cell phone, including a code that in-store shoppers can share with a sales assistant who can use it to retrieve the exact item, and a link to the product page

Finally, an E-Commerce News article about using social networking initiatives as a integral part of your multi-channel operations. As the article notes "there's just not enough time anymore to wait and see if your mix of applications, content, catalogs, pricing and service is optimal every 90 days. It needs to be a daily take on performance , and with social networking, that's possible without being obnoxious or intruding to your customers... Optimizing cross-channel experiences can now be done with real-time data based on listening to customers using social networking."

(Added bonus - Retail Systems Research reports on "the role that eCommerce will play, not as an independent entity, but as a player in an integrated cross-channel strategy." What are the biggest business challenges and the most viable near-term opportunities?
)


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Online Shopping—in the Store


According to AMR Research, more and more retailers are providing in-store kiosks and wireless devices that let shoppers access a store's Website for product information or to place an online order. More than 40% of retailers offer such services, and nearly three quarters plan to do so by 2010.

These technologies "can save the sale for retailers by creating an endless aisle of products when the store is out of stock or space limitations prevent the retailer from displaying its full selection." Additionally, kiosks provide customers with supplementary product information available from the retailer's Website.

At grocery stores, kiosks have transitioned from manned stations to standalone sources information that can grab customer attention and influence their purchasing decisions by offering food-related items such as recipes, health information, wine pairings and cooking demonstrations.



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Stores' Brand Identity Is In The Bag!


Quick link to an interesting MarketingDaily article about store bags - it seems that every other retailer out there is trying to differentiate themselves and "refine their relationship with customers" through their bags, or lack thereof.

Whole Foods with Sheryl Crow-design reusable bags, Giant Eagle with team-themed bags (also reusable, of course), and Wal-mart vowing to cut its plastic bag use by one-third in five years. Bags offers brands a way "to speak right to people's core values.

You're not just asking them to walk around with your logo; the bags give them a chance to say something about themselves. It's very smart."

While we're at it, here's a WSJ article about the design of slightly more upscale bags - holiday shopping/gift bags from major NY retailers, such as Saks Fifth Avenue and Barneys. One thing that is exactly the same as Wal-Mart: all going green as well...


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What to Do When Your Marketing Budget Is Cut


Nobody really knows at this stage how to appropriately plan their budget for next year - will things improve or will they get even worse? What should I put add to (or delete from) my budget to make sure I get the optimal outcomes?

The ANA recently polled conference attendees about their marketing mix, budgets, plans, and tactics throughout the event (covered by MediaPost). The results show the following:
  • 33% said spending will be reduced and 33% said spending will be constant / marketing mix will be reallocated
  • 56% of CEO think of brand-building as an investment, while 21% think it's an unaccountable but necessary expense
  • 70% currently measure brand growth according to sales and net income, while others use third party brand equity valuations (15%), shareholder value (9%), household penetration (4%) and company culture (3%).
Obviously a mixed bag. Since all marketers have to put something together whether they can predict the future or not, here are three articles that can help you think about how to achieve the best results:
  • What to Do When Your Marketing Budget Is Cut - While your management wants you to react immediately, you know that an ill-considered elimination of marketing support can quickly translate into a disastrous drop in sales. Rather than responding hastily and arbitrarily just to show activity, I recommend performing a quick analysis of your situation to get a better understanding of your best business alternatives. This will help you to redirect your marketing budget to maximize results.

  • Using Search Data to Drive Annual Budget Planning - This year an uncertain economy will leave its mark on all line-items, search included. And even though search spending is likely to remain flat, the clever search marketer will present a refined strategy based on changing consumer tastes, as evidenced by recent search data and offline indicators. Assuming that the smart marketer has been analyzing such data for years, 2008-2009 is the time to put it to the test. 

  • Rethink Your Search Marketing Budget for 2009 -  Data shows that 49% of marketers set their PPC budgets too low and burn through that money too quickly. Many marketers also consider SEO efforts as “free,” causing them to overlook the costs of external consulting or in-house staff time needed to implement tactics. The article provides advice for "creating a budget that will help you optimize your dollars" including tips that cover setting goals based on the quality of the leads or customers generated by search marketing,combining SEO and PPC into one search marketing budget, carving out a percentage of your search budget for testing, analyzing past campaign and testing results for new activities, and supporting your budget requests with facts.


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Online Video Helps Retailers Covert Browsers into Buyers


More and more case studies are being published about
retailers that have added videos to their web sites and found them to be effective in getting consumers to buy and retaining their loyalty. Videos can help create a "more dynamic, interactive and engaging environment (that) can contribute to a total brand experience and drive user engagement, allowing retailers to create a rich, memorable brand impression for online shoppers, drive repeat traffic to retail sites and increase online sales revenues."

Personally, I can think of several instances where I found it difficult to understand exactly what a product does from the text, and I'm sure I would have bought it if only I could have seen it in action.

