Social media is so last year. Make way for social commerce.

Social commerce is the next generation of social media / marketing as it relates to growing a business. It’s traditionally defined as the monetization of social media and its unique ability to influence virally – to drive online / e-commerce sales activity. I’d also introduce offline sales activity to the definition as well, since over half of offline retail sales are directly influenced by online research - prior to making a purchase.

The term social commerce was coined by Yahoo, way back in 2005, to describe a new set of online collaborative tools that it was developing, such as shared pick lists, user ratings and reviews and other user-generated content relating to online products and services. It has quickly evolved at a velocity that requires all B2C organizations to take note and to re-allocate social media resources to encompass and grow their social commerce component. Bazaarvoice is an organization that has been extremely successful in assisting clients in leveraging user-generated content to increase online conversions and grow e-commerce sales. It recognized, early on, the direct correlation between increasing sales conversion rates and the quality of guest reviews.

I am a firm believer in the increasing relevance of social commerce and how it can help B2C organizations grow revenue more cost-effectively than traditional media channels and social media applications. What makes social commerce so appealing to me is that it’s super-efficient at targeting current and potentially new customers that have a high affinity to purchase your product or service; it’s extremely cost-effective; it’s very trustworthy for consumers and it has extraordinary viral / referral potential. Most importantly, it directly influences every potential customer who visits your website or offline store; from those who matter most - your cheerleaders (guests, associates, vendors and 3rd party influencers such as bloggers, media and article authors). I like to call these superstars your key influencers. They can have a dramatic effect on your top-line - if given the opportunity, tools and encouragement to take the time to help others make good purchasing decisions.

Trust, believability and social connectivity become front and center in social commerce since brands, products and services are rated and voted for by real people that have direct experience using your product. You have a good, better and best product assortment and your best products will have 4 or 5-star ratings. Your opportunity here is to make sure you buy more of these and less of your lower-rated products, since you will be converting your best at a much higher ratio. Concurrently, you would want to reduce or eliminate any 1-star or 2-star products that are not only being rated poorly by your guests, but is also slowly and painfully damaging your brand. A referral, recommendation or a 5-star rating is infinitely more valuable than a traditional advertisement where the message is distributed through more traditional “push" advertising channels - i.e. TV, radio, newspaper or other corporate-generated commentary.

Social commerce also helps to increase overall business productivity by significantly reducing returns, providing better product selling forecasting, inventory control; reducing recurring marketing and advertising expense, increasing guest loyalty, improving customer acquisition rates and growing brand equity. According to the National Retail Federation, around 40% of all gift recipients return at least one item each year. Amazon recently filed a patent application regarding new technology which, they claim, could significantly reduce gift returns using “screening” methods that would require an approval from a gift recipient from certain gift givers (think plaid shirts and ties) - and give them the opportunity to convert the unwanted gift to a credit or gift card before it ships. Interesting concept, though I think there’s going to be significant controversy with this one, and understandably so.

Below are some examples of social commerce channels that are increasingly being used today –

• Customer product ratings and reviews. Between 60-70% of us check out and use online consumer product reviews prior to making a purchase. Online mega-retailer Amazon is the king of mastering customer ratings and reviews to increase conversions and reducing returns. Trip Advisor is another terrific example from the travel category. Bazaarvoice and Power Reviews are the leaders in this channel.

• User recommendations and referrals. 90% of us trust recommendations from people we know. 70% of us trust product recommendations - from people we don't know. Consumer recommendation have become today's most credible form of advertising.

• Pick-Lists and Wish-Lists. These facilitate and make gift-giving infinitely more efficient and allow givers and recipients to connect though social channels. These tools are highly interactive and are proven winners in gaining loyalty and reducing returns.

• Social Shopping. Crowdsourcing wisdom reigns with social shopping. The success of group shopping concepts such as Groupon and Social Living are examples of how shopping has become more social. In this case, you are joining other shoppers in purchasing a great online deal. Groupon emails a “deal of the day” to its subscriber list and sets a minimum number of shoppers needed to purchase the deal before it is offered. It’s a great way for guests to get half off deals to local offline businesses and it’s a terrific customer acquisition tool for local businesses. A retail client of mine with a single retail location generated 1,000 Groupon purchases within 6 hours and immediately expanded their customer base by 20% and experienced an incremental 40% sales lift over and above the groupon amount. Social shopping sites also serve as an aggregator for like-minded shoppers. ShopSocially, Kaboodle and StyleFeeder are two examples of sites that focus on fashion-oriented conversations. ShopSocially is a site that promotes social shopping directly through individual Facebook accounts and can ask questions, rate products and shopping experiences in real time. Growing online marketplaces such as Shoply and Facebook-specific Payvment are also good examples of this growing channel.

