I’m saddened by today’s retail landscape in Australia. Shop windows shout lowest price, when what I really need are inspirational gift ideas, good sales advice and the comfort that my dicky gift choices can be returned when they turn out to be just that, dicky!

Pricing is a consideration for sure but only in so much as the chosen item is inside or outside my budget, at which point the role of a retail assistant is to upsell upsell upsell!

At this time of year, the vast majority of retail spending is focused on gift buying. But in this world of consumerism on steroids, friends and family are increasingly hard to buy for – combine this with the paradox of choice we feel and no wonder the shelves remain stacked and the gifts received remain, er, dicky. Pricing, though, is rarely the issue.

The solution is probably right in front of me, a personal shopper! But who knows how to use one of those? In the world of online, a Personal Shopper is only a few clicks away. Punch in my budget, a broad description of the loved ones I’m buying for and bam, inspiration is at hand. Maybe my better-half gets an email with options to choose from that will better narrow the items presented back to the buyer, Buble or Gaga, Block colours or print, ebook or paper? Now I have items to choose from that make me look like the hero I am, and I can pick up in store to boot (time for that all-important upsell and gift wrapping service!)

Clearly these are difficult times, and Christmas is an expensive business, so the price conscious shopper with a gift in mind is looking for the best price available. But I don’t believe that is the whole story. By focusing on lowest price retail I worry that our biggest Branded retailers are on a race to zero, yet they’ll remain unable to compete with online – this is a lose lose for all. Online is the key to harvesting Signals for that personal experience, it’s the opportunity for Big Retail to take “personal retailing” to the next level; training consumers to think Online is all about Lowest price and best discount is to underwrite the death of Big Retail.

Discount heavily and I will love you right now, inspire me with insights and ideas and great service and I will love you for ever.

Footnote:

Two stories in today’s SMH caught my eye, one announcing that Australia’s Retail legend Myer was launching it’s Boxing day sale today to online customers, and the other covering the Neiman Marcus Christmas catalogue (which has been available since 1926 and growing from strength to strength each year!) interesting contrast between growing retail and contracting retail.

Another story here from ninemsn, Harvey Normal now cannibalising its own revenues through offshore hosted online store, ug.

Find and adjust to just 5 Signals for short term gain, build a strategy to address all 57 to change your business altogether.

Finding and exploiting these signals has contributed greatly to our success at Cudo, and over the coming months I will be talking to retailers across multiple industries about finding this kind of value from their existing data.

More to follow.

The Group Buying Industry Code of Conduct is being jointly announced today by AIMIA and ADMA and is an essential step towards ensuring a minimum standard of transparency and service from the participating Group Buying businesses and was called for by Cudo back in June of this year.

Although the long standing Cudo Satisfaction Guarantee means we are fully compliant with the Code from day one, we are delighted to be a founding signatory along with a small number of Leading Group Buying business, and hope that the majority of Group Buying businesses in Australia shape up and sign up to the Code.

Groupon.com.au today advertised an iPad 2 with Wi + 3G and a docking station with delivery for $169.00 knowing full well that the actual price for well over $800! This is not ok. Having already apologised for dodgy Bait and Switch advertising I’m surprised at their willingness to ramp it up a notch with misleading offers.

Groupon defended its actions via Smart Company by saying that they had "a technical limitation”, they said  “we are one of a very few sites that can do multiple deals. But what we cannot do is show that in the email – it’s simply not possible."" which meant they couldn’t accurately reflect the real price of the offer and were somehow forced to show a misleading one instead?

This is exactly the type of behaviour we will aim to stamp out through participation in the Group Buying Industry Code of Conduct – let’s hope we agree to a Code before this burgeoning industry’s reputation is irrevocably harmed by tactics like these.

Businesses have been discriminatory since the dawn of time. Recognising that not all customers are equal is essential and provides the key to maximising the effects of supply and demand.

Making the best use of discriminatory pricing means that you need to identify the price sensitivity of each customer group and target them with an appropriate incentive. For example, how willing are they to do work or take risk in exchange for a discount.

Airlines are the masters of price discrimination and there is a lot to be learned from their approach. Granted airlines have the luxury of sophisticated modelling and real time pricing however your business can execute a similar strategy with limited fuss.

Think about airlines’ ticket pricing as a set of incentives and it may become clearer. Imagine the advertising headlines read something like this:

“Book this seat months in advance and we can be sure the flight will sell well. In exchange for that insight and the non-refundable dollars you are willing to give us (that will then sit in our account to earn interest) we will give you a generous discount”

Or

“We are eager to maximise the bums on seats on this flight and as such here is a substantial discount”.