Here are three case studies that illustrate this trend:
  • Online home improvement retailer - A large part of the reason that only 5.7% of home improvement buyers make even one online purchase a year is that they want to see, touch and feel products like plumbing fixtures. To solve this problem, Improvement Direct "created an in-house photo studio that takes images of products from several angles, and then creates Flash-based images that allow site visitors to spin an item to get a complete view of it." The retailer is also "creating its own videos that allow knowledgeable employees to provide information about products." The result - conversion rates increased by 20% for products with these 360-degree views.
  • Electronics retailer - By adding basic how-to videos that help familiarize consumers with the basics of technology, the company has lifted conversions and increased accessory sales 12% in some of the pages they've already tested. They've also received great customer feedback and gotten people to come back to their site again, even when they're not planning to buy anything. The case study also includes several lessons they've learned in the process:
    • Find content ideas by searching your customer forums, asking your sales associates, mining customer service for ideas, and talking to your suppliers/manufacturers. 
    • Focus on the products and topics you want to cover by first targeting the big, easy wins and only then proceeding to your more niche idea.
    • Keep your production quality requirements low for and easy and “relatively inexpensive” process --- simple graphics + shot transitions + basic editing software + an HD camera + untrained staff members.
    • Do not use the videos to sell, do not mention price or discounts or do any marketing
    • Test to find the best combination of format, player, presentation, placement and other video attributes, possibly using a usability lab, multivariate optimizing and results monitoring.

  • Supermarket chain - A UK chain, which sources and packs fruit and vegetables straight from British farms, has created a video that follows the journey of certain types of apples from tree to store. The online video stars their apple buyer, who works closely with farmers to get the apples in-store when they are best in season.
(Late addition - an Internet Retailing article with a few more examples of retailers using videos to drive sales, including two retailers that enable customers to add items directly to their virtual shopping carts by simply clicking on the products as they appear in the retailers' video segments.)

Finally, here's a MarketingSherpa article that explains how to get started on the process of creating low-cost, high-quality online videos. Some of the tips in the article include:
  • Research the subject before starting, including instructional videos on YouTube.
  • Set a solid metric-based goal, such as number of visitors, purchases, leads and conversions.
  • Choose a format, such as short conversion-oriented videos, how-to videos and newscast topic-oriented videos.
  • Get the right equipment, including a camera w/a hard drive (not high def), a tripod, halogen lights and editing software.
  • Prepare scripts and storyboards that tell a story, organize the set and set up the lights and sound.
  • When shooting the video, don't worry about imperfections, do multiple takes and leave some wiggle room. 
  • When editing, avoid fancy transitions, stick to stock sounds and make the file as small as possible.


Posted by Universal Ad


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Top Tactics to Boost Online Ad Response Rates


The online ad market is not looking well these days --- it is declining faster than expected and marketers aren't likely to increase their spending next year. There was only a 0.6% growth in Q3 online ad revenue for the top four Web companies, down from 12.7% last year. Many advertisers have not even set their online ad budgets for next year, and some are already cutting their Q4 budgets across the board. On the positive side, ads are moving from traditional media, such as print and radio, to performance-based display ads, ad exchanges and search advertising (as well as quality and vertical ad networks.)

So how can a marketer best utilize what is left of his/her online advertising budget in this situation? Let's start by looking the preferred online ad formats so you can make sure you're able to reach your target audience in the format to which they're most likely to be attentive.

According to an iPerceptions survey (covered by eMarketer, ClickZ and MediaPost), current ad formats aren't very effective as "the world is suffering from banner blindness, people don't click on banner ads anymore, (and) video ads are not popular with most consumers." That said, text ads are most likely to draw users' clicks, with 25% likely to click a link. The only other format that comes close is the right side banner with 20% likely to click it. Other ad formats don't perform nearly as well. Only 12% are likely to click on a top-banner, 11% for video ads, 7% for interactive units and 4% for interstitials.

40% of users who were likely to click on any type of online ad made less than $50K per year, and only 15% made over $150K. Video ads drew even more respondents with lower incomes: 49% of those likely to click on video ads made less than $50K per year and only 13% made over $150K. 33% of weekly visitors and 29% of daily visitors to a Web site are likely to click on text ads, compared to 15% of monthly visitors and 17% percent of first-time visitors. One final finding --- 31% of those under 25 are likely to click on a video ad, compared to 21% for those aged 25 to 34, and 14% for 35- to 44-year-olds.

Bottom-line: since they can't count on current ad formats so marketers need to "start looking at things like direct content integration and product placement. There's still a place for things like banners and skyscrapers, but it's much more about brand awareness than inducing conversions." An additional issue raised by this study is whether "the click should be the focal point for determining a campaign's success, regardless of the ad unit," or whether marketers should look at cost-per-action (CPA)-based models, as well as "more holistic measurements, including clicks, CPM, and other factors taken together."

To that last point, comScore research shows that online ads do indeed have a significantly greater impact "than a typical 0.1% click through rate would suggest," as clickthroughs don't take into account the impact of online ads through "view-throughs" on future consumer attitude and behavior, as well as overall ROI. The effectiveness of online ad campaigns in meeting "branding objectives such as heightened brand awareness, improved attitudes toward the brand, and increased purchase intent, results ultimately in incremental purchasing."

