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January
25, 2002
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Which
way is up?
By Keith Newman
Confusion abounds. Who's winning and
losing depends on whom you ask and when you ask right down to
the second. It's even dangerous on the sidelines. Take a look at
these items and tell me where I should place my bets.
1. A Palm in Hand... Despite Palm's market share advances,
Handspring, its biggest OS customer, lost $14M on lower sales ($70M)
in its most recent quarter. Handspring is betting its future in
its new wireless Treo, a hot-looking wireless phone/organizer/emailer.
The challenge is that it uses the GSM standard - a risky bet because
it has limited coverage in the US, though popular overseas. Handspring,
of course, expects coverage to become standard. At Comdex, founder
Jeff Hawkins noted in his keynote, there are almost a billion cell
phone users just a few more than PDA users, by a couple of millennia.
Yet, to turn the tide means new wireless technology partners, broader
retail coverage to reach the mobile phone/PDA customer, and a stepped
up enterprise strategy. It also means they should stop worrying
about Palm, and Microsoft, and look more carefully at Nokia.
2. Sony said sales of its PlayStation line of video game
consoles and games generated over $2 billion during November and
December, capturing 60 percent of the game industry market. Three
million PlayStation 2 units were sold during the holiday season,
more than Microsoft Xbox and Nintendo GameCube combined. The total
number of PlayStation 2 consoles sold in North America now exceeds
eight million. Sony also sold 1.1 million of its original PlayStation
consoles during the holiday season. Sony didn’t release sales of
its PDAs, Vaio notebooks or other PC-related products. Wonder why?
3. Get Ready for Something. HP-Compaq merger battle has been
a real rock ‘em sock ‘em fight. Will the HP “family” vote for it?
Does it get approved? Compaq has made it clear that it has a back
up go-it-alone scenario that ramps sales. Resellers came out in
support of the merger while folks I spoke with in RetaiLand said
the deal would be bad for them — fewer brands, selection and
less competition. Trying to remain above the fray, HP’s embattled
CEO Carly Fiorina told the Comdex keynote attendees that HP’s primary
focus is, “to create a great end-to-end experience for anyone who
uses a camera. We're not just thinking about the camera or the printer
or the PC or the content or the network connection or the new kinds
of services you can use to create T-shirts or coffee mugs or holiday
cards -- we're thinking about the whole system of devices, technologies,
infrastructure and services required to deliver the experience...
We're pushing the boundaries of what's possible in this new digital
imaging space.''
4. Redlight Special. Whenever I hear about KMart, I always
harken back to a quote from a smart guy I know, “If you stand for
nothing, you’ll go for anything.” I’m not happy the retailer is
bankrupted (removed from S&P 500 last week, stock trading at $1)
but there are rules to retail and they broke a bunch of them. Will
someone snap them up at this low price? Where are turnover artists
when you really need one?
5. Chip Skates. Intel hit its numbers for the quarter but
says it sees no rebound in its business and will cut capital spending
by $2 billion. I have great confidence in this company but I think
their turnaround is taking longer than they thought. Hey, if GDP
can lift over two percent and inflation remains on the sidelines,
companies like Intel will prosper. And that’s a prevailing philosophy.
In support of this, my old friend Intel CEO Craig Barrett gave a
CES keynote that featured Blue Man Group, the Broadway act and Intel
ad entertainers. Craig used all sorts of zany antics during his
address (his first at CES). The affable Barrett equated the wild
presentation to trying to sell PC’s today. He got a great big laugh!
6. The answer is, ‘retailers’. And the question is: “What
was missing from Moxi Digital’s huge media splash? The company recently
announced Moxi Media Center, a digital set-top box, video and music
jukebox, media server and Internet gateway. The company also said
its digital TV provider EchoStar will integrate the technology into
advanced set-top boxes for its DISH Network subscribers. The device,
in addition to receiving digital cable or satellite TV signals,
also plays CDs and DVDs, functions as a 60-hour capacity personal
video recorder and connects to the Internet, via broadband, to download
media. In addition, the Moxi Media Center can wirelessly connect
to up to four televisions in a home and simultaneously play different
media or access different functions. Ginsu knives not included.
Cisco and AOL are among the investors, so maybe they have their
own distribution plans. But it’s a strange thing to keep secret.
