Pinterest taps into the active lurker

Another week, another social network explodes onto the scene. Barely 2 years old and picture collecting social network Pinterest is growing rapidly and making headlines.

Despite being a simple concept - you essentially pin or bookmark pictures onto one or more boards - it is strangely satisfying. I'm by no means an avid user but there is something slightly voyeuristic about browsing image after image to see what takes your fancy. Whether its architecture, fashion, food, travel or technology, there is something for everyone.

I also think it taps into some basic needs in this current financial climate. While there is less money to go round and less desire to be seen flaunting it, people still like beautiful things. Pinterest taps into this, letting you like it, collect it and show it. Friends can still marvel at your good taste and ability to find something unique - just without the need to actually buy it. You're also able to "own" a collection of things that form part of your wish-list, even if most of those wishes have no chance of coming true.

What's makes Pinterest really appealing though is how it engages the active lurker.

Within social marketing we're aware of the 90-9-1 principle which states that typically 1% of people actually create new content, 9% of people curate this content (adding value/re-posting) and 90% simply read/consume it. A recent blog post however from enterprise social network provider Yammer commented on how this 90% might not be quite so passive. Discussing a research study from MIT Sloan, the blog pointed out how upto 50% of these lurkers may actually be active. This may not be directly within the community in terms of posting, but instead are active in terms of how they use and pass on the information.

Within Pinterest though, they seem to use a number of techniques to lower the hurdle for engaging these lurkers directly within the community.

Firstly they have an invite only acquisition process which is something I wrote about in a previous blog. This is becoming increasingly common for these start-ups and social networks as not only does it help them control acquisition (and the associated traffic), but it also helps build up demand and create social currency. As existing members can invite friends, this invite only mechanism helps bestow value on the membership and members are then more likely to recommend it to friends and/or brag about being part of it.

The second interesting feature within Pinterest that looks to create more engagement is how they use "endowed progress". Giving people value up front in the form of a welcome bonus is nothing new within loyalty programmes, however Pinterest takes a different angle on this endowed progress. Rather than a points currency, their currency is measured in friends and so on joining, they automatically link you to people you might want to follow. You're obviously free to unlink from them at any time, but this "instant network" based on your stated interests ensures you see content immediately and don't start with an empty profile. It's a simple idea that really helps you to feel engaged and a part of something straight away - it also helps to power with the final feature, re-sharing.

Pinterest makes the process of collecting very easy, lowering the hurdle to taking part.

You don't have to be the 10% of curators/creators who go out seeking new content to pin from across the web. Instead you can simply browse what others are posting and just pin whatever takes your fancy. This is something that is really interesting and not dissimilar to the Facebook "Like" activity. The difference however with Pinterest re-sharing is the curation part of it - your likes are essentially built up into a collection which you maintain and continue to share with friends. Amazon does something similar with it's Listmania service - but you'd be hard-pressed to find it given it's buried at the bottom of the page.

Pinterest have shown however how to bring this functionality front and centre and really engage members around it. They are obviously doing something right given they are the fastest growing social media site in history and have already got a presence on almost 10% of the top 300 online retailers.

With an increased desire to both share and consume information, the opportunity here for brands is how to engage this 90% of lurkers in an active way - and Pinterest certainly provides some interesting ideas.

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.

Loyalty in 2011 - A marriage of location, gaming and social

Predicting where things will be in the next 12 months is notoriously difficult as you don't know what you don't know, and an unexpected innovation can pop up at any time. However as respected journalist and technologist John Battelle said in his blog recently about the "next big thing":-

Often times what's directly in front of you is, in fact, the next big thing.

Something however that doesn't need any amount of prediction is that there will be a peak in the sales of commemorative tea-cups, plates, tea-towels and other Royal memorabilia in 2011. With the recent engagement of Prince William and Kate Middleton it seems we'll have the first Royal Wedding in a quarter of a century as well as an additional bank holiday for us Brits to enjoy it. 2011 will be the year of wedding fever, nostalgia, bunting and street parties.

This does neatly segway into another type of engagement however - customer engagement and the associated loyalty we look for from it. What 2011 looks like for loyalty is a little harder to predict - there are no fixed dates or big events. There are though some key trends that we are seeing in the wider market which will all impact on loyalty in some way - taking us one step closer to solidifying that customer engagement into wedded bliss.