According to the study, online ads "typically lifts online sales by 27% for two weeks to three months, (and) the lift in offline sales is typically 17%." Exposure to ads also increases site traffic (65% for one week and 46% over a period of four weeks) and online searches for trademark products (52% in the first week and 38% in the first four weeks). Bottom-line: "Not only does online marketing have the benefits of more attractive advertising rates and a faster growing retail channel, but it's clear... that Internet marketing also generates incremental sales in retail stores."

Considering all this data (good and bad), here are three articles that provide practical tips that you can use to improve the performance of your online advertising campaigns. E-commerce Guide offers "Eight Free Tools for Tuning Up Online Ad Campaigns" in order to boost visits and purchases, while Chief Marketer explains what advertisers of all sizes should look for in online ad exchanges and ad networks in order to achieve relevance in your ads and "gain the most efficient and successful audience targeting and reach." The third, from ClickZ, recommends the integration of direct response platforms (data collecting components and back-end analytics) into online banner ads using video.

Finally, here's a MarketingSherpa report that demonstrates the design elements you should use to maximize the effectiveness of your online ads:
  • Emotional - adding a picture of a person is the single most effective way to communicate brand information - improving response rate by more than 50%
  • Utilitarian - adding data entry fields such as email sign up or product search also improves response by more than 50%, while adding a video so you can "pack more information into an ad" improves it by nearly 50%.
  • Efficient - adding drivers such as more dynamic XML text to "match relevant messages to more exposed individuals, reducing wasted media" also improves ad response by nearly 50%, similar to adding interactivity to the ad campaign.


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Holiday Gift Card Giving Shifts to Necessities


Gift cards, whether holiday-related or not, are a huge market. No surprise then that the topic generates so much interest among the consumers, retailers and the media alike. After all, "the gift card is a no brainer for almost any company. They take very little space, so the revenue in terms of square footage is tremendous. And they are low maintenance. It's a terrific way to extend the brand."

Here's a round up of four recent surveys on the subject (although I'm sure you can find a few more if you look for them...):
  • According to Deloitte's holiday survey, gift cards will be the top gift purchase this holiday season for the fifth straight year. Although 66% of consumers plan to buy them, they plan to buy less of them compared to last year (5.3 vs 5.6) and spend less money on each card ($28.43 vs $36.18). Even when it comes to gift cards, people focus on the necessities. Case in point, the popularity of gift cards for gasoline increased to 17% from 13%.

    Despite the convenience of gift cards, consumers have 5.9 unused cards on average (vs 3.7 last year) and 14% are unlikely to ever redeem all their cards. 23% are concerned about the store closing before they can use a card and 24% have had at least one card expire before they could use it. "...Retailers have an opportunity to capitalize on this important revenue stream by implementing more creative and aggressive gift card redemption programs."
  • The NRF survey had similar results - they expect gift card sales to fall nearly 6% as some people pass them up in favor of holiday bargains. Fewer people will purchase them (53.5% vs. 56.6% last year) and when they do, they will spend less ($147.33 vs. $156.24). The biggest spenders will be men and those over 45. They suggest that retailers may want to "make minor adjustments to holiday plans as fewer people may be hitting the stores in Jan. to redeem gift cards.”

    Interestingly, although gift cards will be the most requested gift this year (followed by books, CDs, DVDs, videos, video games, clothing & accessories), those on the buying side aren't as enthusiastic about them. The main reasons are that they feel the cards are impersonal (22.7%), they would rather stretch their dollar by buying merchandise on sale (10.9%), and they do not want to buy a card with expiration dates or added fees (9.8%).

  • Yet another gift card survey, this one from the National Research Network (covered by BrandWeek), showed that while they continue to be a popular and practical alternative to gift-giving, retailers need to better understand what appeals to their target markets in order to make them more personalized. "The perception that gift cards are impersonal is the top inhibitor for consumers purchasing gift cards, with nearly half of respondents citing that as a factor."

    Despite the financial state of the market, over half of consumers plan to purchase at least one card. And although half of recipients typically spend more than the gift card amount when redeeming it, 15% of them spend less than the total gift card amount, giving the card issuer a benefit either way. Discount stores are the most popular gift card benefactors, with 42% reporting purchasing a discount store card in the past year, followed by restaurants (26%) and clothing (21%).

  • One final survey from Archstone Consulting expects sales to dip 5% with only 24% of consumers planning to increase their spending on gift cards. Consumers will also shift their spending towards household necessities such as groceries, and gas, or small indulgences such as dining at restaurants. But retailers can increase card purchase by creatively using incentive programs, such as coupons or discounts for either the purchaser or the recipient.

    Sales of cards through outside locations (grocery, drug stores, banks and kiosks) are expected to grow by 30% vs 2007. Pre-paid bank cards are still the most desired gift cards because of their flexibility, with restaurants/fast food selling more cards than any other category. Surprisingly, while the 13-24 year-old group has the least discretionary income, they spend more on cards than any other demographic on a relative basis, and receive almost 40% of them.
Finally, some retailers are innovating their way to successful gift cards programs. Target, for example, is offering a card that doubles as a digital camera with memory for 50 pictures, and Best Buy's cards have a built in speaker with a headphone jack. Are you using any cool ideas, techie or otherwise, to better position your gift card program in the crowd?


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Paying Attention to the Boomer Generation


The boomer generation is changing and lower-price retailers need to pay attention.