• Forums and Communities. Forums help to create a community. It's your opportunity to listen to what customers are talking about regarding your brand, products and shopping experience. Trip Advisor is the best example of a comprehensive travel community, where travelers post their experiences, photos and referrals of airlines, hotels, destinations and activities and rate the overall experience. Trip Advisor is owned by Expedia and has over 40 million monthly visitors to their site. If you’re looking for travel information, Trip Advisor should be your first stop. Amazon also has very unique shopping forums and communities that highlight specific recommendations and experiences.

• Social Media Optimization. SMO is simply converting social media information into website clicks or offline transactions. SMO is one of two methods of attracting visitors to your website. The other is search engine optimization (SEO). SMO tools can be added to social content such as RSS feeds, share and comment buttons, keyword hyper-text links, rating and review options and file/video sharing. Blogging, article generation, blog commentaries and postings also serve to improve SMO productivity. Viral marketing, referral and sharing options such as bookmarking, photo sharing, re-tweeting and Facebook sharing offer additional SMO opportunities. Lastly, online reputational management (ORM) is a channel with growing importance within SMO – organizations should be monitoring, learning and reacting to social and web chatter regarding their brands. There a several online tools to help you monitor web chatter. Eastman Kodak took this idea one step further and recently created a new senior-level position – Chief Listening Officer, with the purpose of monitoring, learning and reacting to the brand’s online and social chatter.

• Real-time Question and Answer, live-chat and best-in-class customer service. Simple stuff here. Don’t make it frustrating for customers to shop or get answers. It’s been proven many times over that real-time chat modules can reduce direct customer support costs, improve sales conversions and reduce returns. If you force a customer to leave your site without an answer, chances are greater than 50% that they wont' return to complete their original transaction.

• User generated-content such as stories, testimonials, contests and experiences. Customers who write reviews or submit user-generated content spend more, and users who read them convert at a higher ratio. The higher the quality of your user-generated content, the higher you will convert. It’s real, it’s believable and people tend to trust peers more than corporate copywriters. Zale Corporation launched a campaign in 2009 to encourage customers to share their “Love Stories” and were included in multiple channels including their web home page, targeted emails, contests and social networks. It’s an extraordinary way to grow your brand awareness and leverage social commentary with traditional marketing channels such as TV, video and radio.

Here are some amazing social commerce statistics that were compiled by Bazaarvoice, a leading player in the social commerce sphere -

- The power of social commerce can be summarized from a recent Harris Interactive poll (June, 2010). When asked what sources “influenced your decision to use or not use a particular company, brand or product” – 71% claim reviews from family members or friends exert a “great deal” or “fair amount” of influence.

- Not surprisingly, consumer reviews are significantly more trusted vs. manufacturer product descriptions – nearly 12 times more, according to an eMarketer survey from February, 2010.

- More than 90% of online shoppers trust recommendations from people they know, and 70% trust the opinions of unknown users (eConsultancy, July, 2009).

- The average consumer mentions specific brands over 90 times per week in conversations with friends, family and co-workers (Keller Fay, WOMMA, 2010).

- 53% of Twitterers recommend companies and/or products in their Tweets, with 48% of them actually making a purchase (ROI Research for Performance, June, 2010).

- 44% of moms use social media for brand/product recommendations. 73% trust online community recommendations (BabyCenter, LLC, July 2009).

- 67% of shoppers spend more online after recommendations from an online community of friends (Internet Retailer September, 2009).

- Consumers say that word of mouth is still the number one influence in their electronics (43.7%) and apparel (33.6%) purchases (RAMA / BIGResearch December, 2009).

- Recommendations from family and friends trump all other consumer touch-points when it comes to influencing purchases (ZenithOptimedia Ad Age, April, 2008).

- 61% of people rely on user reviews for product information or research before a buying decision is made(Razorfish, 2008).

