Monday, March 15, 2010

Incent The Desired Behaviors

I just finished watching a 60 minutes segment on Wall Street, talk about an eye opener. Millions upon millions of dollars paid out for "performance" that did not benefit shareholders....aka - the owners. Could you imagine paying your store workers a bonus of ten times their salaries for taking actions that bankrupted your business? Sounds crazy, but it did and continues to happen on Wall Street.

The issue is simple. You must design a compensation system that rewards the type of behavior you want from your employees....ones that build long term, sustainable economic value. If you design a short term reward system, heavily weighted on short term outcomes, you can have results that negatively impact longer term economic fact your to blame for creating the incentive system!

Aligning all aspects of your business with long term strategic goals is sound fundamentals. Your compensation system is no different. In retail, you need to think through all aspects of the business thoroughly, before designing particular bonuses. Be careful to consider all scenarios and potential impacts of your bonus structure. Individuals will always have an inclination to "game" the system to max out their bonus based on the system. You need to ensure your bonus system does not inadvertently cause behavioral changes you did not anticipate.

For example, suppose you have a system that pays a bonus on annual sales and has specific thresholds for % bonus. Say $0 to $99,999 is 5% and over $100,000 is 15% but you make no stipulations for returns. A sales person in November has already sold $100,000 and now pushes product through to his customers so that he can achieve a higher commission on remaining sales in the calendar year. If the customers return the goods in January, he still gets his commission. He may even ship the order at the end of December knowing they'll be returned. He may cut a deal with the customer to move up January sales into December (at a lower price to the customer) to make a higher commission. By not stipulating the rules of the bonus structure, you have allowed the system to be "gamed".

Next time you design a compensation system, be careful. You may be asking for something you never considered....just ask Wall Street!

Integration of Social Media Into Email Marketing

The majority of retailers have been incorporating email newsletters into their marketing strategy over the past few years. They send out periodic emails to their customer lists providing useful content or promotional offers. Of late, more retailers have embraced the social media phenomenon. This requires more frequent communications with "followers" or "fans" in an effort to develop and nurture a community of loyal customers and loyalists.

Unfortunately, most retailers have failed to link both marketing efforts. Recent research indicates that only 13% of email marketers include features that make it easy to share content on social networks. This is a tremendous opportunity being missed. Think about the potential reach capabilities when you allow subscribers who already like your content to easily share it with others. That viral aspect of the Internet is what makes it such a powerful tool to a marketer.

See the link below to an article on the AMEX Open Forum for more details on the demonstrated potential of utilizing linking tools in your email marketing and start leveraging the power of both the Internet .and your social networks to drive sales.

Sunday, March 14, 2010

March Madness - Make Marketing a Priority

I just finished watching the unveiling of the NCAA tournament pool – talk about a marketing engine! The NCAA and CBS sure know how to promote an event. They even make an event out of the tournament draw. It may be labeled madness, but it is very strategic. It's time for retailers to consider marketing strategies as our retail March Madness tips off.

You’ve survived the past couple of lean seasons, and intelligently invested in inventory for 2010. In order for you to win your retail tournament, you need to make marketing a priority …NOW. Some of your competitors have not survived the economic downturn. So, make sure you expend the effort required to increase your company’s visibility; both retaining current customers and securing potential new customers. You want to be the retailer they all look to when they decide to resume spending.

It’s only March. You have 9+ months of sales opportunities ahead. Now is the time to make those key strategic and tactical marketing decisions to ensure your business’s financial success in 2010. Budgets may remain tight, but retailers must continue to invest in marketing to drive sales. The key will be making smart investments.

Here are a few tips to squeeze the most from your marketing budget in 2010.

1.Invest in Search That Optimize Customer Engagement
Use search engine optimization (SEO) in combination with pay-per-click (PPC) to attract potential customers to your website and to your store. In addition, design your website to engage potential customers when they do visit. The website is where consumers usually begin the product and information-gathering process. Consumers have usually already researched your business (and developed an opinion) before they ever step foot in your store.

2. Use Technology to Personalize Customer Service
Your existing customers are your greatest source of potential new customers. Treat them well and they will reciprocate. Take the time to understand their needs and deliver information and content to them that helps meet their needs. Use technology to track and record customer behavior to personalize customer relationships and customize special offers.

3. Leverage Social Media to Attract New Customers
Embrace social media, but use it intelligently. Retailers are realizing that social-networking sites such as Facebook, Twitter, and LinkedIn are invaluable for serving current customers and attracting new ones. Top performing retailers use their pages on those social media sites to provide access to information, invitations, and offers that respond to current and potential customer’s needs and interests.

4. Customize Email Marketing
Email marketing tools enable the segmentation of your email subscriber list into multiple smaller lists. You can segment customers into a variety of distinct groups to enhance customization of emails and offers. Putting in the effort to segment your customers at this stage and carefully considering the attributes that determine the segmentation will facilitate improved email capabilities and potentially increase email marketing effectiveness and sales.

5. Measure Results and Reallocating Marketing Dollars
Many retailers continue to do the “same old, same old” when it comes to marketing. That would be great if they actually knew that the current tactics were the best ways to spend their marketing dollars. Retailers need to measure the impact each marketing activity in an effort to optimize future return on marketing investments. Develop an objective, create a tracking mechanism, measure impact, analyze results and determine the effect on future investments.