Tag Archive: Amazon

The Amazon Effect On Small Business

Took a trip to Nashville and The Bourbon Trail this past week. While in downtown Nashville, this type of sign was quite common in the boot stores.

Don't You Dare Take A Photo In Our Store

Ironically, I took the photo of the sign telling me photos weren’t allowed. The list of things they don’t want you to do is certainly much longer than the list of things they DO want you to do. As far as I could tell, it was only 1 thing: purchase something.

Some might call this a response to the Amazon effect of retail locations becoming showrooms for people to experience a product, only to buy it for much cheaper online. I’m sure that’s a part of it. I’m more of the mindset that it’s an inability to accept the new business environment they’re operating in and an inability to develop a compelling smart solution to the problem. For example, they could highlight the value in supporting in a local business. They could have talked about their commitment to getting you into the right boot, instead of the boot you think you need. I’m just scratching the surface here. There were certainly options, beyond putting up a sign that would simply be ignored.

Behaviors matter. Behaviors are lasting. Behaviors are tough to change. To have such a sign up and to attempt the enforcing of it, is to for people to stop acting the way they normally act. Good luck.

Friday Five – January 10, 2014

Amazon Confirms That the Giant Amazon Box From Reddit Is Real
http://on.recode.net/1aHKhbL
I love this. I love this for so many reasons. Bezos often says something to the effect, he’s in the business of delivering anything to anyone, anywhere in the world. I love that. As part of a lengthy marketing campaign with Nissan, Amazon just delivered a new Nissan Versa to someone. While it may take years for car buying to become a core competency of Amazon, these types of initiatives create energy around Bezos’ lofty aspirations. It’s a classic example of understanding that sometimes you’re not going to get a big immediate return on investment from an initiative, but there’s still many great reasons to invest in the initiative.

inMarket Rolls Out iBeacons To 200 Safeway, Giant Eagle Grocery Stores To Reach Shoppers When It Matters
http://tcrn.ch/1aHKH1Q
So, yeah, mobile, it’s going to be big. If you don’t have someone at your organization who’s focused 100% of the time on mobile, you’re missing out. Mobile can’t be 5% of everyone’s job. The minute that happens, it slips thru the cracks. Apple’s iBeacon product was a smart extension. We’re going to see these types of platforms become commonplace in 3 years. Instead of just 10% of stores as a test, we’ll see NFC styled platforms in nearly 100% of locations. The only bummer from this announcement is the lack of creativity. The first thing retailers want to do with iBeacon is………..deliver coupons! C’mon it’s 2014, we’re better than that, aren’t we?

A closer look at Belkin’s Crock-Pot WeMo Slow Cooker (hands-on)
http://engt.co/1aHL1O9
As a slow cooker aficionado, I’m excited by this. As a marketer, it’s yet another example that the “internet of things” is here and it’s not going anywhere, any time soon. Look at your home, look in your car, look at everything on your commute to work. If it could be connected to the internet, it will be. That’s why, to me, it’s not about digital marketing. It’s about marketing in a digital world. That’s a subtle, but very important nuance.

If a tweet worked once, send it again — and other lessons from The New York Times’ social media desk
http://bit.ly/1iUDiED
Probably the best post I came across in the past week. There’s too much to cover in a brief snippet here, but the team at Nieman Labs did a great job of breaking down what the New York Times learned this past year, in social media. There’s basic stuff, that seems so obvious, but it’s also things we forget about too often. Definitely find time to read this one.

Six Things Every CMO Should Be Watching This Year
http://onforb.es/1iUEE1X
I like David Armano. We don’t always see eye to eye, but I like how his brain is wired. This article on Forbes from David does a nice job of painting a picture of things CMOs need to think about in 2014. I’d make some adjustments to the list. For example I’d combine his buckets for “Ephemeral Media” and “The Responsive Brand” into a larger bucket called the Content Conundrum. Every CMO is going to grapple with how to create enough content across a wide variety of networks, platforms and locations to make an impact…without breaking the bank. The mix of content providers and partners needed to deliver on this, will be like nothing we’ve ever seen before.

