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The Mom & Pop Store: A Book Review, a Personal Perspective, and 5 Lessons for E-Commerce

I'm just back from a 2 week vacation where finally, for the first time in nearly a year, I had time to read books.  While I promised myself ahead of time that those books would not be related to e-commerce or retail, one of them was, and I am thankful that I allowed myself to break the "no working on vacation" rule.

Robert Spector's book " The Mom & Pop Store: How the Unsung Heroes of the American Economy Are Surviving and Thriving"  is well worth reading by anyone in e-commerce, retail, marketing or customer care.   While the book centers on the challenges and triumphs of small local brick and mortar businesses, there are lessons to be gleaned for anyone who interacts with customers in any channel (especially e-commerce, where personal  connections with customers are unfortunately rare).

Drawing from his own personal experience working in his family's "Mom & Pop" meat business, Spector explores the history and perspectives of dozens of small merchants from grocers to jewelers to booksellers to restaurateurs.  They range from century old legacy family businesses to 1st generation entrepreneurial ventures.

These business owners are passionate, innovative, resilient, service oriented and deeply involved in their communities.  No strangers to change, many of them are operating successful e-commerce stores in addition to their core brick and mortar businesses.

This book resonated for a personal reason.  While I was away, I periodically checked the news.  The headlines of the recession continued.  Last week's big news was the unemployment rate, now topping 10%.  The last time that happened was in the early 1980's, which coincided with my graduation from college.  Broke and discouraged by the lack of "real" jobs for new college graduates, I took a part time retail job in what could easily be described as a "Mom & Pop" store.  Without expecting to, I became a merchant. I checked in the new merchandise.  I decorated the store windows.  I helped customers (many I knew by name) and rang up sales.  And most surprisingly, despite the low wage, sore feet and weekend hours, I loved it.  That "Mom & Pop" experience was the foundation of my retail (and later e-commerce) career, and it taught me life long lessons about customers, communities and the importance of humility, whether you're selling in a store or selling online.

As I read Robert Spector's book, I realized how much these successful Mom & Pop stores have in common with one another, and how much the e-commerce community can learn from the guiding principles of successful Mom & Pops.  Here are my 5 favorites:

1) The store is uniquely yours:  I've written in the past about the importance of a compelling and unique value proposition.  Mom & Pops continually face stiff competition from national big box stores and e-commerce giants that under cut them on price and over do them on selection.  The smart Mom & Pops have done their homework and found their niche; the thing that they can offer that no one else can.  Read the story of a small urban grocer who had the nerve to get rid of Coke and Pepsi in order to carry an exhaustive selection of old fashioned bottled soda pops.  He's no longer slugging it out on price with big grocery chains, he's the long-tail merchant of soda pop and his customers love it.   Read about a tiny ice cream shop in Philly that still sells ice cream from a 5 generations old family recipe that defies the science of frozen desserts and keeps customers coming back for more.  And read about the small hardware store in Washington, D.C.  that's just blocks away from a Home Depot and takes care of customers with a well edited assortment and over the top service.   Whether it's a unique product, a unique experience or a level of service that can't be matched, these retailers (like good e-commerce merchants) have something special that is theirs alone.

2) It's personal: E-commerce sites take pride in offering algorithmically driven personalized product recommendations. Great, but is there a human touch to the site, to the service?  Read about the jeweler who visits a long time customer in the hospital.  Her terminal illness has caused her fingers to swell, so he gently cuts the ring off of her finger and has it re-sized so that she can wear it during her final days.  Read about the florist who reaches out to customers who have lost a loved one with a bouquet and a hand written note after the funeral and visitations are over.  On a brighter note, I recall buying swimwear from Landsend.com last year and receiving a friendly phone call the day after the package arrived to see if I needed to exchange a size.  Sure, e-commerce thrives on automation, but a true human touch at the right time is something your customers won't forget.

3) It's the community, stupid:  In the world of e-commerce, social networking and community are things we treat as somewhat novel and new.  Ask any successful Mom & Pop store and they'll tell you that the community is the essential foundation of their business and always has been.  Your reputation is all you've got.  Of course people talk about you.   When people shop, they connect with others, keep on top of community news and gossip and exchange information about who's got great products, who's having a sale, who sold them lousy meat last week.  Mom & Pops donate to local causes, sponsor Little League teams, hang banners out to congratulate high school graduates, take up collections for a local business or family in need.  They do it not as a means of promotion, but as a way of life.  They know that the community will be what pulls them through their own tough times.  Read Spector's example of a florist who lost everything in a fire and was back in business within 6 hours, thanks to the outpouring of support from the community (including supplies and resources from competing florists!).  Read the example of the grocery owner who was shot in a robbery.  The people of the community, including other local businesses, took up collections for the injured man and helped the family get back on their feet.

