Multichannel Magic

Retailers have two objectives this holiday season – getting sales and improving relationships. The objectives haven’t changed from past years but the environment is very different. Governmental issues and calendar conflicts are creating new challenges. The 2013 shutdown and possible default are carrying over into the New Year. Implementation of mandatory healthcare has been a fiasco. People know they have to buy insurance but have no idea of the cost. These issues shake consumer confidence.

Adding to the mix, the best-selling period between Thanksgiving and Christmas is a short 26 days. And, Thanksgiving and Hanukkah will be celebrated on the same day for the first time since 1888. It is a tough time to be a retailer.

Before the decision on the debt ceiling was delayed and the healthcare act applied self-inflicted wounds, sales were projected to be slightly higher than last year. Now, it will be surprising if retail sales reach last year’s mark. The best move any retailer can make is to shift the focus from short-term sales to long-term growth. People may spend less but they will still shop for gifts. This bump in traffic is an ideal time to create new relationships and solidify existing ones.

It’s time to shift from promotional planning to strategizing. The objective is to use holiday season activity to acquire permission and information that can be transformed into sales in 2014. Your customers and prospects are stressing about things they cannot control. The easier you make it for them to achieve their goals, the more endeared they will be to your business. They will remember the positive experiences when things settle down after the holidays. Here are some tips to get you started:

1. Capture email addresses and permissions by offering a free gift, discount, or added value bonus for people to opt in to your email program at every touchpoint. The addresses acquired today will become future revenue.
2. Reward employees for resolving issues quickly and effectively. The easier you make it for people to move on to the next item on their “to do” list, the more they will trust your service.
3. Watch for pain points that need to be eliminated. Increased traffic magnifies stress points like aisle width, website speed, and staffing. Use the holiday season as a learning lab to identify areas for improvement.
4. Use peak times like Black Friday, Small Business Saturday, and Cyber Monday to bring people back for more. Add messages to receipts that notify customers of upcoming special events.
5. Create triggered email messages that do more than provide status updates. Educating customers about your products and services improves their experience and your revenue.
6. Plan your follow-up strategy. Neglect kills more customer relationships than bad service. Create a customized follow-up strategy that targets specific customer types. It moves people from hit-&-run behavior to becoming platinum customers.
7. Make your customers feel valued. The holiday season is stressful. Simple courtesy is often forgotten. Encourage employees to take the extra step to communicate appreciation to your customers.

For more information about creating a strategy that delivers beyond the holiday season, email Debra at dellis@wilsonellisconsulting.com.

Successfully building a business requires resources. Companies with limited funds and staffing find generating consistent growth challenging. The ability to market products and services is hampered by lack of resources. Less marketing creates fewer sales, which in turn trigger the knee jerk reaction of deep discount marketing for cash flow. The discounts reduce profitability and limit resources available for the next stage. It’s a vicious cycle that has to be broken for long-term business success.

Breaking out of that cycle requires a plan that uses available resources to generate the best possible return. Discount marketing has become the go-to tactic for most companies because it works so well. We are often asked to help clients analyze which discount works the best instead of challenged to find the best marketing strategy for the business. One such request found some surprising results.

The question asked was, “What discount should we offer our customers to deliver the best results?” After some discussion with the client, we decided that a better question is, “What is the best way to generate cash flow and profits?” We proceeded to plan tests to find the answer.

The client is a multichannel retail company in a niche market. Prior to the challenge, marketing consisted of catalog mailings ten times per year, Google Ads, monthly postcards, and weekly emails. We used the postcards and emails for our tests. The results were similar.

We wanted to test pricing against personalized messages. We choose five pricing variables: 15%, 20%, 25%, $5 off $25, and free shipping on orders of $50 or more. Here are the results from the email test:

The test showed that 20% off any order was the best result because it was the most profitable. The response rate was lower than the 25% off offer and gross margin was lower than the free shipping promotion but the overall contribution to the bottom line was much better.

On the personalized side, we also wanted to know if there was a difference between categories. The marketing messages targeted people who purchased items from the top four bestselling categories. The personalization mentioned that the recipient had previously purchased similar items and focused on new arrivals. Here are the results:

The bestselling category delivered the best results. This isn’t surprising because of the popularity of the items. What surprised the client is how much better the personalized messages performed in every way over the discount ones. The worst performing category delivered more than the best discount offer. The takeaway for the client was to improve marketing with better targeting.

Eliminating discount marketing completely is not prudent. There are times when discounted messages work well. The best marketing strategies include a mix of personalized and discount messages. Your challenge is to find the mix that works best for your customers and company. If discount marketing is your strategy, here are some tips for breaking the cycle:

Don’t go cold turkey – Your customers have been trained to expect discounts. Completely eliminating them will have a negative effect on your cash flow.

Test first – Segment your customer file and cycle targeted messages to find what works best. There is a side benefit to this process; it starts the retraining process.