7. Best online and off. As sales at Best Buy stores grow,
its online channel plays an integral role. This past holiday season,19
percent of total store sales were significantly influenced by customer
visits to BestBuy.com. The site enjoyed one of the highest traffic
levels overall, up 20 percent over last year and ranking third among
competitive Internet retailers, according to industry rankings.
John Walden, president of BestBuy.com, said, "We believe we are
at the forefront of discovering the power of clicks-and-mortar."
I still want to see the P&L on this division but they are hitting
the kind of numbers where they seem to do no wrong.
8. Benchmark this: Only 30 percent of 250 retailers responded
to customer service e-mails within six hours, according to a December
survey. The six-hour response rate, this season, is slightly better
than it was during the same month in 2000 -- when only 27 percent
of retailers made the six-hour mark. According to the December 2001
survey, 33 percent of online retailers responded to e-mails within
six hours, compared to only 28 percent of offline retailers. However,
online retailers had a shoddier response rate overall, with 40 percent
of those surveyed taking longer than three days to respond, as opposed
to 28 percent of offline retailers.
9. Leftovers from Forecast 2002 (As seen in last issue,
ChannelMedia4)
- Comebacks-of-the-Year:
Palm, 3Com, Intel
- Biggest
M & A Target if They Don’t Come back: Palm
- Going
Away: Expense accounts, 6 lb. Laptops, 3D Modeling for the Net,
Ego
- Still
Not Going to Happen in 2002: MP3 download site that people will
pay for, Video-On-Demand, full time jobs for all the unemployed
in 2001, an easy-to-use AOL interface.
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Performance
Marketing: Rising above the noise
By Melissa Orr
www.campaigners.com
Did
you know???
- The
average consumer sees 3,000 marketing messages per day?
- The
consumer is exposed to upwards of 1,240 promotional offers per
week?
- $1,000
worth of advertising is directed at each consumer every year?
There is really little, if any, debate on the fact that this is a
noisy marketplace and only getting worse each day! It is physically
impossible for you to pay attention to everything that marketers expect
you to. As the noise has increased, many advertisers respond by upping
the ante and increased the noise level of their ads by adding ‘in
your face’ techniques to interrupt your day.
It wasn't long ago when mass media was king! A good example of this
would be SuperBowl 2000. Dot coms, big and small, spent millions of
dollars on TV ads that would appear during the SuperBowl. And for
what return on their investment? Very little considering the dot com
bomb that exploded shortly after.
Another "old" trend in marketing has been the philosophy, "change
for the sake of something new." This is no longer effective, if ever.
Change makes sense when it occurs as a result of what the research
is telling you. For example, a client of Campaigners was launching
a new line of software products. The marketing team felt they should
to keep some of the same look and feel yet needed to break out of
the mold. The company's CEO disagreed with the marketing team, and
an internal fight ensued regarding which packaging style was more
appropriate. Each side had a strong argument and debated it long and
hard BASED ON THEIR GUT, WHAT THEY FELT TO BE TRUE. No matter which
side was right both sides were wrong. Change for the sake of something
new and different may make sense to you, but it doesn’t necessarily
ring at the register! More importantly, you can’t then go with what
you feel is right based on your intuition. Don’t ignore your intuition,
but don’t decide based on it. Get out, do research. (In fact, we're
doing a little research of our own - to see if you are actually reading
this! If so, call 888-524-9192 ext. 10 - first person in each time
zone will win some cold, hard cash!).
So I ask you "How Do We Get Above the Noise?" Simply put, by changing
the trends in marketing.
Marketers increasingly need to find ways to speak to customers individually,
or in smaller groups. I refer to this as "Performance Marketing,"
or marketing with real results. This form of marketing is based on
research and information, not a mysterious art based on intuition
and whim. The consumer needs something tangible in order to feel compelled
to buy your product. The latest rage in marketing is to provide a
flat-out assault on consumer senses through exciting events that bring
brand messages to life in memorable ways via:
- Sponsorships
- Promotions
- Event
Marketing
- Loyalty
Programs
- Strategic
Alliances
These
five facets of marketing all contain a similar approach: a chance
to reach the consumer in a one-on-one manner - thus making them pay
attention and giving you a not-to-be-missed opportunity to make an
impactful and lasting impression and even receive feedback about your
product. For that matter, one-on-one interface can be converted to
a direct sale, for example at the retail store level. Additionally,
Performance Marketing lets both the big fish and the little do just
this. There is an infinite amount more properties available for Performance
Marketing. Marketers who can’t crack the major professional leagues
can now link to everything from bull riding to canoeing. The state
of Massachusetts is selling “sponsorships” for four Boston subway
stops. Even in my little hometown of Manhattan Beach, CA, the city
council was debating recently on “Adopt a Storm Drain” to pull in
more revenue and allow companies to advertise on the storm drain!
