Author: Jeff Larche

With a background that includes direct marketing and customer relationship management (CRM), Jeff Larche brings an unusual approach to his work. What these other two disciplines have in common is database marketing, and they continue to strongly influence his work as marketing technology leader.
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Burger King masks and eBay are big this Halloween

Before the internet there was little chance for enterprising types to profit from holiday-generated scarcity. I’m thinking of the Cabbage Patch Kids dolls, which were the must-have collectibles for much of the 1980s, and caused frenzied pre-Christmas rushes at bricks-and-mortar stores. Now there are online markets to help resolve supply / demand imbalances. I was reminded of this as I talked to my friend at BuyCostumes, the world’s largest e-commerce costume site.

Earlier this month I wrote that if you remove the constraints of shelf space dictated by a physical costume store, you see the same Long Tail sales trends that other categories experience (at BuyCostomes, at least). When variety of product is virtually unlimited (pun intended), niche sales can be very profitable.

Conversely, when there is a lot of demand for something in limited supply, not only will you sell out quickly, but you’ll see that product continue through the food chain until it finds its ideal price. Certainly for Christmas items, but also for Halloween, which is now the second largest American holiday in terms of spending.

A fact I was reminded of when I learned that Burger King costumes are big this year.

BuyCostumes has an exclusive deal to sell these masks this year, and sold nearly 2,000 of them over the course of about 6 hours (cumulatively, because they sold them in batches over several days).

The retail price was $39.99. Many who scooped them up immediately put them back on the market. My contact at BuyCostumes guessed they were going for as much as $80 each on eBay and finally settled down to $65, including shipping and handling. Unfortunately, the speculators, plus eBay and perhaps pay-per-click ad sites (see the ads on the Google search I did this weekend) were the only parties to profit from this demand spike.

For several years I’ve been reading that movie theaters are talking about putting their tickets for extremely busy nights up for a higher price than normal, and conversely, marketing their slow nights at lower ticket costs. That day is still a long way off, for social reasons and not technical ones.

Similarly, I wonder if holiday-related e-commerce sites should consider having their own markets for their hottest products, so they can benefit from these demand spikes. After all, oil companies do it. And isn’t a Burger King mask that can be re-sold many times on eBay and Craigslist just as fungible as a gallon of sweet crude?

The only constraint I can think of: Society may not be prepared to have a merchant with exclusive rights to a product take every action to benefit from its popularity. The negative PR implications of an online auction by the seller may be too great, leaving the opportunity in the hands of the speculators and eBay.

You’ve got to wonder. If the frantic parents outside the toy stores of the 1980’s were told there would be an auction for the last 10 Cabbage Patch Kids, and “Who will start the bidding at $100?” … would there be a riot? And would there be a flame-fest from consumers if modern-day eTailers did the same?

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The persuasive power of a map

David Ogilvy called direct marketing, “My first love and secret weapon.” I feel the same way. The power of a handful of direct marketing techniques has turned so-so campaigns into winners for me more times than I can name. One such technique is including maps in direct mail and email marketing messages. I’ll break the marketing power of geomapping into two tips.

#1 Don’t just tell consumers that they should visit you — show them how, as specifically as possible

Social psychologist Howard Levanthal conducted some experiments in the 1960s to see if he could persuade Yale University students to get tetanus inoculations. In his efforts to see if mailed brochures would work better using fear as a motivating factor, he stumbled upon something more persuasive.

He included a change in the booklet that boosted response from 3% to 28%. As reported in “Effects on Fear and Specificity of Recommendations Upon Attitudes and Behavior,” in the Journal of Personality and Social Psychology (1965), he and his fellow researchers included a map of the campus, with the Health Department office circled, and the times when inoculations were being offered.

In other words, he made visiting the health department more real to the students by showing them how it fit into their lives and their schedules.

With digital printing, you can do one better: You can produce maps that include two dots: You are here and Here we are. I’ve used this technique, and it’s not easy when you’re mailing to a lot of neighborhoods, but seems to be well worth the effort.

#2 Tell them how close they are to you

People don’t look at maps until they are curious about what you have to sell. But you can help them grasp how easy it is to reach you if you tell them right in the headline. If they are closer than they thought, that’s great news. And to quote Oglivy again, “All advertising is news.” Here’s an example of one such headline:

We had the challenge of informing residents living near a community hospital that they should go there for the vast majority of their healthcare needs. The hospital, which was tucked away in a residential neighborhood and was easily overlooked, had witnessed much of their business being drained away by a neighboring medical center.

Our opportunity to start winning this business back came when we were hired to promote a series of open house events (by we, I’m referring to a team I led in a “former life,” as they say in business). The events were to celebrate a complete redecoration of the public-facing areas of the facility.