Get creative – Find your customers’ pain points and ways to relieve the pain. Doing this encourages customer loyalty and reduces the need for discounts.

Think “easy” – The easier you make things for your customers, the greater their responsiveness and loyalty. Making it easy can also reduce operational costs so it is a classic win-win situation.

Measure well – The metrics that really matter are profitability and satisfaction. If your marketing isn’t improving the bottom line and keeping customers coming back, is it really working?

For information on improving your marketing strategy email Debra at dellis@wilsonellisconsulting.com.

A few short months ago, two warning shots were fired by major email service providers. The first was Gmail’s announcement that incoming emails would automatically be sorted into tabs. The second was Yahoo’s decision to reuse dormant email addresses. There has been a lot of debate about the effect of Gmail’s new interface on email marketing. Discussion about the Yahoo changes pale in comparison. Both events are signs of things to come. The rules for email engagement are changing.

It’s only a matter of time before all major email service providers join Gmail and Yahoo. Microsoft has already announced that dormant email addresses would be reclaimed. The plan is to eliminate user access after 270 days of inactivity. The email addresses will then be released after another 360 days have passed. Changes to interfaces will take more time because it requires a major overhaul of the software. Make no mistake, the changes are coming and will be here sooner than you think.

Email marketing is evolving at a rapid pace. The days where cash flow could be generated by simply collecting addresses and emailing promotional offers are disappearing. The new reality requires segmentation, targeted marketing, and customer engagement. The methods for planning a successful email marketing campaign have become remarkably similar to creating a direct mail program.

This change is bad news for companies and individuals that blast their way to revenue. It’s very good news for marketers truly interested in serving customers. When there is a good relationship between sender and the recipient, emails will be read and responses will happen. A study by Return Path looked at the Gmail effect on marketing emails for recipients with high, medium, and low engagement levels. The following chart shows the results:

It shouldn’t surprise anyone that the read rate for highly engaged recipients is still strong. In fact, it is slightly higher at 2.11%. People who love your company, products, and service will find and respond to your messages. I suspect the slight increase is because people have either moved the emails to the primary box or are in a shopping frame of mind when they hit the promotional tab.

Recipients with a medium level of engagement had a decrease of 7.01% in the read rate. This is significant but not nearly as much as the results for recipients with a low engagement level. Their read rate after the rollout dropped 80.82%. This shows us that engagement is key to email marketing.

There is nothing new about better responses from people who are more engaged. Some marketers already have everything in place to benefit from the changes. Others, operating with an “if it’s not broke, don’t fix it” mentality, have some work to do. The activities that increase customer loyalty and retention also improve deliverability and response. This means that you don’t have to completely revise your marketing strategy. Basically, there are two things to do to prepare for the changes – increase engagement levels and keep your database clean.

You will want to do more because email can be used to retain customers, provide better service, educate people about your business, and reduce operational costs. The changes in the rules of engagement are a catalyst to improvements strategically designed to increase loyalty.

Here are some tips to get you started:

Clean your database – The first step is to remove all known bad addresses. Consider sending a message to subscribers that haven’t responded in a while that requests a response to let you know they still want to receive your emails (the time period for “while” needs to be defined by you.)

Create a segmented report by service provider – The effect of the changes on your campaign is all that matters. What happens globally may be very different from your experience. A segmented report allows you to see trends that won’t show in other analysis.

Continue the strategy that is working now – Changing your email marketing strategy is a process not an event. Continuing the strategy currently working keeps revenue flowing while you plan and test new campaigns.

Focus on engagement – Promotional emails will always be a primary part of every successful strategy. Add messages that improve retention, educate recipients, and improve service to your marketing mix.

Create a direct marketing campaign – The same tactics that work with catalogs and direct mail work with email marketing. Segment your file and target people with messages designed to speak directly to them.

Find more tips improving your email marketing strategy in 31 Ways to Supercharge Your Email Marketing.

Service quality is directly related to customer expectations. If people expect an exceptional experience, anything less is disappointing. If people expect less, a little more is pleasing. Managing expectations is the first step to consistently delivering top notch service. Doing it well improves customer loyalty and reduces costs.

Marketing and service is really promise and delivery. The promise creates customers’ expectations. The delivery determines satisfaction. Delivering on the promise begins with the message and ends with the systems and processes that make delivery possible. Communicating inaccurate information or ineffectively executing service leads to failure.

Promises are made with words, price points, and environment. Telling people what to expect is only part of the picture. Higher price points and more upscale environments imply better service. Customer expectations for Neiman Marcus are very different from Target. Both companies strive to match experiences with expectations. This is one of the factors that contribute to their success.

Looking at successful companies for ideas is a good way to find opportunities. Learning from the mistakes of others is an even better way to improve your business. Their missteps give you the opportunity to see what happens when things go wrong. The following two examples are classic “do this at your own risk” scenarios.

