Returns Are the Final Frontier for E-Commerce Dominance

E-commerce has had to overcome several barriers in its relatively short lifespan. (Well, relatively short for a Baby Boomer. But not so much for Millennials and Gen-Zers, who don’t remember a time when milk was delivered to your doorstep daily.)

E-commerce has had to overcome several barriers in its relatively short lifespan. (Well, relatively short for a Baby Boomer. But not so much for Millennials and Gen-Zers, who don’t remember a time when milk was delivered to your doorstep daily — but you couldn’t get almost everything else delivered for free in two days.)

First, there was online penetration. In 1999, only 44% of Americans had Internet access, either at home or at work.

Next, there was the fear of using your credit card online (65% in 1999). Most people got over that as they began to trust traditional retailers’ online sites and Amazon became a household word.

Shipping costs are too high. Enter Amazon Prime and FREE SHIPPING on orders over $30 from other retailers.

“I want to see it and feel it” and “I need it today” resulted in shopping online and buying offline, a common practice for several product categories even today, including high-end electronics and clothing.

Returns are a hassle and/or expensive. Yep! About 33% of global shoppers cited online return policies and processes as deterrents. (Chain Store Age, October 2015)

If there’s one thing consumers hate more than paying for shipping, it’s paying for return shipping. As counterproductive as it seems, I go out of my way to take Amazon returns to a return center to avoid paying $7 for return shipping. Returning an online purchase to a retail location is another option that consumers will choose — one that is probably more time-intensive, with a higher negative ROI. I don’t have firsthand knowledge, but I’m sure most online retailers have tested a higher price point with free shipping vs. lower price point plus shipping. Chances are, free shipping wins.

Zappos offers free returns so you can try different sizes and colors of shoes on in the comfort of your own home. However, free returns are met with the same skepticism regarding price as free shipping.

E-commerce continues to grow at a decent pace.

“Early analysis from Internet Retailer shows online retail sales in the U.S. crossed $517 billion in 2018, a 15% jump, compared with 2017. The growth in retail sales in physical stores reached 3.7% last year. This means that e-commerce now accounts for 14.3% of total retail sales, when factoring out the sale of items not normally purchased online, such as fuel, automobiles, and sales in restaurants. And it also means that in only a decade, the web has more than doubled its share of retail sales. Ten short years ago, e-commerce was at 5.1% of total retail purchases.”

While an almost threefold growth in 10 years is impressive, I think that making the return process more satisfying for consumers can accelerate the growth of e-commerce. Changing the consumer mindset about return costs may be the answer.  In his book, “Misbehaving: The Making of Behavioral Economics,” Richard Thaler notes that members view their Costco and Amazon Prime annual fees as investments and make no attempt to allocate those costs over the various purchases they make during the year.

Is there an opportunity for an unlimited free returns membership add-on from Amazon or another retailer? I know people who are chronic returners at brick-and-mortar stores who would welcome it. Pricing it certainly would be tricky. What do you think?

Swimming in Amazon Shopping — for the Exotic and Different

Amazon shopping is its own beast. When I moved to Brazil, any mention of “Amazon” immediately conjured up visions of this great river teeming with hungry piranhas, surrounded by nearly impenetrable jungle; one of the last truly wild places on Earth, a great place to visit. But, as the expression goes, you wouldn’t want to live there. That was 19 years ago.

Walking in the Amazon
Credit: Peter J. Rosenwald

Amazon shopping is its own beast. When I moved to Brazil, any mention of “Amazon” immediately conjured up visions of this great river teeming with hungry piranhas, surrounded by nearly impenetrable jungle; one of the last truly wild places on Earth, a great place to visit. But, as the expression goes, you wouldn’t want to live there. That was 19 years ago.

Say “Amazon” today and the 24-year-old behemoth that comes to mind is the largest online retailer in the world, a direct seller and digital marketplace with a piranha’s aggressive appetite. It is said to have chosen its name because the Amazon was “exotic” and “different.” It is both. This year, Jeff Bezos, Amazon’s founder and boss, reported that the company had achieved 100 million Amazon Prime subscribers, or 64% of households in the U.S. If any company can be said to have disrupted the retail landscape, Amazon is the one.

Swimming in Amazon
Credit: Peter J. Rosenwald

The unbroken growth of Amazon shopping worldwide demands the answer to the difficult question: which came first, a consumer desire to be able to conveniently purchase a wide range of goods with the convenience, price and choice offered online by Amazon and its principal competitors? Or Amazon’s brilliant marketing, which seduced the consumer away from brick-and-mortar retailers — even shopping malls — to the computer screen and convenient home delivery?

Amazon River
Credit: Peter J. Rosenwald

There is no doubt that sophisticated online shopping appeared at just the right moment in the digital revolution. Whether it will doom retail shopping is an open question.

A recent article in eMarketer Retail provides some clues to the direction where consumers are driving the online business model.

“According to ‘eMarketer’ forecasts, the gap between U.S. first-party sales on Amazon and third-party sales is widening. In 2017, direct sales grew 20.9% to reach $70.40 billion. By 2019, that total will climb to $95.08 billion. By comparison, marketplace sales jumped 41.4% to $129.45 billion last year. And marketplace sales are expected to log growth topping 30% this year and next. “

What is the “marketplace,” other than a digital shopping mall in your home or in your pocket? Why endure the traffic, parking problems, store clerks who frequently know less about the merchandise than you do and all of the bother that comes with it?