Right now, your business probably has a series of ongoing campaigns designed to incentivise price sensitive customers to purchase. Offers such as “half price Tuesday”, “book early to save”, “book late and save” or “buy one get one free”. These are all effective discriminatory price strategies.

The key is to deeply understand both your “price sensitive customer” and your “marginal cost of sale” i.e. the true incremental cost of servicing one additional customer now that your fixed costs are covered. The likelihood is that each additional customer can be serviced profitably even if they only pay 30% of the full advertised rate. You can profitably take utilisation from 65% (which is the typical breakeven point) to >80% even if each new customer only pays 50% or less of the advertised rate. There is a risk of course. If you broadcast the discount too largely your full paying customers may hear about the lower rate, they may be annoyed or worse still hold back from purchasing, therefore cannibalising your base revenue stream. Learning how to target your “price sensitive customers” is essential to profitable price discrimination.

Data driven marketing solves each of the issues described above. Find ways to identify and reach the “price sensitive audience” (geography, prior buying behaviour, acquisition source) then serve discrete offers designed to encourage acquisition behaviour, such as switching from an existing provider, prepayment, bulk purchase or even to drive
out of the area. The level of incentive you offer should be generous; if your costs have been covered you can afford it. Ensure staff treat all customers equally and focus on providing a great customer experience that will maximise profit, loyalty and word of mouth recommendation.

Remember, “price sensitive customers” are savvy, not cheap. Reward them with great service and you will earn their loyalty, except next time they will pay full price – no discrimination required

This is no PR stunt, this is an important step that was born out of necessity. The growth of the Group Buying industry in Australia has lead to more than twenty companies starting daily deals websites; this growth brings real risk to merchants, to consumers and to the category as a whole. Once agreed though, the Code will bring a set of principles that will go a long way to protecting Merchants and consumers from that risk.

Cudo and Spreets as industry leaders at least recognise the importance of putting merchants and members first, ensuring the group buying experience continues to be strategically sound for merchants, and enjoyable and worthwhile for members. As the category grows, our introduction of this voluntary Code of conduct provides a framework from which to implement some of the fundamentals of good group buying and promote best practice.

We have invited our Group Buying competitors to get involved in the development of the code and sign up to the finished document, I sincerely hope they do – many existing Group Buying businesses will have to mend their ways if they are to sign up of course, let’s hope they do that too!

The draft Code of Conduct is as follows:

Our commitment to members is to:
1. Always offer you great deals – genuine discounts on quality products and services from first class merchants
2. Never engage in misleading advertising, such as advertising specific discounts or products that don’t actually exist (known as ‘Bait and Switch’)
3. Make our deal descriptions and terms & conditions clear using plain English so you know what to expect in return for your voucher. Where exclusions exist, they will be equally clear using plain English and will never be intentionally misleading
4. Make our website terms and conditions clear and in plain English so you know what to expect from your experience with our sites
5. Respect your privacy at all times and abide by the Privacy Policy you agreed to when you joined the site
6. Respect your email account at all times, taking measures to protect it from hacking or other fraudulent use
7. Work with our merchants to make sure you can easily redeem your voucher and that you are treated as good as or even better than a typical full paying customer
8. Provide responsive and helpful customer support and service – seeking to fully understand and resolve your issues
9. If you’re not fully satisfied with your experience, we’ll seek to understand why, address the issues and, if your issue cannot be resolved, provide you with a full refund or credit
10. Do what we say we’re going to do, every time

Our commitment to merchants is to:
1. Work with you and your team to make your group buying promotion as successful as possible
• Help you package and price the right deal for your business
• Help you prepare for the increase in customers
• Help you manage the increase in demand including capping your offer as necessary
• Help you maximise your up-sell opportunity to enhance the experience of new customers at your business
• Help you get customers coming back
2. Provide you with clear payment terms
3. Provide fast, effective, personal customer service through a dedicated account management model
4. Do what we say we’re going to do, every time

Alternative sources include Hitwise, Google Analytics and Alexa – however GA is pretty unreliable and Alexa provides a Relative view only. Hitwise is the worst of the bunch given their data collection methodology means it doesn’t represent the broader online population and worse still, it doesn’t necessarily reflect human activity!

