Mobile devices are everywhere, they’ve become a third appendage. Couple this with people’s passion for shopping and you have powerful mix…but how do you use it?

The fear, from consumers, was that mobile marketing would be disruptive. If it was, the mobile marketing business would be dead.

Mobile marketing is at its core, 1 to 1 marketing. It’s about building a stronger relationship. You need to allow people to opt-in, but this should not lead to opt-in overload. You want to be perceived as a dear friend….not a nudge. What would you whisper to them? What can you tell them that will make love your more?

NOW is the word and the acronym that Andy’s been thinking about.

Near-by, customers need to be in your radius, close, local
Only, there has to be a limit
Wow, make a compelling offer

The power is getting the person when they’re ready to buy. The basic building block is the text message (SMS).

Andy provided five things you can do NOW.

1 The NOW Pssst: Limited time offers, but it needs to be engaging and special. Target people near your location.

2 The Secret Sale: Things like in-store sales, or special offers. Texting to a special number will provide them a message/discount/coupon. It’s completely opt-in. No paper costs.

3 The In-Store Experience: Give the customer control of what they want. Give them additional information, the backstory on products.

It should be noted that text messages have to be short, so the message is message, no marketing speak.

4 Woot! Like Countdown: Send limited offers to opt-in customers. The idea is similar to Woot!

5 Mini WAP Sites: Basic mobile web sites that provide information about a store.

What are the benefits? Once again an acronym HUMID.

Hyperlocal - Operate things at a local level. Give local managers the tools and power.
Uurgent - Text messages hit, e-mail sit. People respond to text messages quicker than other forms of communication.
Measureable - Mobile is a data-crunchers dream.
Immediate - Promote cold, fast, hard sales
Dynamic - Take action when you need to. Empty store? Do something.

Shoppers love discovery, talking, bargains and recognition. Mobile delivery can address all of these.

FAO has been around since 1862. There were two recent bankruptcies in 2002 and 2003. However their direct-to-consumer business is growing. Their retail locations are in New York City and Las Vegas. With their brand equity they are looking to expand their private label toys.

FAO has some brand perception issues. They’re perceived as expensive. The store is sometimes seen as a museum or a tourist site. Other issues: Net relevant to today’s kids, it’s all about the New York store, just for the holidays.

The plan was to repurpose the brand. This started with the merchandising strategy. They wanted to target items that had: Quality, Design Integrity, Orginality, Health/Safety.

With this change they removed hundreds or brands and vendors. Shortly afterward same-store sales rose 20%. Other than Thomas the Tank engine, FAO did not carry a single recalled toy. That’s part of their focus, safety and quality.

Their product mix is very selective. There are more private label products and exclusives. The brand repositioning has allowed FAO Schwarz to stand out among children’s retailers once again. This change has led Hollywood to their door. Movie studios look to FAO for exclusives for movie-related toys (think Charlotte’s Web, Harry Potter, etc).

Their research has shown that FAO is strongly associated with quality. They also had a very high net-promoter score. FAQ has brand recognition similar to large global luxury brands. There is also high affinity within children.

Research showed that FAO is seen as the expert in child development. At first it’s kind of scary, but now they’re looking to really embrace that. FAO is working with an advisory board to help build that development arm. Ed was sure to mention that their advisory board was a real board of experts, and not a pretend board like some others.

The key questions are: How do they appropriately participate in the parenting community? Who is our audience? Women are a key customer segment. “Women don’t just buy brands, they join them?”

Ed noted that they passed on WebKinz. They had a first look at the product, but they felt the quality of the plush was not that great. But that’s not what the toy was meant to be. With that

FAO is leveraging their brand by working consignment deals. Vendors pay for the build-out, repay staff costs and FAO only pays for inventory sold. Ed noted that he has brands lined up for these deals. For FAO it’s great, they can constantly update/upgrade their stores with no capital outlay.

Recent external capital investments did not focus on IT or infrastructure. Moving forward, one of the key focusses is updating the infrastructure.

With the brand repositioned, FAO is building new revenue channels. They include clothing, health & wellness as well as publishing.