4) Invent, then re-invent. Staying in business is about change.  Read about the ethnic grocer who introduces new items as the neighborhood shifts from European immigrants to Hispanic immigrants.  Read about a long standing neighborhood bakery that now focuses on weekend business and smaller cakes and bread loaves for smaller families.  Read about an upscale London butcher  who now carries premium quality seasonal game since his neighborhood has become increasingly affluent.  Your audience might change, their needs and tastes might change, but you can still be meaningful.  You have to be.

5) Overcome adversity. Big adversity: Not every business survives recessions, fires, floods, death and destruction, but those that do teach us valuable lessons.  Read the chapter about Hurricane Katrina and the passionate bookstore owner who managed to get the store re-opened within 6 weeks after the disaster (it took Barnes & Noble 6 months to re-open).  Read about the beloved New Jersey deli that burned to the ground, only to re-open 9 months later to lines of customers wrapped around the block.  Many of the businesses in this book have been around for nearly a century and have endured much more than the e-commerce industry's "bubble" or the current recession.  They've taken the long view and weathered the inevitable hard times with dignity and perseverance.

Of course, I highly recommend reading "The Mom & Pop Store" in a beach chair with the sun on your back and a drink in your hand.  If that's not in the cards, I still recommend that you read it.  Every e-commerce leader has an inner-merchant, and this book should help you get in touch with yours.

For the record, the rest of the books I read on vacation don't have anything to do with e-commerce or retail.  Unless of course you have a lot of nasty office politics to deal with, in which case I recommend Roderick Graham's "The Life of Mary: Queen of Scots: An Accidental Tragedy".  Nothing quite like imprisonment, poisonings and be-headings to help you keep things in perspective.

From the Author's Mouth (well, actually, from his computer): An Interview With Martin Lindstrom

If you haven't had the chance to read Martin Lindstrom's book Buyology yet, trust me when I tell you that when you read it, you'll have plenty of questions. I did. Fortunately for me (and you) Martin generously agreed to answer a few of my questions in an email interview.  Our virtual discussion is below.  My review of the book is not quite as interesting, but if you'd like to read it, you can find the post here.

SM: The neuromarketing research used in Buyology is obviously very complex and expensive.  How quickly do you see these techniques becoming more widely available?

ML: I am pretty convinced that it is only a matter of years before many if not most of the Fortune 1000 brands in one way or another will begin adapting components from the neuromarketing communities in order to strengthen their research.   Recently I founded Buyology, Inc. , a New York based company specializing in analyzing brands based on the findings from the Buyology study.  My idea was to make this type of insight accessible for everyone, not just for the big boys, and thus ensure that we'll see a combination of qualitative, quantitative, and neuromarketing based research.  It makes sense, as we today know for sure that existing research techniques simply aren't able to understand and analyze our subconscious mind.  Neuromarketing studies can today be conducted at price tags as low as $40K.  As the techniques become more advanced and the technologies and software more sophisticated, we'll see a further price drop, and most likely offerings which even the smallest companies would be able to afford.

SM: You cite the humbling statistic that 80% of new product launches fail within the first 3 months.  For companies that can't yet afford or access neuromarketing research, what sorts of things can they be doing to improve on the failure rate?

ML: The premise of my book is to dare; dare to be different, to go to the edge - in short, to stand out.  A wise man once said " If you're standing in front of a monster and need to beat it, turn its strength into its weakness."  The strength of Fortune 1000 brands is that they have the capital to build brands.  Their weakness is that they're inflexible, afraid of offending anyone, and petrified of standing out.  As a small business this is your opportunity.  Some of the most successful brand releases I've seen build exactly on this; they provoke, stand out, go to the edge.  In short, they leverage the fact that they dare in contrast to the multi billion dollar brands.   In fact, when advising those Fortune 1000 brands I often ask them to imagine cutting their marketing budgets in half, helping them to recover their entrepreneurial spirit, simply for the reason that they struggle to regain that spirit which once helped them to become what they are today.

SM: It was clear from the research that a sensory approach to branding; one that incorporates sound, touch and smell in addition to visual elements is very important.  This obviously gives brick and mortar stores an advantage over e-commerce sites, at least for now.  Do you see the e-commerce experience becoming more sensory, and if so, how?

ML: I'm still surprised about why sound hasn't found a natural role on the internet. We all have speakers, and we all have ears - yet how come less than 1% of the top 1000 websites contain branded sounds, i.e. sound which reflects the signature of the brand?  And how come navigation sound hasn't hit the net yet? I mean, you use your cell phone and it replies by playing navigational sounds when you dial, switch it on/off, have a low battery, you name it.  The same is the case with computer games, your TV, even your alarm clock.  Yet still when you visit Amazon, eBay or any other shopping site, there's just dead-on silence.  No confirmation sound when I've clicked "accept credit card", no sound confirming when I've placed stuff in my basket, no error sound if I've filled things out wrong.  How come? I think that would be a good first step to pursue before anything else.