Price vs. Value

It’s not secret that I think Chris Brogan might be the biggest snake oil salesman ever to walk the land.  The other day he might have jumped the shark.  Chris shared with the world his “day rate.”  Are you ready for what it is?  Sit down.  Get comfortable.  Please don’t have any water in your mouth as I am not responsible should you choke on it.

Ok, here we go.  Chris Brogan’s day rate is $22,000.00.

Did you just say WTF?  I know I did when I first read it.  Let’s break this down.  At $22,000.00 a day, he’s worth $8,030,000.00 per year.  What does that really mean though?  Let’s add some context shall we.  That annual “salary” would make him 2x more valuable than Drew Brees, 8x more valuable then Evgeni Malkin (and only 1 million less valuable than Sindey Crosby) and roughly the same cost as having both Dustin Pedroia and Kevin Youkilis on your team.  You might ask why I picked professional athletes as a comparison point.  Well I did it for two simple reasons

  1. The public often complains about the skyrocketing and out of touch with reality costs of super star athletes
  2. We’re passionate and attached to our super star athletes

Usually with athletes we have a way of comparatively reviewing them against their competition.  Whether this as at the contract negotiating table or the arbitration table, this happens all the time.  Athletes and owners will often lament that it’s not personal, it’s business.

Heck, even Chris argues, “Pricing. This isn’t black magic. It’s business. It’s commerce. It’s fairly basic.”  Well, he’s right about it not being black magic.  He’s right about it being fairly basic.  Let’s see how basic it is:

Price: Price is the starting point for what the owner/author/provider/etc. thinks something is worth.For example, the suggested retail price of Trust Agents is $24.95. That’s what Chris thinks his words are worth on a per book basis.

Value: Value is what the market deterimines something is worth. For example, this copy of Trust Agents currently being sold for $6.00 on eBay.  Hmmm…$6.00 sure doesn’t seem like $24.95.  Actually it seems like people value Chris’ words 75% less than Chris does.  Well it’s like Chris said, “This isn’t black magic. It’s business. It’s commerce.”  Well said.

I don’t begrudge Chris charing $22,000.00 a day for his “services.”  On multiple occasions I’ve asked him what those services are and what he’s actually done, but he’s yet to respond or provide any real backup to substantiate he’s capable of doing what he says he can do.  And it’s for that reason, that while Chris’ price is $22,000.00, I value a day with him at $1.05.  That’s the cost of a McChicken + Tax.  It seems appropriate, at least with the McChicken I know what to expect from the experience.

So, Chris is right, he charge what he wants and I can pay what I want.  Although, there seems to be an interesting gap between price and value doesn’t there :)

Rethink The Funnel – Why Real Estate Is King

By now those who know me are tiring of my constant cry, “Real Estate Is King.” I’ve been telling anyone who’d listen for the past year and a half that your brands need to be owning property all over the monopoly board. Just owning Boardwalk isn’t going to cut it.

What does that mean? Since the dawn of the internet we’ve all been following the same funnel based model for success:

  1. Run a bunch of advertising
  2. Have the call to action for the advertising be to the brand’s site
  3. Get people on to the site
  4. Convert the people

In applying this model we were trying to drive traffic to 1 destination. In doing so, the focus was always on Unique Visitors. The baseline and focal point for success rested on increasing the number of unique visitors. If you were estimating a conversion benchmark of 10%, having more unique visitors increased the total number of conversions. Makes sense.

But, in leveraging that model, we didn’t take into account all the other interactions taking place throughout the web. Often these interactions were smaller…micro if you will. Despite being small, they definitely mattered; and they still do.

As companies look to engage consumers where they are (Twitter, Blogs, Facebook, etc.) something interesting is going to happen. Unique Visitors to the site are going to decrease. They’re going to matter less because the funnel isn’t linear.