No self respecting bride however would consider walking up the aisle without taking account of the Victorian tradition of taking something old, something new, something borrowed and something blue - and neither shall my loyalty predictions.

Something old - Coalition

Coalition programmes have been around for decades, starting with the original stamp collecting programmes. However they have really come of age now with existing programmes going from strength to strength and new programmes rolling out worldwide. Group Aeroplan has recently launched Nectar Italia and Nectar Chile and Loyalty One has taken stake in Dotz in Brazil. Now American Express has bought Loyalty Partners who run PayBack in Germany. Ed Gilligan, American Express Vice Chairman said of the deal:-

“The loyalty coalition model is growing rapidly in many parts of the world [and] Increasingly, consumer decisions about where to shop and how to pay are based on loyalty offerings"

It's not just the growth of new programmes, the existing ones are also gaining strength, with Nectar UK recently following up it's new partner Homebase with leading utility company, British Gas.

This is a high growth, and increasingly competitive area so expect to see more of these programmes coming to a country near you.

Something new - Geo/Local

You can't have failed to miss the explosion of Groupon in 2010. It's meteoric rise culminated in Google trying to buy it for a reported $6bn and when that fell through they then managed to secure $0.5bn in additional funding. While Groupon has an interesting (but not unique) business model, what really makes it interesting is the local merchant aspect. Representing about 1/3 of all sales within the US, these independent retailers are a large pool to fish in, but the challenge has always been economies of scale.

What Google ad-words did for online marketing however, services like Groupon are doing for offline. Barclaycard Freedom is another example of scheme engaging the thousands of small independent retailers and although this has yet to become well established, I think the prospect of creating services that engage local merchants will grow.

The reason for this is simple - relevance. All brands need to be relevant to get cut through and it's much easier to be relevant when the marketing is from a local restaurant or retailer than when it relates to an increasingly sterile national (or global) brand. It also provides larger brands with the ability to target marketing spend more effectively, rewarding spend at locations that have room to grow without simply rewarding spend everywhere.

As Fast Company recently reported on Google's move into this area and it's recent move of Marissa Mayer from Search Products to Geo/Local, Google said

"Marissa is moving over to an exciting new role covering geo/local, which is crucial to our users and the future of Google" (emphasis added)

It's not just Google, Facebook or Foursquare that get this; location is going to be a key variable in our marketing toolkit in 2011.

Something borrowed - Gamification

Well 2010 was when gamification really burst upon the scene and along with it a lot of controversy about the term itself. However, despite the controversy most people agree that the idea of utilising gaming dynamics to help create motivation is worthwhile.

It's interesting that currently early adopters have been either online communities/e-commerce sites or offline automotive companies with both Ford and Nissan using gaming mechanics to improve driving techniques within their electric vehicles.

I think 2011 will see this become more mainstream, with full blown traditional loyalty programmes such as hotel, airline or retail loyalty utilising gaming mechanics explicitly. As I've blogged about a number of times this year, this one trend has the possibility to really lift levels of engagement within a loyalty programme and looking forward, to possibly remove the redemption currency itself (and the associated liability)

You don't get very far however within gaming mechanics before the need to go social kicks in - the real power being based on the bragging rights that come from achievement - and so this is the theme of the final predication.

Something blue - One word. Facebook.

Facebook has come of age. It now has the majority of the Western world assimilated into it's network. It has the lions share of their online attention (recently beating Google) and a depth of information on individuals that rivals Wikileaks.

Retailers like JC Penny and Best Buy are integrating their e-commerce offerings directly into Facebook and brands such as Oreo cookies are now driving all of their traffic to their Facebook page. The reason for this is simple - brands want to fish where the fish are, and Facebook represents a very big ocean.

What's interesting though is not the use of Facebook, brands have been doing this for a while now. It actually that Facebook is for many brands starting to replace their own online offering. I think in 2011 we'll start to see loyalty programmes actually launching their online offering directly within Facebook or at the very least, using Facebook Connect for security.