The answer would seem to be that consumers still find “shopping” fun, and welcome the live interaction with like humanoids. (What was that great one-liner? Christmas is the time people stop shopping and start buying things.) Last weekend, a visit to a nearby shopping mall found it teeming with happy families, kids and canines in tow, enjoying the experience.

But shouldn’t the generous loyalty programs offered by some online marketers overcome the temptation to go out and shop? It appears not always. Another recent article, also from eMarketer, said:

“Loyalty programs have a serious retention problem. Consumers are quick to sign up, but quick to forget about a loyalty program once they get their initial discount. Members, overloaded with points, miles and free shipping offers, are not necessarily consolidating purchases with one brand in order to accrue rewards.”

There is no simple answer, which is good news for resilient retailers. The many benefits of the Amazon marketplace model appear not to always outweigh the entertainment value of physical retail shopping. Social media is not really very social and you can’t buy the kids ice cream cones on your iPhone.

The piranhas may have to go hungry for a while longer.

humanoids on the Amazon
Credit: Peter J. Rosenwald

Marketing Success Metrics: Response or Dollars?

It’s tempting to ask about whether marketing success metrics should be response rates or money. But you don’t need to ask marketers what they want. Basically, they want everything.

It’s tempting to ask about whether marketing success metrics should be response rates or money. But you don’t need to ask marketers what they want. Basically, they want everything.

They want big spenders who also visit frequently, purchasing flagship products repeatedly. For a long time (some say “lifetime”). Without any complaint. Paying full price, without redeeming too many discount offers. And while at it, minimal product returns, too.

Unfortunately, such customers are as rare as a knight in white armor. Because, just to start off, responsiveness to promotions is often inversely related to purchase value. In other words, for many retailers, big spenders do not shop often, and frequent shoppers are often small item buyers, or worse, bargain-seekers. They may just stop coming if you cut off fat discount deals. Such dichotomy is quite common for many types of retailers.

That is why a seasoned consultants and analysts ask what brand leaders “really” want the most in marketing success metrics. If you have a choice, what is more important to you? Expanding the customer base or increasing the customer value? Of course, both are very important goals — and marketing success metrics. But what is the first priority for “you,” for now?

Asking that question upfront is a good defensive tactic for the consultant, because marketers tend to complain about the response rate when the value target is met, and complain about the revenue size when goals for click and response rates are achieved. Like I said earlier, they want “everything, all the time.”

So, what does a conscientious analyst do in a situation like this? Simple. Set up multiple targets and follow multiple marketing success metrics. Never hedge your bet on just one thing. In fact, marketers must follow this tactic as well, because even CMOs must answer to CEOs eventually. If we “know” that such key marketing success metrics are often inversely correlated, why not cover all bases?

Case in point: I’ve seen many not-so-great campaign results where marketers and analysts just targeted the “best of the best” segment — i.e., the white rhinoceros that I described in the beginning — in modeled or rule-based targeting. If you do that, the value may be realized, but the response rate will go down, leading to disappointing overall revenue volume. So what if the average customer value went up by 20%, when only a small group of people responded to the promotion?

A while back, I was involved in a case where “a” targeting model for a luxury car accessory retailer tanked badly. Actually, I shouldn’t even say that the model didn’t work, because it performed exactly the way the user intended. Basically, the reason why the campaign based on that model didn’t work was the account manager at the time followed the client’s instructions too literally.

The luxury car accessory retailer carried various lines of products — from a luxury car cover costing over $1,000 to small accessories priced under $200. The client ordered the account manager to go after the high-value target, saying things like “who cares about those small-timers?” The resultant model worked exactly that way, achieving great dollar-per-transaction value, but failing at generating meaningful responses. During the back-end analysis, we’ve found that the marketer indeed had very different segments within the customer base, and going only after the big spenders should not have been the strategy at all. The brand needed a few more targets and models to generate meaningful results on all fronts.

When you go after any type “look-alikes,” do not just go after the ideal targets in your head. Always look at the customer profile reports to see if you have dual, or multiple universes in your base. A dead giveaway? Look at the disparity among the customer values. If your flagship product is much more expensive than an “average” transaction or customer value in your own database, well, that means most of your customers are NOT going for the most expensive option.

If you just target the biggest spenders, you will be ignoring the majority of small buyers whose profile may be vastly different from the whales. Worse yet, if you target the “average” of those two dichotomous targets, then you will be shooting at phantom targets. Unfortunately, in the world of data and analytics, there is no such thing as an “average customer,” and going after phantom targets is not much different from shooting blanks.

On the reporting front — when chasing after often elusive targets — one must be careful not to get locked into a few popular measurements in the organization. Again, I recommend looking at the results in every possible way to construct the story of “what really happened.”

