Living la vida local

Until the end of the 19th century virtually all retail was local.

There was no such thing as a chain store or a catalog merchant. Most raw materials were locally or regionally sourced. The local shopkeeper predominated.

For centuries, the typical merchant specialized in a particular area of expertise–butcher, baker, cobbler and so on. He knew most customers by name and understood what they liked. With the ability to get instant feedback on his offering he could readily curate his offering to local tastes. He didn’t have to learn 1-to-1 marketing. It was his lifeblood.

In the 1880′s, Richard Sears and Aaron Montgomery Ward launched their catalog businesses, and in the decades that followed, consumers began to have greatly expanded choices. As the 20th century unfolded, the transportation infra-structure improved dramatically, creating greater opportunities for sourcing product from around the globe. Multi-unit retailers proliferated and eventually the bulk of retail shifted to regional malls, mass discount stores and dozens of national “big box” retailers and specialty chains.

In the last 15 years, the advent of e-commerce, along with incredibly efficient direct to consumer supply chains, have made it possible for the individual consumer to have virtually infinite choices available to them. The local shopkeeper model has become largely extinct.

Now it’s come full circle. Retail, like politics, has always been local. The winners have always been those that bring the most remarkable and relevant solutions to individual consumers. But over time what was possible shifted. Those that failed to keep pace lost out.

Today the retail world is becoming increasingly bifurcated. A few players are winning by riding the long tail and by offering low prices and efficient shopping. For everyone else, the world is a lot more complicated. Right now the challenge is to differentiate your brand in a sea of sameness. Right now the goal is to curate your offering–or make it incredibly easy for the customer to do it for herself–to a specific set of consumer needs and wants. Right now your mission is to know your customer better than the competition and to leverage that insight to craft more unique and personalized solutions.

Sounds familiar right?

Advances in technology make it possible for your brand to provide value in much the way the shopkeepers of yesterday did. To know me, to understand my individual preferences and to use that information to tailor your offering to my specific requirements is the formula for winning.

You can keep chasing price and remain wed to mass approaches to marketing, customer service and operations. And you can hope to beat Amazon and Walmart at their own game. Let me know how that works out. Or…

Or you can commit to treating different customers differently and invest in a strategy steeped in localization and personalization.

The choices are increasingly clear. The commitment to one path or the other is becoming more urgent. You need to choose.

Ultimately it’s death in the middle.





In search of relevance

Excellence used to be the Holy Grail. Develop extreme competence in cost position or product innovation–or some other key element of the so-called value chain–and you were rewarded with strong market share and a high earnings multiple.

Today, not so much.

In an increasingly digitally driven world, advantages that used to endure for years, or even decades, can be supplanted in weeks or months.

In the sharing economy, capabilities that once created insurmountable barriers are suddenly the price of entry.

At a time when the long tail is the norm, and consumers can easily be overwhelmed by choice, share of attention becomes the scarce commodity. Your ability to break through the noise, to earn permission, to be seen and truly appreciated because of the consistent, deeply relevant consumer value you deliver, is now the essence of competitive advantage.

When you accept that most of what the consumer encounters everyday is, at worst totally irrelevant and at best mildly entertaining or a source of mindless distraction, than you embrace the quest for the remarkable and the intensely relevant.

And, by the way, you’re going to need a bigger boat.


Compelling, creepy or annoying

By now, hopefully you have realized that the world is an ever-noisier show and that the bar for commanding attention and persuading your audience continues to rise.

By now, hopefully you are making the shift away from a little bit of everything for everybody, to the right experience for the right consumer.

By now, hopefully your mantra is quickly becoming “treat different customers differently.

Yet while many of us say we “get it’, so many of our actions remain incongruent.

We annoy our customers by too many emails, phone calls or nuisance fees. Cumbersome policies and procedures turn our customer service groups into the sales prevention department.

We scare our customers by sloppy data collection and management processes.  We confuse–or worse, irritate–them by employing seemingly random algorithms that generate largely irrelevant “targeted” marketing messages (I’m looking at you Facebook!).

Sadly, we fail to give respect to that precious asset we call customer permission.

As digital analytic and communication tools proliferate, and their marginal costs drop, they become all too easy to over use.

