Is scaring your customers good for business?

This opinion piece on the Spark A Synapse Blog sums up exactly my response to Walmart’s screening public service announcements from the Department of Homeland Security

WalMart is teaming up with the Department of Homeland Security to broadcast messages about the DHS “If You See Something, Say Something” campaign in 600 of its stores. This is the creepy new “public service announcement” that will be broadcast in WalMart, narrated by no less than the head of the Department of Homeland Security herself, Janet Napolitano.

As a freedom-loving, big-government distrusting person, this stuff looks like it’s straight out of an ‘end of days’ dystopian sci-fi movie.

As a marketer, I have to wonder about the motives behind it? Cosying up to the DHS perhaps? A genuine (though misguided) concern for the ‘safety’ of their shoppers? An overly egotistical view of their own importance to their shoppers’ lives? Or maybe, this sort of thing is all part of a much more sinister plan to build a climate of fear. When people are afraid they comfort-eat (more sales) and they may be driven to stockpile for the coming apocalypse (more sales of tinned and longlife food).

I’m taking off the tin foil hat now. Have a good weekend and stay safe y’all.

Adding value to remove value

Apple have just announced free engraving for iPads ordered from their online store. It’s a perfect example of how personalisation can add value to the initial purchase whilst at the same time restricting the resale possibility of the item.

Who could bring themselves to part with an iPad that had ‘to Daphne, with love’ etched into the back of it? And how much less is a personalised product worth anyway – sufficiently less that it’s not worth selling when a new one comes ou

How can you personalise your product so that someone wants to hang on to it for sentimental or perhaps other reasons?

What’s your Groupon Strategy?

Businesses are falling over themselves to get featured on Groupon and its clones.

Prague alone, a city of just over a million people, has a double-digits number of group buying deals sites. I’ve taken the opportunity to buy a number of deals myself from several different sites. The curse of the marketer is to evaluate every experience they have as a customer from the other side. So this is the “here’s how I’d do it” post.

A while back I wrote about the pros and cons of using group buying deals sites as a marketing tactic. Since then there was a very interesting first hand report by the owner of a cafe in Portland, Oregon about her experience running a Groupon promotion and how it nearly put them out of business.

Even if the site you’re looking at working with doesn’t take 50% (or 100% if the deal has a sticker price of less than $10 – yes seriously!!) as Groupon does, you’re looking at drastically reduced revenue, so you’d better do your sums and be trying damn hard to make the deal worth your while long term, because short term it’s very likely to be in the red. If you’re not sure, don’t jump into it because everyone else is, there are plenty of cautionary tales out there. Still set on it? Here’s my take on what a business should do when they run a Groupon…

Be smart about the deal

The last thing you want to do with a deal is lose money or damage your business’s long term viability by attracting bargain hunters that won’t come back or training customers to buy only when there’s a special. Think about what you could offer very carefully. Consider offering something that by its nature is likely to lead to return business. It might not even be part of your regular offering, it could be an introductory class if you teach something or provide a service, restaurants can make their deals exclusive of drinks (usually the highest profit area anyway), or for a special event (tasting evenings perhaps) rather than offer a discount that can be used anytime within three months. Retailers should consider long and hard what they’re offering – half off $50 worth of any goods means you’re left with $10 or so to pay for the product. The best option for retail would be to offer a single product or range of products which normally have enormous margins (maybe talk to the supplier about running the promotion), to make sure they cover their costs, and that they put into action the rest of these suggestions.