SM: I was fascinated by the chapter on mimicking behavior; how seeing others do something makes us want to do it too.  Will the explosion of user generated content and social tools work to a marketer's advantage to propel this behavior?

ML:  Most definitely, and it is already happening.  It is not coincidence that YouTube and other video sharing networks have turned out to become as popular as they are.  We love to observe, imitate, and repeat other people's behavior.  I still recall when I was a kid watching Michael Jackson moon walking.  Suddenly the whole world was imitating him, then we were wearing a white glove.  Those trends or fads are likely to be started by brands in the future, and because of the internet they're likely to spread substantially quicker and more efficiently.  From a practical point of view this means that brands will begin to consider how their new soda has to be consumed, or how their new candy is to be eaten.  In short, they'll no longer just develop the product, but consider the entire experience package and spread this using social media.

SM: For me, the greatest irony in the book was the success the cigarette makers are having with subliminal marketing.  The law says they can't advertise traditionally, yet that doesn't seem to be a detriment to their success.  This obviously raises some ethical issues and some interesting debate about government involvement in these sorts of situations....thoughts?

ML:  I was honestly shocked when we discovered the true power health warnings have on smokers - encouraging them to smoke even more.  It's scary, and so is the fact that we indeed smoke more, not less at a global scale.  How come?  Because the tobacco companies were banned from advertising and thus had to find alternative avenues.  This was indeed the best thing which ever could have happened to them.  Why?  Because it forced them to think about new techniques.  As everyone else was resting on the good old techniques, tobacco companies suddenly went ten years ahead of time, bypassing the problem the rest of the brand world today faces: that consumers are bombarded with information and thus the impact is somewhat diminishing.

So, what have we learned?  I think government needs to play on equal terms with the tobacco industry.  When I released Buyology we were, to my knowledge, the first in the world using fMRI to understand the true power of tobacco advertising.  Considering the impact the tobacco industry has on the world and our health, not to forget the cost of the health bill, anti-smoking communities should have access to substantially more sophisticated research techniques and thus gain the latest insight about the true effect of anti-smoking campaigns.  This should be the starting point, and a lot of resources should be put aside to further understand the true influence of tobacco related messages.  Once we've discovered the truth (or as close as we can possibly come to the truth) new regulations should be established, yet regulations which can be adjusted as time goes by and new research results emerge.  It will always be the dog chasing its tail.  My hope is with studies like the Buyology project we'll continue keeping an eye on players and beat them at their own game.

SM: As I read the book, I noticed a lot of parallels with another recent marketing book, "Buying In" by Rob Walker.  You cite many of the same brands (Hello Kitty, Livestrong, American Apparel, Apple, etc.) Have you read the book? If so, do you feel that your findings are complimentary?

ML: There are indeed parallels, and I'm glad this is the case.  It would be kind of scary if everything I wrote about in Buyology would be totally opposite of everyone else.   It is easy to identify  the successful brand players in the world; the numbers and the buzz tell it all.  This where I'm in clear agreement with people like Rob Walker.  Buyology however represents one difference which Rob's and I'd say just about every other book or study out there doesn't include: scientific evidence proving why the Hello Kitties of the world have succeeded.  The good news here is that some of the theories we've been working on for fifty years or more have finally been confirmed.  The bad news is that many of the theories now finally can be confirmed to be an utter waste of money.  So you could say where Rob and other's books are version 1.0, Buyology is version 2.0; where science offers us an insight and a dimension never put on the classic brand heroes of today's world.

SM: What stores do you do go to for your favorite dopamine hit?

ML:  It's funny you're asking about that, because I often joke around with this exact term when my girlfriend and I are shopping, teasing her by saying "let's go in and get a dopamine boost."  I love brands which are not yet discovered.  I love art, creative stuff that doesn't have labels on, but which tells a story that is unique and special.  I love products which have a special story.  I love stuff you can't buy everywhere, but only in small stores; somewhere in Japan, Columbia or Saudi Arabia.  Things which no one has and few care about.  That gives me the rush.  And yes I am, by the way, affected by brands, however I guess I'm one of the harder individuals to persuade (for some strange reason) ;-D

Buyology: A Book Review. Or, How Brands Can Use Science to Get Religion

Attention marketers: Forget consumer focus groups and surveys.  Instead, increase your market research budget and go for a little neuromarketing research.   It might just save you a costly failed product launch or teach you why interacting with your brand needs to be equal to a religious experience.

Martin Lindstrom's latest book, "Buyology: Truth and Lies About Why We Buy" is just out.  It's the book for you if:

• Like me, you are fascinated by how brands are built and how they influence our purchase decisions
• You're a marketing leader who, like me, has struggled to convince your fact-based executive team about the importance of building an emotionally powerful brand
• Like me, you're a shopping enthusiast who wonders why shopping makes you feel so good or why you bought those shoes that you'll never wear

After years of extensive (and yes, expensive) neuromarketing research, Lindstrom is able to reveal how our subconscious brains respond to marketing messages (or not) and how purchase decisions are made.  Over 90% of consumer buying decisions are made in the subconscious, says Lindstrom, so understanding how the subconscious works is the key to the cash register. 