This will bring three huge benefits. The first is simplicity. Members will be able to login and service their loyalty accounts without any effort - no credentials to remember. The second is interaction. Members will be able to see posts from their loyalty programme directly within their social feeds - no email, no direct mail and much more immediate. The final benefit is social proof - members will be able to see what other friends are doing, what other friends have bought and what other friends have redeemed for.

Combine this with the potential that Facebook brings to virtual goods in the form of social gaming - something that Amex has recently introduced into the Membership Rewards programme and that Citi qucikly followed by introducing them into the Thank You programme - and you have a major change in how loyalty programmes are designed and deployed.

Whether proprietary or coalition loyalty, the marriage of these three main trends of location, gaming and social will change the face of loyalty over the next 12 months.

Image credits: Google T-Shirt, Badges,

Did the Grinch steal Christmas (TV)?

I miss the Christmas movie.

As a child, when we only had three TV channels, no VHS and single screen cinemas, the Christmas movie was for many people the first time the movie had been seen.

We'd cherish the Radio Times to see what was on and then plan ahead to watch all the great movies.

How times have changed.

I now have IPTV on 3 different boxes, I can choose to watch a film on demand through BT, Sony or LoveFilm. Invariably I've already seen it at our 10 screen cinema, purchased it on DVD or loaded it onto my iPad.

I watch more films, but they don't have the same special magic they used to. I still buy the Radio Times, but that's largely because it's the Christmas thing to do - I have an EPG on my TV and TV Guide on my iPad.

The Grinch didn't really steal Christmas TV - instead it was our desire to have everything now at the touch of a button, and the medias desire to supply it.

I'm not saying any of this is a bad thing. We've essentially traded the Christmas Movie that was created through scarcity for the everyday convenience of entertainment on demand.

What's interesting though is how this plethora of choice for something we really wanted and valued can actually result in us valuing it less.

Seth Godin discussed this in a recent blog entitled The inevitable decline due to clutter where he discussed the trend within digital to just keep giving consumers more of everything - more messages, more offers - because essentially it's free. However he points out that:-

Once you overload the user, you train them not to pay attention. More clutter isn't free. In fact, more clutter is a permanent shift, a desensitization to all the information, not just the last bit.

We saw exactly this effect in some research we carried out a couple of years back. When looking at communications within retail, there was a increase in relationship strength as communications increased - suggesting that building a dialogue with customers is a positive thing to do.

However this quickly turned into a decrease as these communications became too frequent. Customers were tuning out of the communications as they got overloaded and at the same time, were tuning out of the brand.

If you want to keep customers coming back, want to keep them interested, then you need to keep things special.

• Change the experience - Mix things up a little. Email is great and it's cheap, but finding other ways to communicate, even if it's just an occasional quality DM piece can really cut through.
• Keep it relevant - It's better to send nothing than to send something irrelevant. If a customer consistently finds nothing of value in your communications they will simply cease to value them.
• Facilitate, don't just communicate - As the clutter increases, people shut down the overload and start to look internally to friends for opinion. Be part of that conversation.

A great example of someone doing this currently is Coca-Cola. They have always "owned" Christmas, having Santa Claus in their advertising since the 1930's, but there is always a risk that people become "desensitised" to it.

This year however they have had their Coca Cola Truck touring Europe and this has managed to do all three things.

It has changed the experience, bringing the advertising to life. It has kept it relevant, doing something we'd expect from Coke at a time of year when we want it. Most importantly though, it has facilitated the conversation, with friends snapping pictures of the truck locally and posting them to Facebook (here's one a friend of mine took)

Having driven past it on the motorway, there is something almost magical about seeing it in real life - even if it is just a truck. I may have been even more excited than my kids - but it's nice that some things are still special.

Grinch image by Mykl Roventine (Flickr)

Creating a pointless loyalty programme

Many brands would love to have a loyalty programme, but don't see the point as they feel they can't make it work for various reasons such as low purchase frequency, low margins or brand fit.  Worse still, other brands simply run head-long into creating a programme without giving due consideration as to what they want to achieve or even whether the programme will be valued by or add value to their customers.

However the mistake here is to simply assume that a loyalty programme means a points programme.  That providing recognition to customers for repeat custom requires some form of currency and reward catalogue.  This is not the case.