As more and more consumer data becomes readily available, it’s easy to convince ourselves that we have greater abilities to get the right offer to the right customer at the right time.

In concept this is true, and unquestionably we stand at the precipice of a phenomenal opportunity for marketers and consumers alike.

But before we plunge into this brave new world, before we do what we’ve always done–i.e. throw everything at the wall and see what sticks–let’s ask ourselves a basic question:

Is our attempt at personalization fundamentally compelling, creepy or annoying?

In my experience the customer will see it as one of those three. And unless you are delivering something clearly relevant and differentiated, you’ve wasted your resources and the customer’s time and attention.

Even worse, in the increasingly critical battle for share of attention, you’ve squandered an opportunity. Do that too often and I stop listening, I un-subscribe from your e-mails, I stop caring.

Maybe you have so many profitable and loyal customers that this isn’t a big deal for you.

Maybe. But probably not.





Creepy sidewalk guy

The other day I was waiting to meet a friend on a busy Manhattan street corner.

I was killing time checking my emails when I heard a man to my right yelling something like: “Hey darling, you look so good, let’s go have lunch. What do you say, you and me?”

I turned to see a reasonably put together twenty-something beckoning a woman who apparently just happened to cross his path. Not too surprisingly, she seemed to be ignoring him.

Less than a minute later, the same thing happened. Again, an attractive young woman walked by and once again this Lothario of the pavement fought to get her attention and lure her with his intrusive offer. Again he was ignored.

My guess–and hope!–is that this guy’s pitch never works. Yet, he keeps trying it.

After all, what makes anyone thing that some stranger will want to start a relationship based on random interactions and irrelevant offers? Clearly it would make more sense to get to know the person better and interact in a way that reveals real interest, keen relevance and a desire to forge something for the long-term. And why would you keep repeating something that has no evidence of success. It all seems like a recipe to be ignored over and over again. Frankly, it smacks of desperation.

Which brings me to many brands’ marketing plans.

As “professional” marketers it may be easy to say we have nothing in common with the creepy sidewalk guy.

But we’re kidding ourselves if we think the reasons our messages are ignored are really any different.






Mr. CEO, tear down this wall!

It’s not hard to find literally hundreds of articles imploring brands to adopt a multi-channel–or as is fast becoming de rigueur, “omni-channel”–strategy.  I’ve written my fair share of them.

Typically these articles provide helpful hints or highlight core capabilities one must embrace to achieve this recommended state of retail nirvana. In fact, at last week’s CRMC conference in Chicago, speaker after speaker delineated the usual suspects.

We must have a 360-degree view of the customer. We need to become channel-agnostic. We must leverage actionable customer insight to drive personalized interactions. Our customer experience should be seamless across touch-points. And so on.

All good stuff to be sure. Yet the cold hard truth is that while these components are all quite necessary, they are simply not sufficient.

The unfortunate reality is that all the Vice Presidents of Customer Insight and all the Directors of CRM and, for that matter, all the whatever you want to call your new leader of cross-channel initiatives, can do an exemplary job and it won’t get you there as long as a few other conditions exist.

If your brand is still fundamentally organized by channel rather than customer, you will only get so far.

If your company’s senior leadership is rewarded by channel performance, more than brand and customer-driven metrics, you face an insurmountable challenge.

Without the walls between channels being torn down–without the Board and Mr. or Ms. CEO making customer-centricity THE driving force of your customer growth strategy–all the well-intentioned efforts of an enlightened few will fail to gain essential traction.

So Ms. CEO tear down those walls!  What are you waiting for?




The new table stakes of customer-centricity

When the cost of information was high, it used to be that you could get away with uncompetitive pricing.

Before virtually everyone had access to high-speed internet anytime, anywhere, you could get away with silo-ed sales channels and disconnected customer experiences.

Before your customers had frequent exposure to best-in-class customer service, or easy to use on-line checkout or relevant personalization–or whatever counts for meaningfully useful these days–you could get away with parts of your value proposition being less than ideal.

But in a world where the power continues to shift from brands to consumers, where your customer doesn’t care how you happen to be organized, where she increasingly expects you to know her, remember her and tailor experiences to her precise wants and needs, the table stakes continue to rise.

Sure, you can probably get away with some of your short-comings for a bit longer.

But getting away with something hardly demonstrates leadership.