For instance:

  • Response Rate/Conversion Rate: Total conversions over total contacted. Much like open and click-through rate, but I’d keep the original denominator — not just those who opened and clicked — to provide a reality check for everyone. Often, the “real” response rate (or conversion rate) would be far below 1% when divided by the total mail volume (or contact volume). Nonetheless, very basic and important metrics. Always try to go there, and do not stop at opens and clicks.
  • Average Transaction Value: If someone converted, what is the value of the transaction? If you collect these figures over time on an individual level, you will also obtain Average Value per Customer, which in turn is the backbone of the Lifetime Value calculation. You will also be able to see the effect of subsequent purchases down the line, in this competitive world where most responders are one-time buyers (refer to “Wrestling the One-Time Buyer Syndrome”).
  • Revenue Per 1,000 Contacts: Revenue divided by total contacts multiplied by 1,000. This is my favorite, as this figure captures both responsiveness and the transaction value at the same time. From here, one can calculate net margin of campaign on an individual level, if the acquisition or promotion cost is available at that level (though in real life, I would settle for campaig- level ROI any time).

These are just three basic figures covering responsiveness and value, and marketers may gain important intelligence if they look at these figures by, but not limited to, the following elements:

  • Channel/Media
  • Campaign
  • Source of the contact list
  • Segment/Selection Rule/Model Score Group (i.e., How is the target selected)
  • Offer and Creative (hopefully someone categorized an endless series of these)
  • Wave (if there are multiple waves or drops within a campaign)
  • Other campaign details such as seasonality, day of the week, daypart, etc.

In the ultimate quest to find “what really works,” it is prudent to look at these metrics on multiple levels. For instance, you may find that these key metrics behave differently in different channels, and combinations of offers and other factors may trigger responsiveness and value in previously unforeseen manners.

No one would know all of the answers before tests, but after a few iterations, marketers will learn what the key segments within the target are, and how they should deal with them discriminately going forward. That is what we commonly refer to as a scientific approach, and the first step is to recognize that:

  • There may be multiple pockets of distinct buyers,
  • Not one type of metrics will tell us the whole story, and
  • We are not supposed to batch and blast to a one-dimensional target with a uniform message.

I am not at all saying that all of the popular metrics for digital marketing are irrelevant; but remember that open and clicks are just directional indicators toward conversion. And the value of the customers must be examined in multiple ways, even after the conversion. Because there are so many ways to define success — and failure — and each should be a lesson for future improvements on targeting and messaging.

It may be out of fashion to say this old term in this century, but that is what “closed-loop” marketing is all about, regardless of the popular promotion channels of the day.

The names of metrics may have changed over time, but the measurement of success has always been about engagement level and the money that it brings.

Playing the Amazon Game: Translating Big Data Into Big Dollars

Will 2018 be the year of Amazon (again)? The first week of the year is always filled with predictions, and there’s a good chance that most serious business predictions for 2018 will include some version of a call for businesses to respond to, react to, or create a new business model in order to compete in this age of Amazon.

Amazon boxesWill 2018 be the year of Amazon (again)? The first week of the year is always filled with predictions, and there’s a good chance that most serious business predictions for 2018 will include some version of a call for businesses to respond to, react to, or create a new business model in order to compete in this age of Amazon. Because the truth is, if you think that non-retail businesses are exempt from this challenge, you are wrong.

While Amazon may have started as an online bookseller, it is so much more than that now. It is, among many things, a cloud computing powerhouse, an award-winning original content producer and streaming content platform, a top-selling fashion house, a gamer’s paradise, the leader in AI and voice technology innovation, and the largest world marketplace for third-party sellers.

The company has innovated in pricing and subscription models, delivery systems and on-demand technologies and scared the heck out of those who previously thought their little corner of commerce was exempt from Amazon’s notice. No one is safe.

When Amazon enters a new industry or vertical — which the brand does with disquieting regularity — it changes the game for consumers and for businesses across segments and industries, challenging everyone and everything we thought we knew about consumer needs and how to sell stuff. Its impact is felt all along the business chain from suppliers and providers to adjacent businesses and directly to the consumer.

Amazon’s expansion plans and willingness to take risks, its consumer experience obsession, logistics expertise, consumer access and deep pocket investments have broad implications across categories. In 2017 alone, Amazon expanded through acquisition in non-retail directions including grocery stores (Whole Foods), cyber security (harvest.ai), gaming (GameSparks) and analytics presentation (Graphiq). And all these moves are strategically designed to strengthen its core offerings and consumer ties.

Amazon’s advantages also include a ubiquitous consumer presence in U.S. homes, (64 percent with Amazon Prime membership according to Forbes). This translates into tremendous data and insights into shopping patterns, price elasticity, promotion and offer value and critical consumer search patterns. And because it freely sells competing products, its marketplace supplies the company with nearly complete information on competitor strengths and weaknesses in not only sales data, but also consumer reviews.

This is in conjunction with the fact that it controls the marketplace and can therefore work the home-field advantage to highlight its own brands or those products that deliver the most value. In short, Amazon has a direct way to translate its big data into big dollars. This is increasingly important as Amazon aggressively expands its catalog of private label categories and products. Other key strengths include its forays into voice search, in-home electronics, alternate ordering methodologies and sheer operational excellence.

In terms of Amazon’s future endeavors, the brand has made recent investments, as well as public statements to include more acquisitions in AI and machine learning — maybe even in healthcare/genomics. And it’s probably safe to assume that we will see more proprietary devices like the Echo and Kindle that streamline consumer connections and reduce any friction in commerce while further building Amazon’s data advantage in the guise of consumer convenience and innovative experiences. Numerous patent applications in logistics, cyber security and cloud computing attest to its attention to the backbone that reliably delivers the Amazon experience.

