Monday, November 9, 2009

The World's Most Effective Marketing

The digital age has changed the way we shop forever; equally as transformational as the onset of the automobile, and has created new ways in which we differentiate products and services. In a 2008 survey from Penn, Schoen & Berland, some 70% of Americans say they consult product reviews or consumer ratings before making a purchase. The internet has quickly become the world's most influential research laboratory.

Consumers now scour the internet looking for reviews or consumer surveys that might help sway them to purchase a particular product or service. In a world where we have over 10 million different consumer products on the market in the US alone, our emotional and impulsive brains need help in making more rational and qualitative purchasing decisions. In the past, the traditional model was to run an ad on television, and pitch to the emotional branch of your brain, and attempt to back it up with a slogan that you could relate to.

Two extraordinary examples of this new "information-based consumer validation" include Amazon and Trip Advisor. introduced their legendary consumer product review ratings system in 1995, and has since created the world-class consumer ratings powerhouse that includes over 5 million unique consumer posts that includes millions of different comments and ratings. Paul Ryder, VP of Consumer Electronics at Amazon, commented that "the biggest change is the amount of research consumers are doing before they leave their houses," and this affects all retailers, online and offline. When I shop at Amazon, I always read two or three of the consumer reviews and utilize the star-rankings when researching new products, to help validate my purchasing decision. In 1999, Amazon launched its "Wish List" service that allows a consumer to list items that they would like to receive as a gift. Friends and relatives can check the list around gift-giving times, and have them shipped directly to the recipient with a nice red bow and a personalized card. This sure makes holiday shopping a lot easier for a teenager! In 2006, Amazon launched individual discussion hubs, centered around product types and brands. They have effectively created the world's largest, self-contained consumer research database, which is continuing to evolve.

These guys get it and customers love it. In the latest quarter ending September 30, 2009, Amazon reported total revenue increased 28% from a year ago, cash flow increased 77% and net income advanced 68%. Nothing short of phenomenal results, especially during one of the harshest economic contractions since the 1930's.

Trip Advisor is another online community service I use for anything travel-related. I always use them when developing travel plans. It's a lot more believable to read individual consumer posts and hear about real-world experiences when selecting a hotel, airline or vacation location. You can relate to what people are saying and how they rank different aspects of their stay such as service, cleanliness, staff, value, price, etc. And what I like the best, is that it's not 100% positive feedback. It's the not-so-positive experiences that I want to hear about. In aggregate, these consumer posts add up to a validation in an increasingly fragmented and complex purchasing process. I recently traveled to Ireland and discovered that on our first night, our B&B had closed. We had made our reservation only 30 days prior to our trip. We were shocked (and exhausted from being up for 36 hours)! The first thing I did was to post the experience on Trip Advisor, to warn other travelers who were booked at the B&B and recommended a nice nearby Inn, where the manager went out of his way to find us a quiet room, even though they were booked solid. He and his Inn got a five star recommendation from us.

Retailers can leverage this new-economy consumer behavior by creating forums for consumers to discuss your products or services. I read recently that one referral is equal to running a television ad 200 times, from an ROI perspective. Encourage customers to promote your products by designing feedback and ratings forums on your website or creating a Facebook Fan page. These concepts require unparalleled confidence in your products or services, as consumers can post the good, bad and the ugly. Keep in mind, it's OK to have a couple of comments that might be constructive, which helps you develop a better product and allows other potential customers to learn about the product through another consumers' experience.

Another useful tool that I've encountered is the launch of Facebook Connect, which allows a website to include a "window" to Facebook friends. When a shopper is on your website, they can "poll" their Facebook friends for affirmation on a product they are considering purchasing. This is done through a link, so your potential customer never leaves your site.

Another more conservative concept is the use of testimonials. Though not as effective as unedited forum posts and ratings, testimonials bring validation and integrity to your product. You can post testimonials on your website (keep them fresh and change weekly), incorporate them in traditional broadcast media (branding), monthly e-newsletters, email blasts, online advertising, and as a tool to boost morale with your own troops.

One technique that I've used successfully is to encourage customers to take a short online survey for a free coupon. We aggregated the results each month and gained lots of useful information, across many department levels. Your customers want to be heard and you need to listen carefully to what they are saying.

I firmly believe that the most effective marketing techniques utilize some form of having the customer tell your story through their own personal experience. Consumers are more skeptical of traditional advertising than ever before, so you need to be truthful, honest and relevant to your target audience. Having your customers become your cheerleader is something everyone should incorporate into a fully integrated marketing plan.

Enjoy the holidays and empower your customers to help drive sales!

Bryan Kipp is President of CMO Retail Solutions, LLC. He is focused on providing interim-CMO services and ROI-centric marketing programs to retail clients. Visit


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