Best Buy and Amazon recently announced that they are going to make their inventory available to any and all developers who want to create apps, widgets, or the like so that sales of the product could happen on this site. The idea is that they don’t care where the sale takes place, so long as it takes place.  The path to purchase isn’t linear. Think about it. You could be on Facebook with the Amazon App installed, see a deal on that book you added to your wish list, and then buy it right there…with NO need to visit Amazon.com. Now, that’s value.

But, what are we going to do about those decreased traffic numbers? The implications are huge. Online publishers set their value based on their audience size. Is your site less valuable because it now gets less traffic? Again, maybe the real point is we need to look beyond unique visitors when determining what success looks like.

Make no mistake about it, real estate is king. If your focused on hoping people land on Boardwalk you’re going to lose this game. Start buying up property now.

Why I Won’t Buy A Kindle

I really want a Kindle.  Every fiber in my body wants to visit Amazon.com, log-in, add the Kindle to my shopping basket, elect the overnight delivery option, and complete the transaction.

But, I don’t and I won’t. It’s not the money, battery life, form factor, selection of books, or features. Nope it’s something much simpler; there’s no easy way for me to convert my existing book purchases to the Kindle.

I have dozens of books that I’ve purchased on Amazon that are also available for the Kindle. In order to get those books on the Kindle I’d have to repurchase them AGAIN. Sorry, it’s not going to happen. I want to be able to access Freakonomics whenever I want. I re-read books often. I can’t even begin to count the number of times I’ve read Where The Suckers Moon. I’ve done a preliminary look at the Kindle catalog. It would cost roughly $1800 for me to re-purchase every book I own into the Kindle format. This is insane, no?

When the iPod came out I didn’t have to repurchase all my CDs. Instead I CONVERTED them to MP3s and synced them with the iPod. This made spending more than $300.00 for an iPod a simple proposition.  I could take all of my music with me in one little light weight tool for a relatively fair fee.

I can’t imagine that I’m the only person who feels this way.

Would it be that hard for Amazon to do the following:

  1. Scan your Amazon purchase history and let you “upgrade” to the Kindle format for free (ideally) or a nominal fee. They have all of the data – it doesn’t seem that hard.
  2. Allow you to trade in your books for the Kindle format. You would go to Amazon.com select the books you are converting, pay in advance (nominal fee), and produce a shipping manifest with a barcode. You would mail/FedEx in your books along with the manifest. Amazon would match the books up against the manifest and assuming everything matches up, scan the barcode which would credit your account for the downloads. The books would then be donated to schools, libraries, and charities. Everybody wins in this situation.

I’m ready to buy a Kindle. Amazon just needs to make it easier for me transfer my library to it so that I can really take 100s, if not 1000s, of books with me wherever I go.

Amazon, are you listening?  Let’s talk.

Twitter Needs A Thumb

Tools on the internet continue to get smarter. Pandora Radio is one of my favorite examples. It serves up music based on the music I like and the music I don’t like. They do this in a real simple fashion. When a song comes on I can elect to click either a Thumbs Up or Thumbs Down icon. Simple, right?

Based on that feedback, Pandora optimizes my playlist. Pandora gets smarter with each piece of information I supply it. This isn’t exactly revolutionary right? Tivo, Amazon, and Netflix have been leveraging this type of approach for years now. Heck, even Facebook let’s you do that to the ads that are served. Yes, you can thumbs up or down an ad. Based on that information Facebook is supposed to get smarter and no longer show you an ad you clearly aren’t interested in.

This brings me to twitter. As you know I’ve been a big fan of implementing a rating system for twitter for a while now. When twitter was a kiddie pool this feature was a nice to have. But, now that twitter has become an ocean it’s a must have. Imagine being able to thumbs up or down a tweet and having twitter get smarter based on that feedback. Twitter could recommend new people to follow based the feedback and even filter out people from your stream.

To me, that’s value. Much like NetFlix you could compare rankings with your friends/colleagues and let their feedback influence the recommendations. That’s social media at its best right there. What would be even better is if twitter aggregated all the feedback across their membership base to score tweeters. Think about it. No longer would you have to simply look at the number of followers someone has a means of evaluating their value. The community would be able to influence and determine their value. On some level the community would be similar to deputies policing the twitterverse.

