My Strategy for the Sony/Google Challenge to Amazon’s Kindle

Sony, Google Challenge Amazon – WSJ.com.

This is a recent story about Sony and Google partnering up to challenge Amazon.  What Sony needs to do is follow the successful strategy of Lexus when they came into the U.S. market to challenge the luxury car incumbents.  Lexus focused on the customer experience, providing elegance at an affordable price.  They were not trying to step down and give middle and lower class americans a luxury car they could afford, but rather provide a luxury vehicle that could rival Lincoln, Cadillac, Jaguar, Mercedes and BMW at a much lower price.  These cars were elegantly appointed with comfort, style and standard features far beyond what you would get in the above mentioned brands.  Additionally, the purchasing and services process were very simple and hassle free.  They did their research and attacked all the pain points of the owners of other luxury brands.  Many people decided to give Lexus a try, not me though as I have always been a BMW loyalist, as either their second or sometimes primary luxury vehicle.  Where Lexus excelled is in substantially raising the bar on repeat purchase rates.  Customers were blown away with the ride, the quality of the vehicle, the fact that they had far fewer repair issues than their competitors.  As Lexus increased their share in the market, they were able to raise their prices and not lose customers, while also continuing to steal share away from their competitors.

Sony is in a fairly similar position in that Amazon is the category leader with a first movers advantage.  What Sony has going for it, however, is the fact that they are not entering into a mature market, but rather an emerging category where there is plenty of opportunity.  Amazon has snagged the early adopters already, who will help propel the Kindle forward through word of mouth and repeat purchases, just as has been the case with the iPod.  Sony certainly wants to avoid letting Kindle gain the significant competitive advantage that the iPod has.  iPod has watched many wanna be competitors come and go.  iPod is a great product and has its direct linkage to iTunes, where songs cannot be exported across other devices, thus making switching costs very high.

Sony’s partnership with Google is brilliant in that it can help to minimize the current advantage the Kindle has of being owned by Amazon which provides a simple and seemless ordering experience, as well as being the current leader in convincing publishers to make their books available for electronic distribution through the Kindle.

It is my believe that eventually, the Kindle, and whoever else emerge in this space, will replace many printed books.  We will begin to see students use them in school, as well as other new business models popping up where travelers will be able to rent a kindle for a flight or cruise or other travel event and download content on their rented device.

Early on, Sony needs to prove it is a viable contender to the Kindle.  They need to made their product available at a below market cost to convince consumers to give it a try.  I am sure there is some fear that Sony may not stay in the space, thus they would rather go with the Kindle because they know Amazon is in this for the long haul.  We need to see the Sony product in the hands of people.  If I were Sony, I would send it to leading bloggers, executives and other influencers who could help Sony to gain share.

Just like with Gillette, they switched from being in the razor business to being in the razor blade business.  Sony should not focus so much on making money initially on its device, but rather the revenues from the downloads.  You never get a shot at the download revenues if you do not have devices in distribution.

My challenge to you Sony is to break from the traditional product entry strategy.  Use your creativity, ingenuity, and the combined brand cache of Sony and Google to give the Kindle a run for their money.  I would be happy to set my Kindle aside and try your product if you want to use me as a test.  You need to find your core and then run with it.  Make some noise, let people know you are in the game.  Turn up the volume Sony and get this one right like Lexus did and not wrong like Microsoft and Dell did against the iPod.

MAKE US AN OFFER WE CAN’T REFUSE

Sony Reader product page: http://tinyurl.com/2za2ru

The Right Formula For Grabbing Market Share in a tight economy

The Right Formula For Grabbing Market Share in a tight economy.

In these challenging economic times, the attached approach for grabbing market share is certainly worthy of consideration.

An excerpt from the opening paragraph of the attached article states “When most people see the symbol CO₂ they think of the acidic oxide. According to many sources, CO₂ in concentrations of 7% to 10% can cause dizziness, headache, visual and hearing dysfunction, and unconsciousness within a few minutes to an hour.”

