On Internet Business

When bad advertising goes good

Posted by Michael under Social Media

Microsoft profits leaped by 60% in the final quarter of 2009 and the company has claimed this is owing to the ‘heavyweight marketing campaign’ for Windows 7 which is an amazing response given that the advertising was roundly, widely and deeply panned by industry watchers – blogger after blogger and advertising commentator after advertising commentator said the adverts, especially those for Windows 7 ‘parties’ were uniformly awful.

So how did the operating system become the best-selling operating system to date?

Partly because the adverts weren’t aimed at the industry experts but at the vast underbelly of people who have to use a computer for work or study but whose understanding of the systems involved is as limited as the average person’s understanding of the internal combustion engine – it turns out that this huge section of society was perfectly happy with advertising that the cognoscenti described variously as patronising, painful or just plain bad.

Microsoft admits it was assisted by a rebound in personal computer sales in the run-up to Christmas, partly resulting from the last minute investment in laptops as Christmas gifts, but it does seem to have found a level of communication with the bulk of the marketplace that’s worked well.

And so to the iPad, derided on release by the Guardian Newspaper the Wall Street Journal, to name but two. Good product, Bad name, was how most people described the new product and while there are minor concerns about its functionality (why no Flash support?) the major one has been over the name. The number of jokes about it on Twitter led to #iTampon becoming a trending topic. Several high profile women in the technical and media industries have made terse comments about the way that the name seems to suggest sanitary protection and expressed concern that either (a) something must have gone wrong in development for there not to have been a single woman in the many brainstorming meetings around the name who could point out the obvious connotations or (b) they pointed them out and were overruled anyway, which smacks of a patriarchal approach to selling the product.

The question for Apple is whether they, like Microsoft, have got around the gatekeepers of technical development and reached right down to the potential buyer – given that at the press conference, Steve Jobs described the product as ‘so much more intimate than a laptop’ – apparently without irony, it seems unlikely that Apple had understood the way the name might be viewed rather than being confident that the industry response and the public response would be differently graduated, as in the Microsoft case.

Apple are very quiet about this avalanche of wit at the iPad’s expense, suggesting that they’re caught out by the media attention and public fun being had at their expense. If this is the case, it’s a rare example of Apple being wrong-footed in marketing, but the next six months will show if they can still turn bad advertising, and bad publicity, into good sales.

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Online retail the real 2009 winner

Posted by Michael under Online Retail

UK shoppers, buying online, spent more than £5.4 billion, according to Interactive Media in Retail Group (IMRG). That’s an increase of over 17% on the same period to 2008 and a single month increase of nearly 4% on November 2009.

While that’s good news for online retail generally, the breakdown of figures is of particular interest to the online-only retail community as their index actually declined as the index for multichannel retailers rose.

Why did multi-channel retail perform better in 2009?

1. Good multichannel marketing allows the customer to choose how they interact with the retailer – this may make the difference between purchase and non-purchase with a customer who’s vacillating about making a financial commitment. Being able to buy in the way that suits them best, whether it’s a phone call to a living person or the impersonal efficiency of shopping online, can be the final impetus that triggers spending.

2. Seamless experience – the best multichannel retailers have managed to ensure that their entire team is focussed around supporting a customer’s desire to buying through the channel that they prefer – which means ensuring that they allow returns through all channels, offering loyalty rewards across channels and making voucher and gift purchases work as easily through every channel. This seems to have generated a more repeat sale buzz than online only, because customers learnt that they could, for example, make an initial purchase online, request a return over the phone (ie immediately they realised the product wasn’t what they wanted) and then use the resulting self-printed refund voucher in the nearest retail outlet.

3. Order capture – this seems to have been a biggie in helping the multichannel retailers boost their sales. Use multiple channels as back office ways to get stock from one store to another, or to help people order out of stock items for home delivery, or just to show them that they can drive twenty miles and pick up the item that’s out of stock locally, seems to have met customer needs in a way that the simple ‘out of stock’ message given by some online only retailers didn’t.