Looking beyond the storefront (Catalogue and Internet) there are things they need to improve on. Their site was boring and not up to date and it doesn’t match the excitement of he store experience. They’re looking to replicate the in-store experience as much as they can.

Retail expansion has been spearheaded by their Macy’s in-store presence. The Chicago Macy’s story is performing way beyond expectations.

The next phase is licensing. They’re working to license the FAO name to media properties, etc. Internally they’re developing a brand book. The brand books sets internal and external expectations.

For Ed, one of the things that drew him to FAO was the ownership. They’re owned by a hedge fund. Ed asked the audience, “How many of you are owned by private equity firms?” A few hands went up….Ed’s response, “Just you wait, it’s coming.”

Ed described the relationship he has with the owners, it’s not unlike a traditional board. There is a need for constant communication. You need to know are they investors or operators? Investors are starting to think like brands. They want to be seen as innovators.

However, owners will always look to extract brand value. You need to watch this since it can lead you astray.

The key challenges of working with owners:
- Want it all, want it now
- Push for every opportunity
- Challenge convention
- Uncomfortable pressure
- How much do you shield your team?
- Must be comfortable working with senior people
- Expectations of success
- Fear

Lessons learned:
- Great brands are much more rugged than most people think.
- FAO’s key asset is its brand. We need to honor our heritage, but keep relevant.
- Chart a path that has a chance to succeed.
- Know your customer.
- All innovation must pass the brand filter.
- Private equity ownership has been a huge plus for FAO Schwarz.

Jack Jia from Baynote was first to speak. Jack defined the major problem as being poor search and navigation, 83% of leads to a site will abandon in the process. Sure you’re driving people to your site, but are they conversions? In measuring loss, they found that 95% of visitors will give a site 3 clicks before abandoning. Compare this to most commerce sites which require 6 clicks to complete a sale (from inbound link to sale).

Enter the long-tail dream. Is it better to sell many of 1 or 1 or many? In Jack’s words it’s tail or torso. In order to benefit from the long tail you need to expand your inventory. Here’s the problem, when you increase you inventory, you also increase you chances of users getting lost.

One way to help users navigate sites is the wisdom of crowds. The other concept is emergent behavior. Rather than relying upon what somebody ‘tells’ you what they do, watch what they actually do. Track usage patterns and learn from them. Recommendation technology is based upon these tools.

Jack showed an example using US Appliance, how they make recommendations based upon browsing habits of other users. Community involvement also helps bring relevance to keyword searches.

A side benefit of the long tail is that long tail products have a higher margin.

Jack then sat down to talk with Brian Elliott of Alibris. Jack mentioned that Brian and Alibris stumbled into the long tail way before it was fashionable. Alibris currently sells 75 million SKUs, 15x what Amazon sells.

Brian talked a bit about Barry Schwartz’s book The Paradox of Choice. People are sometimes are paralyzed by choice. How do you balance offering more (long tail) without scaring it off (paradox of choice).

At Alibris they do have a number of options for single items, but they allow other customers to rank/rate and this helps other customers. They’re also constantly refining their site based upon customer testing.

Alibris built their own recommendation engine. The looked to their vendors for data. Many of their vendors have a wealth of information about their products. The challenge is to hook into that data. The second factor the look for is demand. A high demand product doesn’t always make a good recommendation.

Jack asked Brian about some of their SEO/SEM tactics. Brian stressed that the keyword strategies need to appeal to the machine (i.e. the spiders) as well as the consumer.

So much of the recommendation model looks at user behavior around purchases, but what about the non-purchaser? How can you take the data from those sessions and do something with it? That’s the next step.

Brian served as the moderator/intro for the session. Brian provided some background notes, keying off of Wal-Mart’s recent foray into UGC. Wal-Mart is doing a tremendous job marketing the fact that they have reviews, but what is being done with them?

In the case of Peets Coffee, their founder recently died. The company user their blog as an online memorial for Alfred Peet. The comments they received were incredibly inspiration and built a deeper connection with the brand.