Before

  1. Do your sums. I know I’ve said that already but this is the fundamental ‘no money, no business’ part. If you’re losing money on every sale you’re not going to be in business for long. Work out how much you need to make extra from each customer. What extra products or services can you sell? Deals that can only be used one at a time, for a partial amount of a bill give you the best chance of making full ticket price revenue on the rest of the order. Most of all, don’t try and sell more than you can handle. If you’re a service provider (say a fitness instructor) don’t try and sell 3000 hours of your time for a tiny sum, you’ll end up resenting the customers.
  2. Keep it quiet (publicly) – you’re about to run an offer at a dramatically cheaper price, don’t damage your revenues in the days leading up to it by tipping anyone off.
  3. Tell your team. Make sure everyone who works for you is aware (but sworn to secrecy) of the impending deal. Explain the conditions so everyone is clear.
  4. Get a commitment from the site for how long the expired deal will be published for, at a well keyworded URL – but not including your business name. Make sure the links to your site on the page are not nofollowed and if possible, use valuable keywords, not ‘click here’ or ‘website’.
  5. If you can, find out if the site will let you follow up with buyers of the deal by email, and if you can identify redeemed and unredeemed deals.

On the day

  1. Tell your network – tweet it, post it on your Facebook wall, your blog and website. Consider emailing it to your list. You might think this contradicts point 2 above, and goes against the whole ‘group buying deals are about getting new customers’ line but as Joseph Jaffe teaches us in Flip The Funnel, your existing customers deserve to be treated at least as well as new customers. If you don’t tell your existing customers it’s like you’re hiding it from them. And hiding the truth is like lying, and lying is bad (see, I learnt everything I needed to know about marketing in kindergarten). Plus if you’re running this offer, you want it to ‘tip’ (become valid) and you want it to spread. Your existing customers are the most likely to share the deal with friends because they already know you.
  2. Be staffed well enough to handle the enquiries. Even if the deal doesn’t start till the next day, expect phone calls, emails and personal visits.

When the deal is being redeemed

  1. Schedule demand, if you can – if you’re a service provider, try and spread out the bookings so that you can be available for full-price paying clients.
  2. Stand by the conditions, but don’t be a stickler – in the story of the cafe owner, she was prompted to write the blog post to tell her story because she refused a longtime customer’s Groupon because it had expired. It would take a really understanding customer not to feel mistreated. Most customers aren’t. Saying ‘we have to stick by the rules because other people took advantage’ doesn’t cut it. The cafe had received the money (what little there was) from that customer’s Groupon, expired or not.
  3. Get something out of the interaction – assuming most of the buyers of the deal are new to your business, take the opportunity to grow your email list (tag it if you can, that information is going to be useful), Twitter followers or likes on Facebook. Print up some fliers to hand people when they present their deal coupon – taking a ‘what next’ approach. Suggest places they can write reviews, or connect with you further. Consider that these are value-conscious consumers and for many any loyalty they have is to the deal site, but if there’s something you can do to capture future business, now’s your chance. Have a loyalty programme? Tell them about it. High-tech with plastic cards? Give them a form to fill. Low-tech with paper cards and stamps for each visit? Hand them their card with the first stamp on.

After the deal has expired

  1. Go for the final squeeze – if you segmented your mailing list with new signups from the deal now is a perfect time to go for a final squeeze – what action would you like these people to take? Remember this group aren’t quite like your organically grown list of existing customers, so tailor the ask to that. If the deal site allow it, write to deal buyers through them.
  2. Measure – if you planned well, you had metrics that you would judge against. Now’s the time to do that – take the scores for whatever you were pushing for – revenue? Facebook likes? Email signups? Repeat visits?
  3. Evaluate – take the numbers from the last step – did it make sense for you to do it? What could have been done better? What did you learn? Would you do it again?

I’m pretty sure I’ve missed several nuances. If you agree, let me know in the comments.

Update: If you want to run the numbers, I recommend downloading the Groupon profitability spreadsheet helpfully prepared by Rags Srinivasan.

Image credit: NCReedPlayer

Nobody seeks out vague promises

As marketers we all love to promise the earth but you need to be able deliver on what you’re offering. If you need to use weasel words and internal jargon to qualify your promises, you’re doing it wrong.

