Retention and Relationships

Time flies, I guess.  Getting acquired will do that to you.  Time to get back on the horse.  I’ll be doing a lot of cross-posting from other places as I build out a lot of ideas around, well, lots of things.

Remember when we used to think of the web as an interesting place to read what a company wanted to tell us?  Now we can watch movies, get real time feeds from many sources simultaneously, buy practically everything, manage companies, and entertain ourselves for hours (or days or weeks) on end.

Social has that same feel, doesn’t it?  Where the user base has entered the late majority, where there is a critical mass of interesting content, and where the apps growing up in the fertile soil of social foundations (Facebook, Twitter, OpenSocial, etc) are finally getting interesting.

To me, its clear we’ll look back on these last 2 years of the social boom as just the beginning, just as browsing brochure-ware sites was in the mid-late 90′s.  The ideas coming out of retail, CPG, manufacturing, financial, and travel make it obvious there will be an explosion of new ways for people to interact with people or companies.  Wish I could share what I hear but an NDA is still an NDA.

Part of the reason there hasn’t been a post in almost 8 months is that I’ve been on the road for practically all of those 8 months.  At last estimate, I’ve had 23 trips in the last 27 weeks to such hotspots as New Jersey, Utah, Oregon, Chicago, and Philadelphia, to name a few.

What all this travel has done is re-acquaint me with the joys of frequent flier programs and access to key seats.  Now I crave Economy Plus on United, fly Delta, AirTran and Virgin America primarily to get wi-fi, and travel with 2 laptops (one small enough to work on) when I don’t get a prime seat assignment.

If United could just keep its prices within a few percent of every carrier, I’d shift to them every time.  Realizing this and its impact on my behavior is a great reminder of why loyalty program and status still play such an important role in relationship marketing.

It’s pretty clear that this holiday will be brutal for some retailers and great for consumers.  Merchants are going into this holiday season much better prepared than in 2008, when most assortments and marketing had already been planned and placed when the Lehman Brothers bankruptcy on September 15, 2008 crippled the banking system and the economy seized up in response.

What are they doing?  From what I’ve seen, I’d characterize the changes in three categories:

1)      Leaner inventories – The bulking up that normally precedes December appears to be far more muted.  Fashion items are coming in lighter, with companies ready to fall back on basics in the last weeks before Christmas if necessary.  10/25 shipments are where most Black Friday goods are shipped, so we’ll really see what inventories are like in another week or so.

2)      Earlier promotions – Last weekend looked a lot like a December weekend in terms of promotions and sales.  It looks like everyone is on the same page and ramping up the noise level early to tap into holiday budgets even farther in advance.

3)      Lower risk tolerance – This is more subtle, and shows up in many places.  From what I’ve seen, it looks like trusted brands, proven categories, and quantifiable marketing are all in vogue.  Expenditures need immediate return these days, since its almost impossible to take on debt to finance long term initiatives.  There is a little risk-taking at the margin (just enough to add a splashy item or two to advertising), but almost everyone appears to be hunkering down with their safest bets and preserving cash.

As we go into a second weak holiday, it’s likely there are a lot of companies that have been slowly burning through cash that may be in dire straits come January.  With the debt markets essentially closed to small and mid-size businesses, there may not be enough lifelines to keep everyone afloat through 2010.

In an ideal world consumer confidence comes back enough to keep the worthy players going, the worst locations get shut down and converted to housing (infill is good – more density around the remaining locations and less rural land turned into subdivisions), and the debt market finally loosens enough to let CFOs do their jobs.

My latest at VentureBeat’s Entrepreneur Corner.

This was an interesting article, primarily since it was very focused on a specific task – generating a second sale.  While repeat visits often happen naturally, nudging customers to return is often necessary.  The second purchase is incredibly important, since it identifies the customer as someone with the potential for a long term relationship.  Additional investment in the relationship will have a far higher likelihood of paying off with these customers.

If there’s one writer I never tire of, its Seth Godin.  Yesterday’s post on Brands That Matter was a perfect case in point.  Seth’s been banging on the “be different” drum for a long, long time.  But judging from most marketing today, he needs to keep pounding on the idea.  He’s still making the case for brands to stand for something, to make sure the customer experience is consistent with the brand identity, and to continue to come up with ways to stay fresh.  I’d argue that resource constraints often get in the way, but deep down I know that’s no excuse.

