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ABI Research are forecasting a significant growth in Internet Enabled cars, with 50m vehicles sold by 2017 with native Internet connectivity.
In car connectivity is already broadly available with smartphone-dependent products like HondaLink available in most markets today. However like any new technology, the real breakthrough comes when new applications are developed by a broader ecosystem, which, as far as we can tell, is yet to happen.
It’s quite possible that 30 – 40% of new cars sold in Australia will be Internet Enabled with 5 years, yet few business have connected cars in their 3 year plan.
So we all want our time online to be a more private affair, but find it impossible to wade through the policies and figure out what’s what? Further, even if you had the time to read them, would anyone but a Privacy Specialist understand them, and worse, be willing to forgo the benefits brought by Facebook and Google in an effort to maintain some sort of online anonymity? I suspect not in each case.
It’s hard to see how to solve this issue.
Over time I worry that the role of government will be to reign in on the issue if left unsolved, which would be a bad outcome for all.
It’s rare that a great product would win without the support of great service, so why then are the two so quick to grow apart?
The problem, I think, is success.
Scale and its associated economies support the development of a product but rarely do they support the development of the accompanying services. There are exceptions, of course, but not many; McDonalds is one, Apple another, Sadly I’m at a loss to think of a third.
It’s worth noting of course that Apple and McDonalds are are notable exceptions to the rule, albeit for vastly different reasons. McDonalds is a very, very large franchisor, and the “product” being sold does not come in a bun, the product is the Franchise. The Franchisee buys a proven recipe for fast food and efficient service. If McDonalds didn’t have control of the entire McD’s ecosystem through a tightly wound Franchise Agreement it would be impossible to maintain its brand of high-margin consistency that allows it to continue selling to franchisees at a premium.
Apple, on the other hand, is all about brand, and that brand extends through the product supply chain to the lifestyle, which includes the process of purchasing and ownership. Prior to Apple seizing control of its supply chain the service part was delivered by 3rd parties, now it is a powerful pillar in the house of Apple.
When a typical business grows, investment is poured into improvements in the production process, reducing the cost of goods and improving margins. The same can’t be said for service, great service at scale is costly, and returns to scale are minimal. In addition, training great service to new staff takes time, so the gap between product uptake and service delivery can grow rapidly if the growth was sudden and unforseen.
Improved margins are seductive, investments in service are not, and so the conflict begins.
As a business owner, you can get ahead. At a minimum there should be a record kept of a consistent service KPI such as Net Promoter that can serve as an early indicator of customer sentiment taking a turn for the worst. Where growth is happening at the expense of service the growth should be arrested until the issue is identified and resolved, hard as it may be to do so.
Positioning your entire business as a product is smart, have a McDonalds-like operating manual with detailed descriptions of service procedures and quality standards, or emulate Apple by asserting service as a key part of your brand, then live it with every touch-point!
To favour growth at the expense of service is a short term win, the positive sentiment that propelled growth in the first place is already evaporating, allow that to continue and chances are your brand will never recover.
Group Buying helped good businesses access revenues that had previously eluded them, improving utilisation, buoying their P&L and promising a sustainable new revenue stream from this exciting new consumer channel.
But now that the sector has waned and desperate Group Buying businesses have become fixated on stack ‘em high sell ‘em low product chuff – those once buoyed businesses are left feeling a little queasy.
Just one of the problems they face stems from prepayment, one of the headline benefits touted by most group buying companies (including me).
Although quick access to cash is manna from heaven for most business owners, prepayment has left behind a tequila-like side effect.
The problem is this. A top priority for all online businesses should be around Funnel Conversion, i.e. the ability for the business to convert leads into dollars, however in a world of prepayment, conversion becomes somewhat unimportant. In fact, if breakage (unused vouchers) is a profitable exercise for the merchant, higher conversion may actually mean lower short term profits.
Now that Group Buying is providing an ever declining proportion of revenues, many online businesses that signed up to breakeven or lossmaking campaigns in order to grow their subscriber base, now find they are unable to monetize that base due to poor site performance, especially in the area of conversion.
Faced with lower than expected revenues, these companies often head back to Group Buying to find that like-for-like offers work only half as well as they did before. Now the business is in a pickle, the drug is half as effective, risk its brand by doing twice as much? Surely you know your drug dealer is never your friend?
The key is to get the fundamentals of your businesses working right before looking to Group Buying or any type of Marketing for that matter. Ensure that the purchase funnel is converting 60% or more of the people who hit “Buy Now”, that your Subscription Channel is effective, and your email strategy is delivering appropriate Open, Click and Purchase rates.
When cloaked by the shiny veneer of Group Buying dollars your site performance will look a whole lot better than it really is. Time to sober up, shake off that hangover and see if your bedfellow looks as good as you remember.