Of course not all of this would be free. Twitter after all needs to make some money. From a monetization standpoint, twitter could sell back the information from the community to individuals. Wouldn’t you like to know the raw numbers? If you care about your brand (personal or corporate) you should.

I have a sneaking suspicion as to why they won’t implement this feature, but that’s a whole other post.

Am I crazy? Let me know what you think.

Guest Post – The Impact of an Unavailable Web Site: Dennys.com Superbowl

I’m out on vacation this week.  The keys to TheKmiecs.com have been turned over to a few, select, awesome guest writers.  The following has not been edited by me and is the work and effort of the original author.  I appreciate the time and thinking that went into this post and hope you will too.  Enjoy!

It’s been a week since Denny’s ran their Superbowl ad featuring a free meal and all information seems to indicate a successful effort. The message was perfectly aligned with the economy. In a time when people are being laid off by the hundreds of thousand, offer a free breakfast to everyone in the country.

The company had seen considerable negative change in the past 20 years. They faced lawsuits accusing them of racism, and a growing public perception of inferiority, tarnishing a brand that was once widely known for good value.

Looking to put that behind them, this was an effort to reintroduce people to the value proposition of Denny’s meals. This was a big bet. Failure brings ridicule and questions on why the company spent $3 million on the effort. Success can be equally challenging, as Denny’s learned.

What Happened

Following the Superbowl and on Monday morning, Dennys.com experienced a surge in traffic with people looking for information on the offer and the location of the nearest restaurant.

According to comScore, 15% of all respondents visited an advertisers web site after seeing their web site, and 23% of those respondents visited Dennys.com. With a total audience of nearly 100 million viewers, that would place the number of visitors to Dennys.com around 3,500,000 people. Other reports vary in estimating traffic from a 434% to 1,700% spike. Both sets of figures are reasonable as the bulk of visitors likely came during peak times.

As a result of this spike, Dennys.com was largely unavailable to people after the Superbowl and Monday morning.

A Preventable Outage

It was predictable that Dennys.com would experience a significant surge following the ad. Unpredictable traffic from sources such as the DrudgeReport.com, Digg.com, and Twitter.com can lead to an unforeseen and overwhelming load on web sites, but placing a Superbowl ad requires advanced planning.

Note that Denny’s made the offer for breakfast on Tuesday morning. This may have been intended to give people time to coordinate going to Denny’s. There was clearly thought about the activation and timing of the program, but there was a either a miss in collaborating with their Digital Agency or Technology group, or a lack of experience in handling this type of event.

What Did Denny’s Miss?

It does not appear Denny’s made changes to their web site or hosting arrangement to prepare for the Superbowl traffic. A quick check of their site indicates two key misses:

  1. From a brief review of the source code and scans for origin servers, it does not appear there was a Content Delivery Network (CDN) utilized for the site. A CDN reduces the work a web server must do by offloading the amount of work it performs. A CDN such as Edgecast, Akamai, Amazon Cloudfront, or Limelight places copies of the static assets of a web site on ‘nodes’. When a user requests a web page, they are first routed to the assets on these nodes instead of the web server. In my experience, a CDN can reduce the load on a web server by over 90%, while improving response times by up to 45%.The most recent detectable change in Denny’s hosting environment occurred in October 2008 when they upgraded to a new version of IIS. We cannot tell from this information if Denny’s added capacity to their web servers.
  2. While it appears some steps were taken to minimize the number of queries required by users, the area most likely to be used by consumers was still partly dynamic (restaurant locator). Search of this type is among the most resource intensive. An alternative would have been to provide static navigation pages (state > city > locations). These could have been easily created by searching with the existing Content Management System and saving the results as static pages.

The cost to implement a CDN varies by vendor and capability, but I would estimate the total cost for both of these solutions to be less than $60,000 for the year.

The Negative Impact to Denny’s

The Internet provides us with enough information to make educated guesses on the impact of the failure. I’ve found it’s useful in the past to use a Customer Lifetime Value scenario to determine the impact of these decisions.

