Monthly Archives: October 2009

Retailing in High Fidelity

Posted October 29, 2009
Posted in Branding, Marketing
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By Doug Stephens

As consumers we are continually making trades, concessions and compromises in the quest to satisfy our needs and wants. According to Kevin Maney, author of the book Trade Off: Why Some Things Catch On and Others Don’t, there is a constant push and pull between what he calls fidelity and convenience. Fidelity being the quality of the experience associated with acquiring something and convenience, referring to the ease with which something can be acquired.

High fidelity experiences are usually less widely available and often cost considerably more. They tend to be more exclusive and offer a higher level of quality, shopping experience and service. Convenience based experiences are comparatively easy to find and cost less. They also tend to serve larger customer segments.

Consider the difference between a dinner at New York City’s famed Peter Luger steakhouse and your local McDonald’s. In a given week, the same consumer may choose to eat at both but for very different reasons. McDonald’s is a convenience driven choice, while the decision to go to Peter Luger is being prompted by the desire to have an exceptional dining experience. One is cheap and convenient and the other is expensive and high fidelity.

Both propositions have a place and can be very successful. Convenience serves our needs, while fidelity feeds our wants. As Maney puts it, we need convenience products but we lovefidelity products.

Companies hit pay dirt when they achieve Super Fidelity or Super Convenience, a place where they are literally untouchable in their chosen market space. Consider Neiman Marcus and Wal Mart; two brands that sit at opposite ends of the fidelity/convenience spectrum and yet both very dominant.

Between the two ends of the spectrum lies what Maney calls the belly – a zone where businesses are neither very convenient nor high fidelity but merely a little of both. This, he maintains is a perilous spot to be in. Consider Sears. Having neither the low prices nor the convenience aspects of a Wal Mart and also lacking the fidelity of a Saks Fifth Avenue, it has been relegated to the belly. On the fringes of the belly are the retailers that manage to maintain their positions but don’t necessarily enjoy dominance. This represents the majority of companies that fight it out in the trenches every day for an extra percentage point of market share. Every day is a struggle to avoid falling into the belly.

He also warns marketers against chasing what he calls the mirage, where companies attempt to become both super fidelity and super convenience – a combination he maintains is impossible to achieve. Pursuit of the mirage, suggests Maney, is precisely what led to Starbucks’ difficulties in 2007/2008. The very exclusive aura that surrounded their brand simply disappeared when suddenly there was a Starbucks on every corner, at every airport and in every grocery store. In pursuing super convenience, they severely diminished their fidelity.

What I like about Maney’s model is it’s simplicity compared to other such positioning frameworks. It’s something any business large or small can easily use to chart their current market position. It also serves to provide a clear compass heading for businesses to follow in improving that positioning.

According to Maney, if there is a consistent trait among great businesses it’s their ability to discover the thing they do better than anyone else and then focus relentlessly on doing it.

3 Reasons Retailers Should NOT Use Social Media

Posted October 20, 2009
Posted in Social Media, Technology
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By Doug Stephens

Social media is as much an evolutionary reality as walking upright, yet smallNO-SM businesses continue to find reasons not to participate.  A recent study of 500 small businesses found that the vast majority of owners are neither marketing their business nor getting business information through social media.  This is sadly reminiscent of the situation a little over a decade ago now when small business reluctantly came to the internet.

In a previous post I took aim at some of the most prevalent excuses among small businesses for staying on the social media sidelines.  From the fear of latent “employee tweeting” to anxiety about brand-bashing in the blogosphere, small businesses are to a large extent, psyching themselves out of social media.

Having said that, I do feel that there are a few legitimate (but still very surmountable) reasons for not diving headlong into social media.   Here are what I regard as being the top three.

1.  No Budget:  The early press on social media spawned a misconception that it was without cost.  Well, if time is worth nothing, then that’s correct.  But of course time isn’t free – whether it’s your own time or someone else’s.  While websites are like houses that are built and then perhaps added onto, a social media program is more like a garden that requires daily attention in order to grow and stay healthy.  In the early stages you may be able to handle the workload yourself, but as your social media garden grows, it may be wise to hire someone to manage it for you.  You should also budget for a range of ancillary costs.  You may need to “tweak” your website, adding feeds and links to and from social media channels as the need arises.

2.  No Plan:  The social media highway is becoming littered with companies that began without a plan and broke down shortly after setting out.  Without objectives and a clear sense of the steps required to succeed, social media can be highly ineffective and even detrimental. How you use social medial, the media channels you choose, and to whom you direct your messages are vitally important.  You need to ask yourself some questions before setting out.  Do you see social media as a customer service tool or a means of spreading information about products or promotions…or both?    Do you intend to write a full blog or just share bite-size pieces of information through micro-blogs like Twitter?  Which social media channels are your customers actively using or engaging in and how can you connect with them?  Will you measure success in terms of sales or simply the number of customer relationships you develop?  And what is a customer relationship worth to you?