Imagine that, you too can spew your marketing message on the side
of the sewer!
Recently, a client of Campaigners asked us to create a marketing program
to build their subscriber base exponentially in a short amount of
time. We knew the best way to do this would be by rapid product awareness
and an effective impression based on creativity, tenacity and grass
roots level marketing. Our marketing arsenal included neighborhood
fairs and festivals, sponsorship of local marathons and concerts,
a customized van that toured local "hot spots" (such as major league
baseball games, the beach, parking lots of participating retailers),
and live radio remotes from retailer parking lots in which a DJ directed
listeners to the store in real time. All of these activities were
managed by our Field Delegates who conducted one-on-one demonstrations
with the consumer in order to better educate them on and sell the
product. Campaigners sales & marketing efforts proved successful with
a 53% increase in subscribers within 7 weeks and thousands leads which
were turned over to the client for telemarketing sales. This campaign
was clearly an all out assault on the consumer’s senses and the
results proved that to be true!
There are some interesting trends today that support this idea of
"Performance Marketing:"
- 65%
of marketers with programs focused on mass media are no longer
feasible for most brands*
- Media
advertising has slowed to 12%*
- 45%
of marketers are spending more on events/promotions and less on
TV ads*
- Event/promotion
segment has grown 50% over the last three years*
- Sponsorship
is the fastest growing segment of promotion industry with marketers
spending 11% of their overall budgets on sponsorships*
*Statistics
courtesy of Promo Magazine
Marketing must be about creating value in the minds of the consumers
building brands by identifying a common ground between a consumer
and your product. It’s defining expectations and over-delivering on
them. The bottom line is we need to communicate to the consumer, to
know what they want and to deliver what they are looking for. Performance
Marketing lets marketers do just that - by building a connection with
the consumer, and by learning from tangible and quantifiable results
what works and what does not. With Performance Marketing, we, the
marketers, can over-deliver to the consumer - keeping us one step
ahead of mass marketers by getting the consumers into stores and buying
our products.
Melissa Orr is President & CEO of Campaigners, Inc., a Performance
Marketing Agency located in Manhattan Beach, CA. Campaigners services
include retail, reseller and event marketing, sponsorships and promotions.
To learn more about Campaigners, please contact us at: info@campaigners.com.
(top of page)
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Apple Stores Showing Promise
By ChannelMedia Staff
Rival retailers wondering how those
gaudy Apple-owned outlets are doing, need wait no more as the company
has reported in its annual SEC filing that they posted a 'small loss'
in the first quarter of 2002, and then expects to report a profit
for the rest of the year. Apple has been aggressive, with 27 openings
in the last seven months, two more than originally projected.
Apple is targeting high-end malls and neighborhoods in an effort to reach
the 95 percent of the market they are missing. It’s a poor time to enter
retail with a recession that witnessed Apple revenue decline by 34 percent.
Rival Gateway shut its Gateway Country Stores after feeling a revenue drain
and conflicts with its direct channel.
Apple believes it’s in a different situation, since it develops both its own
hardware and operating system. It sees its stores as a chance to educate
the public to it’s advantages over Windows-based PCs, best represented in the
iMac introduced earlier this month to great fanfare at its annual MacWorld Expo.
The company has also introduced the iPod and iPhoto which are noteworthy
steps toward making the Mac platform the center of a home digital
universe. They are not alone. Intel and Microsoft made the same claims
regarding their own technologies at around the same time last year
and the recent CES reinforced that. Past Macintosh advantages such
as DVD/CD burn-in capability have been eroded.
