Mobile's Surge

Sending one-way communications to consumers on mobile devices or optimizing a website for mobile is no longer good enough. Brands must now be able to optimize mobile channels in a way that enables consumers to make purchases, track pricing and comparison shop whenever and wherever they wish to in order to remain relevant.

That includes mobile versions of websites, as well as custom mobile apps. 

According to a February 2012 Consumer Electronics Association M-Commerce Forecast, 90% of consumers own a tablet, a smartphone or a cell phone. Of these consumers, 37% are engaging in some form of mobile commerce. On average, consumers spent $642 on mobile purchases in the past 12 months -- a whopping $124 billion overall -- the report revealed. The Internet spawned e-commerce, and in the past few years, the iPhone has spawned m-commerce. 

A differentiated approach

Perhaps no company better understands the value of m-commerce than Staples. The company invested in a new mobile commerce site, M.Staples.com, in 2011, as well as new mobile apps. The redesigns came roughly a year after the company invested in its first ever mobile site and app. 

In January, Staples said it would open an e-commerce innovation center in Massachusetts, designed to bring new ideas to market in m-commerce and social media, and in early February, the company launched a new website optimized for tablet browsing. Staples partners with technology vendors Skava on the tablet site, Expicient on the mobile apps and Usablenet on the mobile website. 

The new M.Staples.com features a shopping cart that synchronizes in real time with a user's Staples.com cart, a GPS-powered store locator, store inventory look-up and enhanced on-site search, including an auto-suggest feature. M.Staples.com is designed more for research, while the apps are meant to facilitate commerce, says Staples' mobile strategist. 

"Between a smartphone and a tablet, tablets are more transactional in nature," says Prat Vemana, director of mobile strategy at Staples. "We brought out the convenience of reorders for the tablet redesign, (including) faster checkout and the ability to access rewards. We've optimized it for transactions. The mobile site is optimized for research."

Walmart also uses its mobile site to enable product research and purchase preparation. The company launched its first mobile site and apps in 2010 and has since made several upgrades. Currently, the mobile site offers product details, customer ratings and reviews, and pricing information. 

Walmart's iPhone app enables consumers to add items to a shopping list by speaking, typing or scanning bar codes. Consumers can use the app to calculate total price in real time as specific items are added to mobile shopping lists, and they can find the in-store aisle location of products in select stores across the country. 

"We're at an exciting time of transformation, both for our customers and our business, as we move into the next generation of retail that integrates online, social, mobile and our physical stores," says Paul Cousineau, VP of mobile products, Global E-commerce at Walmart. Although he would not reveal sales or traffic data, he says mobile apps drove "significant traffic" to Walmart.com during the holiday season in 2011, and many of the shoppers were customers that had never previously purchased on the site. Walmart launched its first iPad app last November. 

Amazon.com is widely recognized as the inventor of the mobile commerce space. The online retailer built its first m-commerce site in 1999 and its first apps in 2008. The company uses a distinct approach for each mobile channel. 

"It was important to include meaningful and familiar aspects of the Amazon experience (on mobile sites) like one-click purchasing, customer reviews and wish lists," says Sam Hall, director of Amazon Mobile. "We also offer mobile applications tailored to specific devices to make the shopping experience faster and easier." 

Amazon has apps for the iPhone, Android phones, Kindle Fire, iPad, Blackberry and Windows Phone 7. Unlike mobile websites, apps enable consumers to do things like access the device's camera for barcode scanning and use voice input as an alternate search method, Hall says. 

"We designed our Amazon mobile app so that a customer could both search for and find a particular item, and (then) buy it within a very short period of time," Hall says. "This means the design had to be simple and 'glance-able' at first view, but still offer a path to more detailed product information." 

Not every brand goes out of its way to develop an original mobile site. Gavin Masters, e-commerce delivery manager at Hallmark, says his company's m-commerce site is an optimized version of the company's website. The retailer works with EPiServer, a content management company, to integrate their commerce platform across channels. While many industry experts bang the drum for a complete re-architecting of m-commerce sites, Masters says that can result in endlessly chasing new technology. "By the time we get around to re-architecting, the devices change," he says. "Today's mobile browsers are a lot more accommodating of standard sites than they have been.” 

Hallmark instead focuses its resources on mobile apps. Masters says the company has "double-figure apps internationally (and) five or six in the U.S." Hallmark's Story Buddies app is designed for consumers that have already made a Hallmark purchase, in order to engender loyalty. The app features interactive stories and games designed to "enrich the (customer) experience." 

Hallmark's mobile transactions increase each year. M-commerce transactions comprise roughly 10% to 15% of all of Hallmark's e-commerce transactions. 

A seamless experience

Although many retailers prefer differentiated approaches to how they develop and optimize mobile sites and apps, Michael Murray, CMO of e-commerce and online at Sears, says his company offers a seamless and uniform experience across all devices. 

"Whether m-site or mobile apps, we're really agnostic...We're looking to make sure that the customer experience is continuous and integrated," Murray says. "Mobile phone, PC, tablet, all of those expressions should be consistent and uniform to help that customer. It takes a lot of hard work to help the customer in that way, but it's worth it." He says Sears' goal is integrating online with mobile and physical stores. "Mobile is a bright tile in that mosaic." 

While Sears optimizes its sites to offer similar experiences, it does acknowledge that consumers' mobile device use differs from PC behavior. Since 2010, the retailer has enabled consumers to order an item on a mobile device and pick it up at a retail location within five minutes. Prior to the holiday season, Sears launched a similar policy for returns. 