Loyalty is all about customer retention and anything which encourages customers to make that next purchase - and to continue to make purchases - is in essence a loyalty programme.

Creating a pointless loyalty programme (one without points) does not mean creating a programme which is simply pointless.  Instead it's about looking at where your brand can facilitate and build upon customer interactions - creating deep engagement and participation, and ultimately increasing and maintaining loyalty.

So how do you provide added value without giving points?  Below are a few recent examples of brands doing just that.

Exclusive Access/Content

Starbucks in the US announced recently that it is looking to use exclusive content to recognise and reward customers.  Providing free WiFi, customers will be able to access a content network called Starbucks Digital Network which in partnership with companies like Yahoo will provide local content that you can't read anywhere else.  Commenting on this, CEO Howard Schulz said

"Free WiFi is in my mind just the price of admission - we want to create.. new sources of content that you can only get at Starbucks, this is a thing that doesn't exist in any other consumer marketplace in Amercia."

This also fits well with their brand as they consider Starbucks "a third place" - somewhere between work and home - and the local, exclusive content may add to this.

The hope is that this will create loyalty with customers through content that is "so compelling that it drives incremental traffic"

Exclusive access and content is well used by many brands, such as O2 in the UK which provides their customers with priority access to concert tickets.

Social Currency

In a previous blog I discussed how people all want to feel a little special some of the time and that creating a means to let people set themselves apart can be a great way of gaining additional loyalty and increased motivation.  A recent article in McKinsey Quarterly showed this working in a social networking context - discussing how providing people with a means to publicise their activities, whether this is through the award of badges as used on foursquare or the publication of achievements from sites like SportyPal.

The article pointed out:-

"Recognition from peers is a powerful motivator, and brands that allow users to gain it deliver real perceived value.  When users publicise that recognition, it translates into word of mouth"

The author Michael Zeisser, VP of Liberty Media discusses how they have taken this one step further and actually look at word of mouth as a distinct form of media - allowing it to be treated as a form of content to which can be applied tried and true content management practices and metrics.  Going on to say:-

We see this phenomenon daily—for example, on the forums of our Bodybuilding.com site. When members boast of reaching their target weight or other goals with help from Bodybuilding.com workouts, we receive authentic and credible word-of-mouth endorsements at almost no cost

This works to create loyalty in two ways.  Firstly, it taps into peoples desire to chase goals, such as achieving/beating a best performance time - and being able to brag about it to others.  Second it taps into the idea of Social Proof, letting people know that others are taking part and keeping them on track - helping them stay loyal.

Interaction Loyalty

Increasingly it is more important to recognise and reward customers for their interaction, not just their transaction.  This means creating tools that allow these interactions to be captured as unlike a purchase there isn't usually a POS transaction.

Obviously it's possible to capture online interactions such as reading/responding to an email, logging into a website or recommending a friend.  However some brands are beginning to experiment with linking offline interactions such as store visits with loyalty - and seeing great results!

In the UK for example, Dominos Pizza has linked up with foursquare to reward customers who check-in at Dominos outlets, essentially letting Dominos know that they have visited - even if they didn't actually make a purchase themselves.  Whilst this is a very new phenomenon, Dominos feel they are really seeing the success of it, reporting that they have seen:-

A 29% surge in pre-tax profits to £17.5m, buoyed by a strong performance from e-commerce sales and attributing its link-up with Foursquare as key to its recent performance.

Competitor location based social network Whrrl in the US has also looked to link a customers physical location with a brand through its Society Rewards programme.  Working with US petrol retailer Murphy USA, if a customer checks-in at any of their 1,100 locations they will immeadiately be in with a chance to win up to $50 of free fuel.

While at a basic level this programme is simply a sales promotion mechanic, where it starts to get clever is that the more a customer checks-in - and others act on their recommendations - the higher levels they achieve, providing additional opportunities to earn.  In essence, the more a customer interacts with a brand, the more they get back.  Whrrl describes this by saying:-

Whrrl’s Society Rewards is based on a person’s ability to inspire friends to try new ideas at real-world places. Users receive additional points when others “Want To” try that idea, actually do try the idea or pass on the recommendation to their friends. Users also earn points by getting others to join the Society and by checking in at qualifying locations.