Yes, they did indeed strap research volunteers up to all kinds of machines and watch their brain activity while they watched commercials, looked at brand imagery, listened to ring tones and even smelled things.

While the book is chocked full of findings, it's an easy and enjoyable read that never overwhelms with the academia.  The findings are in some ways validating to all of us who believe in the power of strong brands, but are in just as many ways humbling, as we see example after example of marketing execution that falls flat with the brainwaves.

Among my favorite takeaways from this research, in no particular order: 

• Brands and religion are a lot alike. Strong brands produce brain activity patterns identical to religious images.  And no wonder, says Lindstrom, since powerful brands adopt the same  foundational pillars as religions, such as the use of symbols, storytelling, rituals, a sense of belonging, a clear vision,grandeur etc.
• Shopping is sensory, and pictures aren't enough.  Brain activity swings in the favor of a brand if there are associated smells and sounds in addition to familiar visual cues. For those of us in retail,it's a rallying cry to up the ante on the sensory components of our e-commerce sites and stores.
• Customers say no when they really mean yes.  As we all have witnessed, what people say they do and what they actually do are two different things.  In one memorable chapter, research subjects say that they don't like a TV show they just watched, while their brain activity indicates that they really do like it.  The show turns out to be a hit.
• Subliminal advertising is not only alive and well, it's marvelously effective. In a case of true irony, the cigarette companies have become masters at this, given that they can't advertise in "normal" ways.  And guess what? Those warning signs that they're required to put on the packages? They actually make smokers want to smoke more, not less.
• Mirror Neurons.  You've got them. Sure, everyone wants to be an individual, but whether you admit it or not, you like to buy what other people are buying and do what they are doing.  Mirror neurons. You've got them, and they cause you to mimic other people's buying behavior. Maybe a reason why "best sellers" and customer reviews are so popular on our e-commerce sites?

Oh, and don't worry.  In case you were wondering, Lindstrom does have a chapter on the use of sex in marketing.  I'm sure you're dying to know whether or not it really works. In the spirit of continuing Buyology's research, let's see if that's enough to entice you to buy the book.

A Tall Tale Called the Long Tail? A Sensible Merchant's Point of View

WARNING: This post is too long by almost anyone's standards. But it's a cool and very important topic to e-commerce merchants.  You might want to read it anyway.

Back in 2006, like a bunch of other people, I bought Chris Anderson's book The Long Tail: Why the Future of Business is Selling Less of More.  Like a bunch of other people, I loved it.  At last, it seemed that someone had intelligently outlined the forces at play in the world of e-commerce and the changing dynamics triggered by increased product choice & accessibility.

Anderson's work sent an alarm bell to many traditional merchants: it's time to start obsessing about product extensions, limitless choice and highly personalized niche "micro" assortments.  For those tasked with managing inventory and running a profitable business, not an easy task.

Then, just to keep us on our toes, around the same time The Paradox of Choice: Why More is Less by Barry Schwartz was published, calling on those same merchants to avoid the pitfalls of over-assortment, to allow customers to focus on just a few choices and avoid the "overwhelm" factor.

So, what's an e-commerce merchant to do?  Sell less of more and risk over-assortment and dead inventory? Or sell more of less and risk commoditization and lack of brand differentiation?

I was prompted into thinking about this again recently, when I saw a brief article in the WSJ: Study Refutes Niche Theory Spawned by Web, which highlights recently released research by Anita Elberse and her supporting Harvard Business Review article Should You Invest in the Long Tail?

As it turns out, the conclusions of Elberse's work challenge some of the Long Tail's key principles. Specifically:

• Best sellers are more important than ever (Anderson says they are losing steam to niche products)
• Scores of niche products are never purchased and are unprofitable (Anderson says they are gaining importance to retailers)
• Niche products don't rate well in terms of customer satisfaction (Anderson says that some long tail products are just bad products)

Elberse's work has spawned a very interesting discussion on Chris Anderson's blog longtail.com. Overall, while Elberse's research is solid and her conclusions worthy of debate, some aspects of her work, specifically the use of percentages vs. numbers in her reporting and her definitions differ from Anderson's.  Those differences are big enough to cause loyalists of The Long Tail to stand firm, and confused merchants to perhaps become even more confused.

After reading the books, the research and the blog (all well worth your time to read, by the way), it seemed to me that it was time for a bit of merchant sensibility to be infused in the mix.

The risks of going too far with both limited "best seller" assortments and over-specialized niche offerings are well known to retailers.  While the web gives us exciting opportunities to break down brick and mortar barriers, capitalizing on those opportunities takes strategy, discipline, investment and plenty of hard work.   To be successful mining long tail profits, there are are few big things you need to master:

A) Know your product category. Long tail examples typically cite books and music: digital consumption or high sku count or both.   If you're not in one of those categories, you need to think through how the long tail applies to what you are selling.  Are there niche size ranges, colors, designs, or features that cater to an under-served market or to extreme loyalists who can't get enough of what you sell?   What data do you have to support investing in long tail inventory?  It's not just about carrying everything under the sun.