On that note, today’s post on Not So Good At Math shows the other side of the coin – that many marketers aren’t necessarily strong mathematicians.  That begs the question – if they aren’t good at creating interesting and distinctive brand identity, and aren’t good at generating insights from underlying data, what are they doing in marketing to begin with?

Pandora Radio logo

I love Pandora.  Pandora rules.  I wish everything was like Pandora.  I don’t really have to think or do much, and an incredibly accurate stream of stuff I want to hear just appears like magic.  I can tweak it to get it dialed in to my tastes.  And I now buy MUCH more music than I used to, discovering new music and buying on Amazon so Pandora gets a little affiliate revenue.

The closest we see to this ideal today is Amazon and a few other online retailers.  Borders appears to be using my purchases (finally!) to tweak the email they send me, which is great.

This is the next frontier for retailers and manufacturers.  A whole generation has had their priorities reoriented, much as the Great Depression did 70 years ago.  Consumers will think a bit more before buying and will be much less willing to use credit to finance their lifestyle.  So selling will need to move to a more relevant, customer-specific mindset if a retailer wants to succeed over the long term.

There are already many companies focusing on this space, but it will be a long time before clear winners emerge.  I think the winners will likely be those who can distribute the experience wherever customers want to consume it – which means we still have a ways to go.

I try to help a non-profit ”international neighborhood micro-center for artistic and intercultural life in San Francisco” with operating and marketing advice.  They put on 120 events a year and I’d always advocated getting the word out about individual events.  We looked at email, and while it would probably work, the overhead for so many was relatively high.  (Almost everyone is a volunteer and resources are scarce.)

Enter Facebook Events.  Set up the event, send an invite, and voila, there’s your email notifications.  Its timely, professional, and useful.  Now I know what’s coming up and can make quick decisions to change my schedule.  It doesn’t feel obtrusive, since I joined the group of my own volition and can control messaging.  It shows the intersection of time-based content, opted in peer to peer communication, and user-controlled media streams (i.e. I still choose email over text) can and will be incredibly powerful.

I expect to see attendance max out going forward.

Yeah, its bad out there.  As a tech vendor, we’re out talking to a lot of companies.  One theme we’re seeing is companies applying unequal tests to evaluate spending on new versus existing efforts.  That’s normally fine, but now every dollar needs to perform. 

This is one of those times when the tide is going out.  (The reference is attributed to Warren Buffet and goes something like “When the tide goes out, we find out who’s been swimming without a bathing suit.”)

You need to inspect every dollar and challenge your assumptions.  Am I generating visits with my radio?  Am I buying too much TV?  Can I get a better deal on my direct mail by bidding out projects?  Because surely your budget has been cut.  And the first reaction is to cut new spending, instead of asking yourself, “Is this proposal a better expenditure than something I’m already doing?”

Nothing should be sacred.  Sports tickets, luxury boxes, or sponsorships – gone (very limited reach, especially geographically).  Television can pause for a while with minimal erosion of awareness.  Radio can probably get lighter for a while with minimal impact.  Newspapers will be extinct in a few years anyway, so might as well learn to live without them now.  Interactive campaigns are fun, but if they aren’t part of a long term engagement program, don’t bother.  Outdoor…uh, I hope not.  [And I won't get into Operations in general - I guarantee you have lots of dead wood.]

What’s on the flip side?  Email, SEM, SEO, Facebook, iPhone, basic customer segmentation, versioning, response modeling (i.e. don’t mail everybody!), PR, retention marketing (pretty much of any kind), etc.

In fact, it might make more sense to do zero-based budgeting where you fund these initiatives first, then see what’s left for the rest.

There’s a lot going on out there, as I noted cuts at Neiman Marcus, Barnes & Noble, Google, rumors of a Microsoft cut, and the Gottshalks bankruptcy filing in the last 30 minutes.

In addition to updating your resume, now is a really, really good time to examine the decisions you make during your work day.  Are you assessing each task for value creation?  Are you considering how to do a task better or cheaper?  Tweaking your mindset now will pay dividends very quickly, as your output produces more value and less busywork.  For example, if you don’t look at your website as though it is a conversion engine, you are missing the point.  Design is nice, content is nice, good writing is nice, but at the end of the day, are you measuring its effectiveness at meeting key objectives, namely leads and/or revenue?

Question your routine, and I guarantee you will quickly find ways to add more value, and make it that much less likely to be on the wrong list when the inevitable layoffs occur.