- 83% of all holiday shoppers are influenced by customer reviews (ChannelAdvisor “Consumer Shopping Habits Survey).

- High product ratings will increase the likelihood of purchase for 55% of consumers (eConsultancy, July 2010).

- By 2014, 53% of the total retail sales (online and offline) will be influenced by the web, as consumers increasingly use the internet to research products before purchasing (Forrester, March 2010).

- Luxury institute research revealed that, of the customers who shop for high-end merchandise online, 78% did so in order to find the best price, while 77% did so to compare brands (BrandWeek, January 2010).

- The Trust in Advertising survey of 26,000+ found that consumer recommendations are the most credible form of advertising (Social Media Marketing: The Right Strategy for Tough Economic Times” Awareness, 2008).

- Some 70% of Americans say they consult product reviews or consumer ratings prior to purchasing, according to an October, 2008 survey by Penn, Schoen & Berland Associates (BusinessWeek, October 2009).

- Customer reviews are the most effective social tactic for driving sales, followed by Q&A features and Facebook Fan pages with frequent and relevant posts (Etailing survey of 117 companies, September 2009).

- Brands with the highest “social media activity” (including reviews) increased revenues by as much as 18% (Media Post News, July 2009).

- 9% of companies using Web 2.0 have gained measurable business benefits (McKinsey Quarterly, September 2009).

- Customer Stories campaign drove 13,000 new prospects (La-Z-Boy, 2009).

- Products with syndicated reviews convert 26% higher (Bazaarvoice Case Study, 2009).

- Shoppers who browsed the sites new “Top Rated Products” page, which featured the sites highest rated products, had a 59% higher conversion rate than the site average and spent 16% more per order than other browsers of products (Bass Pro Shops, June 2008).

- Marketing Experiments tested product conversions with and without product ratings by customers. Conversions nearly doubled from .44% to 1.04% after the same product displayed a five star rating (Marketing Experiments Journal, July, 2007).

- 25% of search results for the world’s 20 largest brands are links to user-generated content (Socialnomics, August, 2009).

- Consumers were willing to pay between 20 and 99% more for a 5-star rated product than for a 4-star rated product depending on the product category (ComScore/Kelsey, October 2007).

- By 2013, nearly 155 million US internet users will consume some form of user-created content, up from almost 116 million in 2008 (eMarketer, 2009).

- Over half (51%) of consumers are using the internet prior to making an offline purchase, educating themselves on the best deals available (VerdictResearch, May 2009).

- Online consumers are becoming precision shoppers. For every $1 spent online, $5.77 is influenced in-store (Macy’s CEO, 2009).

Finally, I've included some real-world social commerce applications that have proved extremely successful and might give you some ideas about your business –

•  1-800-Flowers set up the first online retail store embedded into Facebook called “Facebook Shoplet.” Shopping without leaving Facebook. Talk about monetization!

• Mattel added a “ShopTogether” social shopping feature to their website. It allows users to invite friends to shop online together in real-time and chat, compare and shop together in a very social, real-time online experience.

•  In 2009, the iconic luxury brand Burberry launched a website called “Art of the Trench” that featured the history, looks and legend of the Burberry trench coat. The site solicited and posted user-generated content and included voting and product ratings from viewers. The unique concept has been incredibly successful and the site itself has generated over 7 million visits from late 2009 to mid-2010 and has firmly vaulted Burberry into a leading player in brand-positioning Web 2.0.

• BlendTec created a “Will it blend” viral campaign that focused on how its blenders could stand up to tough blending jobs. They had some fun with it, generated low-cost videos and asked people to send in their blending video stories. Now you can watch their CEO blending odd things like I-Phones and Barbie Dolls to show how durable the product is. The campaign was, and still is, hugely successful in repositioning the brand - with sales increasing over 700% over several years; launching a YouTube following of over 200,000 and generating some awards along the way.

• Carrefour, the world’s second largest retail chain recently offered a “FaceShopping” application featuring flash deals to their Facebook fans through a real-time deal feed.

• Dell has really jumped on board with a couple of successful social shopping applications. They offered special deals through their “deal feed” on Twitter – netting them around $7 million in sales. They also launched “Dell Swarm” – a group-buy concept that rewards users with better deals when more people participate and purchase. It follows in the heels of the super-successful group shopping concept, Groupon.