Terry Nelson with Fair Indigo discussed the documentary the developed to showcase some of the jewelry makers in other markets. Once the documentary was created, begin to leverage an experience around that. Allow people to share their experiences

Next up was Darren Scott from Blair who talked about the multi-channel aspect of customer reviews. Once they started receiving customer reviews, the catalog copywriters loved the content. The copywriters are constantly scouring user comments to learn new ways to describe products and how they are used. In this way, content that was generated online is now used in print.

The final panelist was Carol Snyder from QVC.com. Carol showed how QVC is using online polls to drive discussion on the broadcast program. They also link their polls to groups of products. The conversion rate for products linked to polls is anywhere between 15% and 20%.

QVC also looks to the discussion in the forums to determine who they can taylor their traditional broadcast sell.

There were four speakers, a moderator and 45 minutes….it made for a lightning-round session. Brett introduced the topic by asking the audience how many of them had integrated user-generated content into their sites. A large portion of the audience had. Brett compared that to a few years ago when only five of the major retail brands had dabbled in UGC.

People can find the content they want, Google is becoming more of a brand tool than ever. Of course the CMO wants to know, ‘How does this drive sales?’

1. Give you customers a voice
2. Maximize their influence by integrating UGC throughout the brand experience
3. Turn a single voice into a chorus

Integration drives impact. You need to integrate the tools on your site to get people to use them. At PETCO, the initial search filter is now customer rating.

Next up was Paul Martino from Aggregate Knowledge. Their focus is discovery of UGC in non-traditional way. How can you turn people that comment on your products into a sales force? Another focus is interest-based navigation. Driving people through your site based upon user recommendations.

Allow your customers to share their retail experiences within their social networks. However, don’t look at the Facebook Beacon model.

Steve Papa with Endeca addressed information visibility. Retailers have millions of SKUs and other bits of information that get buried. In the physical world retailers organize their stores. In the online world it’s not so easy.

Now layer upon this UGC. How do you organize this content in relation to the products? You need to make the UGC visible. Steve revisited PETCO. User generated reviews are becoming the primary navigation method for users. Allow the customers to organize the store.

Steve stressed that we’re in the first innings of this UGC game and you need to be able to adapt, listening to your customers can help with that.

Next to speak was Jim Calhoun with Popular Media. Jim did a quick review of how the landscape has changed over the past few years. What we’re seeing is a new set of tools that go beyond traditional behavioral targeting. Targeting that is based upon social networks is way more powerful. As botched and as painful Beacon was, it’s the future. Of course the execution needs to be better.

You need to know what percentage of your customer base is participating in online social networks (i.e. MySpace, Facebook). You need to understand how to market your product now how you want, but how the customer wants.

Jim thinks of it as user-distributed content. It provides: Great leads, great customers, high conversion rates, etc.

The final panelist was Joe Chung with Allurent. Joe talked about redefining the shopping experience and perhaps the notion of social commerce. The goal is to move beyond shopping systems built by geeks for geeks. Until now, people would shop in one window or tab and the participate in social networks in the other. Why not a crossover?

User experience can be monetized in the sense that it improves the usability of the site. Make things easier to use. Joe reference a case study where they redesigned the check-out process for a client and drove a 24% increase in sales.

Another concept that Joe showed was widget-based shopping. The ability to browse, select and check-out all within the browser window of another site.

The goal is move shopping and social interaction closer together. Much of this involves taking the shopping experience out of the traditional environment.

QVC is the second most profitable network, this includes the majors. For Bob, advertising and marketing is somewhat interesting, since they run a network. However, they do very little traditional advertising. They have always relied upon word of mouth. They sell stuff via product demonstrations on air.

Now some stats. They reach 90,000,000 home, handled 179,000,000 calls, 341 calls per minute, 3.5 items shipped per second. It’s some serious velocity. On the web the numbers are there as well. 200,000,000 page views in their online community, 400,000 online customer reviews.

Their old web site was a very good transactional site, so why change it? They have a social shopping experience on air, why not online?

The company brand experience are the 3 E’s: Enrich, Entertain, Engage….they applied these online. The first step was integration of video on the web. Customers want to see their favorite show or host online. It’s about providing the content when and where the customer wants it.