(top of page)
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Retail Digest
By ChannelMedia Staff
After seven years building Yahoo
into the dominant Internet portal, Jeff Mallett president and chief
operating officer resigned to spend more time with family and pursue
other business interests. Speculation that he might return to Novell,
where he was running a productivity applications division seems misguided.
Consumer electronics manufacturer Toshiba announced Wednesday
it has developed small (1.8") hard drives with 10GB and 20GB capacities.
The drives will be marketed as a means to increase storage capacity
in portable devices like MP3 players, digital video cameras, digital
cameras, and portable PCs and PDAs. Toshiba did not provide pricing
details. It will begin shipping in March. Similarly, DataPlay
announced portable digital-audio players that use its 500MB capacity
discs, roughly the size of a quarter, with prices between $199 and
$299.
Internet access devices (personal computers, cellular phones, Internet
television set top boxes, and Web appliances) will grow at an overall
annual rate of 41.6 percent between 2000 and 2005, according to Cahners.
Despite slowing sales of personal computing devices, new products
and operating systems will stimulate demand in the coming years. PC
and mobile phone markets, currently comprising over 93 percent of
the industry, will continue to represent the market majority until
2005. While the PC and mobile phone segments will have the largest
unit shipments, smart appliances will enjoy the highest compound annual
growth rate, at 100.8 percent. The Cahners study also pointed out
consumers are hesitant to switch to Internet-enabled phones due to
security fears, price and lack of compelling applications.
Video game developer Arush Entertainment said all of its future
games will be sold in retail stores, in addition to the company's
online distribution service. "Today, retail is the most successful
way to sell games," said Arush CEO Jim Perkins. "We have successfully
delivered games electronically to consumers and digital distribution
will remain a component of our business as that market continues to
emerge." Arizona-based Arush will distribute its "Duke Nukem: Manhattan
Project" title in stores this spring.
Best Buy reported total December sales of $3.86 billion, an
increase of 43 percent. The increase in sales for the five-week period
ended Jan. 5 was driven by a gain in comparable store sales of 6.2
percent and the addition of 65 Best Buy stores in the past year. Sales
also benefited from the inclusion of approximately 1,300 Musicland
stores, acquired in January 2001, and from Future Shop's 95
stores in Canada, acquired in November 2001. Strong sales of digital
and video gaming products contributed to a comparable store sales
increase of 6.2 percent at Best Buy stores during the month, despite
the nation's recession and on top of a 3.7-percent increase in December
of fiscal 2001. Strong digital product sales, including digital televisions,
cameras, camcorders and DVD hardware, drove the results, along with
significant increases in video game sales. Comparable store sales
increased 9.2 percent after adjusting for the calendar shift, which
included more post-Thanksgiving shopping days in the third quarter.
"December sales exceeded expectations for all our businesses,
reflecting both the strength of new products and outstanding execution
across the organization," said Brad Anderson, vice chairman, Best
Buy’s president and chief operating officer. "Based on these results,
we expect earnings for the fiscal fourth quarter to exceed 50 percent,
exceeding our earlier guidance."
In the first 10 months of the fiscal year (44 weeks), total sales grew 31 percent to $16.48 billion.
Comparable store sales for the first 10 months were up 1.8 percent. Best Buy stores generated total sales
of $3.16 billion in the period, up 18 percent. Entertainment software sales posted the largest gains in
the month, driven by sales of video gaming hardware and software and DVD movies. Sales of digital televisions,
cameras, camcorders, DVD hardware and home theater systems propelled an increase in sales of consumer electronics,
which is expected to be the Company's largest category in fiscal 2003. Sales of home office products declined due
to a modest decline in sales of desktop computers, which was partially offset by gains in notebook computers and
peripherals. Sales of major appliances drove positive comparable store sales in the category, marking a turnaround
in the year-to-date trend.
Costco reported net sales of $4.27 billion for the five weeks
ended Jan. 6 an increase of 13 percent from $3.78 billion in the same
five-week period of the prior fiscal year. On comparable warehouses
open at least a year, sales increased seven percent. For the first
18 weeks of its 2002 fiscal year ended Jan. 6, the Company reported
net sales of $13.4 billion, an increase of 11 percent from $12.03
billion during the comparable period of the prior fiscal year. Comparable
warehouse sales for the eighteen-week year-to-date period increased
five percent over the prior year's level.
