Blockbuster, Jessops, HMV... but who's next? WHSmith, we're coming for you

Guest post by Alice Baker, Account Manager at Westgate Communications 

It was a tragic day and a clear sign of the times when a British institution like Blockbuster finally shut it’s doors. I’ll never forget the day my mum took me into the store to purchase Beauty and the Beast (a classic I might add) on VIDEO for my Birthday; something she had to pre-order because it wasn’t available elsewhere. Clearly, I’m showing my age, but the memory still makes a distinctive point - we needed Blockbuster in our lives. Disney is very important to a five year-old.

Fast forward twenty years and I enter that famous store again, this time for another classic: Reservoir Dogs. “Sorry, we don’t have it” the shop assistant replied. Angered by her indignation, her shrug, and by the fact there were 47 useless copies of Bridget Jones’ Diary strewn around the store, I realised Blockbuster had finally become disillusioned by what its customers wanted. It was also clear that I no longer needed the store; for Disney or Tarantino, it didn’t matter. Streaming became the way forward and quite honestly, I’ve never looked back.

A dissatisfied customer I may be, but the point that it makes is that in the last five years the consumer power of our UK high-streets has now shifted from retailer to customer. Blockbuster no longer had what I needed - availability of films, knowledgeable staff etc. - so I went elsewhere.  Understanding what your customer needs and what your USP is, is essential for maintaining customer loyalty. Adapting your retail channel to suit these needs is also vital because consumers appreciate retailers being considerate to their needs.

So who’s next to go? I’m hedging my bets - or should I say hopes - on WH Smith. Here is a store which epitomises all of the issues above. It’s expensive, it has no USP - does it sell books, sweet or arts and crafts materials? And the staff seem adamant on selling me a giant bar of Dairy Milk every time I purchase a lottery ticket. The staff are generally unfriendly and mostly unhelpful and their website seems to offer the same service too as its far from intuitive; so why oh why has it survived at the forefront of British retailing for so long?

As digital books sales with the likes of Amazon and Kobo continue to rise how much longer can WH look to hold on?

Underwired caps incredible month with RAR finalist place

Underwired, the leading eCRM and Customer Engagement agency, has been shortlisted in the Recommended Agency Register (RAR) Awards.

The awards recognise the agencies that have been highly-rated by their clients and to date, over 14,000 customers have rated the agencies they work with. The awards are a reflection on an agency’s ratings across a number of areas including Creativity, Effectiveness, Value for Money, On Time/On Budget and Client Service.

This news comes on the heels of an incredible year for Underwired, which now counts Marks & Spencer, Mitchells & Butlers, Travelodge, British Land, ASICS worldwide, East Coast Railways and the Financial Times among its clients. Less than a year ago the management team led by Jason Holland and Felix Velarde took the agency independent, and in the past month Underwired has won over £1m of contracts.

Jason Holland, Underwired’s co-founder and creative director, said “This reflects Underwired’s culture of partnership and collaboration, and in particular the rapport the client services team has built with our clients. We do business-critical, highly strategic work, and that demands genuine trust. That’s built on a foundation of value for money and doing stuff right and on time – but it’s also partly a reflection of the passion we have for the work we do with our clients.”

The advent of Customer Engagement Marketing

We went through a recession, and while we weren’t looking, the world of marketing changed. We discovered as an industry that making certain that marketing governance is based on sound principles is critical in a recession. Digital marketing, with its granular tracking and ability to follow a customer from first contact, means you can observe his or her behaviour while they consider their first purchase and beyond. When digital marketing is joined up correctly, you should be able to establish precisely how much value you generate for every pound that you spend. And this accountability, during the recession, meant a degree of comfort that marketing actually was working. In other words, we gave credence to – and then priority to – marketing which has built into it a chain of custody.

The traditional view of brand marketing was centred around the way the business wanted to engage customers. To some extent, in the early days of internet-based marketing, this notion of brands built around customers’ needs was lost, at least temporarily. It became ‘build it and they will come’ – a conceit founded on the novelty of the medium: indeed, when I set up my first digital agency there were around 250 servers on the World Wide Web. Attendance and engagement could be reliably assumed.