The headline of the mailing was blunt: You’re less than 10 minutes away from award-winning healthcare. We could say this honestly because we had done drive-time calculations, and created three versions of the mailing. One stating the above, and two others saying 5 minutes and 15 minutes. The database with drive times told us which mailing to use for each address.

When the first event rolled around, it was fascinating to watch people arrive, with mailing in hand, to claim the promotional item we were giving away. They needed to take a tour and turn in the mailing in order to get their gift. That, of course, meant that we could read their names and addresses off of the cards, and add these prospects to a customer relationship management (CRM) database. From there we could re-mail with other offers and news.

It was definitely a group of pospects worth re-marketing to, for these three reasons: 

  1. They were responsive. The response rate for the group closest the hospital was 3.7%.
  2. They loved us. Many raved about what they saw, saying things like, “It looks more like a hotel lobby than a hospital!”
  3. They were now truly our neighbors. Thanks to the geomapping technique, they all knew exactly how to find us.
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Data mining: Finding an arsenal in a bunch of dry bones

In the classic Stanley Kubrick film 2001: A Space Odyssey, based on Arthur C. Clarke’s book of the same name, prehistoric Man has a good day at the office when he realizes how to use an animal femur as a weapon. The implication is that this moment of invention bestowed upon our ancestors a competitive advantage.

What I love most about my job is being a part of a team that has these same “Aha!” moments. Quite often we make newer, better tools that enable us to go out and kill our suppers. How cool is that? 

Even cooler is how the lines between disciplines blur, and we have invention mash-ups. Because we are involved in direct marketing and research as well as interactive projects, we get to invent in those areas as well.

Next week I’ll write about just such an invention involving geomapping. But today it’s analytics, one of the more fertile areas for innovation — and improved ROI — in business today.

I interrupt this story to recommend a free webinar on gaining a competitive advantage through analytics, put on by the American Marketing Association and Aquent (thank you, James Gardner, for the head’s up!). It takes place on October 31 and covers topics every marketer should be familiar with.

3D BarcodeThe analytics “invention” I describe below came from a conversation I was having several years ago with Mike Czerwinski (a co-worker in a prior life), who is one of the smartest people I’ve ever met. Too bad he squandered all that brainpower by getting a PhD in mathematical physics. I joke of course. His scientific background and ceaseless curiosity help him mine data in ways that are sometimes quite unexpected.

Over a beer, Mike and I were contemplating the barcodes on the back of Wisconsin driver’s licenses. They contain all the written information on the front of the card — far more than name and mailing address. The information contains height, weight — even eye and hair color. As Mike might put it, many data points.

This led to the discussion of nightclubs. It’s a very competitive industry, where your profitability hinges on the caprices of a community’s young and social. Significantly, Mike and I had both just read Malcolm Gladwell’s The Tipping Point.

I can’t speak for Mike, but I certainly know that I was looking with a fresh set of eyes, seeing everywhere the social epidemics that Gladwell describes. More importantly, I was ever-wondering how to find Mavens and Connectors. These, according to Gladwell, are the few who influence the many. They can be found at the head of most consumer stampedes, and are to be courted and coveted by marketers — if they can be identified.

How to identify them in a nightclub? If you could see these vectors of influence, and offer them free stuff (drinks, a party room for a special occasion, etc.), they would reward you by drawing their many friends with them back to your club again and again. And if you owned a number of nightclubs instead of one, you could find Connectors or Mavens who frequent one of your clubs and coax them and their loose posses to another, on a night when that club needs the business.

Most importantly, you watch the frequency of their visits. Your club could be packed, but if these influencers (as they are often called in word-of-mouth advertising) have stopped attending, your business is about to plummet. Their departure can be a leading indicator, which can help you make decisions about advertising, staffing, purchasing — every part of your business.

But how to find these valued customers? The answer, as it occurred to us, was the scanners that nightclubs use to document, upon entry, the legality of their patrons. Because being caught with under-aged drinkers can shut a club down, entrants are often handing over their licenses to an attendant who runs the card through a video scanner. I suspect that the typical scanner just takes a picture. It doesn’t actually capture the data. But it could. Patrons give up this piece of privacy for the privilege of partying at a club, and in so doing hand over an opportunity that Mike and I suspected was being overlooked, like a pile of dry bones.

What if the database of patrons was analyzed daily? We wouldn’t be looking for the most frequent patrons (necessarily), but for those loose groupings of people — those clusters — that show up frequently in the line of ID cards. Each cluster would be like a solar system in a nightly star map of patrons. And each planet in these solar systems would invariably orbit the same recurring Connectors and Mavens.