American Express recently published a report into the impact of Service on Customers, focusing on how the new socially connected consumer behaves versus their less connected counterparts, the findings are startling.
One data point out of the report that should provide cause for concern is that an unhappy Social Media Savvy customer will voice their complaint to 53 of their friends, often through Facebook and other channels.
Amex also report that more than 80% of Online Savvy consumers say they’ve bailed on a purchase because of a poor service experience, compared to 55% overall.
It isn’t all bad news though, customers reported that they would be willing to pay an average of up to 13% more for products and services if the business provided excellent customer service – that’s a healthy return for showing you care.
The report concludes with tips for better service:
1) Great service starts with the people who deliver it – Motivate and enable your employees to go above and beyond for your customers.
2) It’s all about relationships – Good service comes down to forming relationships with customers. Look at customer service as an opportunity to deepen your connection with your customers, not just as a transaction to be completed.
3) Make it easy for customers to do business with you – Listen to your customers and use their feedback to improve your product and service.
4) Exceeding expectations is easier than you think – Customers aren’t unreasonable and don’t except every problem to be solved instantly. They simply want to be treated like individuals, know that you genuinely care about their issue, and are working hard to address it.
5) Listen to your employees – They are closest to your customers and understand the most about what customers want and need. Don’t miss out on their incredibly valuable insight.
6) Seek opportunities to make an impression – Understand and act on the notion that every customer interaction is an opportunity to create a connection and to drive customer loyalty and engagement
What’s clear is that the service expectation is increasing and consumers expect more than ever to be able engage with businesses directly or via social media when they have a gripe – sadly though, the number of businesses that can engage in this way is relatively flat.
The full report including a nice Infographic is here
In a previous post I said that "Pricing alone will never lead to a long term strategic advantage, only service quality and inspiration can" – something similar to a quote today from CEO of Masters, the challenger hardware-retail brand from Woolworths.
Don Stallings commented: "more than half the people shopping for whitegoods at Masters hardware stores use smartphones to check competitors’ prices… to get those sales over the line in a traditional store, customer service and the personal touch had to be of the highest quality. [at] Masters [we have] spent as much on training staff to deliver customer service as on the rest of the business"
Meanwhile, across town at Myer, Bernie Brooks laments that "[the] customers’ propensity to purchase is not improving" so they are "pinning hopes on their midyear stocktake sale"
Myer + Myer One Loyalty club have the bones of a very defensible Retail strategy when Multichannel is fully embraced; where Lifetime Value, upsell and cross sell are key and are driven by what is already known about each customer segment, customer cohort or even, individual customer. But each retail touchpoint has to be aligned to the vision of "lifetime customer value is king", something that may be easier to achieve when the business is built from the ground up with no technical or cultural legacy, sadly Mr Brooks doesn’t have that luxury.
"Discount heavily and I will love you right now, inspire me with insights and ideas and great service and I will love you for ever"
Group Buying is a compelling online purchase for the same reason that Music and Porn have been eCommerce stalwarts since the dawn of the Internet, because the purchase is instantly satisfying.
Unlike typical Online shopping, making a purchase through a Group Buying site means you are rewarded instantly with a Voucher or Coupon. Suddenly the customer has something real; the voucher guarantees access to the product or service and locks in the discount they have been savvy enough to secure.
Online discount shopping usually means trading off the available discount for the wait the customer will have to endure, versus paying a bit more to pick it up in store – in some categories customers are willing to pay significantly more if that means getting instant access, think Apple.
But more can be done to close the gap and make online shopping more satisfying. A voucher is a great start, something glossy and celebratory that serves to remind them how savvy they are. Game mechanics also have a part to play, with regular email updates documenting the journey of their purchase, building anticipation and a sense of fun. Lastly, why not allow pickup? If your business has physical infrastructure where the voucher can be exchanged, this is a tremendous opportunity to cross-sell (like a physical Thank You Page!).
Things don’t always go well, no matter how passionate you are as a business owner. What’s important, is what you do next.
yabbit will help you to connect with your customers, on premise and off. Providing a platform to gather feedback about your business, and giving you a critical opportunity to respond when things have not gone well – before your highly connected and passionate customers turn to social media and their favourite ratings and reviews site to share their disappointment.
At no cost to you or your business, yabbit will provide an easy to use feedback platform that will encourage your customers to “tell it like it is” – simple, discreet feedback, straight to you, the one who cares the most, the business owner.
yabbit is looking for 100 passionate business-owners to get involved in a pre-launch Beta, to provide us with invaluable feedback that will help us shape this business into a game-changer for your business.
Go to www.yabbit.com to register.
I still have a soft spot for the Bellevue Behemoth, I enjoy a Windows Phone 7 after all! Yet I can’t hide my disappointment with their new G+/Pinterest competitor So.cl having logged in for the first time today.