Driving Sales. Recordable DVD drive sales will grow from 1.3 million
units in 2001 to 9.8 million in 2002, more than 30 million units in
2004, and 50+ million in 2005, said Jon Peddie, president of Jon
Peddie Research. Key factors driving RDVD growth will be the release
of the DVD Forum's new DVD Multi specifications and the growing number
of affordably priced multifunction Recordable DVD drives and recorders.
jon@jonpeddie.com.
Best Buy tapped the Watts Group, Canada's leading business
processing organization for contact centers, promotion fulfillment
and integrated direct marketing services, as the Company's preferred
provider of rebate fulfillment and customer care. The Best Buy-Watts
relationship began in October 2001, with Watts providing customer
contact center support and rebate fulfillment services for Best Buy.
(top of page)
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Kenneth
Pearl Executive Search
The Technology Channel-Sales Recruiting Experts
Contact Us Today ken@kennethpearl.com
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Hitting
the Right Target
By Steve Cross, President, The Cross Channel Group,
Inc.
We've all seen stories about people
having the wrong leg amputated. The good news is the doctor did
a really superior job, the bad news is he aimed at the wrong problem.
I think about that a lot as a consultant who help clients figure
out how to design programs that accurately target customers. What
clients want is to get the most product in front of the most potential
buyers, but if we don’t aim our marketing at the right target customers,
we suffer inefficiencies.
Consider, if you will, Chrysler. They have a huge winner in the
PT Cruiser, but in a classic mismatch at launch, they let profit
drive away. Reason: the initial market target was Gen Y--cool young
people who wanted beach buggies. The ads were great if you wanted
to reach them and placed where Gen Y would hear and see them. Trouble
was, the buyers turned out to be Boomers with retro nostalgia for
cars of their youth.
What happened? Chrysler didn’t profile its customer in advance.
Not surprising. They’ve had problems ever since the minivan focus
groups came back negative years ago. The research at that time told
Chrysler to not even bother with the category. Lee Iaccoca, Chrysler’s
chairman at the time, insisted on launching anyway, because his
gut told him the focus groups were wrong. In the end the gut beat
the groups by orders of magnitude. Chrysler has dominated the category
ever since the maiden launch.
My point is simple: Before you spend a marketing dime, know your
potential customer. Do your profile work right, then take the appropriate
aim. What demographic and psychographics profile wants your product?
Why? What channel does he/she use for similar purchases?
Answer these first and then you’ll know if your product belongs
at Best Buy or MicroCenter. Does your customer respond best to ads,
coupons, rebates, Web promos or telesales? Once you know this, you
increase your sales efficiency by orders of magnitude. You might
check out Geoff Moore’s, “Crossing the Chasm,” which offers a few
good basic profiling tools.
Your other option is to just use a dartboard. You may lose money,
but with some drinks and a few friends, it can be entertaining.
On the other hand, it may be no healthier than having the wrong
appendage cut off by an otherwise competent doctor.
Steve Cross builds value for high tech companies as a consultant.
Since 1997 his clients have included Pinnacle Systems, Visioneer,
Dazzle, Network ICE, Margi, Aladdin, Outpost.com. He was formerly
sales vice president at Connectix.
Contact: steve@crosschannel.com
408-528-7211
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Secrets
to Hiring Right
By Scott Reedy
Hiring Is As Easy As 1-2-3-4
I counted the other day. Over the years, I've hired about 80 people.
I'm fortunate to have had a high success rate. The folks that have
worked for and with me really have gone on to greater successes. Over
the years, I've narrowed down some common traits I look for that increase
the likelihood for success.
They are, in order of importance:
- Attitude
- Aptitude
- Assertiveness
- Self-Confidence
Attitude
is short for Positive Mental Attitude (PMA). It’s a pleasure to be
with PMA people. This trait can carry someone who may lack either
experience or certain skills. Your team reflects your hiring skills.
Find this trait among applicants and your team will thrive.
Aptitude reflects the fact that future employees must have a certain
mental acuity. This is not so much about education as about being
able to discern fact from fiction and the ability to root out the
problem. New hires need to pick things up and apply them fast. I’ve
known retired executives who never attended college, but could pick
things up fast and go with them. Give the candidate a problem and
see how they respond. Ask them about a situation they were thrown
into where they had to learn a whole new system or program and see
what they did to succeed.