And guess what? You’d have these people’s mailing addresses. Once you identify these influencers (or suspected influencers — you can afford to be wrong occasionally), you’d mail them offers that really matter. A mailing to a few hundred people could potentially move a thousand or more partiers to your establishment when you need them the most.

If you know of anyone applying this idea, please let me know. It’s a concept that still needs to be tested, but I think it could have tremendous potential. Click to view a larger version of this mapIn the meantime, here is a social map that charts the frequency that bands play at certain nightclubs. The clubs are colored according to type (blue=cover, red=original). Lines between clubs represent the number of bands that played at both clubs over the 18-month time period. The size of the clubs’ dots indicates sharing of bands. To get the full effect, and to read the whole story, check out this report with a time-lapse animation. Although the report suffers from lack of clarity, it does have some interesting observations.

Review the graphic and you’ll notice that the cover clubs don’t book the same bands as each other (the blue nodes are smaller) while the original clubs do share the same talent (the greater sharing of bands over the period increases the size of the red nodes).

I think you can infer from this that cover bands, which tend to play genres of music (e.g., Disco, Grateful Dead / Jam, Modern Country), tend toward a few clubs that fit this style of music, while a greater “genre” is new, original music. This material needs to be played in more of a circuit of clubs, ala vaudeville. Back to Mike’s and my invention, I think it would only work in the red clubs, because sharing of bands also means sharing of patrons, who follow the bands. Or, of course, the idea would work for nightclubs featuring no live music at all.

Like much in academic studies, I see little immediate business value to this Boston College study, which in some ways states the obvious. But it makes for an interesting view of the nightclub scene. And who knows … it might fuel your own beery inventions.

A message to Mike: We really need to go out and get a beer sometime. I miss the shop talk and rambling inventions of the four of us — you, Kevin, me and Guinness. Call me.

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Countdown to my Carnival of Marketing winners

It’s a great idea. I’ve learned a lot from the concept, and want to give back. It’s the Carnival of Marketing. Every week a blogger volunteers to review recent marketing blogs that have valuable, actionable information, and then provide a good summary of the content with links. I can thank Noah Kagan for adapting the concept from other blog “carnivals.”

And I’m pleased to say that I’ll be hosting the Carnival during the weeks of November 19 and 26.

So here are your instructions: Be sure to return those weeks to see the juicy content I’ve accumulated for your benefit. And if you’re a fellow blogger, let me know as the dates approach of an entry that’s particularly worthy of the spotlight.

Here is the email address where you should send those entries: jlarche (at) gmail (dot) com. The Official Rules:

  1. Don’t submit an old post. The post needs to be from at least the past couple of weeks, and preference will be given to posts from the most recent week.
  2. Submit posts that are actionable. Tips that people can actually apply will almost always win out over abstract stuff. “How” beats “Why.”
  3. Submit posts that are complete. As a corollary to the above, posts that refer out to articles or other sites for more information, or that have anything to the effect of “Watch this space for more information” are going to be among the first to be cut.
  4. Don’t submit posts that are nothing more than a pitch.

That last point should be self-evident. Marketers, like other poisonous organisms, are immune to their own venom. I look forward to the submissions, and to sharing the winners starting in one month … and counting!

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Web navigation for those who want to cut to the chase

A friend sent me this Marketing Sherpa article about a great web design approach: Build in a button for those Type A folks who just want the facts.

Type A screen capture from an ad agency web siteIt’s clever idea. The article has links to the site, which is for an ad agency. I suggest you give it a look.

The idea does bring up a greater point: Are you identifying your target audience precisely enough to match their varying browsing styles and needs? Doing so isn’t all that far-fetched.

I’m a big advocate of persuasion architecture, which is a term coined by Brian and Jeffrey Eisenberg of Future Now. It’s a process by which you segment the universe of customers and prospects visiting your site. Segmentation is by persona — which the brothers define as general personality archetypes. These are stereotypes, if you will, for how specific consumers feel about your site’s products or services. 

It all sounds very squishy, and frankly I do find it a little too high-minded sometimes. I’m more of the behavioral type. Generalizing on anything other than past actions can sometimes lead you in circles.

But I am nonetheless deeply indebted to the Eisenberg brothers for taking this idea and extending it to the practice of building pages that contain navigation and content unique for that persona. In other words, if you sell online home security products, and know that a worried single parent is a key persona type, be sure you address this person’s many questions and fears in a systematic way … and also, offer little other navigation or content along that funnel.

The object of persuasion architecture is to move people in an orderly fashion through their decision-making steps, one click at a time. The prize: To unfailingly lead consumers to a sale.

Persuasion architecture is a much-needed breath of fresh air. For the right site, I can see it rewarding Type A people for identifying themselves. And in doing so, rewarding the site owner with a higher sales conversion rate.