B) Take clues from your other channels.  If you are a multi-channel retailer, talk to the merchants for stores and catalog to understand where the opportunities are for logical product extensions.

• Is there a hot category where the limits of shelf space simply don't allow for a full assortment?
• Are there areas of the catalog where space has been cut back due to tighter mailing budgets?
• Are there product lines where the amount of product information desired by the customer is inappropriate for the store or catalog to tackle?
• If you have a limited number of stores, are there opportunities to aggregate demand via the web, therefore building enough volume to justify the investment in an extended product line?

All  of these areas could potentially yield insights as to where long tail merchandising could be successful.

C) Invest in customer insights.  One of the key takeaways from Elberse's research is the need to have intimate knowledge of your customers and their buying behavior.   There are some customers that will never venture into the long tail (such as the busy mom who always buys the same brand and size of popular jeans).  Others will actively seek out long tail products (such as a petite woman who is hard to fit, or a cooking enthusiast eager to try a rare French sausage in her cassoulet recipe).  Understanding who will buy in the long tail and successfully predicting what they will buy is critical to inventory management and profitability.  Elberse points out that a large number of long tail products in music are never purchased.  That's no surprise.  The long tail doesn't let merchants off the hook; quite the opposite.  We still need to intelligently select, assort, and manage inventory to our customers' needs.  A good merchant is a good editor, even in....NO, especially in the long tail world.

D) Invest in product discover ability & accessibility.  Herein lies the key to long tail success.  Carry a lot of the right stuff, and be religious about helping people find it.  Assuming you know your customer and have picked the right products, they have to be able to discover those products in a relevant context.   E-commerce technologies are critical to unlocking the long tail.  Among the the tools you must have in place are:

• Powerful search, preferably in guided navigation format, allowing customers to sort, edit and drill down on a wide variety of attributes, from top level to granular.   Tools like this will help your customer avoid the paradox of choice.  And don't underestimate the manpower and work required behind keeping your product data in search shape.
• Product recommendations.  Don't think that this can be done by a merchant manually assigning "you might also like" items on every product page.   That won't scale, nor will it give you the success rate of automated recommendations that draw from customer history and product data.
• Product information.  Sure, amassing and maintaining a vast body of product content is hard.  But a huge part of what makes that long tail product discoverable to people that might want it is what you have to say about it, or in the case of customer reviews, what other people have to say about it.   The more that oddball product is described, tagged, and recommended, the more likely it will be found by the perfect prospective owner.
• Product reviews and ratings.  As mentioned above, it's not just the reviews themselves, but how you use them as a discovery tool.  Incorporate them into search, comparison tools and site navigation.  Allow customers to ask questions and answer one another.  Incorporate the terminology and attributes used by reviewers into your product descriptions and copy.   And of course, read what customers are asking and saying about the product.  Sometimes a long tail product is a poor seller because it's a lousy product, not because people can't find it.

E) Don't abandon best sellers.   Elberse makes this a cornerstone of her article, citing her research findings indicates that retailers are selling more blockbusters, not less.  Anecdotal case in point:  Last week I bought a CD that would, by anyone's definition qualify as a blockbuster.   The only reason I bought it was because I was on a site  that offered me "top sellers" as part of my recommended products.   Now that I am no longer 15 years old, I am not that savvy about what's selling in music.  I would have likely never known that this CD existed or that it was appealing to me.  The fact that the site I was on knows my musical tastes and offers me a multitude of ways to navigate and discover products was what drove the sale.   So, just like good e-commerce merchandising tactics help people discover the long tail products, they also help less aware customers discover the blockbusters.  And sometimes, it's the blockbuster purchase that drives the customer into the long tail the next time they visit.

So, is The Long Tail a tall tale or a real profit opportunity?  Ultimately the question rests with the retailers who are working to execute e-commerce well.  Comments and success stores are of course, welcome.

And, if you are still in the mood to read more, here are a couple of good case studies of companies successfully navigating the world of long tail retail:

The Hyper-Personalized Business Model Trend

A Niche E-tailer Size up Glamour....One Customer at a Time

And, last year's post:  The Long Tail in Real Life....3 Variations on a Theme   

Summer Reading for E-Commerce Marketers

While you'd never know it from Seattle's grey skies, Summer is here.  If, like me, you're the type that likes to better your career while you kick back with a book, here's one that will fit the bill.

This past weekend, I was doing some work for a client on social media strategies. I had purchased Charlene Li and Josh Bernoff's book Groundswell: Winning in a World Transformed by Social Technologies a while back but had not found time to read it, so this work gave me the long overdue excuse.  Not only did I read it, but I dog-eared just about every page.