When you see an advert for flatscreen TVs offering a ‘free Blu-Ray player with selected TVs’ – what’s your thought process? Is it ‘ooh, I’m gonna get a free Blu-Ray player’ or is it ‘I bet the one I want doesn’t come with a free Blu-Ray player’. How about a sale sign that offers ‘Up to 50% off’? I guess it depends on whether you’re a glass half-full or half-empty kind of person. Maybe you get a nice surprise or maybe you’re disappointed. The one thing that word ‘selected’ doesn’t do is fill you with confidence because it immediately creates a doubt in your mind.

Customers don’t know what ‘selected’ means in that context, they don’t know what a company’s ‘primary service areas’ are. All they know is that the company wants their offer to sound good whilst leaving some wiggle room. Customers don’t care about a company’s ability to squirm out of providing something. They want what they’re promised.

Under-promise, over-deliver
That’s what we should aim for. That’s what gets customers telling their friends about us. The opposite can make people talk about us for all the wrong reasons.

If you’d prefer to state up front everything people can expect from you as part of your service or offering, then go ahead, but don’t hide behind puffery and ambiguity. If there are limitations, don’t be afraid to state them – you’ll only be called on it later if you don’t.

Image credit: kjpm via Creative Commons on Flickr

Banding Together

Is your local retail business going well? Some of your (not ‘really competing’) neighbours doing worse?

I wrote a piece last year about why you might want to help out those who you might consider competitors. I’ve just seen first hand what can happen when a company’s neighbour goes out of business: a much more serious competitor can move in.

My local sandwich shop, a small independently owned business has been serving baguettes, salads and paninis for over 5 years. Later this month a sandwich-shop chain is opening up in place of a cafe, just three doors away. They should have them beaten on price, unless the new shop gets aggressive and goes after their loyal customer base of office workers from around the area. As it stands they’ll attract business just on the basis of curiosity.

Now is the time for the little guy to raise their game, whether they broaden the menu, encourage loyalty (the chain already has a loyalty discount card) and raise their service level: offer delivery, take pre-orders – all the things the chain isn’t willing to do.

If that situation sounds familiar to you, now might be a good time to reach out to them and work on some co-marketing efforts – banding together to ward off a bigger threat.

Image credit: Chiceaux via Creative Commons on Flickr

Price Comparison Mobile Apps – an opportunity for B&M Stores?

barcode scanner
There are a number of apps (Twenga, RedLaser, Save Benjis and others) for performing on-the-go price comparisons.

You either search by product name or barcode, but the pitch for them all is the same: you’re out shopping, in a bricks & mortar retail store when you see a product you want. You take out your iPhone, scan the barcode or type in a product name and check the price, either directly with online stores like Amazon or using Google Products.

The developers of the apps sell them cheaply, the real revenue is in the affiliate commissions to be earned.

Whenever a technology comes that tips the balance unfairly (away from the bricks and mortar store which are being turned into a free showroom for online merchants) there are a number of ways for the ‘wronged party’ to handle the threat.

  1. Do nothing

    This is probably what most b&m stores will do – this is a technical threat that they’ve not planned for, places like Borders and Waterstones have been haemorrhaging market share to Amazon for years.

  2. Fight dirty – mobile signal jammers in stores.

    Great way to come across as the bad guy, a technical roadblock that is likely to inconvenience more people than necessary.

  3. Fight fair – Treat a price comparison as the buying signal it really is

    Given that these apps can (and some do already) know your location when you send that request, the fact that you’re looking for a lower price could be signalled to the retailer you’re standing in. A simple query to their systems could return ‘our best possible price’, not necessarily beating everyone – there’s some value to immediacy and not paying a shipping charge after all. Then just take your phone to the counter to get the item at the reduced price.

I understand there are technical issues with this – not every price comparison app or bricks & mortar retailer would want to take part, but the larger stores stand to lose the most from doing nothing.

Image credit timailius via Creative Commons on Fickr