Archive for April 2009

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Lesson 10: Re-examine and re-define the business

April 24, 2009

Exhibit B in our discussion…www.dailycandy.com

Daily Candy – at least according to their web site – is “a free daily e-mail from the front lines of fashion, food, and fun. Sign up to get the scoop on hot new restaurants, designers, secret nooks, and charming diversions in your city and beyond.”

Visit the site. You’ll find it a bit overwhelming. There are editions according to where you live. There are also sections organized by what you are looking for – beauty, travel, house, food and culture.

Daily Candy is selling its women readers a way of life and hopefully, a better life.  And it’s doing it by communicating with them every day.

From a business perspective, they have taken a vertical, fashion, and delved very deeply into it. Like the RealAge site, Daily Candy is building a deep relationship which will afford them the opportunities to sell a wide range of products and services.

And like RealAge, there is really more going on here. By becoming the source for all things fashion related, these sites, with their readers’ permissions, have a license to communicate – and promote – and sell.

By building loyalty, these sites are creating a captive audience. This audience returns again and again, and more often than not, someone is buying an item or complimentary item to something that the person already owns.

The important takeaway is that while the models that we are very familiar with may not work for the housewares industry, there are many others and others being created daily that will work.

The lesson of dailycandy.com and RealAge (and Yelp, a site that reviews locations, clubs, stores, etc) is that in certain circumstances a traditional web store model will not work. However, other models like the ones that build deep relationships about specific focused areas of interest can.

Bottom lining this…we need to expand our view as what business we are in, who our customer is and what we are truly selling. Doing so will allow us to identify new vistas of opportunities.

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Lesson 9: Understand Your Constraints and Leverage Them

April 21, 2009

When it comes to pragmatic marketing, Mitch Rothschild is the smartest person I know. He runs a marketing and sales company called Raspberry Red. His company has built a site, www.vitals.com, where consumers can check up on their doctors. This site provides consumers with the tools to investigate the backgrounds of physicians and make intelligent, informed decisions about which doctor to choose.

But here’s the cool thing.

According to Quantcast.com, an independent site that measures the characteristics of websites, “Vitals.com is a top 5,000 site that reaches over 1.4 million people monthly, of which 1.3 million (94%) are in the U.S. The site attracts a more educated, middle aged, fairly wealthy, slightly female slanted group.”

No bad for a site that’s slightly over a year old.

Mitch’s gift is that he’s sensible, focused and devotes himself to first understanding the constraints of the marketplace, before applying his know-how to a solution.

He cut right to the heart of the matter when I posed our challenge to him.

The biggest problem, Mitch explained, was that these houseware items are low cost. In completing any purchasing transaction, one should expect a cost of $40 per transaction. Housewares tend to be inexpensive so these transactional related costs cannot be built in and absorbed. Besides, it is very difficult to build a brand on the web.

Mitch then pointed me in a different direction.

You may have heard of a company called RealAge. They provide an online test. This “test” asks 150 or so questions about your personal habits, lifestyle and family history. Based on your responses, the company provides to you – via your e-mail address which you enter — your “biological age” and then makes recommendations on how you can get “younger.” Some of the suggestions are simple – eat a better breakfast, take a multivitamin – stuff like that.

Most important, the test is interesting and people like to take it. After all isn’t everybody intrigued by the analysis and the possibilities. Well, maybe not everybody. However…

More than 27 million people have taken the test. That’s a lot of people…and a lot of data.

How does RealAge make money? While its suggestions are non-medical, it really is selling better living through medications. It is acquiring priceless data that most drug companies could never be successful in getting from prospective patients. If a RealAge visitor becomes a member, his or her data goes placed into a marketing database.

To promote their site, RealAge employs a “hub,” Dr. Mehmet Oz of Oprah fame, as a spokesperson. His message complements RealAge’s – you too can change.

According to the New York Times who did a detailed story on RealAge, companies like Pfizer, Novartis and GlaxoSmithKline parse this data and target their products with a laser like focus to prospective consumers. (RealAge provides only the e-mail address and its site policy acknowledges that it shares data with third parties who can help fulfill its mission of “better living.”)  Because of this wealth of data, these pharma companies can target a specific demographic pretty easily, such as overweight smokers who are male between 45 and 50 and get depressed. The companies then send out e-mail advertisements that present the possibility of a treatment that can make a life-changing difference. Tthe e-mail recipient can then choose whether to investigate further.

So what does this have to do with our challenge…visit the RealAge site and stay tuned…

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Lesson 8: Rethink…and Rethink Again

April 17, 2009

Clearly, companies are beginning to use social networking in unprecedented ways.

The Wall Street Journal in its April 8th edition reported that the Ford Motor Company has “picked 100 young, Web-savvy drivers” to get behind the wheel of its new Fiesta for the next six months and report on what they think about this car on sites such as Twitter, YouTube and Flickr. Ford is giving them the use of the car and covering their gas and auto insurance costs – all in exchange for online reports of their involvement and experiences with the Fiesta.