Here are the two main issues with Hitwise data:

1. Hitwise does not measure individuals – it measures traffic.

This effectively means you could hit your website with bot traffic to boost your numbers and it would show as traffic in Hitwise. Nielsen Australia removed 50% of Stardeals traffic in March because that traffic consisted largely of unsolicited clicks, meaning popups that appear as you close scurrilous ads (Congratulations, you have won $1,000,000!!!!!) – those clicks are still counted in Hitwise.

2. Hitwise doesn’t include key ISPs

Hitwise harvest data from partnering ISP’s, however Australia’s two largest ISP’s BigPond and Optus don’t participate. This is major a concern as a large proportion of internet users (about 58%) are not reflected in their data. This is a particular problem for a business like Cudo given we have a mainstream audience, and mainstream Australia do not typically use fringe ISPs.

Nielsen was recently selected as the official measurement partner of the Australian IAB, in their press release they said:

With the endorsement of Nielsen Online Ratings, IAB Australia is identifying people-based metrics, as opposed to browser-based, as the best and preferred online audience measurement system for the Australian online advertising industry.

This is the nub of the problem. TechCrunch called it out almost two years ago.

At Cudo we don’t care about browsers, we care about people, like the 1,000,000 plus Australians that come to our website each and every month, couldn’t give a monkeys how many Bots swing by!

The clue is in the row of heads above the shelves of candy.

This discount retailer has positioned hundreds of impulse items along two sides of this isle designed to tempt shoppers while they queue for a checkout.

By my reckoning, the shopper you can see at the top of the picture has a 15 minute wait ahead of them, providing lots of opportunity for the retailer to maximise Basket size.

The longer the queue, the greater the likelihood folks will be upsold. This retailer has knowingly implemented a strategy to reward themselves for poor service. That is broken.

Regardless of their EDLP strategy, poor service shouldn’t be part of it. Institutionalising crappy service is outrageous, deriving benefit has to be the shortest of short term views.

Only, it wasn’t.

I felt the entire time that Twitter and particularly the use of a hash-tag had lost its mojo. Previous when I have been speaking there has been a real balance to the Twitter feedback, some great, some not so great, and some just plain old brutal. But not this time. In fact, I don’t think there was a single tweet that could be euphemised as “brutally honest”. I suspect the medium is just too prolific.

In a conference of the size of iStrategy, which numbered around 300 delegates, there’s nowhere to hide and worse still there is a very good chance that the speaker you have just appraised will know what was said and by whom. And no one wants a possible confrontation!

As a speaker at the conference I wanted that brutal feedback, and I was looking for it real time to make adjustments to my session. But it didn’t come. I’d appreciate any suggestion that my talk was good perfect, however I saw some sessions that were quite poor yet no negative tweets emerged, especially not from me!

I think we need to bring some anonymity back to twitter, at least find some other way to harvest the ugliest of commentary.

Thoughts?

The key objection I heard was around Risk, which is interesting given how big business currently thinks about the notion of Risk.

Risk Management is defined as the identification, assessment and prioritization of risks, coupled with coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate events.

Commercial exposure from unfortunate events is inevitable, and in a world of Twitter and Facebook the pace of at which that Risk manifests is astonishing. The viral nature of Social therefore undermines the traditional view of Risk mitigation and damage control – so the first thing big business has to do is acknowledge that the world has already changed, they just haven’t caught up yet.

We know that people have an inherent desire to share, regardless of the sentiment.  If a business has no means to monitor/control the conversation, that’s where the risk exists. And establishing a social platforms early is the only answer.

If your customers are worried, give them a platform to share their concerns, make them feel like they are heard, while you monitor and moderate the conversation. Take some control of the discussion. If they are angry, frustrated or even delighted, give them a platform to engage and share.

There is no reason why the conversation platform you provide can’t operate with strict rules of engagement and therefore the existing risk framework. Sure there are NEW RISKS attached to social engagement, but they exist already, start mitigating these new risks before the unfortunate event you fear most.

Five key truths about Social engagement:

•Your customers will find very effective ways to broadcast “feedback” about you online whether you like it or not

•You can and should measure the sentiment of your target Audience, engage them and give them a platform

•Monitor and moderate the conversation, but never astrosurf

•Social brings New Risk to business, get used to it!

•It’s prudent to provide a platform BEFORE the event you fear the most happens

The issue I describe here around the inevitability of social engagement is told well by the history of a UK Cable company NTL (now Virgin) and its relationship with a consumer lobby group nthellworld in 2000, worth a read.