According to a Millward Brown survey, completed even before September's financial meltdown (covered in MarketingDaily), boomers no longer have the sense of optimism and accomplishment and financial well- being that they had before. Instead, 70% are struggling to make ends meet, thinking short-term, spending more on private-label products, and trading down. Additionally, 20% are uncertain about the future (compared to 10% in 2006), 58% have less expendable income than they did two years ago, 77% are cutting back on expenses, and 41% are dipping into savings.

The study divides the boomer segment into three categories -

  • Yesterdays (25% of boomers, 69% of them are cutting back on spending) - These boomers are pessimistic and typically have lower incomes and more health issues. While they are disconnected and disengaged, they still "buy with clout". Retailers should advertise to them by using price and value messaging, while "reinforcing and validating that they aren't alone and that most average Americans are just as concerned with making ends meet."

  • Todays (30% of boomers, 39% of them are cutting back on spending) - This boomer group has retained their optimism, spending and celebration of self. They have a higher stable income, as well as a vanity streak, feel accomplished and fortunate, are risk-tolerant and their health is good. They are planning well for retirement but are still willing to pay for higher quality. 

  • Tomorrows (45% of boomers, 60% of them are cutting back on spending) - They have lower and middle incomes, but still feel that "tomorrow will be better than today." Although one-third have suffered recent declines in health and are struggling financially, they are self-directed, as well as community- and volunteer-oriented. They key to reaching them is "spirituality and connection: to community, to religion, to information," as well as "hopefulness and optimism bearing themes that tap into their aspiration for a stable future", instead of "retire rich" themes.

All groups are cutting back on spending, mostly on clothing and apparel, dining out and driving. The places they're definitely not cutting back on are cable TV and beauty. One final and very interesting finding - all groups feel that "advertisers aren't speaking to them". Only 25% don't find ads geared to their age group insulting, 46% have trouble relating to people in ads and 53% said ads don't speak to them.

As a side note, if you're trying to reach boomers women, try word-of-mouth (WOM). According to a new survey, covered by MarketingDaily, they have "higher quality" WOM than younger women do. Their "conversations are more credible, and they are more likely than younger women to pass on what they hear to others, to seek additional information and, most significantly, to actually purchase the products talked about."

They also have higher purchase intent than younger women for 14 out of the 15 product categories that were tracked, the only exception being Media & Entertainment. The most positive boomer WOM was in Beauty & Personal Care, and food was also a highly ranked category.


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Five Fundamentals of Integrated Marketing


A quick link today to a ClickZ article about the basics of integrated marketing. It's very difficult to integrate a company's entire approach to marketing. If you want to try, start with the five fundamentals outlined in the article:

1. Start with the customer - put your customers at the center of your strategy and only then can you start working on achieve excellence in you multi-channel processes.

2. Emphasize customer processes - focus on helping your customers achieve their goals by coordinating each channel around that objective.

3. Transcend your campaigns - evaluate customers metrics that go beyond those of an individual campaign, including engagement, value and profitability.

4. Insist on interaction and dialog - your communications must be bi-directional and oriented towards listening and responding to customer behavior.

5. Fuse sales, marketing and service - go beyond the marketing department to encompass all parts of the organization that constitute customer touchpoints.

Bottom-line: To create customer-focused marketing with "relevant communications, interactions, and content, regardless of channel and customer interaction point" requires the leadership of a CMO who can "define and lead a ...strategy that crosses product, channel, geographic, even functional boundaries."


Posted by Universal Ad



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Successful Retailing, Even in a Recession


Earlier this week we looked at how marketers are (or should be) working in the shadow of the economy's black cloud (even finding a silver lining or two along the way!) Now let's look at this question from a retail perspective - a timely issue considering the sharp drop in October retail sales as consumers cut back on their spending. 

According to the NPD group only 35% of consumers have not changed their spending patterns. For the rest, their plans include cutting down on dining out (57%), clothes (54%), entertainment (50%), beauty products and music (44%), movies (43%), toys (39%) and video games (35%). This grim picture still leaves retailers with ways to encourage consumers to shop. For example, coupon use has risen from 23% to 27% since the beginning of the year, and the number of people who are shopping at sales has increased to 28% from 25%.

TNS Retail Forward shows similar results. Shoppers trading down to save money and seeking one-stop shopping venues, online retailers and stores closer to home to save time and gasoline. Naturally, discount and value stores are gaining at the expense of conventional and high-end retailers.  Additionally, store brands are benefiting at the expense of national brands. Whether these changes are permanent depends on "how well retailers address the needs of their new customers and how well new patrons acclimate to shopping in less-familiar territory.”

Even the online retail sector is showing signs of serious trouble. According to ComScore, the growth in online shopping has "fallen off a cliff," and their predicted e-commerce sales growth rate of 6-10% for the holiday season is "shockingly low compared to recent years". The hardest hit categories are apparel, shoe and accessory (3% decline in Q3), books and magazines (17%), and music, movies and videos (29%). Naturally, more and more consumers are going to coupon sites - even those earn more than $100K (37% more to be precise).

