Relationships Drive Business

Strengthening Customer Engagement to Propel Your Business

Inside the Customer’s Head November 11, 2010

Wednesday comScore offered a web session reviewing e-commerce trends from Q3 2010 and covering trends emerging for the upcoming holiday shopping season.  The session promised to hit on “e-commerce highlights from the third quarter of 2010, and will include a preview of online holiday shopping trends and an early read on consumer sentiment heading into the busy shopping season.”

comScore, Inc. is a global leader in measuring the digital world. Learn more about them here.

I’m sharing my notes in hopes you can take away some nuggets to grow your business by responding to consumer trends. What’s any of it have with social media? It’s a look inside the head of the consumer. Gear your social media conversations toward the way consumers are thinking right now.

Within the context of the session e-commerce is defined as worldwide retail shopping done on US based sites, excluding travel, cars and auction purchases.

Highlights:

  • Q3 ecommerce was up 8% over 2009 (2009 was very soft); back to a positive growth pattern.
  • E-commerce is approaching 10% of overall spending.
  • During the height of the recession e-commerce spend went negative to the tune of 1-2%
  • Decline in overall spending during the recession dropped by nearly 10%; e-commerce lost less biz than brick and mortar spending.
  • Ecommerce spend rebound since the recession has surpassed pre-recession levels; brick & mortar spending has not rebounded as much.
  • Consumers #1 concern is unemployment; uniform across income levels and for both employed and unemployed. (see chart below)
  • Inflation is #2 concern
  • 58% of people believe the unemployment rate will begin to improve 12 or more months from now. Consumers get it, and they expect this to last a long time. Expect cautious spend until those 58% believe recovery is closer.
  • Upper income segment is more optimistic about unemployment ending. If this is your market you have a more promising outlook.
  • Consumers are compensating by changing spend in 3 ways:
    • Reducing gift spending (61%)
    • Choosing other brands than previously (57%)
    • Shopping different retailers to save money (31%).
  • Top 25 retailers are gaining market share over smaller competitors; they outspend them on marketing to gain share, and offering discounts to lure customers.
  • Retailers who only sell online are growing faster than those with both online and brick & mortar outposts.
  • Websites with visitor growth are either purely e-commerce, like Amazon; or those whose internet presence interacts with their brick & mortar locations. Like Apple where consumers search the web for classes held in brick & mortar locations. Or Best Buy where you can buy online and pick-up product in-store.
  • Hot trends – sales via Groupon and LivingSocial visit growth has been phenomenal.
    • Hard to tell if there is seasonality to either of them, not enough data yet.
    • See category trends in the chart below.
  • Mobile e-commerce is growing, but not quite there yet – marketers are still figuring out how to reach the mobile user w/ something to buy rather than just give them information on the go.

Now the hard part – What’s any of this mean for your business? How can you use it to grow your share?

As always, drop me a note if you’d like help sorting through ideas.

This recession's joblessness is much different than any other recession.

Consumer categories and expected growth.

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Was LivingSocial promo worth it November 8, 2010

Self Indulgence Tanning and Self Spa coupon from Oct. 27, 2010

On October 27, 2010 Self Indulgence Tanning and Self Spa ran a coupon via LivingSocial. It went out to the Wilmington/Newark DE subscriber list. Today’s post is the story of what happened from the owner’s perspective.

As of 11:00 am two email recipients had called to ask questions about the specific treatment featured on the coupon. The calls continued all day. From the Owner’s Page on LivingSocial.com Judy Grabowski, owner of Self Indulgence, could watch sales of the coupon follow shortly after most phone calls.  By 4:30 she had tallied 54 coupons sold.

On that same page she could see tally count of coupons sold, demographics of the buyers and the amount of the check she would recieve from LivingSocial. If she wanted she had the ability to set a cap on the number of coupons sold. Once the deal was over, she would get a list email addresses and names for those who’d bought the coupon.