These are just a few examples of brands creating pointless loyalty programmes which recognise, reward and engage their customers.

When thinking loyalty, don't just think points - there are many more creative ways to interact and engage with customers.

However points can provide a strong motivator, allowing customers to easily see what is expected and helping to shape ongoing behaviours - utilising any of these ideas as well as points will simply create even deeper engagement and make your currency that much more rewarding.

Either way it's a win-win.

Social CRM - evolution or revolution?

CRM is going Social. But isn't Social CRM just CRM done across social networks?

[pause] [wait for the flames]

The answer if you listen to the promoters of S-CRM is (quite vehemently) no, Social CRM is not a channel. It is not about using social networks to execute standard CRM practices.

In fact, in an interesting blog post by Wim Rampen, he makes some really excellent points about why Social CRM is simply not a channel extension of CRM - another way to speak customers - and instead has many unique properties that make it a more interactive, two way dialogue.

Whilst I get all of that - and largely agree, I guess my problem isn't with the Social aspect of S-CRM, it's with the CRM aspect.

If marketing started out as a way of focusing on the benefit the product provided, rather than on the product itself (so called Marketing Myopia) then CRM was a step forward again, focusing instead on the customer that was receiving the benefit and not just on the benefit itself. All customers weren't equal and so knowing which product to sell, what benefits to highlight, at what quantity and at what price became the mantra.

The buzz words were all about personalisation or 1 to 1 marketing - delivering the right message, to the right person, at the right time.

If only we could anticipate what you wanted to buy and nip in there quickly enough on a channel you were likely to read then we'd make a sale. You'd be happy as you got something you wanted and we'd be happy as we had sold it to you.

I think times are moving on though and if the focus on the product rather than the benefit was essentially Marketing Myopia - a blinkered view of the business a company was in - then focusing on the customer is potentially another blinkered view - almost a Social Myopia - in that it assumes that customers fit into a single neat box. There may be many different boxes, but each customer fits into each box.

This however is just not true and Will makes a very good point in his blog when he says:-

If there is one thing we (should) learn from emergent on-line communities it is that people join these communities to perform a certain job. This can be a social job, functional job or emotional jobs, mostly formed around a shared interest. It is these jobs & interests that bond the people in a community.

What this suggests (and it seems obvious really) is that it is not just about a customer segment, but almost customer personalities - or customer communities as Will defines them.

The problem with this thinking though is that if you begin to segment customers not just by social-demographic measures or exhibited behaviours but instead by community, a customer no longer fits into a neat box. I may be part of many communities - whether they're based around a passion like football, an interest like gardening or a function like my job. Even more complicated, these communities or personalities may vary by time.

My needs when doing the weekly shopping with a large shopping trolley are very different to when I'm walking the aisles on a Saturday evening with a basket - browsing DVDs, wine and ready cooked meals. I'm the same customer, reading the same newspaper, watching the same TV programmes - but I have different needs, desires and approach.

This is obviously difficult to have a view of in the physical world - but in the online world it is much easier to have a view of a persons different personalities or communities, and to interact with these at the appropriate time.

Will makes another interesting observation in a related blog when he says:-

Social Customer Relationship Management is not about managing the relationships with your Customers, it is (increasingly) about managing the knowledge-flows through the relationships of your Customers. And yes, you as a company maybe part of this eco-system of your Customers’ relationships. But please, don’t put yourself at the center of it.

I agree with this and it is why I think Social CRM is not really the right phrase - it isn't really Customer Relationship Marketing - in the traditional sense of trying to build a direct, single relationship with the customer and may be better phrased Customer Context Marketing - building numerous relationships centred around the relevant communities or personalities for a customer and being part of the conversation, not trying to own the conversation.

Whatever it's called however, it's clear that you can't simply apply existing CRM techniques in a social context. This would be similar to brands which simply "mobilised" their websites to create a mobile site - only to find it wasn't relevant to customers in the mobile context.

In the social space, context is king - it's not just the right message at the right time, but more the right message in the right context. Interestingly, a Forrester report designated 2010 as the era of Social Context based on the evolution of the Social Web with the author of the report quoted as saying:-

"The community will take charge and that's going to happen whether or not marketers or brands participate."