One of the most interesting elements of this campaign is that while it will start later this month, the Fiesta will not be available for purchase for about a year!

Ford’s trying to create buzz and attract attention. They also want to reach a new, younger, sophisticated consumer. They selected the 100 participants from 4,000 video submissions. These submissions were graded based on how many followers the participants had, how many platforms they worked across and creativity, video skills and the ability to “hook the viewer” in the first 5 – 10 seconds.

Ford will have no control over the content or the posts. Talk about “driving without a net.” Ford views this as an acceptable risk since most consumers seek out Internet reviews before purchasing a car anyway.

But Ford is not alone in this effort.

Toyota is working to create an online community for its Scion. And in March 2008, before it received a government bailout, GM allocated $1.5 billion dollars to digital and one-to-one marketing.

Closer to home, Intel contacted my 16 year-old son last week. Much like the car companies, Intel is looking to leverage a less traditional form of opinion leaders. Eli writes a blog for teens on technology and Intel wants him to evaluate two computers for them. They’re looking to find out what the next generation of users like or dislike about computers.

It’s clearly a new world and such a new world requires that each of us step outside of our traditional ways of thinking.

And in the end, that may be the most interesting and greatest challenge of all.

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Lesson 7: Use Technology to Forward Your Business

April 12, 2009

We’ve laid the foundation for our solution by discussing numerous disciplines which will be incorporated for re-establishing marketing and sales control within our housewares industry, The remaining area for us to explore is technology.

As is always the case, technology is never the solution in and of itself. Rather, technology is a tool – a very effective tool for transforming the way one processes transactions on behalf of its customers or delivers products or services to them or communicates with them.

In recent months – and although it feels longer than that – it really is months -we have been exposed to a new use of technology, a tool called Twitter. Twitter takes texting to another level. This service allows people to send and read “micro-blogs” or “tweets” of up to 140 characters. That’s about the same length as one of the sentence in this paragraph. Here’s a quick overview.

People who use twitter a re called “tweeters.” They set up free accounts on Twitter and post these very short blurbs. Anyone with Internet access can log on and see these “tweets.” The difference though is this. People can elect to have these tweets sent to their cell phones, mobile devices or computers.

How can one sentence of posting make such a difference? Consider this report from the April 8th New York Times and reporter Ellen Barry.

“A crowd of more than 10,000 young Moldovans materialized seemingly out of nowhere on Tuesday to protest against Moldova‘s Communist leadership, ransacking government buildings and clashing with the police.

The sea of young people reflected the deep generation gap that has developed in Moldova, and the protesters used their generation’s tools, gathering the crowd by enlisting text-messaging, Facebook and Twitter the social messaging network.

The protesters created their own searchable tag on Twitter (ed. note: thus allowing you to look up links that are tagged with one or more subjects), rallying Moldovans to join and propelling events in this small former Soviet state onto a Twitter list of newly popular topics, so people around the world could keep track.

By Tuesday night, the seat of government had been badly battered and scores of people had been injured. But riot police had regained control of the president’s offices and Parliament Wednesday.

After hundreds of firsthand accounts flooded onto the Internet via Twitter, Internet service in Chisinau, the capital, was abruptly cut off.”

If political revolutions can be initiated, how can a business one be started?

On the site Read Write Web, http://www.readwriteweb.com/archives/zappos_twitter.php) you can learn how Zappos, the Internet shoe retailer is using social media to forward its business.

There are literally more than a 100 Zappos employees with twitter windows open waiting to respond to customer service questions.

Here’s a short sample from today’s Zappos Twitter site. I’ve slightly modified each name and removed the links so as to be sensitive to the identities of the individuals since I am using this for a different purpose.

  • @samdeck I want to apologize for your hold time. We’re here for you 24/7 1-800-927-7671. Have an awesome day!!! about 2 hours ago from web in reply to samdeck
  • @onfiref I apologize for the confusion, but which shoes do you need a picture of? Let us know or call us 1-800-927-7671 about 2 hours ago from web
  • @Glorial congrats! We look forward to meeting you! about 21 hours ago from web
  • @mkntz we did upgrade you to next-business day shipping for free on your order! You should receive it 4/14/09 at the latest. about 21 hours ago from web
  • @hinia I would be happy to answer your question. There is no tax when shipping to California from Zappos. 2:30 PM Apr 10th from web

This is customer service in 2009!

Zappos though is also intent on building a community. There’s a dedicated site where you’ll find all of the twittering Zappos employees who tweet about what they are working on and interesting resources on and off the Zappos site. There’s an employee leader board that shows who’s on twitter an dhow many followers they have.

There’s also a page that aggregates all of the public mentions of Zappos. And Zappos has also set up pages for those who rave about the company and its products.

Want to know more about how to use Twitter in your business? Do a Google search on “twitter” and “business”…

Ah, technology as a tool…

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Lesson 6: Draw Attention Using Traditional Approaches Too

April 6, 2009

Suzy’s discussion reaffirmed an initial component that may be critical to an overall solution to our challenge. She had stated at the close of the conversation, that public relations might be an integral element for developing the consumer franchise for these housewares company.