4. Multichannel staffing grew up – Web, catalogue, telephone and face-to-face marketing have different skill sets. The best multichannel retailers have found ways to ensure that staff don’t take a single skill set into each area of marketing: rather, they’ve created skill categories and trained staff moving from one channel to another to understand the customer needs they face in each channel. Confident buyers like online and face-to-face, for example, while those still needing to be persuaded often choose the telephone route so they can ask questions without worrying they will feel the pressure to buy that would be provoked by asking the same questions instore. Understanding the customer needs means that sales staff respond in a channel appropriate fashion and that drives sales, upselling and repeat business.

And the news continues to look good – IMRG chief executive James Roper says that ‘2010 looks set to produce another year of strong results for e-retail, with demand expected to remain high as consumers habitually look online for best buys, and a pipeline of significant improvements emerge, including wider product range availability, even better web sites and a greater choice of convenient and more reliable delivery options.’

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Is the App store the only model for online business?

Posted by Michael under Online Retail

Econsultancy is taking issue with an article by Farhad Manjoo in Fast Company magazine, which claims that the app store model may soon hit a “dead end”.

Manjoo’s argument is that developers don’t need Apple – or, as he puts it ‘in the age of the Web, developers can get their programs to end users without anyone intervening’ and econsultancy considers this to be ‘a notion that’s as dangerous as it is naïve’.

So what’s the truth? Econsultancy says that the Apple App store is like a digital Wal-Mart and like that company, it has created a one-stop venue for people browsing for digital entertainment and content. Just as Wal-Mart has high standards and rejects many would-be suppliers, so does Apple, and in the same way, these standards allow customers to shop with confidence, in both stores, the customer is safe, well-served and going to be happy with their purchase.

That makes perfect sense – but there are other models to consider. In the bookselling world, Amazon has sent hundreds, if not thousands, of bookshops to the wall – but Waterstone’s has succeeded in making a high street book shop business work in the face of the online competition by focusing on a different kind of client and offering a different kind of service – at Waterstone’s the staff have direct input to the books they sell, provide their own reviews of material, and make recommendations to customers about what they might like. For those who like to browse the books, getting a physical impression of them, or take a possible purchase to the coffee shop so they can flick through it over a cappuccino, the Waterstone’s model works better than the Amazon one. And they’ve parlayed it into a substantial online business too.

So what does this mean for online sales and apps? Is there scope for a more bespoke service where some kind of online ‘adviser’ walks purchasers through what’s available and offers personal advice on which app might be best, based on what they already use?

Possibly, but it’s not clear what the business model would be that supports this kind of personalisation. One clue might come in the wide number of apps that aren’t English-language based: there does seem to be some scope in the Farsi/Chinese/Francophone marketplaces to try something different to the App store. Alternatively, there are niche markets – culturally or physically, that might be developed into a different customer base.

Econsultancy points out that ‘Developers can act like prima donnas and complain about how hard it is to get shelf space and how Apple doesn’t give them the treatment they feel they deserve, but the numbers don’t lie: Apple delivers buyers. And without those buyers, there’s nothing for the suppliers (developers) to supply.’ This is true, but only true as long as your requirements as a buyer fit the App store model.

There is scope for developers to explore the possibility of using the open web model to build a different customer experience for those who are already outside the App store customer parameter. But this means that developers have to give up thinking only about product and start thinking about customer too, which they are notoriously uncomfortable in doing – while they clearly give thought to what a customer wants from an app, there’s little evidence that the thousands of developers out there think much about what a customer wants when purchasing an app, and unless some aggregate of developers sits down to build a Threadless style community shop, the App store will remain the Wal-Mart of applications.

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Recruiting for Entrepreneurs

Posted by Michael under Business Growth, Entrepreneur Resources

It’s been estimated that small businesses spend around £69 million a year in the UK just on advertising, interviewing, induction and training new staff.

Small businesses, especially those that are entrepreneurial, also need to attract and retain high quality talent. But small enterprises often run into the problem of identifying suitably qualified and dedicated staff members because larger businesses outperform them in most forms of recruitment most notably on-campus events, word-of mouth referral and talent identification. In addition, larger companies offer stability, security and clear career progression.

So what can small businesses do to compete?

First, using human resources sites such as Monster and Careerbuilder can level the field on many standard areas of recruiting, although they won’t necessarily produce candidates for highly specialised positions.