Example 1: Implementation of the Affordable Care Act (Obamacare)

Just when you think it can’t get worse for the Obama Administration, another story hits the news. Implementation of Obamacare is an over the top example of how failing to correctly manage expectations can quickly turn into a nightmare. The failure on every level to deliver on promises made is fodder for comedians and a worst case example for business leaders. Only a government with no regard to fiscal responsibility could create such a disaster.

The promises that continue to be made makes one wonder if anyone in the Administration knows anything about how the system works. Most recently, people were told to use the telephone or mail-in option since the website isn’t working. President Obama said, “In the meantime, you can still apply for coverage over the phone, or by mail, or in person because those plans are waiting and you’re still able to get the kind of affordable, reliable health insurance that’s been out of reach for too many people for too long.” He failed to mention that the other channels have issues too because the same portal is used to determine eligibility no matter how the application is made.

The failure to deliver on customer expectations began with the project management process. Detailed analysis of the project should have been completed before the first promise was made. If this had been done, then perhaps implementation would have been delayed. This would have allowed thorough testing of functionality by developers instead of the American public. The attempt to expedite completion resulted in limited bidding on the project and an unrealistic timeline.

Example 2: Prestige Portraits

Customer expectations are set high by Prestige Portraits. The company name establishes an expectation of high quality service. “Prestige Portraits” has to be much better than “Good Photography.” The marketing materials reinforce the image. The proof package suggests that this is an upscale company.

The full color envelope notifies recipients that their senior proofs are enclosed and tells them to “open immediately” because it is “time sensitive.” The proofs are showcased in a black cardboard photo folder along with instructions on how to view images online. A mini-catalog of purchase options, order forms, and a discount offer is also included. The direct marketing package communicates quality and ordering ease.

Most prospects receiving this package will have two objectives – selecting a proof for the yearbook and placing an order. The instructions say that there are three easy steps:

1. Go to shop.prestigeportraits.com
2. Create an account
3. Enter your session ID and access code

Information about selecting a proof for the yearbook is near the bottom of the instruction card (see arrow in image below):

This is where the trouble begins. It reads, “Yearbook selection date: 11/01/2013.” Is this the only day that one can make the selection? Is it the end of the selection process? Or, is it the beginning?

Choosing to log on to the website on November 1 seemed like a good decision. It would prevent logging on too early or too late. Or, so I thought.

Creating an account was easy. The landing page when I logged in showed the steps from viewing proofs to checkout:

Each step was highlighted in the navigation bar. This shows customers exactly where they are in the order process:

Good website design moves people easily through the purchase process. Great website design creates an environment that maximizes the revenue. Creating an environment where people stop to think about the process reduces effectiveness. The first stop sign appeared on the Choose Packages page:

What are points? How do I use them? What does each one cost? The copy, “Select any combination and quantity of portraits and products to redeem your points,” doesn’t answer the questions. Perhaps it would be better to order individual items. Clicking on the Add Products tab opens another page with a stop sign.

The difference in the choices is not clearly defined. What is the difference between “Portraits” and “Traditional Designs”? According the copy, portraits are “Portraits in a variety of sizes to meet all your needs” and traditional designs are “Portraits in a variety of traditional sizes.” Well, that is about as clear as mud! The promise of “easy” has been broken and I haven’t completed either of my two objectives.

When the order is ready for checkout, I still haven’t chosen the proof for the yearbook. There is no mention of making a selection throughout the process. It turns out that you have to click the Yearbook Pose link at the top of the page to select a pose.

Clicking the link takes me to this page:

In fine print it tells me “Your school’s yearbook deadline has already passed. Please contact us at 800-736-4775 (U.S. Customers) or 866-557-9254 (Canadian Customers) to make your selection or contact your school’s Yearbook Advisor.”

The call to the 800 number could be used as a “what not to do in your call center” example. After holding for almost 20 minutes the representative selected a proof and I was done with both objectives. The takeaways for Prestige are making it easy for customers increase sales and reduce costs. The call was unnecessary and increased operational costs without providing a benefit. It could have been eliminated by changing the expiration date on the card or in the system.

Tips to keep your company from self-inflicted wounds:

Plan carefully – Delivering on customer expectations requires perfect execution between marketing and service. Work together designing the message to match the process.

Test everything – Testing functionality to insure that everything works together correctly. Users get frustrated when systems crash.

And, test again – Usability is as important as functionality. Invite people unfamiliar with your products and services to test the process. If it isn’t intuitive, rework it.

Solve problems quickly – The CSR that took my call to Prestige Portraits said that he didn’t know why the website cut the selection process off a day early. It was a known issue that hadn’t been resolved.

Know your customers – The better you know your customers the closer you can come to meeting their expectations. Invest in learning as much as possible about your customers so you can provide the right service.

For more information on customer expectations email Debra at dellis@wilsonellisconsulting.com.