Learning the Ways of Amazon

So how should marketers respond to such an intimidating competitor? I often think of Amazon as a wholly different planet filled with a lot of attractive consumers in active search mode for my products, but with its own set of customs, rules and laws. In order to commercially navigate on this planet, I have to familiarize myself with the environment and make some key adjustments.

  • My consumers may exist simultaneously in traditional sales channels and on planet Amazon as well as move frequently between the two. Therefore, I have to maintain a certain amount of consistency in experience and product as well as pricing unless I can distinguish an Amazon-only offering.
  • Amazon is built to provide consumers with easy access to a lot of competitive, comparative information. I better absolutely believe in the value and quality of my product before I enter this environment.
  • I must be ready to deliver at the potential scale and speed of the demand or otherwise risk a decrease in ratings and consequently, a downward sales spiral. This may require supply chain changes.
  • Planet Amazon competes directly with me and it has unfair advantages. I need to safeguard my margins to avoid giving them away.
  • The rules that helped me succeed in online marketing outside of Amazon may not help me succeed in optimizing search visibility or conversion rates within this proprietary world. I need to dedicate myself to learning the ad marketplaces, tools and options and be prepared for a dynamic environment that requires constant investment and learning.
  • I need to understand consumer expectations within this environment and work to achieve positive WOM and reviews/ratings to fuel sales.
  • I need to rethink my brand strategy within this saturated, pricing and ratings-driven marketplace.
  • I need to review my pricing strategy — including sales bundling — in light of the dense competitive field.
  • I need to carefully execute on CRM and other strategies I can control to build and develop sustainable direct connections with consumers outside of Amazon.

So by all means, plan your trip to planet Amazon, but do so carefully as it favors those that not only know its language and terrain, but also are willing to go at it with a full-fledged strategy.

Should You Create a Mobile App?

As a marketer, you’ve created a Web page, established a social media presence and even experimented with mobile marketing. Is it time for the next step? Should you create a mobile app so your customers can engage with you more easily?

Mobile appsAs a marketer, you’ve created a Web page, established a social media presence and even experimented with mobile marketing. Is it time for the next step? Should you create a mobile app so your customers can engage with you more easily? According to the “Synchrony Financial 2017 Digital Study,” 63 percent of the U.S. population over the age of 15 have downloaded a retail app. The average adult has two retail apps on their phone at any given time.

Why People Download Mobile Apps

What are the driving forces causing customers to download retail apps? According to our study, the top reason why people download a mobile app was because they frequently shop at the brand — 51 percent said they downloaded an app for this reason. As a marketer, your most loyal customers are the best targets for an app.

The second reason was to make a purchase, at 48 percent, followed by the desire to browse and compare prices, at 37 percent. So, if you are planning on launching a mobile app, ensure that it’s easy to buy and browse products on it. These are driving factors for your customers.

Who are most likely to download mobile apps? You guessed it, it’s the Millennials. Millennials are downloading apps in huge numbers. Eighty-one percent of those aged 26 to 35 said they have downloaded a retailer app on their phone. The top reasons are the same, to browse, buy and compare prices.

Retailer App EngagementMost Important Mobile App Features

OK, so you’ve launched your mobile app. Now, you want to get people to use it, right? Well, do you know which features are most important to your customers? Below are the top-rated app features:

  • 69 percent — access to discounts and coupons
  • 30 percent — ability to order products quickly
  • 27 percent — product search feature
  • 23 percent — ability to make payments and check balances

So, the number one feature customers want from an app is the ability to save money and access to special offers. Other features that rate highly are speed, product search and payment-related features. If you want your customer to regularly use your mobile app, keep these features in mind. A few surprise and delight perks are always great ways to get customers interested and engaged.

Why Good Mobile Apps Go Bad (or Get Deleted)

The top reason mobile apps get deleted was due to poor functionality. Thirty-five percent of people deleted apps for this reason. If your app has poor functionality, doesn’t meet your customers’ needs or customers have a bad experience, your app will most likely get deleted. There is only so much space on a smartphone and today’s digital consumer doesn’t have much patience for a dysfunctional mobile app.

Coming in as a close second reason for deletion was simply that the app didn’t provide enough value. Thirty-four percent of consumers said they deleted a mobile app because they didn’t see the value in keeping it. This is a warning sign! Even if you spend the time and effort developing an app that runs great, if you don’t provide enough perks or benefits, it just won’t matter — it will get deleted.

In our hypercompetitive world of digital engagement, it’s important to prioritize our digital programs. One of the strategies to explore is engaging with your customers through your own mobile app. If that’s the case for you, be aware of the delighters and pain points for mobile app usage. It can be a great way to engage, but it can also be a lot of work for a minimal amount of gain, if not done correctly.

Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial. All references to consumers and population refer to the survey respondents from the Synchrony Financial 2017 Digital Study unless otherwise noted.

Marketing Challenge: What To Do With the Trump Brand?

What should Donald Trump Jr. and Eric Trump do with Trump Brand? The brand has traditionally been positioned as upscale: hotel rooms that start at $400; golf club memberships for up to $200,000; $50 cologne; $40 wines; $175 ties. But with the president’s low approval ratings, things have not gone well in some of the Trump businesses — paving the way for some geo-demographic segmentation opportunities.

What should Donald Trump Jr. and Eric Trump do with Trump Brand?