I think it's fair to say this also applies to the evolution of CRM - and communities and social context need to be at the heart of it. As the quote suggests, the community will take charge and if the interaction is not relevant and in context, it will be ignored.

Is it the end for traditional retail (or the beginning)

Ever since the first e-commerce site was launched there has been a perceived battle of online and offline retail.

Online retail with it's apparent advantages of economies of scale, the ability to focus on the niche and the low start-up costs. Offline retail with it's higher costs to serve, reduced range (compare a high street book store with Amazon) and limited catchment areas.

But offline retail has one real advantage - it's physical.

I can see, and touch what i'd like to buy. I can compare products next to each other. I can assess size and appearance. This physical connection is not required across all product categories - which is why traditional music shops have struggled - but for many types of product, seeing it in person can be a necessity.

However, the lines are blurring and its less about offline or online shopping and more about convergence (or multi-channel retailing in retail lingo) - and the mobile device in your pocket is enabling this.

In a recent article in the Wall Street Journal, Forrester's e-commerce analyst Sucharita Mulpuru asked the question

"If somebody buys from a mobile device in your store, is that a Web sale or a store sale?"

This is interesting as for many people, one of the issues of buying in a store is actually the costly sales assistant. Yes I need someone to help sort out the actual purchasing of an item, but I'm less inclined to believe they can help me to select the right product - do they have the knowledge - and that they have my best interests at heart - how are they compensated.

The great thing about the integration of online and offline through the mobile device is that I can stand in front of a product in store and access reviews and pricing information instantly. I don't need a sales assistant to tell me why it's a great product, I have access to hundreds of reviews from real people to tell me if its a great product.

One retailer who gets this is Best Buy.

In a recent video they did for the National Retail Federation's 2010 Retail Innovation & Marketing Conference, they demonstrated their view of mobile integration within offline retail.



One thing I particularly liked in this thought piece from Best Buy is the linking of the physical product to online information. This was something I discussed on this blog back in 2008 and it's great to see a retailer with this on their radar.

Another interesting retailer is Starbucks. They have recently partnered with "new kid on the block", social network FourSquare, which they describe as:-

People use foursquare to "check-in", which is a way of telling us your whereabouts. When you check-in someplace, we'll tell your friends where they can find you and recommend places to go & things to do nearby. People check-in at all kind of places - cafes, bars, restaurants, parks, homes, offices.

So basically I can let FourSquare know where I am at any time, and they will let me know if my friends are there as well, plus it will automatically update my other social networks like Twitter and Facebook with my location. However, FourSquare aren't doing this just for fun as their website goes on to say:-

We all have our local hangouts and foursquare keeps tabs on who's the most loyal of all the regulars. If you've been to a place more than anyone else, you'll become "the mayor"... until someone else comes along and steals your title. It may sound a little silly until you see the list of places that are offering freebies to our mayors - free coffees, free ice-cream, free hotel stays - it pays to be a foursquare loyalist and check-in whenever you go!

And there's the magic.

FourSquare get to know where you go and how often - and this is what Starbucks is buying into.

They have partnered with FourSquare to develop a reward programme which recognises people for frequent visits. The rewards at this time are simply a "Barista Badge" (badges are a big thing on FourSquare), but this is just the beginning. Speaking in the New York times Bits blog, Chris Bruzzo, Vice President for Brand, Content and Online at Starbucks says:-

“It’s where the intersection between digital and physical starts to get interesting. Starbucks loves that, because we’re always looking for that intersection, which we think is the evolution of social networks.”

I think this is a very interesting development - whilst it may be the evolution of social networks I think it's actually the evolution of retail.

This "intersection between digital and physical" is all about enabling and tracking customer interactions. Regular readers of this blog will know I've spoken about recognising and rewarding this interaction before - and this is what Starbucks are doing.

In some senses the interaction is more important than the transaction as the interaction is further back in the buying process - if you can get someone to interact with you more often you have a better chance of converting this into a transaction - a sale.

The forward thinking retailers are recognising this and also recognising that traditional retail loyalty solutions are in the most part reactive - rewarding a decision that has already been made.