We first need to build a table of our assumptions:

Measure Value Method for Assumption/Calculation
Audience 100,000,000 Total potential audience of the advertisement.
Purchases per year 12 Estimated 1 trip per month.
Retention Rate per Period 70% Estimated % of customers that return the following month for meal.
Average Purchase Value $12.07 Recent breakfast ticket for two at Denny’s.
Profit Margin 20% Estimated gross profit of restaurant.
Profit per purchase $2.41 Dollarized gross profit of average ticket, calculated from Avg. Purchase with Profit Margin
Cost of Reaching a Potential Customer $0.05 Audience size/cost of advertisement.
Response Rate 2% Denny’s self-reported trial audience.
Coupon or other one-off costs $2.30 Estimated cost per meal derived from Denny’s total promotion cost.
Total Customer Acquisition Cost $2.35 Sum of per customer acquisition costs.
Technology Costs $5,000 Estimated cost per month of CDN for program of this size.

These assumptions are based on public numbers, derived from figures Denny’s has released, some educated guesses, and my personal research on Thursday at the local Denny’s. For the sake of this exercise, we’ll keep this to a one-year analysis and ignore Discount Rate and Product Inflation.

The most controversial figure in this table is the retention rate. With the exception of telecommunications, most companies do not publicize their retention rate. This guess is an average based on estimates ranging from 53 – 85% in the restaurant industry.

Based on these assumptions, we can project that Denny’s would see the following results this year:

  Q1 Q2 Q3 Q4 Total
Customers 3,066,000 1,051,638 360,712 123,724 4,602,074
Revenue $37,006,620 $12,693,271 $4,353,792 $1,493,351 $55,547,033
Cost $29,605,296 $10,154,617 $3,483,033 $1,194,680 $44,437,626
Profit $7,389,060 $2,534,448 $869,316 $298,175 $11,090,998

For a stated cost of $5 million, $11 million in gross profit is an acceptable return. It also accomplishes the goals of reintroducing the brand to consumers, and the financial impact would not be limited to 2009.

But did Denny’s leave money on the table?

Let’s next assume Denny’s implemented the recommended technology steps at an additional cost, and as a result saw an increase of 5% in the response rate to the trial (to a total of 2.1%). What impact would that have on the overall program?

  Q1 Q2 Q3 Q4 Total
Customers 3,219,300 1,104,220 378,747 378,747 4,832,178
Revenue $38,856,951 $13,327,934 $4,571,481 $1,568,018 $58,324,385
Cost $31,113,438 $10,681,764 $3,673,700 $3,673,700 $46,659,508
Profit $7,743,513 $2,646,170 $897,781 $298,084 $11,664,877

The most immediate impact is Denny’s would have served 153,300 more customers on February 3. If we follow the same assumptions through the year and add the costs for the technology recommendations Denny’s would have realized an additional $573,879 in profit for the year. That is a 956% return on the technology investment.

Note: These figures also raise an interesting question into what type of retention programs they implemented. With retention driving significant dollars, was the bigger mistake to not leverage CRM?

What does this tell us?

This wasn’t a Grand Slam for Denny’s, but it was a solid double. Denny’s failure here isn’t critical from a financial perspective. The program will likely achieve profitability for the restaurant, and bring new customers into the stores. The idea with any trial promotion is to introduce people to your brand with the hopes a percentage of the trial audience will return and by those definitions, the company was modestly successful.

While the company will benefit from its efforts, I think it stumbled seriously with the online execution. There was no excuse for Dennys.com to be unavailable to users. For a company that has a reputation issue, not being able to serve people online is a failure. They had the advanced notice. Technology is readily available to serve capacity, and they were clearly thinking about the timing.

Located in Chicago, Rob Saker is a Marketing Technology & Analytics professional in the Consumer Goods industry. He can be reached at his blog at www.robsaker.com.

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Digital dad to Cora and John. Love ironing, bourbon and BBQ; no necessarily in that order. Living life, like I stole it. I'm always up for a

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