One of the marketing people that I have relied on over the years is Steve Clark. Steves the head of Andover Communications, a PR/Marketing firm specializing in product and service promotion, editorial and creative solutions and event planning, specifically for small businesses. That was important because the prices of the products in this industry necessitates a more limited promotional budget.

Building a presence for clients is something Steve is very comfortable doing. He views his role this way – the goal is to get the customers to ask the store why it doesn’t have a particular product in stock.

The other morning, I was watching the Today show, To my surprise, Matt, Meredith, Al and what seemed like the entire Today Show staff, were all wrapped in the SnuggieTM blanket. That’s the blanket with sleeves. The Today Show team was marveling at how great, warm and comfortable it was. Watching them discuss the product was absolutely fascinating. (By the way, the entire segment was just over two minutes long!)

Talk about using a “hub” for gaining a market presence…

And all I could think of was, some PR firm had really truly earned their fees. They had leveraged an infomercial which uses direct response advertising to create a market for very simple invention and then got several minutes on nationwide priime time television haveing their product promoted across the country.

And incidentally, the Snuggie is not only sold on the web. It’s also available at Target, Bed Bath and Beyond and Walgreen’s – the very same stores that our housewares companies have their products.

The lesson here is clear.

Being in a technologically driven world does not mean we should discount traditional methods of promotion. It is very possible to create customer demand through the effective use of traditional marketing and push-pull techniques.

Steve shared with me one of his own experiences. About ten years ago, Steve represented a client that created eyewear for those who spend a lot of time in front of the computer. The eyewear was branded and was designed to reduce eye fatigue. Andover was effective in creating patient demand so that prospects felt a need to go to their local optometrist and ask for the product by name.

To further cement its appeal, he arranged for a local television station to interview the company at a trade show where they were demonstrating the product. The presence of TV cameras at a booth added cache and credibility to the company and helped accelerate the results that they achieved.

Consumer attention though requires critical mass and often this solution involves unique packaging, placement and promotion to create two of the elements necessary for a successful buzz — exposure and credibility.

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Lesson 5: A Brand Community is a Business Strategy

April 2, 2009

As fate would have it, April 2009’s Harvard Business Review presents an article titled “Getting Brand Communities Right.” The article written by Susan Fournier and Lara Lee highlights seven ideas that are important to our analysis. I’ve summarized them here. To purchase this fascinating article so that you can read it in its entirety, click here.

(1)    A brand community is no longer a marketing strategy. It is a business strategy. To be most successful, allow your brand community be a high-level strategy that supports all of your business goals. Communicating with the community allows your business activities to take on new meaning and reflect the needs of those you wish to have as customers.

(2)    A brand community exists to serve the people in it. The authors state that if you meet the needs of the individuals within the community, you will in fact be meeting the needs of the business. Here’s the challenge. All businesses like to control the products they sell, the conversations they have and how they are perceived. Being effective here though means being vulnerable, not all-knowing and committed to addressing a need – rather than building your brand. Now, here’s the payoff. You just might discover an unmet need not related to your opportunity but one that keeps people very related to your business.

(3)    Engineer the community and the brand will follow. There is a science to engineering a community. Typically, people try to build communities around pools. These are individuals united by share values or goals (such as Republicans or Democrats). The authors explain that the relationships these pools form are limited and suggest that Web affiliations based on strong one-to-one connections (the example they use is a Cancer Survivors Network) is the catalyst that creates an engaging energy that sustains the community. The last element is to build a web community around hubs, individuals whom the community admires and is related to. Hooking up with such an individual will again drive passion.

(4)    Smart companies embrace the conflicts that make communities thrive. The natural reaction when one hears a complaint is to address it or squelch it. But in order to be an “in” group you need an “out” group. (Think Apple vs. PC, Coke vs. Pepsi). Strengthen the conflict and you strengthen the community.

(5)    Communities are strongest when everyone plays a role. The best metaphor that I could think of for this principle was the physical neighborhood within which that I live. What gives a neighborhood color, charm and notoriety are the characters within it. Each contributes to the fabric. Allowing people to be diverse in their thinking, types of support and nature makes the community engaging. To see a full list of roles, check out the article.

(6)    Online networks are just one tool, not a community. On-line networks re not enough to create a community. Communities grow from traditional approaches as well. Companies build communities using advertisements, celebrity spokespeople (“hub”), social interaction, entertainment, expert advice, packaging…and on and on.

(7)    Of and by the people, companies defy managerial control. Much like your physical community, to thrive, an on-line community can’t be controlled. Yes, it can be supported and nurtured…but not controlled. Supporting and nurturing may be done with scripts that articulate behavior guidelines  and those that encourage appropriate behavior in a particular setting. In fact, you can create settings that have different rules and allowed behaviors.

The plan for addressing our challenge incorporates these rules. Still there is more analysis to be done.

Stay tuned…

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