The idea of a brand built around what the customer wants has of course changed as a result of the mediation of the internet. The customer is still at the centre of the business’s universe, but this position has evolved. Marketing, once predicated on understanding demographics, motivation and behaviour, can now be said to pivot about which channel the consumer is (or may be) consuming at that precise given point in the customer lifecycle when they are considering a step in their dialogue with the brand.

In simple terms, where once we considered marketing to be about mapping the progression from one medium to the next (TV followed press and PR, followed by Direct Marketing) this new age means we map the customer as she travels from mobile to Facebook, email to website and via SMS to shop.

In turn, this must be mapped against the decision-making cycle: first contact to second, peer review then press review, comparison sites, reminder banner, examination of features, emailed offer then shopping basket. We end up with a two-track series of events, joined at critical touchpoints which define the medium in which we pass on a specific, perfectly-timed message.

This form of marketing planning is necessarily going to be slightly different from segment to segment (a young mum’s media consumption is going to be radically different to that of a Baby Boomer), and from product to product. But the framework is sound, and applies as much to a high-value B2B proposition as to an FMCG brand – in fact we’ve used it for products as diverse as McCain oven chips, ASICS sportswear, Travelodge and the FT. What it delivers is a rational, measurable chain of custody from first contact to value. From this continuous sequence comes your brief for the messaging at each touchpoint, a detailed resource requirements list, indeed a foundation for micro and macro KPIs.

This new post-recession type of marketing is called Customer Engagement Marketing. It takes the power of the brand, dethroned by a combination of recession and digital renaissance, and refocuses it on the customer. In essence, it recognises that the customer is now the centre of everything, and that our job as businesses is not just to design our products around them but to design our marketing around them too.

Evidence-based marketing: myth or reality?

Apparently a Facebook ‘Like’ is worth £7. Isn’t that brilliant? If you have a hundred thousand followers that makes your social media strategy absolutely rocking news. The question is, says Felix Velarde of digital CRM agency Underwired, how many of you really believe it?

We ran a campaign for an FMCG client a while ago, in which we emailed a segment in the customer database using very specific messaging – it was relevant, timely and well-designed. The click-through rate (CTR) of 88% was staggering in anyone’s book. I’d like to say every campaign we run gets that kind of result, but occasionally we crash and burn too. Anyway, wow, what a great result. But what does it mean?

The digital marketing industry seems to be founded on metrics and key performance indicators (KPIs) of variable – if not downright dubious – quality. If you judge any of the industry awards you will know that half the entries benchmark against industry standards which in a lot of cases appear to have been made up on the spot: “Campaign X achieved a CTR of 12.3%, beating the industry standard 8% and therefore deserving of a Gold.”

This is where I have the first of my issues: even if there *is* an industry standard click-through rate, does it really apply to your campaign? Our campaign got an 88% CTR because it was highly targeted to a known audience expecting the email with a fantastic proposition. If it had achieved 12.3% or even 24.6% it would have been a failure. The truth is that no matter what the CTR is, one thing it is not is evidence of anything that isn’t either subjective (“I say, that’s awfully good isn’t it?”) or comparative (“Blimey, did much better than last time!”).

The second of my issues is that all these benchmarks aren’t evidence of sales. And hard revenue really is the only figure that ever matters (and before you ask about brand consideration or sentiment, these are both abstractions of sales – higher brand consideration may imply higher resulting sales, though you’d have to test it to find out if it’s really useful). So what is the *evidence* behind the assertion of success? How do you track from the planning phase through the campaign, to the reality of the effect on sales?

Well, it’s pretty easy in e-commerce. Straight-through processing (which is what the financial industry calls tracking the customer from first contact to order) in digital is quite simple these days. Ad tracking (display, affiliate, PPC and natural SEO) is relatively easily linked to website analytics, thence to email service providers (ESP), back to websites and even passing through couponing and promotion systems. It’s been done plenty of times by the big brands, and even small brands can buy integrated services. So if you’re an online retailer it’s pretty straightforward.

If you’re an FMCG brand you can still do it, although you may need to be a little more sophisticated about it. For example, this might mean matching your customer segments to commercially available purchase data and running regular surveys to track buying patterns in your base and cross-checking them against buying behaviour. If you’re a retailer you can find mechanisms to collect customer data and purchase behaviour at Point of Sale and match this data back to the single customer view.