Assertiveness is critical if you run a team. Sometimes hard to discern,
generally you discern this if the candidate is prepared, asks questions
and attempts to try to take over the interview at least once. Good
sales people are bursting with it. For sales and marketing professionals
in general, a lack of assertiveness is a killer. Do not confuse assertiveness
with aggressiveness. I have spent some time discerning a definition
that you might find useful: Assertiveness is about getting the job
done; Aggressiveness is personal in nature. If someone is pointing
fingers or commenting on personal traits they are likely to turn their
assertiveness into aggressiveness very quickly. Be wary.
It goes without saying that self-confidence is very important in any
candidate. You can learn about someone’s self-confidence by listening
to how they’ve overcome obstacles. Self-confidence is a healthy by-product
of experience and adaptation. Here’s an important note: confident
people know their weaknesses. Look for them to tell you theirs. That’s
a clear sign of a confident person. Self-confidence is important when
your teammates are in tough situations. Confidence ensures they’ll
stand tall and do the best job they can.
There it is. Some of my hiring secrets unveiled. I tell anyone I interview
that I look for these traits. Sometimes I actually ask them to tell
me how they match up to each of these areas. How they respond tells
me what I need to know. It’s not always the answers, but how they
are answered. Looks for these traits next time you are in an interview
and see if it works for you as well as it has worked for me.
Scott Reedy is the Director of Product Management for Daisytek,
a distributor of IT supplies and Office Products.
Contact: sreedy@daisytek.com
(top of page)
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How
Low Will HP Printer Prices Go?
By Chris Barnes, ARS Printer Analyst
While the overall tech sector grappled
with the recession of 2001, many in the color printer industry emerged
with their shirts intact. The "razor-blade" strategy proved resilient
despite mediocre unit sales. But because the bulk of revenues stem
from print output, weak new product sales will eventually impact supplies
revenue.
Attempting to revive new product demand, vendors have introduced exciting
new products that ramp performance and productivity by 5X or more.
But the one vendor everyone awaits remains on the sidelines. Hewlett-Packard
is the clear U.S. market leader in color printer sales and installations.
HP’s most important contribution yet is expected to hit the streets
in 2002 in the form of a series of next-generation Color LaserJets.
Like their predecessors, HP’s new products will set the pace for the
rest of the industry. The question is how low will HP go in price?
HP enjoys the luxury of rarely having to drop printer prices, except
of course, when new models replace old. Such was the case in October
1998 when HP’s Color LaserJet 4500N ($2,900) replaced the Color LaserJet
5M ($4,900), and again in October 2000 when the 4550N ($2,400) replaced
the 4500N. Though, in the last 14 months, HP’s color laser prices
were remarkably elastic, falling six percent year-over-year (26 percent
if you factor mail-in rebates) due to the need to reduce inventories.
HP remains remarkably unaffected by the competition’s price drops.
Historically (as seen in the graph above), it uses products to benchmark
and re-evaluate pricing.
The last time HP re-tooled its position with a brand new product,
the Color LaserJet 4500, prices fell more than 40 percent while print
performance nearly doubled over legacy products. That would be nearly
catastrophic today where competing vendors have priced their next
generation products close to HP’s last generation. But a dramatic
HP move redefining the competitive landscape still looms.
Rather than perpetuate a destructive price erosion cycle in a segment
that requires substantial R&D investment, HP would be keen to adopt
a new pricing strategy for its next generation—one that reflects the
methods used with more mature market segments, such as monochrome
lasers. HP has led in the monochrome laser segment for more than 15
years. For the last five, HP’s pricing strategy followed a very simple
rule: more product, same price.
Over the past five years, HP’s strong market position has allowed
it to keep its network-ready workgroup laser price within ten percent
of $1,450. The same holds true for its A4 products. Beyond brand,
HP, in conjunction with Canon, produces best-in-class products. And
while such quality was once unique, advances in engine technology
from Fuji-Xerox, Lexmark, and others have made it more universal.
To maintain such high standards, the wise would identify a target
price band either within each niche, and stick to it.