3.  No Content:  If social media were a rocket, content would be the fuel that propels it.  And with the extraordinary growth of social media, quality content is rapidly becoming the primary differentiator between successful and unsuccessful Social Media programs.  Content can take a variety of forms including blogs, video, photos or podcasts.  Regardless of your choice, the only iron-clad requirement is that the content has real value to someone- hopefully the target audience.  If you don’t see yourself developing original content, then perhaps you can leverage some from your suppliers, manufacturers or even trade associations. Content doesn’t have to be home grown to be valuable.  There’s value in being an aggregator of information for your audience and creating an epicenter for what’s new and exciting in your product or service category.

So, while there are some very legitimate reasons for not rushing into social media, none of them are showstoppers.  They just require solid planning, management and ongoing attention and that’s really nothing new…is it?

The 3 Worst Excuses for Retailers NOT Using Social Media

Posted October 7, 2009
Posted in Social Media
Reply

By Doug Stephens

Despite the continued momentum of social media, some retailers are still ambivalent about embarking on their own program.  We’ve noticed some recurring  excuses for holding off.  Here, in no particular order,  are our top  three worst excuses for NOT engaging in social media now .

Excuse #1. “We don’t want everyone in the store “slacking off” and Tweeting all day”

If this excuse was valid, companies would also avoid advertising in magazines for fear that their employees would do nothing but read Vogue and Sports Illustrated all day.  Your foray into social media is not an invitation to your staff to sit back and relax and it likely won’t spawn a torrent of latent tweeting either.  Also, keep in mind that with the number of smart phones being carried today your employees are Tweeting, Flickring and Facebooking at work already, whether you like it or not.

The reality is that launching a program may enable you to harness some of your employee’s social energy to get the word out about your great store or chain.  Best Buy for example, has done a great job of engaging their employees and tapping their social horsepower to actually drive the brand.

BB

Things to Consider

a.       Build a policy with your employees. Set sensible, realistic boundaries and guidelines regarding use of social media at work.  Also set clear ground rules regarding privacy, confidentiality, content and language.  As with any policy, focus on the benefits of following it, not simply the penalties for breaking it.  Rather than shutting down staff use of social networking, try to focus their at-work social media to benefit your business.

Excuse #2. “We don’t want people to say bad things about us online.”

The fact is that people will talk about your business whether you’re there to hear it or not.  The benefit to being involved in social media is that you now have an opportunity to curate or respond to feedback on your business.  Negative comments are truly opportunities – not only to solve the problem but to publicly demonstrate your high customer service standards.  It takes courage to step up and be a part of the dialogue and customers respect that.

Home Depot for example, does a good job of directing traffic, positive and negative on its Twitter profile.  It serves as much as a customer service tool as a PR engine.

HD

Things to Consider:

a.       Free services like Tweetbeep and Google Alerts will notify you when your brand or store is mentioned on Twitter or elsewhere on the internet and there are other programs available that will help you aggregate mentions of your brand from all corners of the internet.  Also keep close watch over your Direct Messages on Twitter – customers may be contacting you directly and responding within a reasonable period of time is crucial.   You will have a chance to hear what (if anything) is being said about your business and where it makes sense, enter the dialogue and respond.

b.      Never, ever get into a shouting match online.  Even if it feels like you’re winning, you’re not and things on the internet have a long lifespan.  Best to stay cool and calm.  If you can’t solve someone’s problem reasonably, then it probably can’t be solved – move on.

I think you may be surprised to find a remarkable degree of mutual respect online.  Social networks seem to have an uncanny ability to govern and moderate themselves.

Excuse #3. “We’re planning to get into it at a later date”

Today is a later date.  If you look at the time-lines for Twitter, Facebook and YouTube, all three surged in popularity at about the same time in 2008.  Here we are almost two years later and their growth hasn’t slowed down at all.  According to research from I.T. research firm Gartner, social media will be adopted by more than 60 percent of Fortune 1,000 companies with a web site by 2010. Expect that figure to be closer to 80 percent or higher in 2011.  As for small businesses, a recent study by Sage Software and AMI-Partners found that a rapidly growing percentage of small businesses are also adopting social media as a means to build consumer awareness and connections.

The time to begin a program is NOW.

Things to Consider:

a.       Start small.  Begin with one tool.  If you choose Twitter for example, gradually increase your activity as your comfort level improves.  As you master one channel of social media, build your program from there.  Your Twitter activity can eventually feed into a Facebook fan page, which can eventually link to a blog.  The master-plan can develop over time but the key is getting started now.

b.      Listen first.  Once you enter into the networks where your customers are active, sit back and listen for a while.  Their questions, problems and stories will tell you a lot about what they’re interested in or frustrated by.  Look for opportunities to provide helpful, non-promotional information.

c.      Don’t feel the onus is on you to broadcast.  That is not at all the case. Social media is not a commercial, it’s a conversation.

d.       Reach out to someone who can help.  The world of social media is changing so rapidly, even the experts are challenged to keep up.  There’s no shame in reaching out for help, advice or guidance.

Having said all this, there are a few legitimate reasons why it might also make sense to wait before embarking on your social media program.  I’ll cover those in next week’s blog.  Until then… tell us what you think.  Are you aware of any other excuses businesses are leaning on for not leveraging social media?