The brand has traditionally been positioned as upscale: hotel rooms that start at $400; golf club memberships for up to $200,000; $50 cologne; $40 wines; $175 ties. But with the president’s low approval ratings, things have not gone well in some of the Trump businesses — paving the way for some geo-demographic segmentation opportunities.

Before the election, the Trump men’s clothing line lost its distribution channel when Macy’s discontinued it in 2015 as a result of Candidate Trump making disparaging remarks about Mexican immigrants.

“We are disappointed and distressed by recent remarks about immigrants from Mexico,” Macy’s said, according to CNN. “In light of statements made by Donald Trump, which are inconsistent with Macy’s values, we have decided to discontinue our business relationship with Mr. Trump and will phase-out the Trump menswear collection, which has been sold at Macy’s since 2004.”

You can still buy remaindered Trump menswear on Amazon and EBay. Selected sport coats are going for $100 to $120, and suits, originally priced at $475, are being sold for $200 to $279 on Amazon, if you can find your size. (I know this because, as a result of my research for this column, I’m now being retargeted for these items everywhere I go.) It’s interesting to note that in 2005 a consumer survey found that Donald J. Trump beat out Giorgio Armani and Donna Karan as one of the most trusted fashion names in America, according to the New York Times.

With Macy’s out of the picture, there are a limited number of potential midscale retailer partners to revive this business line — given the President’s current approval ratings.

The Trump real estate and golf properties are experiencing ups and downs, depending on their location. “… an analysis by the New York Times of financial records, and interviews with club members and employees, show that most of his golf venues fared better in areas that supported President Trump in last year’s election than in those that did not.”

“Business is booming at the Trump National Golf Club (in Mooresville, N.C.). The real estate office is selling million-dollar homes, the membership roster is nearly maxed out, and the private club is booking a record number of events … It is a very different story in Los Angeles. The Trump National Golf Club there, a public course, has seen a double-digit drop in revenue from golf in the first six months of 2017, compared with a year earlier …”

Business at Mar-a-Lago in Palm Beach, Fla., was climbing until a wave of cancellations resulted from the president’s remarks about violence. But the Trump SoHo condominium-hotel in New York and the Trump International Hotel & Tower Chicago — both cities that are liberal strongholds — are seeing signs of hardship.

The president’s unpopularity presents significant challenges for the Trump brand. But while his overall approval rating remains low, he shows resilience within his traditional base. Recent polls show Trump’s numbers improving after the post-Charlottesville low point, particularly among his traditional supporters.

According to Investors.com:

“President Trump’s approval rating hit 38 [percent] in the (September) IBD/TIPP poll after what pundits routinely described as a terrible month for the president. While still low, that represents a six-point gain over the previous month.

Regionally, Trump’s gains were strongest in the South, where his approval jumped 13 points to 48 [percent]. He firmed up support among Republicans as well, with an 8-point increase to 79 [percent]. He gained 14 points among those with a high school education, 10 points among conservatives, 7 points with white men and 4 points among those living in rural parts of the country.

(The September IBD/TIPP Poll was conducted Aug. 23-Aug. 31. It includes responses from 905 people nationwide, who were asked questions by live interviewers on cell or landline phones. The poll’s margin of error is +/-3.4 percentage points).”

Based on these findings, it would seem that the brand’s biggest opportunities would be among high school-educated white conservatives living in the rural South.

Enter American Idea and Scion — three star and four star mid-range hotel brands planned by Trump Hotels, as reported by Forbes.com.

The Scion idea is to move beyond a focus on luxury hotels in big cities and create boutique properties in smaller cities. The plan is tied to the Trumps’ new chain, which is being designed as more affordable than the high-end hotels associated with the Trump name. The developers would own the hotels, while the Trumps would be paid licensing and management fees, the brothers told the Washington Post.

The company will open the first of its Scion line of hotels — marketed as a four-star boutique brand — early next year through a deal the company inked for a property under construction in Cleveland, Miss., population 15,800.

Don Jr. told the Washington Post, “We started talking, Eric and I, as brothers, and saying, ‘You know what, there’s something here, there’s a market here that we’ve been missing our entire lives by focusing only on the high-end.’ ”

What’s Next for the Trump Brand? How About NASCAR?

Sponsors of Reed Sorenson’s No. 55 covered the car in Trump-Pence logos for a race during the campaign, a sponsorship that would normally go for $350,000. Might we see a Trump brand car in the future? Bloomberg reports: “American motorsports fans generally overlap with Trump’s base — both skew heavily male, white and Southern.”

The neighborhood adjacent to the thriving Trump golf club in Mooresville N.C., named the Point, is perhaps best known as home to more than a dozen NASCAR drivers and crew chiefs.

What are your thoughts on the future of the Trump brand? Comments below are welcome.

With October Behind Us, Amazon Wastes No Time Kicking Off the Holiday Shopping Season

On its Black Friday Deals Store, Amazon began rolling out thousands of holiday deals with new sales and promotions launching nearly “every five minutes.”

Some of your kids (or, heck, maybe even you) are still trying to scrub off that Halloween makeup from all of the trick or treating that went on, but if you haven’t already started sending out the latest info on your holiday deals and curated gift guides, you’re already losing ground to Amazon.

In a statement published promptly at 12 a.m. Seattle-time on Tuesday, the e-commerce giant announced the launch of its Black Friday Deals Store and more than a dozen different curated gift guides.