While more than enough books and articles been written about social media and social technologies lately, little of it, in my view, has yielded in practical advice and real world case studies. Finally, Li and Bernoff have given us a real resource for navigating this new world.

While I've criticized Forrester in the past for being too "academic", this is an area where a little schooling makes sense.  Far too many companies are leaping into this sandpit without a strategy. The book does a great job of breaking down and distinguishing the types of consumer behavior that drive social media, the types of  social media objectives that companies can develop based on business goals, and the current appropriate social technologies and applications based on those objectives.

While the technologies that enable people to connect and get what they need from one another will continue to evolve and change, the discipline of developing a clear strategy based on who your customers are and what you are trying to accomplish should stand for all time.  As a follower and proponent of social media, I confess I've been frequently confused by how to best use it and measure effectiveness.  I'm sure I'm not alone.  E-commerce companies busy with running their day to day businesses will greatly benefit from the clarity Groundswell will provide.

While Li and Bernoff don't provide all the answers (and who would expect them to at this stage of the evolution?), they do get us all to start asking the right questions and considering the consequences of the potential answers.  What Summer romance novel can do that?

If you still want more after reading the book, you can participate in the Groundswell conversation at www.forrester.com/Groundswell

Now, if Seattle, could just get some sun!

Has E-Commerce Turned You Into a Brat? Or RU2 Old?

One of the things that I love about working in e-commerce is the diversity of skills and talent that are required to make it work.  You need rock solid retail know-how, operational expertise, state of the art direct marketing knowledge, design and user interface skills and, of course, incredible technical ability.

Usually, this means that e-commerce team members not only have different career backgrounds and training; in many cases, they come from different generations.

A few years ago, I had the good fortune to attend a presentation by David Stillman, who, with Lynne C. Lancaster wrote the book When Generations Collide. I left the presentation looking at my team, my own career and my customers from a very different angle.  The book is a few years old now, but the premise is highly relevant. In the words of Lynne C. Lancaster:  "So much of what is going on in our lives is seen through our own generational lens".

The book is full of interesting insights on how cultural, political and economic factors have shaped generational attitudes toward work, family and consumption.  Case in point:

Want To Create "Buzz"? Try The Wisdom of Crowds vs. The Influence of Individuals

Last week, I attended the Shop.org Strategy and Innovation Forum and listened to Andy Sernovitz's keynote address on word of mouth marketing.  His book "Word of Mouth Marketing: How Smart Companies Get People Talking" is full of practical advice.   The rise of online social shopping has marketers everywhere studying up on how to create "buzz"; in other words, how to get people talking about and flocking to their products. In bee speak,  that means getting customers to do the "waggle dance",  a bee's method of using body movements and sound to alert others that they've found something good.

If you are a student of word of mouth marketing, you'd be wise to also become a student of nature and science.  In the last couple of months, I've read a number of articles on "swarm theory";  in other words, how ants, bees, birds and other "leaderless" species in large groups manage to find the right place to live, stake out the best place to eat, solve complex problems and guide one another to into forming a thriving society.  The behaviors are, no surprise, remarkably similar to humans traversing the internet in a quest to find the right product.  And, some would argue that the popularity of certain sites and certain products has more to do with randomness than smart marketing (sorry to deliver the bad news).  Despite the time and money spent trying to find those elusive highly influential people,  much of this writing suggests that more successful results will come from making your product available via mass marketing, then letting regular old non-influential people get the message out in the "random" way that ants and bees do it. 

If this topic is of interest, here's the reading list. 

1) First, read what National Geographic has to say about Swarm Behavior, and how observing bees and ants is proving to have real business value by helping companies find the most efficient means to solve complex scheduling and routing problems and save energy.  Nature's way of decision making is making it's way into the boardroom.

2) Next, read the Knowledge@Wharton article We Are Smarter Than Me: How the Wisdom of Crowds Can Help Businesses Succeed (registration is required, but the content is free) to get an excerpt of Barry Libert and Jon Spector's book We Are Smarter Than Me: How to Unleash The Power of Crowds in Your Business.  There are some terrific examples of how smart companies are bringing "swarm theory" or community decision making into their product development process, creating loyal fans before the product even exists.

3) If you're still not a believer, read an MSNBC article Scientists Abuzz Over More Efficient Web Servers: Honeybee Waggle Dance Inspires System For Internet Hosting Company and you'll see how imitating bees can improve business performance.

4) And finally, this month's Fast Company magazine ties it all together with a story for marketers involving real, HUMAN research.  This one is a must-read.  Is The Tipping Point Toast? challenges the long standing belief (brought to center by Malcolm Gladwell's popular book, The Tipping Point) that trends are driven by a small number of highly influential people. According to The Tipping Point, marketers must seek out and target these influencers to be successful.  Not so fast.  Duncan Watts, a network theory scientist, argues that despite marketer's desire to believe that they can find and target these elusive influencers, the way trends happen is, in fact, much more random, and dependent upon a variety of circumstances that all have to come together.  Take the analogy of forest fires - there are thousands of them every year, but only a few are big, serious fires. The ones that do become big are less about the spark that started them, and more about the conditions that existed around the spark: the landscape, the lack of rain, the remote location, etc.