Such a strategy is easily applicable to today’s color page printer
market, and could succeed for the industry as a whole. Average prices
for today’s tandem (single-pass) letter-sized color page printers
have hovered near $2,500 for three years. As new printer performance
and productivity increase, today’s mature market will continue to
support workgroup-level prices—without further eroding profits.
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The
Internet: Your Company's Consumer Data Dragnet
By Van Baker, Vice President, GartnerG2
Smart marketers in all business segments
would be wise not to overlook the powerful tools the Internet delivers.
You can collect more customer information on the Web than you can
through traditional channels. The Internet's promise has not disappeared.
It is merely evolving as a more rational extension of business. Ignore
these effective marketing tools at your peril. Understanding how your
customers interact with your information is a competitive weapon.
Personalization tools let companies collect customer behavior information,
essential for targeted marketing. These tools help everyone-- not
just e-tailers, but business-to-business marketing companies as well.
Dot-coms really aren't dead
GartnerG2's recent interviews with large enterprise strategic planners
revealed a common sentiment: "Thank goodness that dot-com thing is
over." It isn’t.
Many say they have delayed or scrapped plans to deploy information
or commerce sites. Because their companies were unprepared for both
the Internet’s threats and opportunities, many admitted they brought
a Web site up quickly without understanding their own goals. When
dot-com companies crashed, they were relieved to get back to "business
as usual."
It’s naive and dangerous to think the Internet is a passing fad. Strategists
who ignore the tools that the Web has brought to the game are ignoring
valuable customer information that can increase revenues. Many strategists
mistakenly believe you can only gather customer information by asking
for it. Others let go of valuable data without examining the behavior
it reveals.
Even if you can't tie it to a particular individual, behavioral data
is invaluable. When users visit your site, you have the opportunity
to ask for information. This could be simple as an e-mail address
or demographic information.
Traditional channels like catalogs and retail simply can’t get the
same information efficiently. Figure 1 shows advantages the Internet
offers in monitoring customer and prospect information.
Figure 1: Customer data available across distribution channels
Source: GartnerG2, November 2001
Individual cross-channel behavior
Traditional channels can't track individual behavior, but do offer
information about what was purchased and whether the customer is returning
or new.
This information however, is often incomplete. A customer may use
cash in a store and a credit card in a catalog. The continuity of
information gets lost.
Store and catalog operations have a hard time capturing customer information
even if the customer provides it, simply because these channels lack
a convenient vehicle to capture and aggregate it. Customers are often
unwilling to fill out in-store forms. Attempts by catalog resellers
to interview customers run the risk of alienation.
A Web site, however, can gather considerable data about buying behavior
even if the customer doesn't volunteer information. It's easier to
fill out forms on the Internet, because customers are already using
a keyboard.
Information collected is not limited to Web-based pure play companies.
Many prospects and customers come to a Web site searching for information.
Even if prospects don't buy, their search for product specs can
tell you which features interest them
Distributor or reseller searches can offer insight into distributor
and reseller performance
Analyzing search information may identify sales support problems
Recently, a digital music player vendor discussed the significant
Web site traffic it saw in downloaded songs. The songs were the same
ones the company packaged for free with its handheld players.
Unfortunately, the company did not take advantage of the traffic to
gather valuable customer information. If nothing else, it should have
tracked the most popular downloads to help marketers select music
to include with future products. The free music could have been promoted
as a feature, thereby attracting more customers.
To truly leverage the asset, the company might have requested e-mail
addresses and user music preferences in return for the free download.
This information can identify market sweet spots, sources of purchase
and buyer demographics.
Contrast this with an insurance company that leveraged its customer
database to promote its Web site via direct mailings. By driving customers
to its Web site, the company could promote a flexible billing option
that allowed its customers to select from monthly billings to automatic
annual billings. This let them leverage a service to learn more about
its customers and at the same time, make cash flow more predictable
and reduce costs.
Online business-to-business marketers also use flexible billing to
generate customer loyalty while increasing revenue predictability.
They adjust billing cycles to adapt to customer cash flow needs.
Predictions
- Companies
positioning the Web as just another distribution channel will
lose to companies leveraging the Web. The temptation is to walk
away from the Web as passing fads. This mistake will put companies
at a significant competitive disadvantage. Companies must leverage
all the customer information they can get.