• Facebook connect is another rising star in social commerce applications, where shoppers can log into their Facebook accounts through a window on an e-commerce site and chat about a purchase in real-time and onsite. Any opportunity to keep a customer on your website is a good investment.

• PETCO realized a 5X increase in email click-through rates by including relevant ratings and reviews content in the campaign promotion (Bazaarvoice / PETCO, June 2007).

• Top rated product email drive 46% higher revenue per email in A/B test (Bazaarvoice / GolfSmith, June 2007). Highly targeted, segmented and relevant offers can dramatically improve your email conversion rates.

• I like Best Buy's IdeaX - Idea Exchange forum, which is the online equivalent of a customer suggestion box that encourage sharing, voting and discussing new ideas. I really like the voting aspect - where people can vote for the best suggestions. I also think their Twitter social connectivity platform - Twelpforce, which serves as an online community of tech pro's that provide answers to customer tech-related questions - is a solid social commerce application. As of January 2011, they had a following of over 33,000. It's free and it helps to develop a stronger relationship between Best Buy and their customers. Gina Debogovich, Best Buy Community Manager commented, "having the Twelpforce tweets exposed directly into the community really helps us to continue the conversation, helping more than just those asking the original technical question." Keep in mind, as with any open forum, you need to be prepared for all kinds of comments, positive and negative. For those negative comments, it's a terrific branding opportunity to back up your passion for taking care of every customer and making it right - show your social connections that you care and follow up within 24 hours.

• Zappos.com recently launched its "product showdown" - where two products enter and one leaves victorious. You can create your own competition between two products and see which one wins. Winners are rated on a scale of 1 - 5 and comments help to gain color on individual user experiences. What a great way to engage with customers on products they are passionate about, and not so passionate about!

• Sears has been extremely interesting to watch lately. They’ve become rather innovative when it comes to social shopping and growing their e-commerce side of the equation. Take a look at their ShopYourWay program, which gives customers lots of options when it comes to making a purchase on Sears.com. They offer tons of mobile applications such as Wishbook mobile and I-phone apps, “bumpin Santas” holiday app (very cute), text alerts, etc. I also like their Sears Marketplace concept, which is their first attempt to branch into 3rd party re-selling. They’ll take your inventory and help you sell your wares or they can drive clicks to your own website – for a fee of course. Their “ready in five” promotion guarantees that if you pick up your online purchase in-store, you’ll get it within five minutes or you’ll get a $5 coupon. They also offer personal shoppers, live phone and chat support, home or in-store delivery options and a gaggle of other services. For the week ending November 27th (Thanksgiving week), Sears/Kmart ranked 3rd for multi-channel retail website traffic in the US.

So there you have it - social commerce is here to stay and it’s quickly changing the way we shop and market our goods and services. I think it’s a good thing for all of us, as it encourages competition in the marketplace, weeds out marginal products and players and it gives consumers the opportunity to reap rewards from the wisdom of crowds in an effort to making more educated decisions. Embrace it, have fun with it and have a profitable and happy 2011.

Grow your website traffic with these key concepts

If you’re a small to medium-sized business looking to develop or improve your existing website, your primary mission will be driving traffic to your website. This can be a daunting and formidable challenge given time, financial and skill limitations for most small business entrepreneurs. Growing web traffic is a highly competitive game, and you can’t expect quick and easy results without a dedicated investment in time, financial resources, patience, skill and drive.

What I recommend for my clients is to think about your website in terms of a virtual window that customers will use to do business with you. It needs as much attention and resource allocation (time, financial and people), as brick-and-mortar storefronts, and possibly more, depending on your particular business model.

Once you develop your site and it is up and running, you need to focus on keeping the site competitive, maintaining relevance to your target audience, ensuring it is easy to find on the web, and perform some level of consistent marketing for your site, which can include many free techniques such as SEO (search engine optimization), blogging, social marketing optimization, email and newsletter marketing, creating inbound links to your site and fully utilizing Google Local and Analytics services. Paid marketing can include SEO (if you hire an expert to do it), SEM (search engine marketing), PPC (pay per clicks), targeted advertising on Facebook, issuing press releases, creating affiliate marketing partnerships and BTM (behavioral targeting marketing.)