Through its Black Friday Deals Store, Amazon began rolling out some tens of thousands of holiday deals with new sales and promotions launching “as often as every five minutes” on everything from HDTVs to kitchen appliances and toys. The store will remain open through Dec. 22, and will include dozens of daily “compelling Deals of the Day” that will involve big-ticket items.

“Customers love discovering the best deals on the most sought-after products, and our Black Friday Deals Store and curated Holiday Gift Guides offer them a place to do just that – plus enjoy the most convenient shopping experience with tons of super-fast shipping options,” Doug Herrington, SVP of North American Retail at Amazon, said in the statement. “This holiday season, we’re offering more deals than ever before and – for the first time ever – giving Prime members an opportunity to use Alexa voice shopping for purchasing their holiday gifts hands-free. They can make purchases simply by asking Alexa-enabled devices, like the new Echo Dot, while relaxing at home with family and friends.”

The curated gift guides harken to those big and beautiful F.A.O. Schwarz books that used to come in the mail around this time of the year and get all of the neighborhood kids talking about their holiday wish lists. The obvious difference being that Amazon’s guides will be digital only. The most likely-to be scoured by kids and self-shoppers alike: the Electronics Gift Guide, the Home Gift Guide, and (an Etsy-esque competitor) the Handmade at Amazon Holiday Gift Guide.

screen-shot-2016-11-01-at-8-15-56-am

Of course, the one that resonates with us, and you, has to be the Electronics Gift Guide (pictured above). Looking through the list of products, retailers can get a sense of what products Amazon expects to deliver the best returns this year. What’s more, retailers can get a look at what they’re up against as far as pricing is concerned.

A quick tour through the Electronics Gift Guide shows that the emerging tech categories are expected to be front and center this year. In particular, Amazon places an emphasis on things like smart home tech, wearables, drones, and robotics. Mixed in, though, are some of the staples of the holidays—things like gaming, TVs, headphones, cameras, and more.

The standout category on that gift guide though? The little box in the top left corner of the screen: those electronics gift ideas that come in under $100. During the holiday shopping season, most consumers are looking for the “big deal.” They’re not looking to spend a fortune on themselves or whoever they’re gifting for, and that under-$100-price-point serves as a clickbaity headline. And listed in the Under $100 portion of the guide is everything from smartphones, cases, and bluetooth speakers, to toothbrushes, razors, and portable hard drives.

Calling out your major deals is great, but the strategy here by Amazon—that every retailer can learn from—is their ability to hit the nail on the head with the core online shopper. Categorize those lower price point items into an under $XX amount, and let your e-tail customers effectively impulse buy right from your website.

The biggest takeaway from all of this Amazon news for retailers? Now is the time to start running those holiday deals of yours. If you’re just planning for Black Friday now, you’re well behind the eight ball. It’s 2016, and if Amazon hasn’t made it clear enough for us all these past three years or so, let it be said here and now. The holidays no longer officially start on Black Friday. They start the second all of the pumpkins are down and candy has been handed out. So, finish that Kit-Kat you’re chowing down on, and get to popping. The holidays are here.

Loyalty Programs? We Don’t Need No Stinkin’ Loyalty Programs!

Without fear of (much) argument, it’s a fair statement to say that all companies want, and try to generate and achieve, optimum loyalty from their customer bases. They should want this, because study after study shows the financial rewards of having loyal customers. Some companies reach this goal through superior value delivery, built on quality products and services, and positive, consistent customer experiences. For the past several decades, many companies have relied on customer loyalty cards or programs, by which they can track purchase behavior and give rewards for repeat and volume buying activity.

Without fear of (much) argument, it’s a fair statement to say that all companies want, and try to generate and achieve, optimum loyalty from their customer bases. They should want this, because study after study shows the financial rewards of having loyal customers. Some companies reach this goal through superior value delivery, built on quality products and services, and positive, consistent customer experiences. For the past several decades, many companies have relied on customer loyalty cards or programs, by which they can track purchase behavior and give rewards for repeat and volume buying activity.

Customer loyalty programs are especially popular among retailers. During the years, retailers have found these programs to be powerful business tools within their highly competitive markets. But some retailers have completely disavowed loyalty programs, either never initiating them in the first place or canceling them, in favor of reduced pricing. In fact, this has become something of a trend. What’s behind it?

Let’s start with the biggest retailer—Walmart. The company has long claimed that a loyalty program isn’t needed because its prices are so low. Walmart believes that loyalty programs can, indeed, provide excellent information about customers who participate; however, as one Walmart executive put it: ” … some of the loyalty programs are very expensive, and we don’t think that serves everyday low cost and everyday low price.” Lower-than-competition everyday prices has been Walmart’s merchandising and marketing mantra since its inception. But, at least for groceries and sundry products, that often isn’t the case. Supermarket chains like Save-A-Lot and Aldi’s, neither of which has a loyalty program, will often beat Walmart’s item-for-item pricing by a significant margin. And other competitors can use their loyalty programs to selectively pick products, and individual customers, to offer pricing—which undermines Walmart.

