Are You Going for the “Quickie Sale”…or the Relationship?

The Myth: During the holiday season, the goal of retail, online, and mail-order marketers should be to process as many sales as possible. This will help recoup some of the lost revenue due to the poor economy.

The Reality: Marketers are losing millions of dollars by going for the “quickie sale”. It’s hard to get a customer at any time of year, so when they are coming to you, driven by the holiday purchasing wave, you have the opportunity to accomplish much more than just robotically swiping their credit cards and moving on to the next transaction.

This month, millions of customers will be purchasing from an on-line, mail-order or brick-and-mortar marketer. The majority of those customers will not be engaged in any way by the sellers, who are stuck in a manufacturing model, trying to process “ holiday” transactions as quickly as possible. These blunders represent literally millions of dollars in lost opportunities to establish relationships with customers who could make multiple purchases in the future.

In a previous blog, Discounting as Addiction, we discussed the dangers of relying on discounting as the mainstay for driving customer purchases. The end result of this addiction is that the only compelling reason to visit the company’s store or web site is for another discount ”high.” This addiction by the consumer is perpetuated by the seller’s addiction to discounting, and so the cycle deepens.

Relationships based on value identified by the customer, on the other hand, carry significant long-term potential for both seller and buyer... but you can't find out what your customer considers valuable if all you are interested in is a “quickie” transaction.

Try This:

Ask each customer if you can ask a few brief questions to help provide them with ongoing value as defined by their individual needs/interests. The types of questions you should ask are intuitive. For instance:

Would they like to receive information, useful tips, or promotions regarding the product(s) they just bought? Are there other products in the store/catalog/or web site about which they would like to receive information? Any other friend or family member they would like to send this information to? And last...as a result of offering value, you have earned the right to request their email address.

Think about it. What better time to prove your value and build a powerful database than at the point of purchase? Most customers are happy to spend the extra few seconds identifying how you can better serve them in the future. And those that don’t want to spend time can choose not to.

Megatrend #4; Consumers Demand Three-Dimensional Website Experiences

The Myth: The primary purpose of your web site should be to serve as a combination brochure and on-line ordering portal for customers and prospects.

The Reality: Consumers (both BtoB and BtoC) now expect far more than product information and convenience in ordering from on-line resources.

In recent blogs, I shared three megatrends of 21st century marketing: Megatrend # 1, that customers expect multichannel, preference-driven communications; Megatrend # 2, that they expect us to trust their requirements for deeper engagement; and Megatrend #3, that consumers are willing to share significant amounts of information about their preferences in order to gain valuable information or resources.

Let’s take a look at Megatrend # 4, which is also based on learnings from recent VOC research for companies such as Microsoft, HMS National, NBC Universal and Life Line Screening.

Megatrend # 4; Websites must now provide a three-dimensional experience that engages the customer and abandons the current one-dimensional, corporate, “me”-oriented Web experience.

Per VOC research, the three dimensions of experience, in order of importance, are: 1. Provide access to peers, for the most trusted information and recommendations, 2. Provide access to relevant subject matter experts, and 3. Provide easier and faster access to the corporation before, during, and after purchases.

Examples of companies who do this well:

Amazon.com, now allows shoppers to connect to their Facebook accounts. As a result, Amazon can now display their friends’ favorite books, films, and so on. Amazon also provides access to both expert and amateur reviewers (via its main site) and to a wide range of peers and content experts (via its Omnivoracious interactive blog site). TunerFish, a start-up owned by Comcast, lets users share TV shows and movies they are watching…creating a real-time "TV guide" of programs for friends. Loopt, a location-focused social network with over 3.4 million registered users, recently began showing them which of their friends liked a particular restaurant.

Megatrend #4 carries broad marketplace implications likely to play out for decades. According to the New York Times (9/13/10), on-line social networks of friends and colleagues are now a more trusted source of purchase recommendations than traditional search!

“The trust factor of friends' suggestions can make a big difference...Loopt's users are 20 times more likely to click on a place their friends liked...than a place that simply ranked higher in search results." Sam Altman, Co-founder of Loopt

Try This:

Take a fresh look at your site. Identify how you can provide a three-dimensional experience which provides, in order of importance, better access to:

Peers Subject Matter Experts Your Company.

Discounting: A Dangerous Addiction

My wife and daughter no longer shop at certain stores unless there is a major sale. Their reason: it would be foolish to pay regular prices, since huge discounts are offered so frequently.

Clearly, discounting has been around a long time and the rationale is obvious. In poor economic times, it seems all the more imperative. Also, if competitors are discounting heavily, how can a marketer not offer discounts?

All that makes sense. The problem, however, occurs when discounting, like an addiction, becomes a dependency. The end result is that the only compelling reason to visit the company’s store or web site is for another discount ”high.” This addiction by the consumer is perpetuated by the seller’s addiction to discounting, and so the cycle deepens.

Based on over 100 Voice of Customer Relationship Research studies we have conducted for companies such as NBC Universal, Microsoft, IBM, Life Line Screening, and others, a consistent pattern has emerged:

• If a company or product is viewed as a commodity, price will always be cited as the #1 variable driving purchases.
• Conversely, if a company or product is viewed as a source of value, then price is consistently ranked as variable #3 or #4, after product or service quality, customer service, and other factors such as value-added information or access to a community of people with similar interest or needs. This holds true regardless of the price of the purchase, or whether it is a BtoB or BtoC purchase.

So, with discounts, discounts everywhere, what’s a poor marketer to do?

The answer...break the cycle! Do not allow your company or brand to become, or remain, a discount addict.

Yes, you have to offer discounts at times, but this cannot become the main reason customers buy from you. Build value around your company, brand and products. Create a value-added experience for customers so your store and/or site become a destination and worthy experience, not just a place for transactions.

Also consider that many people think about what they buy in terms of what it says about them as people. If discounting is the main draw, it says they are good shoppers, which has a very low switching cost relative to defecting to other brands (part of being a good shopper is being shoppertunistic). If buying from a company says you are smart, hip, responsible, etc., you can create cognitive dissonance by switching to a competitor just because they have cheaper prices, because you could be invalidating the good things you thought about yourself by having bought from the first company. The stronger your engagement with a company, the less likely you are to switch just because of price.

A case in point is Threadless. They have taken the act of selling T-shirts, which could have been a simple, commodity-driven sales experience and transformed into something very special. They are a community-driven online marketer specializing in T-shirts designed by members of the community. This community is made up of 3 groups; purchasers, designers and reviewers. According to the Sloan Management Review, the community and customer experience is so compelling that 95% of those purchasing from Threadless.com have voted and posted comments...before making a purchase.

Yes, Threadless uses discounts and has sales, but these are just an occasional element of a much broader, more compelling customer engagement strategy. And, the results of this strategy go straight to the bottom line:

• Over 1.4 million members.
• Over 1.8 million Twitter and Facebook followers.
• Approximately $30 million in annual sales.

Our advice is not to follow the flock of discount addicts. This diminishes the value of your brand and can only result in ever-shrinking margins and loss of competitive differentiation.

Instead, build value around your product or service. Make the experience of doing business with you exciting and fun. Learn from innovators like Threadless, NikeiD, and Starbucks, who have created powerful customer experiences in product categories that less innovative competitors have marketed as discount-driven commodities.

Author: Ernan Roman, President of Ernan Roman Direct Marketing