The authors of the article took a slightly different spin on the properties of CO₂. “C=02. This business formula signals that Chaos equals Opportunity to the second power. What better time for a company to grab market share than when there is a sense that their competition is on their heels. Strong, well positioned brands are always looking for an opportunity to grab their share of the market – there has never been a better time than now!”

Much of the news today is consumed with bleak economic data.  Many companies are going inward, cutting CapEx, laying people off, cutting “discretionary” spending and waiting for the economic downturn to pass.  This is a certain formula for disaster and an express ticket to the dead pool.  What is most important today is to use these times to not cut expenses and staff indiscriminately, but rather to put everything under the microscope to cut those things that never really made sense, but made their way into your operating budgets when you were flush with cash and your investments were returning healthy returns.  Everything else must stay and be used for you to create a battle plan that will ensure you are victorious over your competition.

We are in a period of economic correction people!  This is a natural business cycle, which, at the moment may feel like a free fall from 30 thousand feet.  I do not wish to minimize the severity of this economic downturn, but this is not a time to forget what made your company a world class brand or a company on its way to greater things.  You must continue to invest in the important things that will make your customer continue to choose you over the competition.  You must continue to be strategic and to innovate.  You must put even more emphasis on doing the things that are required to win the minds and hearts of your customers, with a focus on doing things better, faster and cheaper.  This is a time to leverage the data assets you have.  Use the data to drive the insights which will help you to devise the best possible battle plans to gain share.  You must exploit every weakness of your competition and strengthen your most important assets.  If you data suggests you should be trying some new things to gain share, by all means test.  Test often, using this time to strengthen your position.  If you fail, fail quickly and learn.  Get yourself back on course and positioned for a stronger market position.

Be smart, be bold, be strategic, but most importantly, be the things that are most important to your customers.  Don’t forget about your guiding principals, your mission statement and your key points of differentiation.  If you see your competition pulling back, don’t follow their lead, go grab share and make certain you give your new customers what your competition could not or would not deliver.  It is not about slashing prices, it is about providing value.  Value is a multi-dimensional equation that encompasses price, product, promotion, assortment, service, trust and a open two-way communication with your customers.

If you are on the service side, spend more time with your customers to better understand their pain points.  What do you need to do to re-invent yourself to be responsive to how your clients are changing their business.  Are they looking to outsource more services, are they looking for better technology that reduces costs and cycle time, etc.  These will serve as signals to where their heads are and if they get the concept of C = O x 2.  This is a time to be a value added strategic partner more than ever.  Companies can fire vendors, but they are less likely to fire value added business partners that provide a strategic differentiation to the competition that translates to increased revenue, margin and ROI.  If you have clients who do not get C=O2, which I am sure you do, take the time to explain it to them.  Help to minimize their fears.

We are in these turbulent times for the balance of 2009 and most likely the first half of 2010 so strap on your seat belts and pull them tight as it will be a bumpy ride, but it is not the end of the rode.  Those who see opportunity to the second power in this chaotic time will come out on top, stronger than those who make cost cutting their primary objective in hopes of just weathering the storm.

Take the challenge, thrive on chaos and find your opportunity to the second power  C = O x 2

My 30,000 Foot View of Web x.0

I have been having many conversations of late with clients and friends about the evolution of web commerce.  I have been on the multi-channel marketing scene for over 20 years now and have watched the evolution.  When I was a teen or in my early twenties, I often heard from my parents about all the things I have which I take for granted that were not even on anybodies radar screen when they were younger.  The young rock stars of Web 2.o are doing some cool stuff which was not even imaginable 20 years ago or longer.  The reality is Moore’s Law is being challenged and new technologies are advancing more quickly.  Innovation is the key driver, along with an insatiable desire more content and control.