There was a time only a few years back when a Consumer Preview or Beta could be rough-as-guts bad – and early adopters would still evangelise the intent even though they had to cut the execution some slack!
However I think the world has moved on. Looking at innovation through a Lean Startup lens it feels appropriate to cut features in favour of capability when time to market is important. Yet what Microsoft have done with So.cl is enabled 100% of the product features at the expense of capability, in fact, I get errors at pretty much every turn!
In such a competitive market, when trial, adoption and subsequent user engagement/feedback is so critical, I think Microsoft are about the blow the advocacy available from that first wave of geek-adopters as a result of their surprisingly poor execution, a potentially fatal blow for a Network-effects dependent platform.
As an innovator the formula to success seems straightforward, annoy fewer customers than you delight and your advocacy will grow.
Sadly, Microsoft are engaging on a very dangerous battlefield with So.cl, I imagine their their enemies are moving in for the kill already. Another Wave anyone?
Group Think is a very effective mechanic used in Group Buying that is perfectly suited for use elsewhere, other than where exclusivity is important of course!
By publishing the number of items that have been sold, consumers are comforted at the prospect of being part of a crowd and are more willing to buy, assured that many others have thought long and hard before deciding to make the purchase negating the need for protracted consideration!
The effectiveness of this this mechanic will peter out when availability concerns emerge, but until that point the strategy is sound.
Where access to specific purchase data is problematic, manually updating the Offer to state “more than 1,000 sold to date” works well…
As well as “number sold”, “people who bought X, bought Y” is an example of Group Think. Again these can be manually programmed where automation is not an option.
Gartner describes the adoption of Technology (where there has been clear market Hype) using the Hype Cycle diagram. The same diagram can be usefully adapted to describe the current challenges facing the Group Buying industry given it was built on a platform of extraordinary hype and has since suffered its own decline. Also, much like how the Technology Hype Cycle describes the organic adoption of the technology over time once the Hype has dissipated and the useful nature of the innovation emerges, Collective Buying does add real value to Merchants and Consumers, and beyond the hype and the noise of Group Buying, that value add still exists – which then begs an interesting question, what is required to ensure an enduring future for Group Buying?
The key phases of the Gartner Hype Cycle are on the left of the table, an equivalent stage in the Group Buying evolution is on the right:
I believe that to get through the Trough of Disillusionment and onto the Slope of Enlightenment, the players in the industry need to follow the 4 tenets of Effective Group Buying:
Dan Sullivan’s 2005 book, How the Best get Better, contained some simple tips around improving your referability – I thought it would be useful to repeat here.
Four simple rules:
What struck me most about this framework is the absolution simplicity of its guidelines, and the no-brainer nature of the points.
So if the rules of the game are this simple, why publish them here? Tragically these behaviours are atypical – especially rules 1 and 4!
Stock limitations can be a condition, i.e. we really only have 200 available in our warehouse, however setting a stock limit can be a very effective tactic to drive up sales, this is the Scarcity Game Mechanic. To set an appropriate limit, forecast the likely sell through of a particular item, then set a stock limit that is 10 – 15% higher than that forecast, the Scarcity Game Mechanic if played right will ensure the limit is reached and your forecast is exceeded.
To illicit the right response, the shopper has to feel some sense of urgency due to the stress that comes from missing out, clearly this is less effective in the early phase of the sale but that’s ok given the forecast amount would have been reached on its own. Having a genuine countdown display is key, either literal or abstract, regardless though it has to be genuine, once the limit is reached the item is “Sold Out”, it’s tempting to find and release more stock however once this occurs, the scarcity mechanism will be discredited for good. Promoting the Stock Limit though display advertising or EDM is also good, however the level of promotion provided has to be proportionate to the Stock available. Lastly, if a Consumer comes to the site after the limit has been reached, this is a great time to reinforce the “don’t miss out next time, be first to know with our SMS program” or similar engagement/re-targeting program.
As part of the "Get Schmart" 2012 Marketing Conference Billy Tucker, owner of data consultancy 57 Signals, believes that email will increasingly become a redundant form of communication in the retail world. Despite the incredible penetration of email in our society Billy believes that the under twenties demographic are increasingly using social media as their preferred platform of communication. As he puts it "
Group Buying works for a reason, regardless of the service woes plaguing the industry (which have been driven by a combination of greed and inexperience, not the model itself) the principles behind Group Buying are sound. Over the next few posts, I will explain the key mechanics and position them in a series of non-Group Buying contexts.
This is the first of six posts I will write that describe those mechanics.