I’m going to share some of the most effective concepts that will help you increase your website traffic in 2010. You have three choices on how to handle development and execution. You can tackle it yourself, hire an external specialist or hire a full-time person or team to execute on your behalf. Your decision needs to be based on your resource limitations (time, financial and skill) and all three have pros and cons, which I’ll cover in a later blog.

Search Engine Optimization

SEO is defined as the process of optimizing the pages on your website to be more visible to search engine mapping, thus increasing your chances of appearing higher up on the search results page. Research indicates that only a very small percentage of people move past the first page of search results, so you must be on the first page to generate meaningful traffic.

SEO involves identifying and incorporating relevant keywords into your website text. Keep in mind that you want to think like a customer, and how they would search for you using a search engine. If you’re a local business, you can improve your results by geo-targeting. For example, if you operate a website that sells books in Portland, you want to include “books Portland” or “books 97219” or “books Oregon” in your keyword strategy. Avoid single keywords when possible, as they are extremely competitive, and you should focus on as many keywords with three to four words as possible, to optimize your results.

Also, keep keyword density in mind too. A good rule of thumb is to include your primary and secondary keywords in about 5% of your text per page. If you over-use keywords, most search engines will flag your site as a SPAM originator. Ensure your keywords are included in your URL, meta tags, headlines, second-tier text and body text. Include as much internal hypertext linking as possible to increase your SEO stature.

Another SEO technique is to add as many back-links, or in-bound links, as possible that directs to your site. You can accomplish this by linking with social marketing sites such as Facebook, affiliate link sites such as LinkShare or partner sites that are willing to include a link on their site. Keep in mind, that quality vs. quantity is your key to success here. You can start with including your business profile on professional directory sites such as BIzNik or MerchantCircle. Another proven link-building technique is to take the time to review and read relevant blogs and articles and leave comments and a back-link to your site. These link-building techniques will increase your visibility with the search engine crawlers.

Once you have completed these steps, make sure that you submit your website data to the top four search engines. According to ComScore search market metrics, as of December 2009, Google owned 66% of the search market, followed by Yahoo with 17%, (Microsoft) Bing 11% and Ask at 4%. These four search engines own 98% of all search.


Website Content & Marketing

Content is King on the web. If you don’t have relevant and frequently updated content, you won’t be able to increase your website traffic. You want to become the expert in your field or product segment and improve your communication techniques. Listed below are some suggestions to improve content, become recognized by your guests as an expert in your field and keep information flowing to keep your potential audience interested enough to come back to your site –

- Issue press releases (include keyword hypertext links to your site). Terrific national brand exposure and increased opportunity for new in-bound link traffic.

- Email marketing – leverage your guest database with relevant offers and information to your best guests. Make sure you have a place on your website to gather opt-in email addresses. Find the right frequency of email messaging – be careful to not email too frequently or you’ll annoy your potential guests.

- Blogging – great prospecting tool and keeps you relevant within your business segment. Include a link to your blogs on your home page.

- Electronic newsletter and articles – Great way to keep your guests informed and interested in your business. You can include links to your partner sites, and hopefully they will do the same in return.

- Social Bookmarking – a bookmark is a stored web location or URL that can be accessed quickly and conveniently. Bookmarks can become social or viral when bookmark links are posted on popular web content sites such as dig.com or del.icio.us. You can post a bookmark on these sites for referral traffic and, as an added bonus, many search engines will count these links as back-links, which will help improve your organic rankings.

- Most importantly, update your website to keep content fresh and relevant. Update every three to six months.

Affiliate Marketing

Create new markets for your business, almost immediately. Affiliate marketing is simply paying others to help you sell your product. In return, you pay a commission to the entity that delivered the sale. Affiliate marketing has grown into a huge ancillary online business segment.

Here’s how it works – you solicit web partners that are interested in selling your product on their site, either with direct product listings or through a link (back to your website). Web tracking technology (cookies) is used to track your movements from the affiliate site to your site, so that the appropriate affiliate partners can be compensated appropriately. The best example of product affiliate marketing is with Amazon.com. They have mastered the business of selling other people’s products on their website (and make a profit). Once your products are listed, linked and searchable on Amazon.com, you’ll enjoy seeing new customers entering through this new window. The purchase is made through your website and Amazon takes a percentage of the sale as their commission.

