More and more, we find we can fool the consumer less and less. Transparency on the web, combined with some real economic pressures, have led consumers today to be more savvy than ever. So, with consumers who are aware of competitive offers and motivated to seek them out, how do we actually provide the case for them to purchase from us?

First of all, the “same old, same old,” will not work. That is not to say that what you have offered in the past will not work today, just that what you offered in the past will not work today, IN THE SAME WAY OR FORM. Take what you have offered in the past and reinvent it by combining it with services or product add-ons that help consumers solve problems. Focus less on margin and more on customer growth. Remember, you cannot save your way to prosperity, especially in this economy.

One example is an outdoor sports products company that began to offer free tuning of their products at the end of th season to the customer. Lousy margins in the very short term, but such outstanding retention and cross-sell that the difference was more than made up in 6 months. Another client is offering storage of a digital form of their product, which permitted the customer to access the products 24×7 from any computer as well as order more versions on-line. Results still pending, but I would anticipate add-on sales from those consumers to exceed a control group by a wide margin.

Simple combinations here, but the main point is (1) focus on solving customer needs and (2) target customer repeat and retention as the goal — do not let AOV be the driver. Otherwise you will act for the transaction and the customer will treat you just that way, as a transactional vendor, not a partner in solving life’s hard problems.

Image by monstro via FlickrIn a blog post by Kevin Hillstrom on his excellent site, www.Minethatdata.blogspot.com, called “Substance,”he discussed the scarcity of approaches that really have helped retailers work their way out of tough economic times. Here is my response:

Let’s get down and dirty and help out some of those retail/e-com marketers who are struggling (which is most of them):

1. Solve real problems — consumers will still make purchases that solve real problems — problems with organization, with making smart choices quickly (and impartially), with making the RIGHT economical choices without cheating themselves.
2. Reach consumers when and how they want to be reached. Repeat carefully/selectively for a time and then leave them alone — they don’t want it then anyway. You cannot bludgeon them to make them buy.
3. Provide service to make the experience of purchasing as accurate and simple as you can. Use service to “add value beyond the sale” and differentiate.

More on actually how to do this in my next post.

In Bryan Eisenberg’s article, “Attaching a dollar value to marketing efficiencies,”, in FutureNow, he writes about the best ways to market in a down economy, when traffic has begun to decline in e-commerce for the first time in years. Bryan correctly believes that it is critical to maintain spending in strategies that prove their marketing worth, such as pay-per-click, as long as you can track it back to actual sales and measure the effectiveness. He is also correct that, since marketing does a poor job of tracking spending to results, their spending is often the first area cut.

However, remember that the focus ideally should be on customers, not on the strategies as a whole. All customers are not created equal — they do not have the same relationship nor the same historical and potential value. Using a customer-centric approach, by focusing spending on the right customers (those who are retained and have the greatest potential to increase spending) and creating a customer experience that reflects a relationship focus, the metric ROI for strategies converts to ROC — return on customer.

Once you have developed some sort of customer grouping (I will call them segments in this posting), the key is to take action on them. Otherwise, the segments are academically interesting, but that is all. What you have done is to identify customers who behave similarly. Now you can begin to create a customer experience for those different segments, to optimize the opportunity.

How do you use these segments to build a customer-centric organization? By giving responsibility for the different segments to different marketing teams and them empowering them to do what it takes to grow the revenue, margin and customer count in their segment. In effect, to create accountability, you have to create metrics and then use them. After all, “what gets measured is what matters…”