Winning on the Web: Stuff That's Cool for Niche Retailers

To win on the web, you need to make an investment. I’ve always determined the cost/benefit ratio by weighing the opportunities for growth on the web against the costs involved with gaining and sustaining exposure on this medium. And as a result of that examination, I’ve reached the decision that it’s definitely worth the risk to be a web player. This is a “what do I do now?” report on some successful innovations in the marketplace.

Let’s start with a new business book entitled Freakonomics. Prepare to be dazzled by it. In the book, authors Steven D. Levitt and Stephen J. Dubner explore the hidden side of everything. This is a must-read for anyone who likes to turn conventional wisdom on its head. Steven D. Levitt is a University of Chicago economist who studies the stuff and riddles of everyday life from cheating and crime to sports and child rearing. Usually, he commences with a mountain of data and a simple, unasked question like, “Which is more dangerous, a gun or a swimming pool?” or “What kind of impact did Roe vs. Wade have on violent crime?” Though these questions may not seem like typical ones an economist might pose, Levitt and Dubner show that economics is at its root the study of incentives — how people get what they want, or need, especially when other people want or need the same thing. What unites all of their stories is a belief that the modern world, despite an overload of obfuscation, complication, and downright deceit, is not impenetrable and if the right questions are asked, is even more intriguing than we think. This book can help you think clearly about asking the right questions during your business-planning process. Read it!

LOOKING FOR NEW INNOVATIONS TO SLASH YOUR TELEPHONE COSTS?
Let’s start with Skype. This is a system that allows anyone with a computer and a broadband connection to call mobile or land-line telephones almost anywhere on earth for pennies per minute. When two people are at computers running Skype, they can talk to each other (using a headset or microphone) absolutely free for as long as they want, and the sound quality is far better than that of telephones. Working out the time zones is the real challenge.

LOOKING FOR PROGRAMS TO COLLECT INFORMATION AND ORGANIZE IDEAS?
They are becoming so numerous, varied, and rapidly proliferating that a list of the good ones soon grows very long. NOTE-TAKER ($69.95 from www.aquaminds.com) is an attractive and powerful Mac-only data organizer. AXON IDEA PROCESSOR is an unattractive and powerful PC-only organizer. For $135, it is available from web.singnet.com.sg/axon2000 in Singapore. There is also BRAINSTORM ($75, from www.
brainstormsw.com) in England.


LOOKING FOR ONLINE SEARCH ENGINES?
The web is a hit in the search for growth. I’ve noticed more merchants are embracing online search engines as profitable elements in their marketing plans. If you’re not marketing through multiple channels, you’re just not in a good position to compete in today’s information age. I’ve written many columns about the benefits of multichannel marketing in the past and I’m very enthusiastic about shopping on the web, through catalogs, and in brick-and-mortar retail stores as the most convenient way for your customers to shop. Multiple channels afford the merchant the opportunity to pull in new customers who might not know about their catalogs or retail stores, but find their sites while searching on the web. It’s a very cost-effective way to reach new customers.

In 2004, companies spent about $4.1 billion on search marketing to direct online users to their web sites, according to a study by the Search Engine Marketing Professional Organization, a non-profit association located in Wakefield, Mass. About 80 percent, or $3.3 billion, went for paid placement, or the “sponsored links” on Google, Yahoo, and other search engines, said Kevin Lee, chairman of the association. But increasingly, merchants are seeking ways to boost their showings on Google and Yahoo’s free or “natural” listings, which online users often turn to first.

You need to make sure that your site is “crawlable” so the search engines will find them. Companies often make the mistake of using the same “title tags” for every page of their site, making it difficult for the engines to differentiate them. Each page should have a unique tag. You can learn search engine optimization through books and seminars, but many choose to hire a specialist. If you do it right, search engine optimization is a relatively cheap way of generating traffic.

What can you expect to pay? Small firms can expect to spend $30,000 to $40,000 annually to have an outside firm handle search marketing. I’ve done research with companies about the effects of the economic slowdown and often when a firm’s store sales are down and their catalog business is flat, their web business has grown and boosted the company’s overall sales.

WHAT’S A CUSTOMER WORTH?
This intriguing question is answered in CUSTOMER EQUITY: Building and Managing Relationships as Valuable Assets by Robert C. Blattberg, Gary Getz, and Jacquelyn S. Thomas. This talented trio (two professors and a business partner) has written a must-read for serious marketers. They have taken a holistic approach to the many facets of developing true client relationship management by citing relevant case studies from leading customer-driven companies. How has the management or mismanagement of customer assets played into the successes, failures, at-risk status, or Cinderella stories of GM, Amazon, AOL Time Warner, FedEx, Oprah, Bluefly.com, and Harley Davidson? You’ll learn the strategies and tactics that make customer equity management work. They outline customer equity’s three core strategies — customer acquisition, customer retention, and add-on-selling — and the balance among them, and explain how the customer life cycle affects strategy and the marketing mix.

“The Oprah Show” is an excellent example of the value of products and services. It’s focused on improvement and empowerment of her target audience of women. For her viewers, each additional product Oprah sells provides a further source of enjoyment. Many of the topics featured on her TV show are also featured in her magazine. When she airs a show featuring a beloved celebrity, she often features that celebrity in “O” Magazine. She creates an intimate connection with her audience by revealing her likes, dislikes, joys, and fears on her show and in much more detail in her magazine. She has created a bond with her audience by sharing the most intimate aspects of her life. Her willingness to disclose these details builds a personal bond. This intimate bond directly translates into her ability to produce add-on sales. Customers are confident that each new product Oprah endorses will be a high-quality one and that it has their needs in mind. Her portfolio of products — “O”, Oprah’s Book Club, OxygenMedia, and Harpo Productions — reflect the core messages of her show’s improvement and empowerment. She completes her specific marketing communications aimed at her customers through her web site. On Oprah.com, she encourages her customers to discuss any of the issues apparent in any of her works. The sense of community she fosters with her viewers on the show is translated to her other products.

I’ve covered lots of “Stuff That’s Cool” in this month’s column — everything from Freakonomics to Oprah’s marketing communications strategy. Put this “new stuff” in your marketing tool box and test some of it. Most successful marketing winners that I’ve met during my career are willing to take the risk of testing new ideas. In the meantime, here are a few of Marshall’s Leadership Quotations to inspire you:

“Leadership: The art of getting someone else to do something you want done because he wants to do it.”—Dwight D. Eisenhower

“The real leader has no need to lead — he is content to point the way.”— Henry Miller

“Where there is no vision, the people perish.”
— Proverbs 29:18

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Marshall Marcovitz is the founder and former CEO of the CHEF’S Catalog, a leading Internet shopping site. Currently, he is a lecturer, a university professor, and a marketing consultant. He can be contacted at mmmellow9@yahoo.com.