As for generating customer purchase data, Walmart has a “scan & go” app for mobile devices, which allows customers to scan their own items as they shop; and this provides the company with valuable information on what customers are purchasing, the length of time they’re shopping in the store, and what offers and coupons might drive future purchases. Walmart uses additional methods of understanding individual customer purchases. One of these is Walmart credit cards. Another is reloadable MasterCard and Visa debit cards. A third is “Bluebird,” a prepaid debit card which functions as Walmart customers’ alternative to having a checking account, with which they can make deposits, pay bills—and shop at Walmart. Like Tesco is already doing in the U.K, Walmart has been considering development of its own bank, which would provide even more customer data.

Asda, a Walmart-owned supermarket chain in the U.K, also has no loyalty program. It’s the second-largest supermarket company, behind Tesco; and, as in the U.S., newer low-priced chains, such as Aldi, are actively competing with Asda. In place of a loyalty program, Asda believes it provides customers with what they want most, a “great multichannel retail experience.” The chain, according to executives, focuses on the key fundamentals: prices, quality, convenience and service. Alex Chrusczcz, Asda’s head of insights and pricing, offers two explanations of how the organization is endeavoring to build customer loyalty:

  • “Aspire to treat customers equally, or you’ll create a fractured brand and shopping experience. If you have someone paying one price and another customer with a coupon paying a different price, the perception of the brand is becoming fractured. Make sure it’s consistent.”
  • “Be pragmatic in terms of technology and analytics. They aren’t a silver bullet. Use these tools and combine them with the experience of your team.”

From my perspective, the second explanation is common sense; however, the first statement is really questionable—even counterintuitive, if a subordinating goal of loyalty behavior is to help drive customer-centricity. Simply put, all customers are not equal in value; and marketing strategies which treat them as such often create lower revenue.

In the U.S., regional supermarket chain Publix has no loyalty program. The company doesn’t have, as a result, the ability to track, at a household level, what customers are and aren’t purchasing in their stores. What Publix does, instead of loyalty cards, is try different alternative approaches to build sales. One of these, for example, was to test a program where shoppers could set up an online account where they could digitally clip coupons; and then, in the Publix store, the discounts they’d set up online could be automatically applied by typing in their phone numbers. Publix also has a BOGO program for their own brands, and accepts competitors’ coupons in their stores.

Some retailers do more than emphasize the sales and service fundamentals. They build genuine passion for, and bonding with, the brand by creating a more human, emotional connection. And, though there are few organizations like this, retailers such as Trader Joe’s are the exception that proves the rule. Trader Joe’s has no customer loyalty program. What they have is enthusiasm, achieved through differentiated, every-changing customer experiences, enhanced by upbeat, helpful employees. This has enabled Trader Joe’s to generate sales per square foot that are double the sales per square foot of Whole Foods. So, another way of stating that Trader Joe’s creates loyalty behavior without a program is to say: The shopping experience is, defacto, the loyalty program.

Now, we come to retailers which had customer loyalty programs, usually of long-standing, and elected to discontinue them. Actually, much of this has been done by one organization, Cerberus Capital Group, the early 2013 purchaser of multiple regional retail supermarket chains from Supervalu (Shaw’s, Acme, Star, Albertson’s and Jewel-Osco). Calling the new positioning “card-free savings,” and reflective of the first strategy stated above by Asda, each of the chains issued statements with themes like “We want buying to be simple for all, so that every (name of company) customer gets the same price whether a loyalty card has been used or not.” Additionally, and again like Asda, these chains have said they will go back to the basics: clean stores, well-stocked shelves, reduced checkout time, clearly marked sale items and creation of a more customer-focused culture. Some of their executives have also theorized that the chains will now adopt a more local-level approach, rather than customer-level, to their decision-making, and that individual store managers will now be more actively involved in driving successful performance.

So, the chains acquired by Cerberus appear to believe that “sunsetting,” or eliminating these programs, is a calculated risk and that they would still find good ways of providing value to retain more loyal customers, as well as incentives for those with the potential to move from purchase infrequency. Most analysts, however, felt that Cerberus eliminated the programs largely because the chains they purchased were either not mining card data, or not effectively analyzing and applying this material for better marketing and merchandising, thus making the loyalty systems too expensive to maintain.

Cerberus has entered into takeover discussions with California-based Safeway, which also owns Vons and Pavilion. If this sale takes place, it’s a good bet that these chains will also drop their reward cards, because Cerberus-owned supermarkets clearly don’t need, or want, no stinkin’ loyalty programs.

An Opportunity to Learn From Leading Retailers

What do cross-channel retailers like to do best (besides make money)? Share their stories and insights with their peers so they can learn from one another. Well, eM+C’s sister publication, Retail Online Integration, is giving those retailers a great platform to share their thoughts with its Retail Marketing Virtual Conference & Expo – Fall 2011, which is taking place next Tuesday, Sept. 27.

What do cross-channel retailers like to do best (besides make money)? Share their stories and insights with their peers so they can learn from one another.

Well, eM+C’s sister publication, Retail Online Integration, is giving those retailers a great platform to share their thoughts with its Retail Marketing Virtual Conference & Expo – Fall 2011, which is taking place next Tuesday, Sept. 27.

If you’re a retailer, you don’t want to miss out on this free, informative one-day virtual event. The opening keynote, E-Commerce Retail Roundtable: Holiday Best Practices, featuring Peter Cobb , co-founder and senior vice president of eBags.comOpens in a new window; Jack Kiefer , founder, president and CEO of BabyAge.comOpens in a new window; and Andy Hoar , an analyst at Forrester ResearchOpens in a new window, will provide listeners with tips to make the 2011 holiday season their best one yet.