Another affiliate technique is to drive traffic to your website through online coupons or links that are listed on partner sites, which simply serve as third-party traffic aggregators. Websites such as CouponCabin.com or Coupons.com generates tens of millions of visitors a year and you have the opportunity to be exposed to these visitors when they are ready to make a purchase. These customers are looking for deals, and if you have the right deal, you’ll win using this technique. Again, you pay a percentage of the sale which results from the coupon transaction or link to your site.


Utilizing Google Tools

Google is the absolute king of search and you should allocate most of your attention and resources to improving your Google search rankings. Google also has some terrific tools and free business applications that, surprisingly, aren’t always used. Here’s a summary of some Google applications that can help you increase your website traffic –

Adwords – target messages by relevant keywords. You pay for each click to your website that originated from your target keyword. You can also geo-target your message by nation, state, DMA or city or a custom radius from a target address.

AdSense – generate a new revenue stream from accepting advertising on your website from non-competing and relevant advertisers.

Local Business Center – free business listing and can include address, phone number, map and directions, web URL, blog link, hours of operation, picture or logo, and you can even post a video. When a customer searches for your business name or address, this profile will be at the top of the page.

Analytics – once you set up your account, you can access all kinds of traffic data. You can track daily website visits, unique visits, new visits, geographic source and type of visit (direct, referral or search). All these tools will help you better understand what’s working on your site and more importantly, what’s not and how you can improve your site metrics.

In my next blog, I’ll focus on how to perform social marketing optimization that will increase traffic to your website and help to grow your fan base.

Happy New Year and wishing you success in 2010!

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 www.cmoretailsolutions.com

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. Amazon.com 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 www.cmoretailsolutions.com

Creating a Winning Gift Card Marketing Strategy

Gift card revenue represents an extraordinary opportunity as we approach the holiday season, especially this year when traffic and overall holiday sales are predicted to be somewhat flat to last year's depressed levels. Today, the National Retail Federation unveiled, what I believe is a conservative, yet realistic, prediction for this year's holiday sales. The NRF is predicting a 1% decline from last year's levels to $437.6 billion for the November and December period.

Here are the top 5 reasons that an energized, focused and well executed gift card marketing campaign is essential to every retailer this year:

1) Drives lots of traffic to your retail locations, post-holidays. Most holiday gift cards are redeemed in January and February. On average, the holidays generates as much as 40% of a retailers total annual revenue, so you want to ensure you leverage this traffic to benefit your slower 1st quarter.

2) Improves cash flow immediately. You get the cash now and book the revenue later, when the cards are redeemed. A CFO's dream come true!

3) New customer acquisition. Many gift card redemptions are made by new customers. What a great opportunity to make these cardholders feel welcome. Remember, it costs three times as much to acquire a new customer than to service an existing one. Roll out the red carpet for these new guests!

4) Gift Cards are more profitable. According to a 2007 BigResearch survey, 50.9% of gift card recipients spent "much" more than the face value of the card. In my personal professional experience, it's about 50% more. They also tend to be less price-sensitive. According to a JC Williams Group survey, 40% of gift card recipients paid full price vs. 16% for customers using other forms of payment. Finally, it's estimated that between 10 to 15% of all gift cards are never redeemed, leaving between $10 to $15 billion on the table!

5) It's a terrific incremental sales opportunity, everyday, at a very low cost! Think about it. If you have 200 retail locations and you generate 2 million transactions per year and every associate presents a gift card at the close of each sale, your gift card sales will skyrocket. A simple reminder such as "Thanks for shopping at XXXX today. Would you like to add a XXXX gift card today?" will create extraordinary results and there's no marketing cost to do this.

Big opportunities exist to create new markets for your cards. You need to consider branching out of the traditional model of selling your cards exclusively in-store and on your website. You need new eyeballs to grow your business.

I'd recommend developing programs that reward other businesses and organizations to sell your cards to their members or customers. I'd develop several 3rd party programs to drive incremental gift card sales. There are thousands of shopping websites out there that are in business exclusively to drive traffic to your stores or website. These websites will track clicks-to-transactions and you pay a small percentage of your sales to these aggregators. You only pay for sales that are booked, so there's no upfront, expensive media campaigns to pay for.

Additionally, you need to develop a new 3rd-party retail program too. You can target your cards placement with other non-competing retailers, financial institutions and other organizations using demographics, brand continuity metrics and geography. It's another new market segment for your business. In this case, there are some upfront costs to produce specialized gift cards, but is primarily a pay-per-performance model as well.