The trick here is to get real data about whether your campaign actually worked, as opposed to seeing floating KPIs that may or may not indicate the same thing – but which provide no scientific basis for decision-making. How many times have you seen “successful” campaigns stopped? There’s a simple reason: there was no evidence to show they generated a profit. If there had been and they had produced £26 for every £1 spent, nobody in their right mind would stop them. Evidence is critical. Myth or reality? Evidence-based marketing is the only thing you should be *allowed* to do!

2013 will be the year of Total Customer Engagement

The year ahead will be marked by a number of really interesting developments in how we engage with our customers. One that has caught up with us – and which marks a sea change – is the advent of the Generation Y customer base. Gen-Y uses mobile as its main medium of interaction; if you’re not using mobile to engage with younger customers then you’re probably missing the biggest trick available, though it has been a very slow start since the trend first became apparent five, or so, years ago. Just in passing, to give you an idea of how trends break, let me illustrate this briefly…

Imagine your customer base is, potentially at least, a million strong. And say on day one a single person uses mobile as their main device for browsing the web, and every day that number doubles. By the end of the first week, 64 people use mobile. By the end of the second week that’s 8,192. That’s the point at which as a business you might start thinking there’s a trend. In actual fact it only takes another seven days and that’s your entire customer base. If you didn’t engage in a mobile strategy after two weeks, you missed it. Trends accelerate in an exponential curve – and in the internet age a trend can look slow for a few years, when in fact the numbers are doubling every month. Mobile is one of these, and if you target people born after 1982, that means you’ve got to jump, now!

There’s another trend that’s been a few years in the making, but in 2013 it will have gathered a critical mass, and it’s going to affect you – like it or not. The trend is for Total Customer Engagement. In plain English this means joined-up marketing, the opposite in fact of the “silo” thinking that has driven marketing during the first couple of decades of digital.

Most companies today have a web strategy, which may include e-commerce. They will also have a nascent social media strategy, a Google Adwords programme, and maybe an eCRM programme serving segmented comms to different sets of customers, split by value, behaviour, demographics and motivations. All of which have given businesses learning and insights into how they engage with customers using ‘new’(ish) channels. What’s lacking is integration. The sea change in 2013 requires a fresh way of thinking about customer engagement, which puts the customer at the centre. The trends feeding this are the shift in the balance of power from brand to customer, driven by the shift towards peer decision facilitated by social media, and the power of collective reviews.

So how does a business tap into this before it’s too late to do anything about it? A shift of focus is required, meaning the marketer needs to understand where the consumer is going to be, on- and off-line, when they are at a moment when they are likely to change their view of a brand, ideally positively. If you can identify that, Customer Type A is likely to be on a mobile, using Twitter, when considering whether to shortlist your brand, then you can target them with the right message at the right time and in the correct format. By mapping where the customer is at each critical point in their relationship with you, and mapping a rational sequence of nudges to take them from pre-custom to loyal customer, and then creating a matrix of comms against medium for this map, then you have a plan for engaging them. This Total Customer Engagement plan gives you as a business several things: a plan that can be tested, benchmarked and improved; a brief for your team and their suppliers so they have specific tasks to achieve against your business’s Key Performance Indicators (KPIs); and a framework that can be adapted when new trends become apparent.

This kind of approach is essentially multi-channel and channel-neutral. It’s also measurable and of course by its very nature future proof. By investing in developing this kind of (actually very simple) framework and marketing architecture, it will protect you against the overwhelming trends that are often nearly impossible to spot early, but which end up rather too quickly having strategic impact. Do it now, before it’s too late!

Innovative marketing thinking shows results

FMCG marketing is hard isn’t it? As brands you don’t even aim your marketing to the people who buy your products from you – you’re doing the work you might argue you want the retailer to do. In addition, you’re also competing with retailers’ aspirations to become brand owners themselves, with Tesco recently launching its own non-Tesco branded ice cream and pet food.