Best practices that will be discussed include:

  • how to ensure your website is prepared for the holiday rush of traffic;
  • updating fulfillment processes to meet growing demand; and
  • last-minute social media and email marketing tips.

The closing keynote, The Future of Retail Shopping With Augmented Reality, Mobile and Social Media, will discus strategies for integrating these emerging technologies into your marketing mix to help increase conversions and sales.

Other information-packed sessions include the following:

  • At Your Service: E-Commerce Customer Service Trends
  • Social Marketing and Commerce Retail Case Studies
  • Cutting Through the Mobile Marketing and Mobile Commerce Clutter
  • Winning Customer Acquisition Tactics for Cross-Channel Retailers
  • Customer Retention Best Practices

View the most up-to-date agenda here. In addition to the great lineup of sessions we’ve put together, you’ll have the ability to network with other attendees via live chats and social networking, as well as download resources and giveaways. To register for this free event, click hereOpens in a new window.

Hope to “see” you there!

Genuine Strategies to Outsmart Paid Search Counterfeiters

According to MarkMonitor, counterfeiters sold $135 billion in goods online in 2010. Many counterfeiters are now using paid search to engage U.S. consumers. Search engines make this possible by allowing third parties — potentially counterfeiters — to bid on others’ trademarks (e.g., Coach bags, Oakley sunglasses, Rosetta Stone). Search engines prohibit advertisers from promoting counterfeit goods, but smart counterfeiters regularly evade the engines. Offshore counterfeiters also evade U.S. law enforcement, which only has jurisdiction to seize domestic domains. As a result, some high-end retailers and software providers are being forced to wage a constant paid search battle against counterfeiters.

According to MarkMonitor, counterfeiters sold $135 billion in goods online in 2010. Many counterfeiters are now using paid search to engage U.S. consumers. Search engines make this possible by allowing third parties – potentially counterfeiters — to bid on others’ trademarks (e.g., Coach bags, Oakley sunglasses, Rosetta Stone). Search engines prohibit advertisers from promoting counterfeit goods, but smart counterfeiters regularly evade the engines. Offshore counterfeiters also evade U.S. law enforcement, which only has jurisdiction to seize domestic domains. As a result, some high-end retailers and software providers are being forced to wage a constant paid search battle against counterfeiters.

Let’s look at Coach, a brand susceptible to counterfeiting. According to Coach’s website, the only sites that sell authentic Coach products are Coach.com, Macys.com,Nordstrom.com and Dillards.com. However, according to Google’s search engine results page (SERP), searchers can buy authentic Coach products from sites like Cosaletoday.info, Aomart.info, Alibuys.info and Bestaomall.info.

Actually, the domain names of the counterfeiter sites don’t even matter; every time Google removes an ad, the counterfeiter puts the same content on a different domain and buys a new ad. Controlling counterfeiter paid search ads is like a game of Whac-A-Mole — every time one is eliminated, a new one pops up.

A “Coach bags” Google query on May 26 I conducted illustrates the paid search visibility that some counterfeiters can achieve. Although rare, the results showed an instance where the top three advertisers are all Coach counterfeiters. Coach’s official website was found in the sixth position.

The most interesting aspect of this example is the position of the counterfeiters’ ads in the top sponsored box and above Coach’s own ad. Google has stated that for an ad to display in the top sponsored box it must meet a high quality score threshold. It’s unlikely these ads — which contain misspellings and are obviously suspect — have high quality scores. Thus brands cannot rely on quality score alone to keep counterfeiters from the top of the SERP. Brands must employ sophisticated strategies to outsmart paid search counterfeiters, including the following:

Powerful monitoring and workflow technology: Brands that are susceptible to counterfeiters must monitor their keywords in real time, 24/7. This requires powerful technology that not only identifies when a counterfeiter is bidding on your brand, but automatically does something about it.

When your trademark monitoring technology identifies a counterfeiter, how long does it take to you or your team to:
1. contact the search engine to remove the listing;
2. increase your bid to ensure you’re running above the counterfeiter until the engine removes the ad; and
3. ease back bids once the counterfeiter’s ad has been removed?

Best-in-class performance marketers optimize the campaign management process to scale across keywords and publishers by combining business intelligence tools with trademark monitoring and workflow automation technology. While speed to market and quality of implementation are important success factors when trying to blunt the competition, it’s critical when a counterfeiter is bidding on your brand.

Multidomain distribution strategies: Brands should consider SERP domination strategies to overpower counterfeiters’ ads. For instance, most luxury retailers sell via channel partners like department stores. These retailers could employ paid search co-op strategies where they provide their channel partners with money to bid on the retailer’s brand. For instance, a retailer could bid on its brand in conjunction with four channel partners, effectively pushing counterfeiters below the fold. This strategy requires clear communication with channel partners, as well as bidding rules and monitoring to avoid cost-per-click (CPC) inflation.

“Official” ad copy: Don’t underestimate the effectiveness of ad copy that contains your trademark symbol and the phrase “official store.” Searchers seeking the real product will look for this kind of copy.

As you can see, complicated paid search challenges require sophisticated, customized solutions. This blog only scratches the surface on how to deal with counterfeiters and other unauthorized parties who bid on your trademarks. Do you have a complicated search challenge? If so, leave a comment below or send me an email at craig.greenfield@performics.com.