As Deloitte's US retail leader summed it up in a Direct article “given the credit crunch and the impact it’s having, retailers need a strong focus on cash flow management this holiday season. At the same time, it’s important to have a strategy and stick with it. While it’s tempting to match or beat competitors’ aggressive promotions, that approach can exact a heavy toll on profits. Retailers should be very strategic in making changes to their planned holiday promotions to limit the adverse margin impact as much as possible.”

So what can retailers do to stay alive or even thrive, beyond the general marketing tips from Monday's post? A BIGResearch report, for example, suggests that they should alter their marketing messages to better connect with shoppers, and help consumers consolidate shopping trips.

Here are a few articles that may provide you with some ideas:
  • How Retailers Can Navigate Inflation's Hazards - Many retailers have found themselves in a tough situation, locked between rising product costs and a limited ability to raise their prices. But Wharton faculty say that handled carefully, the current inflationary period may actually be a business opportunity for some retailers, especially if they make selective changes in inventory management, pricing and promotions.

  • Retailers Feeling Our Pain - Recently retailers have been going out of their way to let their shoppers know that they understand how tough it is out there. Most, by now, have offered various forms of sales assistance and only time will tell if they have been successful in capturing a greater share of shopper dollars along with their offers of help.

  • Will Retail Ever Bounce Back? - During this time of economic turmoil, many sense that when we finally emerge, some key aspects of the commercial world will have been fundamentally transformed. I suspect retail in America is one of them. Casting your mind forward five years, how do you think the retail landscape will be different?

  • Retail Innovates in Hard Times - While financial and economic news is bad for both consumers and businesses these days, the retail sector is being hit especially hard. However, amid the sales drops and predictions for a dismal holi­day season, there are signs that a few retailers haven't been stopped dead in their tracks by the finan­cial turmoil and are moving ahead with innovative projects.

  • Thriftiness on Special in Aisle Five - While it might seem counter-intuitive for stores to teach shoppers to cut their spending, several chains have concluded that providing such knowledge can spur loyalty and keep customers from trading down to cheaper competitors. In an era of prosperity, easy credit and changing social norms, many of those classes were revised to focus on more up-to-date topics.

  • Stop Giving Your Customers Reasons to Leave - Despite current economic conditions, retailers should continue to explore investments in technologies that provide improved customer service and optimize operational efficiencies in order to improve their competitive market position. This article outlines some recommendations for retailers facing various market-driven challenges.

  • Start Planning for the Rebound Now - While it's may be true that things will get worse before they get better, it is just as true that winners will emerge during these uncertain times. Smart retailers will make prudent plans to survive today's challenging environment, but more importantly, they will also continue to execute on a plan to enable them to leap ahead when the economy rebounds.

 


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Marketers Approach New Media With Caution


According to Forrester Research (covered in MarketingDaily and AdWeek), while more marketers are using emerging media channels, many remain wary of the return they'll get. Although 80% of marketers say "the benefits of adopting emerging channels are worth the challenges of trialing, 60% struggle to build the case for interactive marketing, and 68% would rather wait to adopt interactive channels until after they are proven."

Despite these findings, interactive marketing will continue to grow substantially over the next few years (Forrester projects an annual growth rate of 27% through to 2012). Marketers plan to focus on "proven media channels that customers actually use", including as email, search, and display media. Online video and most social media will also continue to show strong growth, with widgets, mobile and game marketing seeing less aggressive adoption. 

Marketers aren't equally interested in all new media channels, despite the massive hype some of them have received. For example, just 18% are currently working with in-game advertising and 67% percent said they have no plans to use it. And only 28% use mobile marketing, while 36% have no plans. Widgets were also rated on the low end with 37% having no plans in the area.

The obstacles on the road to successful implementation are less related to validation and more to execution, including managing content, gaining support, and measuring ROI. More than half of marketers using online video, display ads and search marketing wrestle with measuring ROI, while those using social networks or user-generated content often struggle with tracking results.

Another concern is finding channel-specific expertise. More than 30% of marketers running programs with social networks, blogs, UGC, and RSS adopters worry about their limited know-how and about having enough staff. This will become an even greater concern as they try to integrate them across their marketing mix. 47% want to determine how search marketing affects offline sales, while 38% struggle to tie search to other online programs.


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Marketers Missing the Online-Offline Connection


According to an iProspect report (covered by Promo and MediaPost) 45% of search engine marketers do not integrate their search marketing efforts with any of their offline channels. The integration that does take place is usually with direct mail (34%), magazine/newspaper (29%), television (12%) and radio (12%).

This is direct contradiction to the actual behavior of search engine users. A previous study found that 67% of search users are driven to search by an offline channel (TV at 37%, WOM at 36% and newspaper/magazines at 30%). 39% of those offline-influenced searchers make a purchase from the company that prompted their search.

These results were echoed in a more recent Jupiter report which showed that 66% of people responded to offline ads by visiting Web sites and search engines, while only 14% called a phone number. People went online based on TV (70%), print (57%), radio (32%), direct mail (27%) and outdoor ads (17%). They also found that younger users are less likely to respond to offline ads, and that 82% of those going online did so from home.
 
Back to the original iProspect report, the explanations given by marketers for this disconnect include offline include lack of budget (19%), lack of human resources (15%), lack of senior management buy-in (11%), separate people managing search marketing and offline channels (11%), and simply that they haven't considered it (13%).

