Wednesday 25 May 2011

Can't judge a book (or a customer) by it's cover

Sony reader mb edition

As marketers we're always keen to put customers into specific groups or segments. Typically creating personas for these segments that attempt to describe the customer - detailing where they shop, what they watch, what they read or how much they earn.

Sometimes this is based on research; many times it's embellished with our own "insight".

So if asked to describe a typical consumer in Windsor - one of the most affluent areas of the UK - and the stores they frequent, you probably wouldn't be including the discount store Poundland amongst the profiles.

However this hasn't stopped them from opening a store in Windsor and according to reports in the Daily Mail

There are women in pearls elbowing each other out of the way, and a couple of smart old ladies are having the most awful row over a gardening fork.

Ok - so this is an article in the Daily Mail which may mean there is a little creative licence in the reporting. However Poundland state within the Financial Times that 11% of their customers are from AB social-economic groups.

Research from Nielsen last year on coupon usage in the US also demonstrated this apparent mis-match with affluent customers by showing how those earning more than $50k per year actually represent 60% of the top coupon users - something most people would naturally assume would skew to less affluent customers.

Google's recent announcement about bringing coupons to the mobile phone via NFC further back this up. With 64% of Android users being on incomes of $50k or above this is something they clearly see a market for within a more affluent customer base.

Another example of how we can misjudge customers is shown within ebook sales.

Sales of romance and erotica books have apparently exploded within the e-book format with the main reason thought to be the lack of the embarrassment factor associated with these books in hard copy format (such as reading them on public transport).

Looking at the raw sales numbers you could assume that customers no longer enjoy the romance genre; however, understanding customer motivations as to why they aren't purchasing the books allows for a new channel to be utilised and sales revitalised. Research from Tesco for example indicated that 31% of customers said they prefer not to be seen buying the books due to their association with an older demographic. A spokeswoman for Tesco is quoted as saying:-

Some bashful customers prefer to use e-readers so they can access stories privately. However, there is no reason why reading Mills & Boon should have to be a guilty pleasure

A report I heard recently about a European bank who were trying to encourage customers to shop online also demonstrates this.

They attempted to utilise points promotions to over reward this specific behaviour of online shopping but this had little effect. Instead, what finally worked and significantly increased online card usage was in fact the introduction of an online fraud and delivery insurance. Not taking things at face value and instead trying to understand customer motivations around risk allowed them to unlock a new category of spend.

As the saying goes, you really can't judge a book by it's cover. Whether trying to second guess which customers shop at discount retailers or why certain customers won't shop online, it's important to look at all the angles as customers really aren't one-dimensional.

Monday 16 May 2011

GOOGLE: Legacy - The Game Has Changed


In film Tron Legacy apart from some fantastic music from Daft Punk, there is an underlying story of the online world trying to break out into the offline world. They come close but with the risk of spoiling it for those that haven't seen it - Kevin Flynn (Jeff Bridges senior) manages to hold back Clu (Jeff Bridges junior) and his armies of "programs" - and in the process saves the free world.

However fantasy is great, but when fantasy starts to become reality things get a whole lot more interesting.

Google has steadily been taking control of the online world; beginning with search they have increasingly permeated all aspects of our online interactions from browsers, tablets, mobile, mapping and online tools.

You can almost imagine them uttering the words of Kevin Flynn in the film when he says:-

In there is a new world! In there is our future! In there is our destiny!

But things are changing.

Google are apparently looking to trial the use of coupons at till with retailers using NFC Android phones. Working with eftpos terminal manufacturer Ingenico they will look at a series of trials at retailers in New York and San Francisco.

Philippe Lazare, CEO of Ingenico was quoted as saying:-

Google wants a system where, when you enter a shop or supermarket, you receive a special offer on your telephone. At the checkout, you can take advantage of this offer" by touching your phone to the Ingenico POS terminal, which will be capable of reading the coupon and will automatically apply the discount to the shopping bill.

This may seem like a small piece of news but what's interesting here is the combination of online and offline services from search to location based services through to NFC and POS integration. In theory a customer could search for a product online via Google, be presented with an offer which they can then immediately use to purchase that product when walking into a store.

This ability to track online interactions through clicks and onto online purchases is something that Google and affiliate networks have been doing for years. However the ability to track these right through to offline purchases in-store really brings multi-channel retailing to life.

It also promises to change how loyalty programmes operate. You only have to looking at the number of loyalty programmes with online shopping malls to understand that these programmes really benefit from the affiliate revenue generated when they get members to shop in partner stores. Being able to drive these purchase decisions into everyday transactions however is the real key here.

But Google isn't the only player. Facebook is increasingly linking online and offline with Facebook Deals allowing offline merchants to create deals for online members. While this doesn't (yet) directly link the interaction to the transaction you can bet Facebook will be looking at how they increasingly make it relevant within bricks and mortar retailers.

There was an interesting blog by Adrian Hon in the Telegraph recently about the battle between Google and Facebook and while on the face of it they would seem to have very different businesses, in reality as Adrian points out:-

Google and Facebook are increasingly set up as competitors [for] sorting through the material on the Web.

While each has a very different approach; Google with its highly sophisticated search algorithms and Facebook with it's personal recommendations from friends they are both in the same business - namely monetising interactions between consumers and brands.

Google has done well in providing a more direct and accountable channel for marketing budgets but if Facebook can demonstrate better "bang for buck" through the power of personal advocacy they could see their revenues slowly eroded.

Not one to sit back and accept the status quo Google are firing on all fronts. From taking ownership of the channel itself (mobile/tablet via Android / PC via Chrome) to trying to develop their social strategy (and tying their employees bonuses to the success of this).

This latest effort of linking offline and online through POS is another step in this battle. Making marketing budgets increasingly accountable and in the processes owning the consumer interaction from search to purchase.

As Clu says in the film when looking to break out from the online world to the real world:-

Out there is a new world! Out there is our victory! Out there is our destiny!

While the battle for our attention online is intensifying, Google making a move offline suggests a whole new game and one worth keeping an eye on.