Of course there is a hope that the loyalty programme influenced this decision, but retailers like Starbucks and Best Buy are also ensuring that their loyalty initiatives are working harder and smarter - engaging customers before the purchase - and this is the traditional space for more mass above the line marketing; another area which is seeing a convergence - this time between above the line and below the line.

To me this is the real future of retail and retail loyalty.

Not only the convergence of channels but also the convergence of marketing. Engaging, recognising and rewarding customers across channels - before they purchase - before they are even a customer.

This isn't the end of traditional retail - it looks to me like it's just moved up a gear.

[Image credit Physorg]

First Direct – Is being the listening bank enough?

First Directs roots come from the Midland Bank – at one time the largest bank in the world and one with its roots in my home town of Birmingham.

As a lad I remember the slogan they used which was “The Listening Bank” – and it would seem their young protégée First Direct is doing this in spades.

They listen.

They listen to their customers feedback – and it’s good – as one of the most recommended banks they rightly promote this to anyone else who will listen.

Basking in their reflective glory – they listen and then playback what they have heard. As a First Direct customer I know first hand that this is true – I’ve recommended them.

However me saying this is called advocacy – First Direct saying this can simply become tiresome.

We know they’re great, we know people think they’re great – but telling me isn’t great – show me.

Their latest offering called Talking Point, part of First Direct Live extends this listening – now customers can post their thoughts about the bank on topics from “What do you think about the bank” to “What makes you happy”.

And the customers have responded with the good, the bad and the ugly.

The Good:-

Mandagod says “I love you First Direct – I’ve been with you almost from when you started […]”

The Bad:-

Paul from Sheffield says “Really really annoyed with fd for the first time ever. Have had a Visa Debit card foisted on me to replace maestro. Don’t want. Don’t like. No consultation. A retrograde step.”

The Ugly:-

Ripped off says – “Used to love you. Moved my mortgage to you – […]you don’t pass on rate cuts - I will be leaving as soon as I can as I feel cheated by you – your staff are lovely”

What is notably absent however is any kind of response – I can almost see the tumble weed rolling on by. I don’t want you to just listen, I want a dialogue.

Listening is good.

Telling us you’re listening is good.

Telling us what people think of you is good.

Actually showing us how you responded would make you great.

Actions speak louder than words.

The social value of detractors

I found an interesting presentation last week that I happened to stumble across while reading another blog. This presentation was from Masterfoods and looked at their internal employee networks – who knew who – to see how information and ideas flowed, with a specific focus on the R&D efforts. Now this in itself is interesting because although it has been around for a while, not many companies truly look at the value of their employees and how to unlock individual subject matter experts for the greater good of the organisation. As expected within the document, it identified a few key individuals who essentially channel information around the organisation – from a consumer point of view these would be the Influencers or as Gladwell puts it – the Connectors – the people who have the relationships and move key information and ideas.

The reason I thought this was interesting was because they actually highlighted a negative aspect to this – these people essentially had the power not just to move good ideas across the organisation but also to prevent good ideas from moving. From their position they could decide what was good and what was bad and this opinion may be biased based on what they thought was the right thing and their experience. This potential suppressing of ideas was highlighted as a risk – termed network "domination" - with the recommendation to break these silos by creating new connections.

This got me thinking about whether the same thing could be happening within consumer social networks. We all know about the Net Promoter Score where Promoters (people who would recommend you to a friend) are measured against Detractors (people who wouldn't) to arrive at a score that measures the relative loyalty value of an organisation. However, after a brand has this score what do they do with it. Best practice suggests they look for differences between branches, regions, etc. to understand what may be contributing to any differences with a view to creating more Promoters – all at an aggregate level – but what about the individual customers themselves? Obviously Detractors are themselves not satisfied and this is something to be addressed at an individual level - but what if I knew which other customers these detractors were connected to and more importantly, what if I knew WHICH of these detractors could be considered an "Influencer" – albeit a negative one. All of a sudden these detractors become more powerful – potentially dominating their social network and creating more detractors.