Another disconnect happens when marketers optimize digital assets. Whereas marketers prioritize images (58%) over press releases (32%) and videos (20%), search engine users actually rate news (36%) as more important than images (31%) and video (17%).

Finally, the two integration techniques most frequently employed by search marketers are prominently including the company Web address (84%) and the company name (66%) in their offline projects. Additionally, only 26% utilize the same keywords in offline campaigns as are used in search marketing campaigns.

Bottom-line: “By failing to integrate their efforts with offline, search marketers are essentially ignoring the very channels that drive users to search... To truly push integration forward and fully reap its benefits, it is incumbent upon the CMO to break down the silos…and create a culture that rewards integrated efforts.”


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Holiday Promotional Trends That (Hopefully) Bring In Customers


Although last week I said that I wouldn't post about holiday-related issues anymore, this RetailWire discussion was too interesting to pass up.

According to the NRF study released yesterday, 72% of consumers have completed less than 10% of their shopping as they wait for better deals. While people "may be hesitant to purchase expensive gifts this holiday season... personal and practical gifts will resonate most with shoppers this year." Specifically, they plan to start with clothing and accessories (57%) and video games, DVDs, CDs and books (55%). Other popular gifts - new game systems, Blu-ray DVD players and other electronic items (30.0%), toys (41.6%), gift cards/gift certificates (53.5%), personal care or beauty items (20.8%) and jewelry (19.3%). 

The RetailWire article outlines the promotional trends that have been prominent thus far in the sales, discounts and other holiday promotions that have already been announced. Perhaps these can help you stand out in the crowd and bring in those elusive consumers shopping for gifts for others and for themselves (a bargain on an item they've wanted for months)?

The trends include Communicating Stability (personal messages that focus on the retailer's strengths), Gift With Purchase Offers (free gift cards for those making purchases over a certain amount), Price Point Collections (gift offers under a certain amount), More for the Store (in-store technology & events that create a more interactive shopping experience), and Continuing the Conversation (turning to social media and mobile marketing in order to drive traffic to their websites and physical stores).

Let us know what type of promotions are working for you as the season progresses.


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Steps for Marketing Success in a Down Economy


According to a Nielsen survey "there is a pervasive feeling of uncertainty and concern which is clearly affecting spending levels." 86% of U.S. consumers believe the country is in a recession, more than half of these feel that the economic climate won’t change for at least a year, only 18% believe the recession will be over within a year, and 38% consider the economy their biggest concern over the next six months, with older people even more worried. Any spare cash goes to essential living expenses, and then to savings (38%) and paying off debts (36%).

Belt-tightening strategies include trying to save on gas/electricity (67%), cutting out-of-home entertainment (56%), spending less on new clothes (55%), and using cars less often (54%). Just 4% have taken no action at all. Gender differences are quite distinct - 91% of women (compared to 82% of men) feel the economy is in recession, 39% of women said the state of their own personal finances over the next 12 months was "not so good" (compared to 28%), and only 16% of women (compared to 26%) think their job prospects over the next 12 months will be good.

So what can marketers do to survive in the face of worried consumers? Here is a collection of articles (quite a few of them ---  it seems that everyone has something to say about this issue...) that suggest possible approaches to a problem that is relevant to each and every one of us in the marketing field:
  • Making Marketing Count in a Down Economy - There is no better time than now for marketers to prove their value by demonstrating the revenue-generating potential of their department. The knee-jerk response is to focus on growth through customer acquisition. But experience has taught us that concentrating on understanding and keeping the customers you've got is the strongest strategy in battling churn.

  • Steps for Success in a Down Economy - The smart marketer knows that even in tight economic times, budget cuts to marketing often only result in lost sales, not improved revenues. Now is the time for marketers to make this fact known. Here are a few key steps every marketer today must employ to shift perceptions of their discipline from discretionary cost center to proven and essential value generator.

  • Marketers Need to Adapt to New Economic Conditions - Marketers need to be ready to adapt and innovate to manage and exploit new market conditions. Here is how marketers can provide added value in even the tightest of economic times. You must remain flexible, especially when it comes to gaining customer insight, integrating marketing channels and measuring and analyzing results.

  • Execs Offer Tips on Weathering the Recession - Most people in this business don't yet understand how hard this recession is going to hit by the first and second quarters of next year. It's going to be very severe and they don't understand how deep and long this thing is going to be. So here's some advice on how marketers could better manage the challenges created by the current recession.

  • Carat Urges Clients to Maintain 'Voice' - Because consumers behave differently during recessions, the good news is a chance to grow market share for those willing to learn from history and adapt tried-and-true practices to the media environment. For companies to recapture pre-recession sales levels within a year requires spending 60% more money than the amount saved by cutting the ad budget in the first place.

  • The Challenge Is To Wisely Spend Reduced Ad Budgets - Historically, marketing budgets are among the first to be cut in a budget crunch, but spending more during tough times when competitors may be scaling back is a good way to strategically boost market share. Effective marketing spending during economic downturns is not about how much you spend but how you spend it.