It is no longer about either push or pull marketing, but rather about collaboration, transparency and user generated content.  If you are not giving your customer what they want, someone else is waiting in the wings to steal them away.  Customer Loyalty is defined by stickiness.  Stickiness is defined by a transparent customer experience which makes customers want to engage with your product or service and telling their friends.  With great companies like BazaarVoice, customer reviews are becoming an ante for being seated at the big kids table.  Today we see a proliferation of social searches on Twitter and Facebook where people are asking close personal friends, Facebook friends and Twitter followers for advice and information.  Just yesterday, Robert Scoble said he was in the market for a new mini van for his wife and asked people on Twitter to tweet their opinions on a few different mini vans.  This is the future of social search.  Consumers will give you and others their opinions about your brand, good or bad, whether you want it or not.  The key is what you do with it.  Ignoring customers is a sure bet to share erosion in the future.  It is essential you embrace the two way connectedness being created on the web.  Whether you think you are a participant or not, you are, both personally and professionally.  I love the way Best Buys CMO uses both his blog and Twitter to engage with customers.  He has people tweeting him about stuff they like, as well as things they are not happy about.  He is transparent in his replies and ignores no one.  This is also done very effectively by the CEO of Zappos.  In web 3.0, this will be the rule rather than the exception so you better get some people assigned to following these guys and figuring out your own strategy.

In the early days of the web, Web 1.0, there were many retailers who wondered what they should do.  When should I get in, what should I be doing, how much should I spend.  Many companies figured out that Wall Street was rewarding those with a web presence, thus they began to shift spend and attention away from brick and mortar to web commerce.  Companies were splitting off their web divisions as different companies and the dotcom era of Foosball, pool, beer and pizza was created.  It was the cool place to be.  The dotcom crash occurred and things began to come back to normal, but it was a new normal.  Multi-channel retailing was part of the new normal and companies needed to figure out how the various channels, be it dual or tri, could and should best co-exist.   There is not a best practices guide, per se, however what has evolved is the need for companies to be channel agnostic, always on and provide a seamless, consistent experience for your customers.  Not many are getting this right yet, but they are moving in that direction.  The other thing that evolved with web 1.0 is the pure plays like Amazon who have been able to not only break rules, but create new rules where non previously existed.  Amazon is all about putting the customer first and using rich customer data to improve the customer experience.  Another winner in this arena has been Zappos.  These are two companies that have achieved annual sales in excess of $1 billion+ through a retail channel that did not even exist 20 years ago and they got there faster than any other traditional retailer.  What sets them apart, and makes them both a model to follow, is their commitment to customers, innovation, transparency and collaboration.  Their business models are different, to be sure, but the drive, passion and commitment to be category leaders and innovators is unmatched.

Web 2.o was in large part started by the likes of Facebook, Digg and other social media business models which have made participation and user generated content mainstream.  People have been freaking out of late about the newly launched site design of Facebook, but the jury is still out.  For the most part, I am a fan.  It is taking a bit of time to adjust to the increased noise from the various feeds, but that will settle itself in time.  Facebook did the right thing, however, in the next step of innovating and shaping its business model which will become a powerful commerce engine and source of rich social content, reviews, opinions and so much more.  Nobody understood what blogging was all about, outside of Silicon Valley, just a few short years ago.  Now we have powerhouse blogs like TechCrunch and Mashable to name a few, as well as the newest entrant to the party, Twitter in the form of micro-blogging.  Twitter is being embraced by celebrities, news anchors, professional bloggers and now every day people.  It was just announced today that SalesForce.com is partnering with Twitter to incorporate relevant tweet streams into their enterprise client solutions in an effort to monitor customer views, opinions and feedback.  This will be very powerful and a key point of differentiation for companies that rightfully embrace the notion of listening and engaging with their customers.  I read recently, in my tweet feeds, that people are starting to think in terms of 140 character thoughts and phrases.  This is a good thing, as it forces us to get to the point crisply and succinctly.  Isn’t that what it is all about.  We have a few precious seconds to get the attention of our audience.  How do you say something impactful in 140 characters, many have or are figuring it out.  To me, Web 2.0, is about the conversation.  It is about transparency.  It is about giving people control of what and how they receive content.  It is about user generated, user throttled and user filtered content.  We decide WHO we want, WHAT we want, Where we want it, When we want it and How we want it.   This is brilliant.  We see great new web companies by web experts being created to give us just that.  A few examples are Alltop.com by Guy Kawasaki and SocialMedian.com by Jason Goldberg.  Both have been successful with previous web ventures and are sure to be on the forefront of creating even more new brilliant business models and ideas in the future.  In web 1.0, it was about being channel agnostic.  In web 2.o, it is about being device agnostic.  Mobile commerce and communication will be ubiquitous in web 3.0.  You will need to figure out how to be there for your impatient customers when and where they want you or someone else will.