Taking this thought on – if I knew who the socially connected detractors were or could see someone who had had a bad experience and changed from a promoter to a detractor, wouldn't I want to speak with their friends to reassure them about my brand – to try and diffuse any negative feedback or indeed to try and connect them with a promoter instead within their network? If as is estimated, 1 in 10 people can be classed as influencers then this is 90% of my customer base which is swayed by the opinion of a minority – surely this makes it worth trying to understand a customers social connections further.

What would it take to do this though? Well we all think we're very clever in loyalty marketing (well some of the time) – and that data is king. We know the customer individually, we know what they have bought and can predict (or at least try to) when they will buy again. Increasingly with NPS we also know if they like us – or not. What we don't know in most cases is who they know – most programmes don't track, collect or facilitate members connecting with each other. Even where a programme does provide ways to connect people through "send to a friend" or "member get member" promotions, this information is typically not used or even retained.

I think this is increasingly a big mistake – the more we can understand a customers relationships and their opinion of a brand the more we can understand the power they may exert. I've yet to see anyone proactively engage with detractors and their social network – but looking at the work done with Masterfoods this could potentially reap real dividends.

Retailers Need to Start Thinking Imaginatively

I was reading an interesting article today on retailers and their use of mobile within the buying process. I was quite surprised when it said that 40% of those surveyed said they already had an information-led mobile internet site or were considering building one – I'm guessing that there were more within that 40% that are considering it versus those doing it as the mobile channel is not something I've experienced in a major way from online retailers or any retailers for that matter. 30% of retailers questioned felt the use of mobile was unimportant and almost 50% didn't feel that the success of mobile and e-commerce are interlinked.

The article went on to say that the "survey showed the use of mobile among retailers is high but the benefits of having m-commerce capabilities are yet to be recognised"

Theodore Levitt said in his article "Marketing Myopia - Harvard Business Review" in 1960 that "Management must think of itself not as producing products but as providing customer value. It must push this idea into every nook and cranny of the organisation otherwise the company will be merely a series of pigeonholed parts, with no consolidating sense of purpose or direction". That statement is probably truer today than at any time before as customers are dealing with retailers across many more channels and are expecting the same level of service and recognition regardless. The buzz words in retail are "Multi-Channel Retailing" – having one cohesive customer centric experience across all channels rather than pigeonholed parts.

For many retailers though this is still a pipe dream – their e-commerce solution is completely separate to their EPOS solution, vouchers issued in one can't be redeemed in the other; customers (and hence purchases) in the online channel are known, customers in the offline channel are not. For some retailers there is almost a rivalry between online and offline with no real cross promotion of either channel, acting as if customers are either on or offline – but never both.

Retail loyalty programmes can help bridge the gap in this regard, acting as a centralised solution to bring together customers and transactions from all channels – providing a single customer view and a solution for creating and delivering relevant promotions back to all channels whether these are via email, SMS, direct mail or POS receipt. Even here though many retailers get it wrong – running a loyalty solution only for offline and ignoring online, or further muddying the water by running two loyalty solutions, one traditional and one via their store/credit card product – never the twain shall they meet.

In an ideal scenario I should be able to walk into a retailer and seeing something I like, text the product code to an SMS short code to get real time product reviews – if I like it I can order it there and then to be delivered, or pick it up and take it to the till. At the till I should be able to swipe my card and have the cashier know who I am, what I like to purchase and make a recommendation for something else I may like that is coming in next week. On my till receipt is an offer for something that I would like which I can go online to purchase. Going online I can see a history of all my purchases across all channels and can see items I've viewed before whether online or in-store via my mobile requests. If I choose I can post these to my social network profile so that my friends can see what I've purchased and react to this, comment on it and if they like it they can purchase it (and I may even earn some commission on the referral).

None of that is particularly hard to implement, but it's about putting the customer at the heart of the buying process.

Theodore Levitt went on to say that "the belief that profits are assured by an expanding and more affluent population is dear to the heart of every industry. If consumers are multiplying and also buying more of your product or service, you can face the future with considerably more comfort than if the market were shrinking. An expanding market keeps the [company] from having to think very hard or imaginatively."

Well we're not in an expanding market anymore – so retailers who continue to have expanding profits will probably be those who are thinking imaginatively and putting the customer at the heart of their organisation.