  • An Old Buzzword Is Back: Bargains - As the year began, consumers started to see a trickle of advertisements that played up brand value rather than attributes like status or prestige. As the economy worsened in the spring and summer, the trickle became a torrent. Now, as the crisis in finance continues, a veritable tidal wave of ads devoted to saving money is washing over the country.

  • Marketers Take a Softer Tack to Reach Uneasy Consumers - In response to the roller-coaster stock market and plunging housing prices, marketers are adopting a softer approach to peddling their wares, playing up comforting images in their ads and focusing on family and the warmth and safety of home. Some marketers are even reviving old advertising to remind consumers of happier times.

  • In a Recession, Try Empathetic Marketing Ideas - With all the contemporary conversation about co-ownership and co-creation of brands, I would have expected to see an absolute torrent of brands trying to walk a mile in their customer's shoes. The paucity of such programs is both a surprise and puzzlement. The only ones I've seen even alluding to today's financial realities come from the fast food category.

  • Increase Spending, Market Share In A Recession - Savvy marketers realize that it is because many marketers cut advertising spending during a recession that it is the best and least expensive time to gain market share through advertising. Publishers are more open to negotiating deals. Plus, there is less competition as other companies reduce budgets. This is the time to brand yourself as the leader in your category.

  • Recession-Proofing Your Brand - When you choose to cut marketing, you put your brand at risk, increasing the likelihood that your brand will lose relevance to your target audience and your retail partners. The key to making your brand survive--and dare I say even thrive--during a recession is to outthink your competition. Following are three strategies to recession-proof your brand.

  • Four Communications Strategies for a Down Market - In light of the recent turmoil in the global financial markets, marketers must step back and assess all of their communications to ensure they are in sync with their customers' current situation. In this weak economy, marketers must modify their message to respond to customers' changing perspective.

  • Invest in Digital Marketing in Down Markets - Smart companies invest in digital marketing in down markets for an assortment of reasons. Primarily they are looking for efficiencies that allow them to continue to market to their audiences. Behavioral marketing is about targeting refinements that enhance marketing effectiveness and make it a natural for budget-challenged marketers.

  • Turn Your Web Site Into a Cost-Effective Recession Solution - With smaller marketing budgets, companies are hunting for cost-effective, measurable systems to sagging sales figures. Surprisingly, many sales and marketing heads don't know enough about the true power of web marketing and the latest tips and tricks to take full advantage of its cost-effective nature.

  • Winning Marketing Tactics in an Uncertain Economy - The state of the economy impinges on the marketing budgets of companies small and large. Although search marketing is recognized as providing a higher ROI than other marketing channels, clients today seem to want even more for less. Let's mull over some tactics to squeeze every last drop from a shrinking marketing budget.

 

 

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Retail Gets Its Loyalty Act Together


According to a DMA survey the majority of people in various industries maintain some form of loyalty programs. In the retail market specifically, 73.7% of supermarket and grocery store respondents use face-to-face interactions to invite customers into their loyalty programs, whereas almost 80% of retail and department store respondents use face-to-face interactions to draw their customers into their loyalty offerings. 86.2% of retailers cited maintaining active customers as the primary reason for their loyalty programs followed by tracking customers’ behavior (81%).

Indeed, a recent Aberdeen report showed that retailers are becoming increasingly sophisticated when it comes to their loyalty programs, moving customer strategy from a typically "resented expense... to a welcome investment." And no wonder as there are definite indications that best practices in this field drive success in terms of sales increases, repeat sales and customer retention results.

81% of all respondents currently operate a loyalty program, with 45% registering customers for loyalty programs via sales associate in the store, 41% at the point of sale, and 41% online. 21% use “cross channel loyalty tools that align with cross-channel customer demand” and 34% plan to implement this capability within the next year. Their top two objectives - lifetime customer value (57%) and competitive advantage (39%).

Real-time customer data is also starting to gain traction, with 14% tracking customer purchases and behavior as part of their loyalty initiative metrics within one or two hours of purchase, and 23% planning to implement real-time capabilities within the next year. The two most effective strategies for using customer loyalty data --- “elements that suit specific customer affinity and preference” (53%) and “personalized promotions across channels” (52%).

Case in point - Virgin Entertainment reported that "its two-year-old loyalty program was starting to pay significant dividends," with the average dollar spend by VIP members being 60% higher than non-members in 2008.

The Aberdeen report also outlined best practices for retail loyalty programs -

  • Develop customer reactivation campaigns (within three to 12 months of departure) to reduce attrition and improve lifetime customer value.
  • Increase frequency of multichannel loyalty campaigns from an average of one to two campaigns per quarter to four campaigns to increase share of wallet.
  • Establish single point of ‘ownership of the customer’ for more cohesive relationship marketing decisions.
With that in mind, here are three more interesting/thought-provoking articles on the subject of customer loyalty:
  • Loyalty Programs Suffer from One-Size-Fits-All Approach (following a recent WSJ article) - According to two professors, many customer loyalty programs aren't boosting marketing share as intended because most retailers adopt a one-size-fits-all approach. They argue that product discounts aren't changing the long-term buying behavior in shoppers who value things like personalized service, convenience or shopping pleasure more. Not surprisingly, the professors argued that retailers should focus on providing customers with more "individualized rewards, based on what they value."