Web 3.0 is going to be about bringing it all back together again; introducing two key elements which are just now being dabbled with in Web 2.0 – measurement and monetization.  The who, what, where, when and how need to be understood and analyzed, ultimately resulting in insights which create a path to monetization, whether it be products, services or ad revenue. But, as in web 2.0, unlike  web 1.0, the customer must be at the center of the decision-making process.  Chat groups, Twitter, Facebook and other have made it unavoidable to be part of the conversation, engaging, transparent and on your game 24/7.

In another 20 years when my kids are my age and potentially pondering these same types of issues with an entirely different innovators dilemma’s, it will be fun to sit back and say to them, well you know when I was …

I hope you enjoyed my post from 30,000 feet, I welcome your comments.

Coupon Innovations: SMS Push Strategy Being Used By Kroger

Finding Coupons Online Has Increased to Stretch Grocery Budgets – WSJ.com.

At a time when consumers are cutting back on spending, and trying to make that which they spend go much further, Kroger is once again embracing innovation and technology to sustain its leadership position in the grocery space.  It is no surprise that Kroger continues to deliver stellar results to its shareholders as they always find ways to surprise and delight their customers by embracing and activating change.

Mobile marketing and SMS are something which many companies have talked about, but Kroger is one of the companies doing something about it which will pay dividends.  It is not just about activating a mobile strategy, but activating the right mobile strategy.  Kroger has been testing an SMS push strategy for the deployment of its coupons and will soon be rolling it out.  The coupons are pushed to customers via SMS, which are then loaded to their loyalty card for easy in store redemption.  This avoids the hassle of having to clip and carry paper based coupons and creates customer stickiness.  There are some exciting things Kroger can do in a later phase of their roll out, including pinging customers in store as a reminder to purchase the items that have received coupons for.  Additionally, they can add other cross sell promotions based on behavior and shelf adjacency.  Kroger has been brilliant in their strategies and innovation, thus I am fairly certain there will be many more advancements in this strategy, without over complicating the process or confusing the customer.  It is always best to crawl, walk, run.

The statistics for electronic coupon usage and redemption suggest this is a strategy that more companies should begin to incorporate into their marketing mix and loyalty programs.  Today online coupons only represent 1% of all issued coupons, but their usage is growing rapidly and redemption is up 140 percent year over year.  The key to increased redemption is less about the channel and more about the relevancy.  Those companies who are beginning to embrace electronic coupons are advocates and converts to one to one marketing.  Kroger is a leader in the grocery space, which can be attributed in large part to the effectiveness of their loyalty and couponing strategy, which will further be enhanced by the convenience of electronic deployment.  As smart phones become more pervasive, shoppers will be able to build their lists on their computer and push it to their phones and match items to eCoupons, or do it directly on their phone like my wife (but unfortunately we do not live in a state which has Kroger or other sister brands, thus we don’t get the benefit of participating in their loyalty program).

Kroger has embraced the power of customer data and continues to innovate their business, embracing technology to connect directly with their customers in a relevant and one to one manner.  This is not just a win for Kroger, it is a clear differentiator with Kroger customers who have often said that Kroger really knows their shopping habits and continually delivers relevant coupons based on what they buy, rather than being like most other grocers and retails who subscribe to a one to many saturation approach for their coupon programs.  A third critical participant and winner in this strategy are the CPG companies who work closely with Kroger, participating in the couponing matrix strategy based on customer behavior.  This is another success story, worthy of another blog post at another time.