Using your website as a recruitment tool is also a good way to identify talent in your industry – it’s a form of marketing that delivers the best results when combined with social media outreach to inform the likely candidate base about your company and the work ethos that you offer.

Start-up businesses may not be able to take advantage of career fairs at schools and colleges, but can benefit from taking part in structured curriculum-based information sharing such as giving talks on emerging technologies and fields of employment, this has worked well for the games and multi-media industries in particular. Offer your services as a speaker to local colleges who are training people who might become your employees – you can also offer an internship or work experience opportunity which is a good way of finding people who may later become employees.

Always be aware that the expense of hiring the wrong person is greater than the cost of recruiting the right one, and use techniques such as psychometric testing, effective interview techniques, and considering the personality fit that a candidate requires to work well in your organisation.

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Business Planning Resources round-up

Posted by Michael under Business Growth, Entrepreneur Resources

While there are many tools and information sources online, picking good resources to investigate your business potential can be make or break – here are some of our top picks:

Researching a new business

Scavenger gives you online access to hundreds of reports and guides relating to almost every kind of business from coffee shops to creative industries. You can use the scavenger site to find case studies and to explore what training you might need to succeed, what your customer base will look like and who the competition will be – it’s not free but the reports are affordable and it’s better to pay in advance to find out the facts than to pay with business failure by not knowing what you were up against.

Writing a business plan

A key to succeeding in business is having an accurate and informative business plan that will give you new business clear direction and ensure your spend your set-up time doing the right things. It’s vital to invest effort ensuring it’s strategically perfect. The Business Link website has comprehensive information on who a business plan should be aimed at, what it should contain and how to gather the information you need, as well as showing you how to lay it out.

Do the math

Bplan has a range of calculators that you can use for free, such as their cash-flow and break-even calculators and their start-up-costs estimator which tells you your likely capital start cost. There are also sample business plans to look at and some can be downloaded for free.

Investment angles and angels

If your start-up costs exceed your finance, or if your business is likely to need early investment of capital or expertise, Angel Deals is a virtual global network for the business community. It links entrepreneurs seeking funding and growth with investors seeking deal flow and people seeking work. It’s a one stop resource for every kind of investment.

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Business books to read in 2010

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Here’s a round-up of some of the best business books I’ve read in recent months – there’s something here for every entrepreneur:

Great Game of Business, author J. Stack – When first published in 1992 this book contained the seminal ‘The Higher Laws of Business’

1. You get what you give.
2. It’s easy to stop one guy, but it’s pretty hard to stop 100.
3. What goes around comes around.
4. You do what you gotta do.
5. You gotta wanna.
6. You can sometimes fool the fans, but you can never fool the players.
7. When you raise the bottom, the top rises.
8. When people set their own targets, they usually hit them.
9. If nobody pays attention, people stop caring.
10. As they say in Missouri: Shit rolls downhill. In other words, change begins at the top.

To which Stack adds ‘The Ultimate Higher Law’ = when you appeal to the highest level of thinking, you get the highest level of performance.

This book is ideal for businesses focused on teamwork as it contains insightful information on how to get individuals focused and working together to achieve business success.

E-myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael E. Gerber – In an almost opposite way to the previous book, this one aims to fix the work life/balance for the entrepreneur.

Gerber feels that almost everyone who launches a business is a technician and will sooner or later suffer from Entrepreneurship seizure – the E-myth. He says small businesses do not work out because the technician-founder is working IN rather than ON the business, in other words is managing the mechanics rather than the strategy. Gerber takes the reader through installing systems in the business so that anybody can run it. The systems, not the individuals run the business. McDonalds is the key example here – with a constant workforce turnover, it still operates effectively because the systems keep the business going, not the people.

Crossing the Chasm: Marketing and Selling Technology Products to Mainstream Customers – author Geoffrey A Moore – This is a little more specialised, but it’s a book that reveals how high-tech products require marketing strategies completely different to those used in other industries. Moore offers ‘chasm theory’ which shows why high-technology products initially sell well to a technically literate customer base, but then hit a lull (the chasm) as they endeavour to cross over to mainstream buyers. But the book isn’t merely descriptive, it offers solutions to the problem by showing how to cross the chasm by getting marketing professionals to create profiles and target specific sections of the population rather than aiming straight for mainstream success, and uses examples such as Apple, Oracle, and Sun to elaborate the theory.