And failing to understand, and to act upon, the differences between “nice to have” and table stakes is a sure path to failure.


Built for me (Part 3): The promiscuous shopper

You may know the old joke that ends: “We have established what you are, madam. We are now merely haggling over the price.” Now apply that in the retail context.

I introduced the notion of the promiscuous shopper nearly 3 years ago. This special, but hardly rare, breed of consumer is always on the hunt for the best deal and completely devoid of any potential to be loyal.

When you choose to anchor your marketing strategy on relentless un-targeted promotions, and then layer on extra coupons and rewards points, it’s the promiscuous shopper who is the first to bite, and who then spikes as a percentage of your business.

To be fair, most businesses need some of these consumers from time to time. There is clearance product to be sold and any sensible marketing and merchandising strategy will reflect a natural demand curve.

An unusually high level of discounting may also be necessary to drive initial trial, so long as you are confident that repeat business has the potential to be loyal and profitable.

And certainly promiscuous shoppers are not always immediately apparent. Time and solid analysis are needed to separate them out and start to chase them away.

But always bear this in mind: when the promiscuous shopper feels that your business is built for them, it’s the first sign of trouble. Big trouble.

Built for me (Part 2): Treat different customers differently

In my last post, I suggested that the most powerful brands elicit the feeling from their core customers that the business was designed around their unique needs and wants. That is was built for them.

This idea is a core tenet of strategic business model design. But it extends to tactical execution as well.

I’m hardly the first person to espouse the “treat different customers differently” mantra, but embracing it is essential to putting “built for me” into practice day in and day out.

Built for me can extend to how you deliver your customer experience. One size fits all approaches rarely yield superior customer service marks. When you don’t pay attention to–and act upon–my unique preferences, I’m less and less likely to return.

Know me, show me you know me and show me you value me.

Built for me should be a driving force behind just about any brands marketing strategy. More and more, mass promotion fails to move the dial or gives the illusion of prosperity when all you are doing is chasing sales with no potential to be profitable–or chasing customers with no potential for loyalty.

Leverage analytics and insight to deliver a progressively more personalized set of messages, offers and experiences.

There is no question that pursuing a built for me strategy introduces cost and complexity. But more and often than not, failure to embrace this path eventually leads to middling performance and consumers who are more than happy to take their business elsewhere.


This might take a while

Certainly the world is moving at an increasingly faster pace.

Clearly we have seen transformative new business models seemingly come out of nowhere to supplant industry incumbents.

Without a doubt, traditional sources of customer loyalty are being challenged in a rapid onslaught of ever-expanding options and innovative marketing techniques.

Yet, for many brands, it is still very much the case that relationships and trust matter.  And those precious assets are rarely earned quickly.

Despite the publication of Permission Marketing well over a decade ago, too many brands fail to follow the basics of Seth’s admonitions.

Too many brands want to get married on the first date.  Too many brands fail to take the time to treat different customers differently.

Too many brands think quantity trumps relevance (I’m looking at you Groupon).  Too many brands think they can shift their customer base quickly (I’m looking at you JC Penney).

As the pace of change accelerates, you may be tempted to do everything faster. But if you have a business model that is anchored in trust, rooted in deep relationships and in building a growing permission-based asset, the right answer may well be to go more slowly and deliberately.

Yes, it might take a while. But it’s likely to be worth it.



My Top Ten Blog Posts of 2012

Happy New Year.

And now, as has become my custom, here are my top ten posts of the past year. Enjoy. Comment. Debate. Share.

1.   The world’s best loyalty program.

2.  The end of e-commerce.

3.  JCPenney’s Road to Recovery (Part 2): The intervention.

4.  JCPenney swings for the fences (Part 1).

5.  JCPenney’s Road to Recovery (Part 1): The reality distortion field.

6.  JCPenney’s Road to Recovery (Part 3): The 10 point action plan.

7.  In gut we trust.

8.  Now you’re just somebody that I used to know.

9.  Honey, I shrunk the store.

10. 8 things that are wrong with your omni-channel strategy.

And one of my personal favorites that, in my humble opinion, was mostly overlooked: Knowing what ‘yes’ looks like.

But it did get excerpted in Seth Godin’s new book The Icarus Deception.  So I got that going for me. Which is nice.