  • The Customer Loyalty Myth - Do loyal customers translate into steady sales or profits? Intuitively, the answer should be yes -- and indeed, customer loyalty is a significant metric by which companies rate their performance. However, there a few problems with the concept of customer loyalty and a corporate strategy to develop it. For one thing, customer loyalty is difficult to measure. Two, even if it were easy, it doesn't necessarily add to a company's bottom line.

  • Immersive Customer Experiences Aren't Just for Customers - A successful loyalty strategy requires that you immerse your creative team in every aspect of its design and implementation. To engage customers in relevant and continuing conversation, creatives must continually better their customer knowledge. At the beginning of any loyalty marketing initiative, establish the program's foundations and goals. Make sure everyone intimately understands not only the value proposition, but also how customers are expected to respond to it. Then, take the process a step further by submitting your creative team to customer "immersion therapy."


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Inspire Consumers to Interact with Your Brand


A quick link today to a Chief Marketer article that talks about how to make sure your messages are welcomed by consumers by delivering "the right content, at the right time, in the right media". Use the data you've collected through transactions and interactions to bring "offline and online efforts together to create faster, more efficient and more personalized campaigns."

A recent survey showed that consumers are comfortable with personal information being used to make their shopping more relevant. 77% have made additional purchases when they encountered personalized recommendations, more than half usually peruse those recommendations, and 36% award more loyalty to merchants who offer true shopping personalization.

With that in mind, you need to create more relevant marketing communications by putting together "an intelligent (and responsible) recommendation system" and "marketing pieces filled with merchandise based on the individual's past purchase behavior" using, for example, unique personalized URLs that lead to personalized landing pages with real-time deals. 

Even if you don't have much data, you can boost sales by combining names and past purchases to create highly personalized messages with creative presentations to cross-sell, bundle, and introduce new offers. Even if you don't have any transactional history, you can still make it work with highly relevant messaging, based on ZIP codes and knowledge about your competition.


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Focusing on Referrals, Abandons Helps Bolster Sales


More and more consumers "see online retail as a primary benefit of the Internet", according to a new Nielsen report. 78% of adult consumers purchased something online in the past six months, including travel, banking and retail. 28% of the online audience purchased at least one clothing item on the Web over the past six months, 26% purchased a book, 18% made hotel reservations, 16% made auction purchases and 14% spent on events.

Obviously, more shoppers are also using search engines and comparison sites, but more and more of them also click off an site after viewing just one page and abandon shopping carts. According to MarketLive data, in "a reflection of the state of the economy and how the social researcher is dominating the marketplace,” shopping cart abandonment rates went up 2.7% from 2007 to 2008, while “one-and-out” visits jumped 18.9%. Conversion rates (3.96%) and shopping cart visits (8.87%) didn't change much compared to last year.

So what can online retailers do? Make sure landing pages provide relevant and compelling content, use analytics tools to find pages that are converting poorly, add user-generated reviews, build trust by enhancing cart pages with info about the company, and "make sure there is a toll-free number customers can call for service." One more data point - loyal customers are three times more likely to convert than first-time visitors (25% vs. 8%) and twice as likely to make it to the shopping cart (34.2% vs. 17.1%) - so send them relevant, personalized e-mail offers.

One relevant case study published in different versions on MarketingSherpa and DM News shows how retailers can use data to create targeted campaigns that can personalize the shopping experience and increase sales. The bottom-line is that marketers should customize their messaging based on a visitor's click tracks and other site behavior, such as abandoned shopping carts and on-site search terms.

In the example given, Diapers.com created an e-mail campaign targeted specifically at consumers who have aban­doned their online shopping carts. They managed to significantly increased their response and conversion rates compared to previous campaigns by sending customers a personalized reminder e-mail containing the items they left in the shopping cart a couple of days after they abandoned it, if they haven't returned to purchase.

In addition, they boosted referral-based sales by doubling their referral incentives and tapped Web 2.0 influencers by sending them gift cards. These practices tripled the percentage of new customers and increased message board discussions that drove referrals. Maybe best of all is that “once you get the system set up and running properly, the incremental effort is effectively zero. And you are getting sales that, presumably, would have been lost.”


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Retailers Use Social Media To Spur Back-To-School Sales


A quick time travel break today. Let's go back a few months to the the back-to-school season. Remember that time when we weren't bombarded with bad economic news each and every day (just once or twice a week...)?

I came across a Jupiter report from August (covered in MarketingDaily and Internet Retailer) which showed how retailers are targeting younger consumers by using Web 2.0 technologies as part of their full-scale back-to-school marketing campaigns ---  social networking sites, widgets, video games, virtual worlds, online video, and more.

According to the report, retailers looking to creates one-on-one relationships with young consumers are expected to largely benefit "in the form of branding and awareness building rather than direct sales as social media has shown little direct impact on actual online retail sales.”

A related MarketingDaily article focused on retailers setting up shop in virtual worlds, and how to successfully use branded virtual goods. The key point is that it needs to be created with "both the look and feel of the world and the preferences of the user base in mind." Another must - allow (and expect) members to give feedback.

Anyone see follow-up reports to see how these campaigns worked out for the retailers? Let us know!


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