My hat is off to Kroger for its continued innovation and continued belief that customers should be at the center of the decision making process.  Through their key partnership with dunnhumby, a global consultancy that has perfected the practice of using customer data to drive insights which lead to action, Kroger has continued to differentiate itself with its customers, winning greater share and delivering an impressive string of year of year earnings growth which they have directly attributed to how they have embraced their customer data to drive insights which have reshaped their strategy!  In these difficult economic times, more than ever, data is king and more companies should take a page out of Kroger’s playbook.  It is not acceptable to cut marketing budgets across the board or cut programs you do not like, but rather a triaz of your customer data should be performed to determine where you are getting ROI for your spend and where you can prove value.  This is not a time for keeping pet projects with soft benefits which cannot be proven as meeting a clear and measurable objectives.  We are entering into a new marketing era where accountability is more essential than ever.  A lot of what worked in the past, or could be sold as having value, is either not working or at risk.  This is not a short term situation, thus as marketers we must be strategic, accountable and put customers at the center of our decision making process, using the rich data that sits in our databases.

A Customer For All Seasons

There are many marketers today who are concerned about slowed revenue growth, or even shrinking revenues, as well as fleeting customers. What can you do to truly recession proof your business… Listen To Your Customers. I have often been bewildered by how many marketers will rally their teams in a war room to strategize on how to increase revenues, acquire new customers, gain greater revenues per customer, by adding a new feature or function, price changes, new ads, etc., but they often neglect the most important part of the equation: talking with and listening to their customers before making changes. It is o.k. to develop concepts from an inside out perspective, but they must be market tested or vetted by those who pay for the salaries and overhead of our companies – The Customer.

A critical customer segment, Mavens, as defined in Malcolm Gladwell’s The Tipping Point, are twice as likely to talk to others about their experiences with our brands. Not only are they twice as likely, but they tend to have very developed social networks that listen to them, trusting in their opinions. It is critical to fully understand and respond to the opinions of your Mavens in advance as they can play a significant role in the successes and failures of our brands. A good practice for all marketers to embrace on a daily basis is to ensure their products and services appeal to people’s aspirations and their dreams. As marketers, we must inspire prospects and consumers alike as we move them from awareness to trial and hopefully loyal customers.

When trying to decide what the next new product or service is you should be focusing on developing, I would suggest trying not to be one of the many “me to” products and services that exist today, unless you have a unique hook that can gain you share. A better approach, however, is to focus on creating products and services that are game changers, that can be tomorrows market leaders not followers. Don’t be afraid to think big, break the rules, challenge the current conventions within your industry and kill some “sacred cows”. Develop your products and services from the point of view of the customer. What latent need is not being met efficiently today. How many times have you thought, “boy I wish I had thought of that, it is so obvious”. Focus on differentiating yourself. As you think about your business, focus your product development on the needs and wants of your current Mavens and those you would like to attract to become Mavens. If you haven’t done so in the past, begin to spend a disproportionate amount of time focusing on keeping these key individuals happy. You can do this by providing them with exceptional service and the products they are demanding. Do not attempt to do this by sitting in an ivory tower, speculating on where your next share gains can come from, but go to the source, the Mavens, for your answers. It is also important to always be extremely respectful of their time and privacy. That said, you still must not forget to solicit feedback from them whenever possible, preferably before undertaking actions that might affect their future experiences with your brand. Always avoid, at all costs, going to market with new products and/or services without first engaging with your customers (those who pay) and, if appropriate, their end users (those who use). Establishing a simple customer feedback loop or echo chamber, before implementation or product launch is an essential element to maximize the chances of success .

If you can follow these simply rules and make it part of your operating disciplines, you are assured of having better success at keeping your custommers through all seasons, as well as attracting new ones.