Judy specifically chose not advertise the LivingSocial coupon to her existing customers. She wanted to see it play out organically. That would tell her how many of her existing clients were shopping for deals via email coupons. (If you’ve watched LivingSocial or Groupon offers, spa deals do very well. Which leads me to believe the market is huge and loyalty may be low.) Yes she was hoping the deal would bring her mostly new clients. But, she was willing to accept that existing clients would benefit, as well.

The demographics provided on the buyers helped her learn more about her customer base. She could see their geography laid out on a map, how they made the purchase (iPhone app or via the email) and time of day the purchase was made. From that information she could infer other things:

  • How far were they willing to drive for services and what direction they were coming from. That could help her open another location in the future.
  • How many of them use iPhones.  One of her treatment vendors has an iPhone app, too. Maybe clients would be receptive to offers from their app as well if she made them aware of it.
  • Time of day they are most receptive to spending or at least time of day they are most decisive. If she does other newsletters it gives her a clue as to the best time of day to hit their email.
  • From the phone calls she learned what questions people had about a specific treatment, FIT Bodywrap.  She’ll be sure her staff hits on key points that resonate with buyers.

I know, inference is not a sure thing. There’s no way to know when the coupon will be used, or if the customer will become a regular. There’s no way to know how long people considered the purchase before making the buy. But it’s all good information to begin exploring and testing with other promotions and communication tools.

Lessons learned to help you with a similar offer:

  1. Be sure your staff knows the details you included on the email sent out by LivingSocial.
  2. Be sure staff can speak intelligently about the promotion and the specific service or product you advertised.
  3. Have enough staff on duty to handle the phones and your regular traffic.
  4. Gather info on the offer from more than just LivingSocial’s tools.
  5. Have a specific goal – Judy’s was to see what would happen with no promotion beyond those on LivingSocial’s list.

Have you tried a similar offer? What did you learn? What would you do differently?

 

Groupon – The Good and the Ugly September 23, 2010

Too-good-to-pass-up deals in your city, emailed to your Inbox.

Groupon is the latest wunderkind of social networking. In the last 3 weeks they’ve been the feature of stories in everything from Fast Company to NPR, Today Show, Good Morning America, and was named the #1 Hottest Website for 2010 by Fox Business News. They offer hyper-local marketing in 140 markets in the US. Offering one too-good-to-pass-up discount everyday to their email audience. Here are some past offers.

Today I read a horror story from Posies Cafe. It got me thinking we need to talk carefully about who it’s right for and how to strategically plan for wild success and its aftermath.

How Groupon Works:
1. Each day they feature something from an advertiser, something cool to do at an unbeatable price.
2. The offer only goes live if enough people join that day… so inviting friends is encouraged.
3. Check back the next day for another awesome Groupon.

Groupon Target Audience:
They’re socially active, both online and off. Here are the demographics.
– 50 percent go out twice a week or more
– Habitual users of Facebook, Twitter, blogs, and other social media tools
– Savvy Online Shoppers

What the Groupee gets:

Exposure to highly targeted audiences.

– Sales at deep discount.

– Payment before the end user gets the product or service.

What’s in it for Groupon:

Groupon takes a commission on every sale. They provide the audience and the distribution channel. They process all the transactions and take a cut. Usually it’s 50%.

How it’s changed business

Groupon’s model rearranges payment’s spot in the transaction. Payment happens in advance of the consumer using the coupon at the retailer. It moves you getting paid closer to the front end of the process. That could be good for your cashflow.

In deciding if Groupon is right for you, look at it from all angles. Run the financial scenarios for 50 sales for 500 sales. Ask yourself these questions:

  • What will you do with the exposure when you get it?
  • How will you stay in touch with the new customers it brings you?
  • How will the influx of business affect existing customers, and can I live with a worst case scenario?
  • What are my true costs of the deal?

Groupon’s biggest competitor is LivingSocial. Some of the details are different, but it’s based on the same principles of group buying power, and people sharing good deals with friends.

Other articles to help you decide if Groupon or LivingSocial is right for your business: