Trendwatching.com's 11 consumer trends for 2011

TrendWatch.com has released its annual list of consumer trends and opportunities for 2011. The list makes for interesting reading, with some obvious and some not to obvious entries. Urbanomics is a new one for me! Many of these concepts have been around for a while so it looks as though 2011 will be the year they break through to the masses. The list is:

1. Random acts of kindness
2. Urbanomics
3. Pricing pandemonium
4. Made for China (if not BRIC)
5. Online status symbols
6. Wellthy
7. Social-lites and Twinsumers
8. Emerging generosity
9. Planned spontaneity
10. Eco superior
11. Owner-less

Many of these have got me thinking about how Packt can incorporate them into its marketing and some have chimed with our current strategy.

I've experimented with the ideas behind pricing pandemonium and these have worked well for us. We plan to launch our first site-wide flash sales later in the first half of the year.

When Packt launched in 2004 it incorporated the concepts discussed in number eight, emerging generosity. The company gives a percentage of its sales of Open Source books to the Open Source project that it was written on. Up until the end of 2010, Packt has given close to $250,000 to Open Source projects through this scheme and it annual Open Source Awards.

Read the full report here: http://trendwatching.com/briefing/

Marketing to consumers buying for business

The books that Packt publishes provide knowledge, technical support, fresh ideas and case studies to IT professionals. These books are bought largely to aid work projects and as such, we sell most of our books during the working week, Monday to Friday. So it was to my surprise to find our new premium subscription product selling more during the weekend than during the week.

This was a puzzler.

I began thinking about and doing some research into the differences between weekday customers and those that buy at the weekend.

Surveys suggested that the majority of weekday customers claim back from or buy through business accounts. This makes sense because our books support business projects and therefore customers claim the money back as expenses. Unfortunately for me, there was very little change in the ratio of business buyers for weekend purchases.

As I packed up my thoughts and prepared to go back to the drawing board, I began thinking on a parallel track about our customers. Our lovely customers. They're making purchasing decisions and buying for themselves but the company is footing the bill. Not unusual, but a transaction not widely discussed or documented.

So I'm going to return to the drawing board another time and park the question about weekday/weekend customers for now. Instead I want to explore this business expense transaction that our customers use to buy our books.

Business transactions
The terms Business-to-Business (B2B) and Business-to-Consumer (B2C) describe the two main methods of transacting goods and services. These are well established and have been adapted over time to include transactions between businesses and governments (B2G) and, thanks to eBay and the like, even consumer to consumer (C2C).

After looking at the behaviour of our customers in more detail, I believe that there is another, almost tacit style of business that goes beyond existing B2B and B2C strategies. As suggested above, this is business-to-business transactions, purchased by consumers.

Think about how many products and services that are purchased within organizations for organizations are actually done so by regular employees, or consumers, rather than professional buyers, purchasers or business managers.

The types of products and services in these transactions are generally medium to low range in terms of price and are often paid for by the employee and then claimed on expenses. This can include anything from books, tickets and travel to room bookings or stationary. Essentially, these are products and services that are considered by the moneymen to be low risk enough to empower employees with making their own purchasing decisions.

In order to fit in with the establishment we could call these types of transactions, B2C4B.

The classic business-to-business marketing tactic is to push products to their target market by working with the businesses that sell them to consumers. More often than not, this involves steep discounting with the development of close relationships between individuals in the supply chain key to success.

Using supermarkets as an example, businesses that manufacture the products that line the shelves will typically discount by 50% on its retail price. Whereas it’s the supermarket’s responsibility to promote these products to its customers, it’s often the manufacturer that pays for this promotion. Buy-one-get-one-free and similar offers are largely absorbed by the manufacturer and it’s often their representative’s relationship with the supermarket’s purchaser that gets them to the front of the shelf.

Business-to-consumer, or selling and marketing goods to the end customer, adopts well known tactics. We're all consumers and the majority of us will have been sucked in by slick advertising, the powerful benefits or celebrities endorsing that must-have product. These appeal to our desires and aspirations.

So why should we target consumers buying for businesses differently?

Whereas B2C tactics can be applied in these scenarios, and will have an impact, consumers buying for business have different behaviours and will purchase with a different mindset. Whereas consumers buying for business are desire driven and influenced by third parties, they will be hesitant due to intangible pressure from management. Depending on the size of the business and also their role within it, these consumers may be less price sensitive as ultimately, the money isn’t coming from their pocket.

There is also the possibility that many business-to-business strategies target professional buyers and purchasers when in reality they could also be targeting consumers.

There are some good examples of businesses adopting this B2C4B approach with their marketing campaigns. Viking Direct is an office supplies company selling everything from paper and pens through to computers and coffee makers. The company sells online but built up its business through a hugely successful mail order catalogue.

Viking understands that as well as business owners and senior managers, amongst its target market are going to be PAs, receptionists, administrators, and executives etc. buying on behalf of their company. The marketing team at Viking has tacitly adopted this B2C4B strategy by targeting these buyers. Along with purchases of particular items comes free gifts.

On the homepage of the site today are offers of a free torch toolkit with on orders over £100 and a free camera with selected Lexmark printers. Let's face it, offering a 10% discount on a printer might not be a deal breaker for people who, ultimately, aren't footing the bill. However a free gift, whether for the company or for the person making the order, is going to turn heads.

Taking this idea further are many agencies who keep in their client's good books by providing them with gifts at Christmas time, or by taking them out to lunch on their expense account. A really good agency will find out important dates or events in their client's personal lives, like birthdays or weddings. They then send cards and phone up and pass on their congratulations. These tactics are adopted by agencies because they know that even though they're working business-to-business, the point of contact is a consumer.

Instinctively, Packt has adopted a B2C4B strategy since it published its first book in 2004. The marketing team targets consumers and also works closely with individuals direct at businesses. I think the clearest evidence of this is how www.PacktPub.com is set up.

The books themselves are written to include case studies with practical real-world examples that can be applied to professional projects. Our product pages are set up to demonstrate how consumers will benefit from the books as well as outline how these will be translated into tangible business benefits.

Should the add-to-cart button be clicked, the shopping cart is set up to make expense or business transactions easy. We include a box in the cart for customers to add their VAT number and then enable invoices to be easily downloaded from customer accounts.

So what does this mean for you?

Depending on the products that you work with, this could mean nothing! However you might want to take a look at your current strategy and think whether you are, or need to, target consumers buying for their business. Should you adopt different tactics for them?

Convergence 2011 is Coming

Azox will be a Bronze Sponsor again this year at Convergence 2011 in Atlanta, GA, April 10-13. Don't miss it! Convergence is the meeting point for the Microsoft Dynamics customer community. There attendees can learn, discover and connect with industry experts to get the most out of their Microsoft Dynamics products.

This annual gathering of business professionals is where new product releases are announced, where best practices are shared and learned, and where business relationships and partnerships are forged and renewed.

We will also be giving away passes, so stay tuned to find out how you can get your free pass. If you plan on attending and would like to schedule a one-on-one meeting with us please contact us at sales@azox.com.

Why did Webvan fail so spectacularly?

A spectacular case study!

For the first part of the question, here are some major reasons why Webvan failed.

From the supply chain management perspective, we need to consider the six performance drivers, namely facilities, inventory, transportation, information, sourcing, and pricing. Among these, Webvan’s costs of facilities, inventory, transportation, and information (including software) are much higher in comparison with traditional supermarket supply chains. For sourcing, Webvan needed its employees to pick items for orders instead of customers doing this at a bricks-and-mortar store. So, it added extra labor costs for handling customer orders. All of these higher or extra costs were applied to the grocery industry, where margins were only 1% to 1.5%. To make the matters worse, Webvan advertised that its prices were 5% lower than conventional stores. All of these resulted from its hope that the number of customer accounts would be high enough to make profits after three or four quarters. In reality, the number was far below the forecasts and the company kept losing money. Clearly, Webvan’s supply chain design was too expensive to be profitable and too elaborate to operate efficiently and effectively.

From statistics and forecasting perspective, Webvan came out during the heyday of Internet companies when there were not enough stories of failures from history to tell and learn from. Thus, timing also played a role here with overly optimistic numbers and forecasts such as 5% of US households would buy groceries online in a few years and online grocery market would be worth $3.5 billion in 2000 and $6.5 billion by 2003. In this high spirit, Shaheen saw the market as $1.5 trillion, an IDC projection for 2003, which encompassed all web-based purchases. Based on these fantastic numbers, Webvan CFO insisted that Webvan would be “highly cash generative” and that the DCs were likely to operate at breakeven capacity within five quarters of being launched. In reality, it had not hit this target after six quarters since the launch.

From strategy perspective, the management team was too confident and ambitious. They wanted to do everything everywhere in a huge scale. Consequently, they went against their original strategy of providing a more cost-effective solution. They acted hastily in building huge, expensive, and complicated DCs. At the same time, they invested money for plans to expand into various US regions at the same time. They also announced projections that were almost impossible to be realized such that if everything went according plan, Oakland DC would be profitable within 6 to 12 months and other DCs might break even in 60 days. Even a tiny company never has everything going according plan, let alone company with complicated information systems and huge infrastructures as Webvan. Naturally, they should have been prepared to get several unexpected problems and thus, that statement should have never been made. They hoped to get 8,000 orders a day from Bay Area DC to make operating margin target of 10% to 12%. In reality, after six quarters, the averaged number of orders was only 2,160, too far below the projection.

Note that all the changes later, including partnerships and Homegrocer acquisition, could not save Webvan due to either ineffective and inefficient designs and implementations or being done too little too late.  

And the second part,  here are some major reasons why Webvan failed spectacularly.

First, its funding happened so fast and spectacularly. In 1999, it was the most funded for an Internet company with $400 million. Its first day of trading, at one point, it mounted to $15 billion capitalization. It raised a total $800 million. All of this funding and market valuation happened for a company with only $4 million in revenue at that time.

Second, its dream team was included so many senior executives experienced in a broad range of industries with well-established companies such as Borders Books, Goldman Sachs, Oracle, and FedEx. With these diverse experts, who could imagine Webvan would fail?

Third, for the three straight quarters in 2000, it had been voted the best online grocer of 12 in a survey. This means, customer satisfaction was achieved well.

Fourth, in the last quarter of 2000, only 6 months before it closed for good, it posted a gross margin of 27%, highly competitive with large conventional grocers.

Finally, the time it took to fail was also dramatic. It closed its doors less than two years since its heyday on November 5, 1999.

End of The Month Webinars

Attend Azox end of the month webinars. We will be hosting three webinars next week.

Product Webinars

Webinar - Credit Card Processing for Microsoft Dynamics GP.

Looking for a software solution that processes credit card orders securely, reliably and easily. Attend this webinar and learn more about this solution that allows you to process credit cards directly within Microsoft Dynamics GP. Register Here.

Webinar - Integrated E-Commerce for Microsoft Dynamics GP

Find out how this e-commerce solution can help get your business online all while being completely integrated with Microsoft Dynamics GP. Learn how consumers, distributors and customer service representatives can place orders online while having orders flow through to Microsoft Dynamics GP real-time. Enjoy greater website features such as search engine optimization management, Content Management and easier web design capabilities with drag and drop web parts and skinning. Register Here.

Partner Program Webinar

Azox Partner Program - New Opportunities to Grow Your Business

For resellers of Microsoft Products find out the benefits of becoming an Azox partner under the new Azox Partner Program. Differentiate your business and accelerate profitability by promoting and selling Azox solutions. We will discuss the new program and how partners can take advantage to generate more business. Register Here.

How to write customer surveys to produce the response you want

Where I work, we probably have 20-30 different surveys on the go at any one time - largely run by different people, I might add! These range from surveys with specific questions about our products through to surveys about our customer service and the website. These present us with a wealth of opinions and data to aid our strategy. Crucially, many of the answers we’ve received have stopped us from wasting valuable time on projects or activities that customers aren’t interested in.

In a previous post, I talked about the importance of talking to your customers and how surveys can help. I’m going to use this post as an opportunity to share some of the things I’ve learned from this and how you can write surveys to improve your business.

Start with the end in mind
What is it that you really want to find out? The surveys that don’t produce enough responses or yield valuable data are the ones that don’t work towards a specific objective. This is because the people filling in them want logical connections between questions and want to understand what it is you’re hoping to get from the survey. If they have a good idea about what it is you want to achieve, they’ll write more useful responses.

So before you begin thinking about questions, write down what you want to achieve from the survey. From here, the questions will flow and as long as you refer each question back to this statement, you shouldn’t go off track.

Target your responders
Think about the type of people who answer surveys:

1. Those who love you
2. Those who have a grudge against you
3. Those who are neutral and are responding out of the goodness of their hearts (or because they have nothing better to do!)

The type of survey and questions you ask are likely to affect the type of group you target. For example, if you want to find out what your brand’s strengths are from a customer’s point of view, you’re likely to target the first type.

Whereas it’s good to get a range of opinions from all types, the first two here can skew your results, so aim to target a majority of the third type. I guess your next question will be: how do I target that group?

In truth, you can never be truly accurate; however the easiest way is to segment your customers into a group that are most likely to fall into the third category. These are likely be first time customers with one transaction - query your database and pull off a list of customers in this segment and you're away.

If you include an opt-in checkbox on your surveys for you to contact them again with further survey requests, you can then build up a profile of that customer, making them easier to target in the future.

Keep your questions short and personal
Surveys with long questions are the surveys with few responses. Long questions are intimidating and, psychologically at least, demand long answers. People are giving up their time and aren’t anticipating long, wordy questions that require essay responses or could cause confusion – they want to be in and out. So reduce the length of your question, reduce confusion and you’ll get more responses.

Write your questions so that whoever reads them feels like they're the only person being surveyed. This intimacy will produce honest and detailed feedback.

To achieve this, use emotive words and avoid asking anything too generic or patronising. If someone feels like they're just an anonymous customer providing a company with valuable feedback, they're likely to quit the survey or complete it with negative feelings.

Open/closed questions
Use a mixture of open questions, which require opinions and written answers and closed questions, to narrow down opinions. Closed questions are quick to answer and due to this will provide instinctive responses, which are often the most honest. If your survey only has open questions, try not to ask too many, otherwise it'll take ages to complete, which may sway people's decision about taking your next one.

Offer an incentive
Many people’s first reaction to a survey request is to ask, what’s in it for me? A fair response really – why should we expect someone to give up their time for nothing? Offering an incentive to complete the survey will increase the number of responses you receive.

We used to run surveys with no incentive and got very few responses. In fact, our response rate was around 15%. We then began offering discount codes upon survey completion and the average response rate shot up to 40%. In the 18 months following its introduction, these discount codes had been used just under 2,000 times, which has proven to be a very lucrative channel for us!

Act on the data
Finally, one of the things that some companies are guilty of, is receiving survey responses and not doing anything with it. Use the feedback as the basis for change, even if you don't take much of it onboard.

It's also easy to get consumed by negative feedback and concentrate on what you're doing wrong and how to improve it. However make sure that you spend some time focusing on the positives and react to those strengths. If you're being told that you do something well, play up to it and make it better - turn it into your USP and a reason for people to use or purchase from your site.

As a final comment, I use www.SurveyMonkey.com to handle all of our surveys and they make it very easy to set up and distribute. They also present the feedback in a straightforward manner, making it easy to consume and spot trends etc.

5 simple ideas for improving your website’s conversion

The average varies depending on who you talk to (and choose to believe) but the general consensus is that most websites convert about 1-2% of the people that visit it. So typically, 98-99% of people who find your website are leaving empty handed.

Therefore, the opportunity to convert and acquire more online customers is there. If implementing even one of these ideas increases your conversion rate by a small percentage, you’ll be making more money.

After getting visitors to your site, this has to be the most important ongoing activity for any ecommerce marketer.

At worst, the conversion rate on my website was under 1%. With careful optimisation, this is now at over 2% - still room for improvement, you'll agree. These five ideas helped me to turn around my own site's performance and should give you some food for thought for your own. If you want to see the list up front, here goes:

1. Find out where people leave
2. Talk to your customers… constantly
3. Always be testing
4. Settle shopping cart nerves
5. Focus on quality, not quantity

1. Find out where people leave
The first stage in any audit of your visitor’s behaviour is to find out where they leave the website. If you can narrow this down, you can start implementing tactics for making them stay... and making them buy stuff.

If your website is appropriately structured, you can use your analytics package to find out where most people leave. If you use Google Analytics, this is expressed as % exit. Locate the pages with the highest % exit rate and you’ll identify where people are leaving.

Simplistically speaking, there are generally three places where your visitors will leave:

1. Before the product page
2. The product page
3. The shopping cart

If visitors are leaving before they even reach the product page then it’s likely you’ve got a problem with navigation, search or credibility. We’ll look at product pages and the shopping cart in separate articles.

Navigation
Navigation on some websites can be a labourious and illogical process. Some websites attempt to include every possible category in all number of navigation bars. Whereas the popular opinion is that customers want choice, and in most cases they do, it’s been found that too much choice doesn’t lead to sales.

An experiment in the paper When Choice is Demotivating, by Sheena S. Iyengar and Mark R. Lepper found that:

“…people are more likely to purchase exotic jams or gourmet chocolates, and undertake optional class essay assignments, when offered a limited array of 6 choices rather than an extensive array of 24 or 30 choices. Moreover, participants actually reported greater subsequent satisfaction with their selections and wrote better essays when their original set of options had been restricted rather than expanded.”

You can read more about this experiment here.

So I recommend that you use your primary navigation bar to display the key categories or areas of your website. From the homepage, you should aim to get your visitors to a product page within three clicks, ideally two.

JohnLewis.com does this very well, with clear categories in the main horizontal navigation bar and keyword rich drop-downs on mouse-over. When through to a category page, deeper navigation is presented in a vertical navigation bar on the left hand side. This makes navigation logical and easy to move around the site.

JohnLewis.com

Getting to a product page should be easy and if you land on the homepage, you’re only two clicks away from viewing a product.

Conversely, Sainsburys.co.uk could take some tips from John Lewis. Despite having some neat features on their site, navigation isn’t one of them. If I landed on the homepage and wanted to buy some bagels, I’m at least four clicks away:

Home > (Food & Drink) Buy Groceries > Bakery > Rolls, Wraps, Bagels & Pitta > Bagels

With thin horizontal navigation bars using a cluttered bold font in a reasonably small size, the experience of getting to your product is difficult and laboured.

Sainsburys.co.uk

Search
The alternative to finding your products through navigation is going direct to the search box. This is often an underused facility on websites that can be optimized to convert visitors. If your search is well designed, you can also use it as a tool to upsell other products to customers. Internal search is such an extensive and important subject that it deserves its own article and something I will write in due course.

As it’s the first thing many visitors will look for on your site, the search box should be easy to find. Above the fold and close to your main navigation are rules to follow, with most websites opting for top right.

The results page will either present users with what they want or leave them frustrated. We’ll come to the latter shortly, however even if your search algorithm is technically sound and presents accurate results, there are things you can do to improve the user’s experience.

Think about how much information you should display and whether to list lots of potential results or whether to list fewer and go into more detail. This will be dependent on the number of products your website has and also the variety of these products. If you sell a number of similar products, you may want to differentiate them by adding more detail to the search results, like product size, release date or colour.

You can take this one step further by categorising results and enable users to filter them for relevance. This then empowers users to take a broad search term and then whittle down results to get more accurate results. Here you can offer refinement by size, colour, availability, price etc.

One feature that has worked well for me is to include buy buttons in search results. Quite often, users that search directly for a product have made the decision to buy, so directing them to the product page is just another unwanted click. It also takes advantage of their impulse to buy and gives them fewer chances to drop out.

Don’t leave the page blank. There’s nothing worse than seeing an empty page with the message ‘sorry, your search produced no results, please search again.’ With this message, you’re effectively telling your users that they’ve done something wrong, rather than the website not behaving as it should. Now the likelihood is that the user did do something wrong and your website is working as it should; however that old adage of the customer always being right is a good one to adopt here.

If the keywords used in the search term produce no results, by all means suggest trying another search but use it as an opportunity. Take the initiative and offer other suggestions, presenting them with ideas, including potential misspellings.

Credibility
Credibility is more than having a flashy, user-tested website designed by a top agency. It’s about reassurance. When someone visits your website, they want to be filled with the confidence that you’re an experienced business and that they’re not the first person to buy from there. They need the reassurance that their transaction will be safe. They need reassurance that they are going to get what they pay for.

LingsCars.com can be used as a great example of this. This site contravenes all the laws of website design, yet it works (why is altogether another blog post!). Outside of the flashing images and humourous text, the site does a good job of convincing users of its credibility. Above the fold, visitors can read that this isn’t a joke:

- You can trust me!... In 2009 I rented over £35million of cars (at RRP)
- HonestJohn.co.uk Highly Approved Trader badge
- Security badge
- SSL badge

LingsCars.com

 During the order stage, there are further statements about data protection and security, alongside customer testimonials and other reassurance statements.

All of this gives the website credibility and persuades visitors to convert.

2. Talk to your customers… constantly
It sounds obvious, but the only way you’re truly going to find out why 99% of your visitors leave your site without buying is to talk to them. If there’s only one thing that you take away from reading this, it should be this.

You can talk to everyone on your site:

- Visitors who browse the site and then leave
- Visitors that click add to cart and then leave without paying through to those that buy.

This helps to fine-tune each stage of the journey. And the best thing is, visitors are happy to talk to you.

It’s obviously easier to target and interact with people when you have their details, however you can get feedback from all visitors. The easiest way to do this is to set up short surveys for anyone to complete and then advertise these on your site. I’ll cover writing effective surveys in a separate blog post (update: customer survey writing tips here), however the key questions to ask are: did you buy here and if not, why not.

To enable this, you can sign up with an online survey company, like SurveyMonkey.com, which allows you to collate and analyse all responses in quite some detail. You can link to these surveys in order confirmations as well as customer service e-mails.

There are a number of companies that offer services that target visitors who abandon their cart or register and don’t buy. These can be expensive but provide great opportunities to understand your customers better.

3. Always be testing
The beauty of ecommerce is that you can make changes and see how it affects consumer behaviour instantly. A/B testing gives you the opportunity to test variations of the same thing to see what produces the best results in order to optimize your website to its full potential.

Therefore, if you’d like to test the colour of your add-to-cart button to see which one converts best, A/B testing can split visitors into equal groups and serve the different coloured buttons to each one. After time, you can check the stats to see which performed the best and then implemented it permanently.

There’s no limit to what you can test, from landing pages, button size and colour, to images and offers in the cart. Remember that you can continue to test the changes that you’ve made

I borrowed the title for this idea from this book, which is well worth a read if you want to learn more on testing with your website.

4. Settle shopping cart nerves
After clicking the buy button and now sitting safely in the cart, customers will continue to have questions. A common misconception in web design is that the decision to buy a product is made solely on the product page. It’s not; it’s often made long before landing on the product page.

The shopping cart is often the time that shoppers start questioning the credentials of your site.

- Is this a reputable business?
- Are my details safe?
- When will I get the goods?
- How much is shipping?
- How long will it take me to checkout?
- Etc.

Therefore, the shopping cart should answer these questions and settle the nerves. This is easier for the bigger brands that have built up reputations. One site that does this well is My-Wardrobe.com, which does a good job of answering the key questions.

My-Wardrobe.com

The majority of questions that a shopper might have are answered here. There's even a list on the right hand side, detailing 5 Reasons To Shop With Us, above a trust seal. At the top of the page in red, there is a message designed to manage customer's expectations about shopping, which gives customer's confidence and the company a transparent image. Beneath this is a line that encourages you to call their customer services team if you have any questions. By the proceed to checkout button are icons that detail the ways you can pay, which further establishes trust and confidence.

Interestingly, apart from the red shipping message and trust seal, these payment methods represent the only colour used in the checkout. I imagine that this is designed to draw customer's eyes to the key elements that will settle a shopper's nerves and aid conversion. Whether they should add colour to the proceed to checkout button is another question.

5. Focus on quality not quantity
You can spend time and money focusing on increasing your traffic but if they’re never going to buy, then you’re wasting your time. Traffic may go up, but conversion will go down. It may sound obvious, but unless you focus on quality traffic you’re never going to attract the visitors that will spend money on your site.

Because Google rewards websites with more (quality) inbound links, the focus for many marketers has been to build up as many as possible. The downside to this strategy is that a focus on quality, targeted traffic can pay the price.

Instead of settling on a catch-all policy, identify your top targets to develop relationships with and aim towards achieving regular links with them. Position your relationship as a partnership; suggest mutual links and you’ll be treated more seriously than the plethora of companies that send mass template e-mails on behalf of their clients. There’s a blog post here about writing influential e-mails that can help you with this.

Azox Mentioned in Redmond Channel Partner

Redmond Channel Partner has recently published an article mentioning how Azox has leveraged Microsoft PinPoint to help interested customers find solutions for e-commerce and credit card processing solutions. Read the full article here.