FOCUS ATTENTION ON ONLY A FEW OFFERS
Limiting promotional efforts to only 1 – 3 featured offers enhances the perception of those offers and likely uptake, minimising “noise” around those offers will further spotlight the chosen few. Featuring multiple offers on the other hand dilutes the “WOW” and runs the risk of Paradox of Choice effects.
Most email platforms will support controlled tests, such as sending one control group an EDM with multiple offers, one with the three best offers and one EDM with only a single “hero” offer.
Assuming the control conditions are sound, the likely outcome is that the Hero and “three best offers” EDMs will each provide a click through rate that is greater than the “multiple offers” EDM even though the multiple offers email included the featured offers from the other tests.
Most transactional websites share a common shortcoming, leaving a significant amount of value up-tapped. The Thank You page is seen as a simple confirmatory page, there to provide certainty to the customer that what they think just happened, just happened. But the Thank You Page is a comma, not a full stop.
You have battled hard to win the customer, fought to provide the right product at the right price, and you have lost many along the way. But once a transaction is complete, you’re done, there’s a tick in the box and the user begins again, <close window>, <new tab>.
But your customer is, at that moment, your biggest advocate – you are in the Golden Window. Your Advocate is brimming with delight at the purchase of that holiday, auction item, or e-book, so why stop now?
Immediately post transaction is the right time to harness their advocacy, and here are six ways to get value from the Thank You Page:
[check out RockLive in Australia and the many other agencies emerging in this space]
The average age of an Australian internet user is growing fast; catering for this shift is increasingly important.
According to the Australian Bureau of Statistics, 79% of Australians over the age of 15 are online – meaning adoption is way past the Early Adopter phase (According to the Diffusion of Innovations curve) and well into the Late Majority – at 84% adoption only the Laggards are yet to join!
In terms of age profile, 96% of 18 – 24 Year Olds are already online, so new audience growth will mostly come from older age segments in the coming years. In the past two years, 55 – 64’s joined the web at almost twice the rate of their younger counterparts.
This new older audience presents an interesting opportunity, by nature they are more considered and loyal (and/or resistant to change), and have an appealing cash pile at their disposal.
Winning the over 55’s is hard though, often they rely on personal recommendations and will Trial only after careful consideration, but they are worth the effort.
So here are six tips for appealing to an older user:
Pricing alone will never lead to a long term strategic advantage, only service quality and inspiration can.
I’m saddened by today’s retail landscape in Australia. Shop windows shout lowest price, when what I really need are inspirational gift ideas, good sales advice and the comfort that my dicky gift choices can be returned when they turn out to be just that, dicky!
Pricing is a consideration for sure but only in so much as the chosen item is inside or outside my budget, at which point the role of a retail assistant is to upsell upsell upsell!
At this time of year, the vast majority of retail spending is focused on gift buying. But in this world of consumerism on steroids, friends and family are increasingly hard to buy for – combine this with the paradox of choice we feel and no wonder the shelves remain stacked and the gifts received remain, er, dicky. Pricing, though, is rarely the issue.
The solution is probably right in front of me, a personal shopper! But who knows how to use one of those? In the world of online, a Personal Shopper is only a few clicks away. Punch in my budget, a broad description of the loved ones I’m buying for and bam, inspiration is at hand. Maybe my better-half gets an email with options to choose from that will better narrow the items presented back to the buyer, Buble or Gaga, Block colours or print, ebook or paper? Now I have items to choose from that make me look like the hero I am, and I can pick up in store to boot (time for that all-important upsell and gift wrapping service!)
Clearly these are difficult times, and Christmas is an expensive business, so the price conscious shopper with a gift in mind is looking for the best price available. But I don’t believe that is the whole story. By focusing on lowest price retail I worry that our biggest Branded retailers are on a race to zero, yet they’ll remain unable to compete with online – this is a lose lose for all. Online is the key to harvesting Signals for that personal experience, it’s the opportunity for Big Retail to take “personal retailing” to the next level; training consumers to think Online is all about Lowest price and best discount is to underwrite the death of Big Retail.
“Discount heavily and I will love you right now, inspire me with insights and ideas and great service and I will love you for ever”
Two stories in today’s SMH caught my eye, one announcing that Australia’s Retail legend Myer was launching it’s Boxing day sale today to online customers, and the other covering the Neiman Marcus Christmas catalogue (which has been available since 1926 and growing from strength to strength each year!) interesting contrast between growing retail and contracting retail.
Every business, offline or on, generously receives up to 57 Signals from a prospective client at the point they touch your business, those signals are there to be read and understood allowing your offering to be optimised in real time – maximising the likelihood of purchase.
Find and adjust to just 5 Signals for short term gain, build a strategy to address all 57 to change your business altogether.
Finding and exploiting these signals has contributed greatly to our success at Cudo, and over the coming months I will be talking to retailers across multiple industries about finding this kind of value from their existing data.
More to follow.