Winning: The Ultimate Business How-To Book by Jack and Suzy Welch – Jack Welch’s personal life is perhaps nothing to boast about in terms of work/life balance, but he does offer some of the most simple, powerful and proven management practices in the business today. His message is simple and clear if you: empower others, ask questions, tap into the potential of all of your associates, choose integrity and honesty over charts, graphs, and politics, and spend more time in action than slaving over budgets, you’ll achieve entrepreneurial success. One of the best sections of this book is the list of questions that need to be answered to develop a winning strategy – another real take-way gem is the material on how to take the pain out of agreeing budgets.

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2009’s big social media #fails and how to learn from them

Posted by Michael under Social Media

Two examples from 2009, one from the very beginning of the year, the other from the very last days of the decade, reveal how even big businesses can get the social media world all wrong.

In spring, Skittles, the fruit sweet brand, failed to pull off the Twitter trick. Basically the Skittles homepage was reframed as a Twitter search feed for its own product. During the first few days, this innovation caused a huge buzz in the social media industry, with many people saying that Skittles was the first ‘Social Media Mozart’ but it hardly reached the social media users. Then it did. Over a couple of weeks the Skittles home-page was visited by hundreds, then thousands, of Twitter users, following the twitterfeed that showed Skittles related tweets. And while a few of those visitors were saying nice things about the brand, most were swearing, blaspheming, making racist, sexist or homophobic remarks all prefaced with the #skittles hash-tag. And, guess what? Every one of those potentially offensive tweets bounced right onto the Skittles homepage. It was troll-bait of the highest order and the trolls came in their masses. The brand failure was, for several months, glaringly and publicly evident.

Why did it happen?

Skittles hadn’t prepared their ground. Other companies, like Lush Cosmetics, are noted for their long history of engagement with their purchasers, so the Lush twitterfeed is a good mixture of brand led information and responses to that information, queries from the public being answered by the brand, and customer to customer interaction along the feed. Skittles had none of that and the tweet-savvy Twitter community knew it was being used as a brand enhancement device. Skittles made a cynical bid to hijack the Twitterati and got hijacked in return.

O2 have finished 2009 on a low note in social media, or rather, with notes being what has brought a twitter and forum backlash down on the company. O2 has been sending marketing texts to many customers who have repeatedly asked to be removed from its marketing activities. By Christmas, frustrated O2 customers were being contacted every day about free festive ringtones etc, despite having texted the opt-out number on numerous occasions. Finally the furious O2 customers, including the Father Ted writer, went twitter and developed their own hashtag to complain about the total lack of customer service from this media supplier. They also vented on the influential Moneysupermarket.com forum, and flooded geek forums with their concerns. What rubbed salt in the wounds of many O2 subscribers living or working in London was that during the second half of 2009 there were periods when they were unable to able to make or receive calls or transmit data because of pressure on the network from smart phones like the iPhone – but somehow, O2 managed to get its own spam through to them!

Why did it happen?

A conjunction of failures here: first the iPhone pressure caught out a lot of mobile phone companies, who found that smart phones were prioritised over the network and because they were using up vast bandwidth, ‘classic’ customers were unable to get connected. But for O2 it was much worse, because until November they had the exclusive contract for Apple phones, so their sales in that area were harming their customer base in the non-smart phone arena. Add to that the inability of their own marketing team to respond to requests to stop sending spam texts, and O2 ended up looking like they didn’t give a damn.

What to learn from this

1. You can’t move into new areas of business communication without expecting reciprocal relationships. Companies do best when they engage first with their established customer base using new media and then take that loyal group forward into new campaigns.
2. Just ‘using’ new media is impossible – the interactive nature of the technology means that any company that steps into social media is open to being held up to public ridicule, complaints and scorn, using the very technology they’ve tried to exploit themselves.
3. Social media engagement requires a consistent response from a brand, not just a dipping in and out – it’s not like print or TV advertising which offers the chance to step back and assess response. Going into social media means being ready to work on a day by day basis with customers, with no time to stop and think about your response. If you make people wait, they will believe you are either incompetent or have something to hide.

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