- Companies
implementing personalization technologies and invest in improving
them will win on the Web. Today's market dynamics demand companies
gather as much customer information as possible. Information is
readily available about prospects and customers from the Internet.
One of the few ways to gain a competitive edge is to leverage
customer behavior information to gain predictive insight into
customer buying behavior.
- Companies
that combine personalization with opt-in programs will enjoy the
best results. When targeted customers are invited to opt-in, companies
have enjoyed response rates of up to 35 percent. While this should
not be the only approach in the marketer's bag, it offers the
most effective approach.
Recommendations
- Treat
customer information as gold. A company should use any means at
its disposal to understand how customers respond to branding efforts,
promotional activities and product offerings. If a customer or
prospect calls the company with questions, record the questions
and take the opportunity to ask a few more on behalf of the company.
Patterns will emerge that l give insight into customer responses
to marketing efforts.
- Implement
personalized offers via cluster marketing techniques. This will
allow you to differentiate products by value-added services. The
targeted customer segment will receive these personalized value
propositions favorably. The personalization can include products
and services. One example might be customers who prefer bundled
shipping vs. those who prefer to have flexibility with shipping
as a separate line item.
- Implement
one-to-one marketing when personalization solutions begin to mature.
Personalization solutions are best suited for cluster marketing
at present, but over time the tools will improve and allow you
to refine your efforts. When a company is able to implement one-to-one
marketing, it should implement quickly. This will result in greater
revenues and more satisfied customers.
Methodology
The positions in this document were derived from conversations with
executives from personalization software companies and a review of
the available technologies in the market. GartnerG2 also conducted
a series of interviews with business strategists regarding keys to
future growth. Additional information was derived from the author's
years of experience in the retail trade and discussions with executives
in the retail industry.
For more detail visit www.gartnerg2.com
(top of page)
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PC's
Return Rims the Canyon
By
Dave Uhlman, Cpointe Associates
So it felt a little bit like cowboys
stuck in a canyon looking up at Indians surrounding the rim…right?
You had to look up to see the bottom. Well, it's quite possible
"the times they are a changin'..."
We'd like to think that 2002 would mark the return of PC hardware
purchases by both business and consumers. Why? Well, chips, RAM
or ROM, mghz or flat screens do not drive it. As usual, it’s driven
by software.
It’s already Microsoft’s Windows XP that is igniting the slow, growing
desire to pass the Pentium, Pentium II and even some P III’s over
to the kids for Web surfing and SAT prep. The fuse is lit and burning
toward the primary fuel stage since the October XP launch.
Look back at the past 10 years and at every desktop purchasing boom,
there was a significant software event in the prior six months.
One could argue that some of the earliest were driven by entertainment
software. When Ultima, Doom and others required 50 megs of hard
drive, you either bought a new drive or more likely - a new PC.
And many more games with better graphics needing even more space
followed quickly.
Windows 95 launched the next round. And wow why wouldn’t it have?
Significant steps forward, with the requisite glitches, made us
get the Pentium chip included in our new machine. Windows 98 just
pushed the last of us over the brink and relegated thousands of
286/386/486 machines into the basement playroom.
So why do we have this new Windows product? Because it’s just that
NEW, all new from the ground up. It “recommends” a PII 300mghz
and 128k of memory - minimum. You know it really needs more. Oh
yeah, and 1.5 GIG of hard drive space! So, how many of these machines
are out there today in homes and business across America? Not many.
Why hasn’t the stampede already started? We’re much more skeptical
now that we used to be. Much more “let’s just wait a few months
to see…” The channel, and the products in it, has taught us that.
But, it won’t be long. In fact, as I gaze up at that rim around
the canyon and look very closely those are not Indians. They are
really little software boxes…
Dave Uhlman is Senior Partner of CPointe Associates, Inc with
offices in Los Angeles and Dallas. He is best known as the former
VP/GMM at Software Etc and Computer City from 1989-1998. His client
list includes Global Marketing Partners, Earthlink, Naviant, Stuffbak.com,
Bravo International, RetailHighway.com, AtDiscount.com and others.
Contact: 310-418-5242 or daveu@cpointe.com
(top of page)
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The Channel Access Company. For information on expanding your distribution
options, visit Global Marketing Partners at www.globalwrx.com
or call 800-661-9715.
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