Lastly, you need a comprehensive B-to-B (business to business) strategy to win. There are lots of proven methods to develop a successful business campaign. One of the best methods is to get your card in front of business / organization gift card purchasing decision makers. In addition, you should develop a strategy of targeting business reward programs, such as those offered by Capital One or Bank of America. They offer gift cards as reward options to millions of their customers.

Make gift card marketing a priority this season using non-traditional marketing techniques and watch your program sales grow. I'm confident you'll be happy you did.

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 www.cmoretailsolutions.com

New "Gives Back" Retail Marketing Program

Over the past 2 years, I've been busy testing several new retail marketing programs, hoping to find the "holy grail" within a sea of clutter, noise and reduced mass-media effectiveness.

One program that I've tested and implemented was a "Gives Back" cause marketing program that allows my customers to donate to their favorite church, charity, school, or any local or national non-profit organization of their choice, every time they shop at one of my stores.

In late 2007, in my new role as Vice-President of Marketing at S&K Menswear, my primary mission was to drive traffic to our stores and our e-commerce website, acquire new customers and improve our average sale. I needed to break away from the traditional mode of running monthly sale events, that were supported by very expensive TV advertising. This model was no longer working and needed to be changed fast.

The S&K Gives Back program was launched in partnership with Romeo Advertising in August, 2008. First, we developed a special Gives Back website that functioned as the source for enrollment and tracking, customer service assistance, program news and promotional materials. Next, we kicked-off the program at our corporate sales conference, and the feedback from our managers was extremely encouraging. They loved the fact that they now had a tactical marketing tool that they could use to engage each and every customer, and feel great about delivering the message.

The message to our customers was clear and simple; enroll your favorite non-profit, then enroll yourself and enourage as many members as possible to enroll, and every time they shop at S&K, they earn 5% cash for their organization. No member cards, coupons, special codes required.

After 9 months, we had 5,000 organizations enrolled in the program and the program was generating 2.5% of our total sales volume for the company. In addition, the average transaction was 25% higher than the company average, and approximately 50% of these shoppers were new customers.

We had University alumni groups, large church congregations, national charities, local charities, high schools and a host of other groups that participated in the program. We also held special shopping nights for several local groups, which resulted in additional store traffic. Earlier this year, we ended up hosting over 150 local events over a 2 week period.

The real value here is in its organic, grass-roots nature; where word-of-mouth referrals is the driving force behind our success, and we were only paying for sales as they were realized, without expensive, up-front mass media campaigns. We had churches posting messages in their bulletins, universities using their websites and charities distributing emails on behalf of the program.

I especially enjoyed reading the letters and emails from pastors, schools and charities thanking S&K for helping them raise much needed funds. That's what I call a real win-win-win for the retailer, customer and local non-profit groups.

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 www.cmoretailsolutions.com

How to effectively utilize ROI metrics

It amazes me how the word “ROI” can have so many definitions and meaning within a retail organization. Some are familiar with the term, though never consistently utilize it to gain a competitive advantage. Others use it consistently, using metrics that they are familiar and comfortable with. Either way, formal ROI metrics for evaluating marketing effectiveness should be utilized by all retail marketing professionals.

Gone are the days of running expensive, inefficient mass media campaigns that focused on “hope” that customers would come running in to buy your product. If sales were healthy, the marketing team accepted much of the credit for driving sales. If sales were marginal, marketing was the first one to line up at the chopping block. In either case, there were too many variables involved to know what really happened.

Today, it’s all about quantifying each investment opportunity. Every CMO should require his or her managers to perform an ROI analysis on each proposed campaign. The analysis might be different between organizations due to different levels of selling costs, gross margins and whether fixed costs are pro-rated. It’s amazing how many “great” ideas came across my desk, but after performing an ROI analysis, determined it wasn’t financially possible.

I’ve become a big believer in revenue-sharing marketing programs, where we don’t pay unless a sale occurs. Program costs and markdown dollars can be easily projected and budgeted for, and assigned to the correct expense center. I tested a “Gives Back” cause-marketing program recently that provided a 5% donation with every qualified purchase and a fixed percentage operating cost. I signed a six month contract and established a revenue break-even target that I needed to hit, minimally. As the program progressed, we were able to establish trends that indicated whether the program was operating ahead or behind plan. Due to the quantifiable success of the program, we were able to allocate additional advertising dollars to the program to drive even more sales. In this case, you are shifting higher opportunity marketing dollars AWAY from underperforming programs – a good thing!

