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
Tuesday, October 6, 2009
Wednesday, August 19, 2009
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
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/
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/
Wednesday, July 29, 2009
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/
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/
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