The indirect path to sales means that traditionally it has been difficult to gauge the success of marketing activity. Because you spend three hundred thousand on a television commercial and your sales are three million, it would be useful to think your ROI was ten to one. But there are so many other factors (and costs) - PoS, real estate, press, sales promotion and so on. Attribution is nigh-on impossible.

In the age of digital, it has been frustrating that Brand Consideration, the old advertising-oriented KPI, has remained the principal yardstick for marketers. Why so disappointing?

Digital provides the ability to track everything in a communication journey - or to be more accurate, it provides the means to track every movement a consumer makes online. So we can see when they clicked on a listing in Google, visited the brand website, opted in to emails, opened, clicked and selected a voucher, redeemed it... it’s what in the finance industry is called “straight-through processing”. It means you can keep custody of a customer all the way through their journey along your online marketing process. In marketing terms this is pure eCRM.

Now, if you’re a retailer the end of this journey is a sale. You can then say with utter confidence “I put in £1, and £26 came out. People with kids are highly responsive, 19 year-olds are a waste of marketing money, so let’s stop spending money acquiring them.” But if you’re an FMCG brand and the grocer is your customer and consumers theirs, to get attribution you need to exercise a bit of creative thinking.

First you need a benchmark. You need a database of your consumers, you don’t need many, ten thousand is plenty. And you need to have some real general population sales data, segmented into meaningful customer groups. You can buy this from Nectar or Dunnhumby. You then need to segment your own customer data exactly the same way so it’s comparable. On day one you look at purchase behaviour in your base versus that in the same segment in the general population. Run your eCRM marketing campaign. Then ask the same people about their behaviour. If the behaviour in your base has changed and that of the population hasn’t, then you have effectively isolated the results of your marketing activity - you actually know what effect you have made on sales.

We’ve successfully done this for a number of major brands. If you could increase footfall by 11% or purchase frequency by 3% imagine how much extra revenue you would be generating. FMCG marketing may be indirect, but with a little creative thinking it sure can be lucrative.

The Chicken & The Egg

Which comes first, technology or strategy? I suspect most of you will say strategy – I bet, however, most clients actually do it the other way round. In the world of CRM and database marketing (whether it’s executed online or in mixed media), if I had an egg for every time a client delayed strategy projects while they go through procurement for the tech to support it, I’d have the makings for an awfully big omelette. Logically of course strategy should come first: work out what you want to do and why you want to do it, test the theory, then build the technology to support a plan that works.

Yet – and see if you recognise this – budgets consistently get spent on technology first. Sorting out the Email Service Provider (ESP) before working out what kind of segmentation is required, or what kind of multi-channel tracking is required, seems absurd. Going further upstream from that, spending large amounts of money on a Single Customer View (SCV) before working out how you’re going to monetise one also seems counterintuitive. I’m not sure of the rationale; is it that “if we have the technology, we’re ready for anything”? More likely in the days of recession, where a company has surplus cash but needs to cut costs, the argument for making a large technology decision means it can be moved to capital expenditure and accounted for on the tax bill.

But this means marketers are then constrained to playing catch-up, beholden to the decisions made based on the balance sheet instead of based on customer marketing requirements.

On a macro level it’s a bit like hiring an ESP to do CRM strategy – the answer will only ever be ‘use email’, never multichannel or SMS only; likewise, by buying the SCV platform or the CRM system before deciding on what you’re going to do and why precludes things like the advent of social, or whatever the next mercurial marketing channel change turns out to be. If you’ve invested in the big technology, you’re stuck with solutions that use it. Or of course you’re stuck with a white elephant, a capital expenditure project that sits in the corner waiting for you to realise the people with the manual have long left the company.

In fact, this is precisely what happened when CRM was invented. Huge IT installations were sold to firms that wanted to amortise spare cash, then never got used, and eventually when the ‘high-ups’ started asking questions CRM became a dirty word. That was twenty years ago, and today’s marketing decision makers must remember what happened else it happen again. And now that marketing and technology are intimately entwined, this kind of monstrous over-investment in IT without a clear strategy for what it will actually be doing for marketing can no longer be blamed on the egg-heads when it goes wrong. It’s now everyone’s responsibility, especially marketing’s, to make sure the investment is supportive, not directive.