In other words, the leaderless crowd makes the trend happen by responding to its needs and the environment...and that bee doing the waggle dance because he found nectar is just as likely to be your average Joe bee than some BMOC bee.

Time for lunch. I think I'll try that new restaurant down the street that everyone's flocking to.

Kindle-ing All The Way: Making My Reading Season Bright and My Suitcase Light

No vacation would be complete without a little bit of field testing thrown in.  This past week, my husband and I escaped the last minute holiday crunch with a trip to Hawaii.  Whenever we travel together for more than a long weekend, we face a logistical dilemma: books.

Both of us are avid readers (my husband's greatest fear is being unexpectedly stuck somewhere without ample reading material) and we use our vacations as time to catch up on the books we accumulated since our last getaway.  A good week's vacation in a "butt in a beach chair" destination can require at least 5-6 books per person.   In the past, we've shipped a box of books to our destination ahead of time, or checked a separate bag full of books. 

Fortunately, Amazon's Kindle was introduced in time for me to buy one for my trip.  While my husband lugged 6 books in his luggage, I loaded my Kindle with 8 titles and packed only one "real" book (I carried it for safe measure in case I didn't like the Kindle or it broke or something, then I'd at least be safe until I could find a bookstore).

Here's the verdict on my Kindle experience:

Portability: The Kindle is lightweight and fits easily into my handbag, so I was able to take it with me everywhere - big win.

E-commerce:  Buying books for the Kindle is a breeze, and the wireless delivery is fast and slick.  When I first ordered my Kindle it was sold out, so I used the two weeks leading up to the delivery to buy my digital books - they were all waiting for me on my Kindle the minute I took it out of the package.  I do wish the selection of books available were a bit better, but it's not bad and I'm sure it will improve over time.    Buying books and newspapers on the Kindle itself (as opposed to on Amazon.com) is terrific when you're on the road.  At the airport, I purchased that day's WSJ for 75 cents, vs. having to wrestle with a newspaper on the plane and deal with cramming the used paper in the seat pocket.  I'm not ready to give up the "real" newspaper for everyday, but for travel, I'll never lug the newspaper again.

Reading: The Kindle is easy on the eye and not a compromise compared to traditional books.  I read 4 complete books on the Kindle and started a 5th during my vacation, with no eye strain.  It has a long battery life, and reading in the sun was no problem.  The only issue I had with readability was when reading a business book (yes, I did read a business book on vacation) which had some numerical charts, and in most cases the charts did not fit on one screen and were pretty much unreadable.

Interface: Using the Kindle is more intuitive than I thought it would be.  If  a sign of good usability is that you don't have to read the manual or go to the demo screens, then the Kindle passed the test for me - I was able to figure out just about everything in one try, though the Kindle probably does some things that I have not discovered yet.

Design: There are a few design flaws with the Kindle, which you've probably read about in other reviews.  I had read that some users objected to the very large "next page" and "previous page" buttons on the side of the device, as they caused users to hit them and turn pages when they didn't want to.  I initially had this problem, but resolved it easily by using the Kindle in its case, which is easily held like a traditional book.  By resting my hand under the spine, I was able to easily turn pages only when I wanted to.  This, however, created another issues.  With the Kindle in its case, it is impossible to turn it on or off, or to turn the wireless on or off ; the buttons for each are two very tiny switches on the back of the Kindle.  You have to either take the Kindle out of the case or try to get your finger between the back of the Kindle and the case, either of which is impossible to do without hitting the paging buttons.  This is a minor annoyance, not a deal breaker for me.

The Bottom Line:  At $399, the Kindle is expensive.  It's a e-commerce winner as far as the buying and fulfillment experience goes (as you'd expect from Amazon).  There's room for improvement on the book selection and product design side, but for an "out of the gate" product, I'm calling it a success.

And my suitcase, for the first time ever, is lighter than my husband's!

The Wisdom of The Bulletin Board: Innovating With Discipline

For years, I've had a small magazine clipping pinned on my bulletin board.  It's a picture of Meg Whitman, CEO of eBay, with the following quote:  "...strategy is as much the art of exclusion as inclusion. What are you NOT going to do?" 

The clipping is sun faded and dog eared, and it's only about 3 or 4 inches in size. But I have carried it with me from company to company.  It's had a place on the wall next to a few of my other favorites: a newspaper article about a woman who found a message from God in the veins of a tomato (no, I am not kidding), a credit card offer for a limited edition Elvis Visa card (unfortunately, I'm not kidding about that one either - you can even choose between the "young" or "old" Elvis on the card) and a quote from Seth Godin that appeared in Fast Company magazine:  "There is no correlation at all between success and hours worked."   I am still trying to decide whether or not I agree with Seth. But I know for sure that I agree with Meg.