Even mass media campaigns should have an ROI target established, thought using different metrics. One proven way to do this is to establish a control group (or better yet – several), which could include specific customer segments or markets; as well as analyze trend changes in affected markets vs. control markets. You need to be careful to ensure you are filtering out as many variables as you can such as local events, weather, market size and cultural variances. At the end of the campaign, you should be able to have a good feel as to how your investment dollars were spent. You should always have a target or goal established to measure how close you were to meeting your target. This process will force you to become a smarter allocator of marketing funds.

Direct marketing, affiliate programs, affinity marketing, search, online, loyalty and coupons are terrific programs that are easily tracked by retail partners and don’t require a lot of up-front spend and rolling the dice. I had a lot of success with these types of programs over the past couple of years and I’m working to help retailers incorporate more of these proven and quantifiable programs into their marketing matrix.

Always keep an open mind to new ideas. Just make sure you do your homework before you take the plunge.

Bryan Kipp is President of CMO Retail Solutions, LLC. He provides interim CMO services and focuses on identifying and executing ROI-centric marketing programs for retail clients. Visit http://www.cmoretailsolutions.com/

How to create a successful retail brand

Creating a strong brand in retail is more challenging now than it has ever been. This also makes it one of the biggest opportunities, ever, for forward-thinking retail organizations to capture market share from the big boys. You need a vision that is supported by very clear mission and positioning statements, and a very strong execution team that will be your brand champions along several fronts (communication, merchandising, people talent and finance). The process must be disciplined, focused and relevant to your target market.


First, you need to have a clear concept and a focused target market (demographic, psychographic and geographic). The next step is to research this target market using a host of different metrics that will assist you in finding the right product(s), and identify the most productive means to effectively communicate with your guests.


If you don't have the right product(s) and don't keep new ancillary products coming through the pipeline, you will fail. It's that simple. You see it everyday in the retail world - trying to accommodate too many different guest segments with a small assortment, thinking that you can keep everyone satisfied as long as you have, at a minimum, some product coverage within each of many segments. Many retail organization are hesitant to focus on fewer guest segments, because they fear the "liability paralysis" that keeps them from achieving success in being the clear and concise leader, within their primary target market.


Once you have identified your guest target segments, learn as much as you can about them. You do this by investing a certain percentage of your sales on research. It doesn't have to be conducted using expensive, and sometimes misleading focus groups , or customized studies. You also have lower-cost, yet equally or more productive, data available through syndicated data reports, online surveys and creating your own focus group / surveys with your best guests.

Next, you want to make sure you are communicating with your guests in the manner that fits their lifestyle. Younger guests typically spend more time online on social networking sites and spend lots of time surfing the web. They spend less time watching TV (when they do it's usually only a handful of programming that they consistently watch.) They spend considerably less time listening to the radio and more time using their IPOD. You need to know this and develop a comprehensive plan in order for your marketing efforts to be effective.


Finally, once you've completed product, market and consumer research; identified the right product(s) and created a comprehensive and diversified marketing strategy, you need to rally the troops. Every member of your organization should memorize your mission and positioning statements and live by it, every single day. Your executive team should spend at least 20% of their time on the floor or talking with guests and associates. It's amazing the number of ideas that are generated from the selling floor. Keep an open line of communication with your guests and associates to encourage change. Encourage your team to experiment and that it is healthy to fail, as long as you learn from it.


Lastly, lighten up and have fun. I worked at a large Fortune 100 retail organization who's senior management would occassionally visit stores and create uneasiness through the entire store organization - you'd think that royalty was coming to town. You heard stories about managers being reprimanded on the selling floor for the floors not shining or a T-rack being out of place.


One last closing thought - develop a store music-track that is fun, energetic and makes your associates and guests feel good. Encourage your associates to get to know customers and have fun with them too. Use humor with your associates and I guarantee that a happy associate will create many happy guests!


Bryan Kipp is President of CMO Retail Solutions, LLC. He provides interim CMO services and focuses on identifying and executing ROI-centric marketing programs for retail clients. Visit http://www.cmoretailsolutions.com/