A major initiative is the ‘Item on Air’. It shows the web user the item that is currently being sold. They can also watch the webstream of the video. The inventory numbers are updated every six seconds, both on the air and on the web. There is video all over the site.

Their program guide was also upgraded in the web re-design. Video is included on the program guide, so instead of a paragraph they can watch an actual preview.

‘Items Recently on Air’ allows customers to view things they may have missed on their favorite shows. From a technical standpoint it’s difficult. It’s about media asset management. Bob said that video and media asset management will be your next new headache.

The next major initiative for QVC was the social shopping community. It starts with things like interactive polls. They embed community on every page of their site. QVC has 24 full-time internet sales managers. They interact with online communities. Many sections of the site feature host blogs, forums, responses, etc.

An innovative feature is their Model’s Closet. This section of the site allows broadcast viewers to review products not currently featured.

The important thing to remember is that what drives them is not an online commerce strategy, it’s a company-wide strategy. Much of what they’re featuring online is driven by their broadcast product.

Andy started off his talk with some examples of great, simple WOM. It’s the little things that make all the difference. He talked about Red Envelope and how with great product presentation they turn the conversation to their brand.

There has been a evolution in the marketing business, ads to affiliate to search to WOM. With traditional advertising you pay up front, need to monitor the program and then measure results. With affiliate marketing you only pay for success, but it sometimes doesn’t scale well. With search you can reach millions for a very low cost, but there is still overhead and management. With WOM, the work is done by the customer, usually at no cost.

The secret to increasing ROI is to get other people to spread your ads for free.

One of the things that lead to Amazon’s early success was the affiliate program. They made it really easy for people to run their ads…and yes the affiliate program is advertising. When the first blogging widgets were created, Amazon was there. This enabled them to reach a whole new audience of advertisers.

With traditional advertising, you run it and it’s done. That’s the way traditional banners. People never save banners. With WOM it can go on and on. With good WOM the true test is will people keep doing it without paying for it. If a blogger picks up a WOM campaign, that blog post will live forever and chances are the reader impressions are a bit more qualified than a traditional banner.

Andy showed the popular Will it Blend campaign. You have millions of people watching an ad that’s over a minute long. Then consumers pass this along.

There are three tenets of WOM economics:
- Starts Cheap
- Gets Cheaper
- Builds Assets

WOM is also recession proof. Happy customers are the best ads. The motivation is not money or an affiliate link, it’s love. Love gets people to advertise for free.

New love is incredibly powerful. Think of the out-of-box experience. It begs for a recommendation.

WOM 101:

1. Give people a reason to talk about YOUR stuff
2. Make it easier for that conversation to take place

A classic example is Krispy Kreme, they gave people to talk about, hot doughnuts….unfortunately they lost that thing. You can now find their product in gas stations. Who talks about food you buy in a gas station?

To make it easier, make it portable, make it mobile. Allow people to pass it along. Make it easier to share.

There are two motivations in WOMM, the first is You, the brand.

The second motivation is Me, ad in the talker. The influencer. The person you would call about buying a car, or travel. Who is your ‘local’ expert.

There are very specific emotions related to WOMM:
- Happiness: when things to right.
- Love: passion for products, think Apple
- Surprise: surprise them with things they don’t expect
- Fun: think about the stuff your mom forwards to you
- Smart: people like to be experts, give them the inside scoop
- Pride: take ego and add information and reward, make them VIPs
- Anger: when things go wrong, it’s also the most powerful of emotions

The third motivation is US, make them part of the community. It’s about belonging. People love to show their relationships with brand statements. Think about the Harley owners club.

The 5 T’s
- Talkers: find out which people talk about you, it might not always be your current customers
- Topics: What makes a good press release, does not make a good WOM topic
- Tools: What’s in the box? What are you sending people, can you pass it along?
- Taking Part: This is what scares marketers, you need to get involved, respond, fix the problem
- Tracking: spending time interacting leads to new inbound links, use traditional metrics

The final question is, “Would you tell a friend?” Is that you’re selling, marketing…something you would tell a friend about? If not, what can you do to fix that?

A big thanks to Andy Sernovitz and Greg Peterson for helping out with the blog.

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