Recently, I read an article in the WSJ that reminded me of how important it is to define the few things that are important and and do them well - and that means resisting the temptation to do more. The article, "How Innovation Can Be Too Much of a Good Thing" tells the story of how Avery Dennison Corp.  pared back its number of new product releases and as a result was able to get more good products to market successfully than in the old world of jamming endless ideas into the pipeline.

Every time I speak to my colleagues and clients in e-commerce, I hear the same thing.  "We have such a bottleneck in IT.  We just can't get new site features out fast enough. Our list just keeps growing and we don't have enough resources to get it all done."  Sound familiar?  Of course it does.

But it's not just an IT resource problem.  IT just happens to be where the ideas start to back up at the door.  If by some miracle your IT partners were actually able to do all of the things you want them to, it's unlikely that the marketing teams would be able to successfully launch all of those products or that your designers and copywriters would be able to turn out all of the front end pages.   Not to mention the need to stabilize and refine those new features once they went live.

If you have this problem (and you probably do), there are a few things you should do quickly to avoid the never ending logjam and cycle of poor execution:

• Always have a complete list of all ideas and potential projects, both in work and in the queue.  If the list feels like a hodgepodge of randomness, revisit your strategy: is it focused and clear to everyone on the team?  What are the big things you need to accomplish to deliver on the strategy?  Is there a well understood road map?
• Understand your capacity for new projects vs. keeping the business running.  If  it takes 50% of your IT department's time to maintain your existing site,  you are going to jeopardize your business by pulling resources to work on new things.  Chances are, other departments (marketing, site operations, creative, etc) have similar limitations.
• Develop a straightforward, consistent process for evaluating and prioritizing new projects, and be relentless in following it- no projects "sneak on" to the list, no bribes.  Be sure it's clear who the final decision maker is.
• Constantly monitor where you have bottlenecks (design, coding, testing, etc.) and use that to drive hiring decisions and resource allocations.
• Resist the temptation to overload the team - build in time to fix bugs, refine features and analyze results.
• Find a copy of an old book "The Goal", by Eliyahu M. Goldratt and Jeff Cox. It reads like a story (not the greatest one, by the way) but provides an easy to understand illustration of how the disciplines of identifying bottlenecks and managing throughput drive successful business results.

Be constantly aware that many companies tend to value innovation over execution.   How much time  do you spend in meetings brainstorming and generating new ideas vs.  discussing which of those ideas are the most important and how you are going to be sure you have the time to execute them well?  And, as Meg Whitman would ask, when you come out of those meetings, what have you decided NOT to do?

I guess if you've eliminated enough things, you can go home early, which would prove Seth Godin right.

"The Long Tail" in Real Life....3 Variations on a Theme

A couple of weeks ago, there was an article in the WSJ about how Klezmer music didn't do very well in a test at Wal-Mart. 

So, is anybody shocked that "Great Songs of the Yiddish Stage" didn't fly out the door?  Probably not.   But for followers of  "The Long Tail" by Chris Anderson, this is a bulls-eye, in the flesh example of what he's talking about.  While this sort of niche music is perfectly suited to the web (provided you've got the tools to help your target audience find it), the big box stores can't handle it profitably (and actually look kind of silly when they try), so they wind up carrying the same predictably boring assortment and reducing the music they carry to a commodity.

There's more:  Business Week recently did a short piece on Whole Foods' approach to bringing  products from small local providers into their assortment. This shows how an aspect of  "The Long Tail" can actually work in bricks & mortar. When the merchant has a keen understanding of the customers and suppliers at a local level, carrying selective niche products can be highly profitable and differentiating.  Obviously keen understanding wasn't a factor with the Klezmer music.

And, in an example of "The Long Tail" at it's purest, CNET News recently ran a piece about a small watchmaker in Switzerland that's letting customers build their own one-of -a kind Swiss watches on line at a site called 121time.com .  It's worth going to the site and building an imaginary watch just to go through the UI, which is meticulously well thought through, and the visual renderings were good enough to make me want to buy the $3000 watch that I built.  No brick & mortar store can do that.

While we're on the subject of the challenges of assortment planning, let's not forget about how important pricing is in the equation. There was a great article recently in Forbes about DemandTec, Inc.  who's developed software to help retailers make pricing and assortment decisions. I love this. This is the kind of thing that product-centric merchants have been doing manually and intuitively for years - and when you start to apply the science to it, you see how much money we're leaving on the table. 

Interestingly, the introduction of  this sort of  science and  the infusion of near real time customer intelligence into the assortment & pricing equation is one  of the big reasons merchants and marketers are fighting so much (see my last post for more on this).   

So, would all of this pricing science have helped Wal-Mart sell more Klezmer music?  I doubt it.  But it might have warned them not to carry it in the first place.