Craig Shields, VP of e-commerce at Jewelry Television, says his goal is to ensure a consistent experience across mobile and online devices. 

"There's a number of companies that have standalone, siloed solutions that can get to market fast, but there can be differences in inventory results, search results and shopping carts," he says. "We wanted to provide a consistent experience so that the shopping cart online and on mobile is the same." 

Jewelry Television partners with Demandware on its e-commerce platform, which Shields says Jewelry Television was able to extend to mobile platforms. 

"Consistency is important," Shields explains. "Any customer with an iPhone probably hasn't had one for more than two or three years. It's still a new experience for shopping online. To interact and find that the online website and the mobile website aren't the same is an unfriendly experience. Plus, internal costs, complications and inefficiencies (are an issue)." 

Jewelry Television launched its m-commerce site and apps in 2010 and is in the process of developing an iPad app, which Shields expects to launch this summer. 

Ken Mowry, SVP of digital marketing and customer engagement at Charming Shoppes, says his company focuses solely on the mobile site. The company does not have a mobile app and Mowry is skeptical about whether apps will ever play a major role in generating mobile transactions. 

"We have not launched an app experience primarily over the concern over low adoption rate," Mowry says. "There's an (industry-wide) 70% drop-off after the initial app download. Unless you come up with a unique app experience, it's a challenge to get customers to come back to it." 

Instead of spending valuable resources on an app that Mowry thinks consumers will download once and then discard, Charming Shoppes focuses on customizing its m-commerce experience on smartphones and tablets. 

Charming Shoppes works with e-commerce platform provider Fry to optimize and tailor its various m-commerce offerings. It launched its first m-commerce site last year, and, in that time 10.5% of its e-commerce revenue has come through mobile, 7% of which came from tablet shoppers. 

Sunglasses retailer EyeSave has also foregone the app route in favor of focusing on m-commerce sites. It works with e-commerce technology services provider Mercent to handle its data feed to third-party sites like Amazon. Mercent optimizes those feeds for the best mobile performance. 

"We priced out some options for building (a mobile site) from the ground up and we thought, why don't we try this (Mercent partnership) out and see if we're doing well," says EyeSave president Darren Lilien. "We have been getting sales through it." He would not offer more concrete figures. 

New investments

Several brands recently made or planned to make their first m-commerce investments within the past six months. PriceGrabber, which has dabbled in mobile apps, built its first mobile commerce site in November. Tim Fernholtz, senior product manager at PriceGrabber, says the new site is "everything on our (e-commerce) site, but basically in a mobile version." 

The mobile site, which was built in-house, is different than PriceGrabber's e-commerce site in that it offers location-based features. The company also launched the DealGrabber app for iPhone in November, which enables consumers to view aggregated deals from daily deals companies. 

PriceGrabber is working on technology that will enable consumers to discover more information about any product on the market by snapping a picture of the product on their mobile device and then submitting it to PriceGrabber. Fernholtz says the technology will be available for the holiday season. 

Private sales site, Totsy.com, generates more than 20% of its traffic on its m-commerce site. However, the company recently began a two-to-three year mobile strategy that includes the March introduction of custom-made social- and community-based mobile apps for the iPhone, iPad and Android, says Christophe Garnier, cofounder, president and CMO of Totsy. The company is working with Diaspark to develop the apps, which Garnier says will enhance the company's "shop and share" philosophy. 

Reebok-owned The Rockport Co. launched its first m-commerce site two months ago. The footwear retailer built the site to be compatible and accessible across different devices to maintain a consistent user experience. 

"We kept the layout simple, the navigation intuitive, (with) touch screen features and prioritization of content so our customers are not overwhelmed," says Kimberly Correia Hunt, head of e-commerce at Rockport. "Growth rates in mobile usage, ownership, traffic and revenue is far outpacing the growth of desktop e-commerce sales."

(Source: Direct Marketing News, April, 2012) 

Cha-ching! Dealership Profits Soar

Used car sales driving profits.

Used Cars Drive Growth

Rising new-vehicle sales are boosting dealership profits. Most public retailers reported much higher first-quarter earnings, and other dealers tell similar stories.

All dealership profit centers are contributing. But it's in used-vehicle sales that many groups see big growth opportunities -- along with some challenges, the greatest of which is a lack of inventory.

"The biggest driver for used-car sales growth is the ability to procure used cars," says Bryan DeBoer, Lithia Motors Inc.'s COO. "We, at the top of the food chain, have a big advantage over the independent car dealer who doesn't take in the amount of trade-ins we do."

But for the Medford, Ore., dealership group to reach its goal of selling 60 used vehicles per store per month, it will have to do a better job at procurement, DeBoer says. In the first quarter, Lithia sold 45 used vehicles per store per month, he says.

"We have to open up our pipeline of used vehicles -- meaning get them from the street," DeBoer says.

Large retailers are using innovative tricks to get used vehicles.

Most say they are relying less on auctions. Instead, they look to increase trade-ins from new-car sales. They also are buying more used cars from Internet and newspaper ads. And they are using so-called equity software that combs their own databases to find existing customers with equity in their cars who might do a trade-in.

Big retailers say they are reconditioning more trade-ins for higher-profit retail sales instead of wholesales through auction.

Retail First
At Penske Automotive Group Inc., retail sales of used vehicles jumped 27 percent in the first quarter. The spike helped boost Penske's first-quarter profits by 38 percent. CEO Roger Penske attributes the increase in used-vehicle sales primarily to an internal program dubbed Retail First.

"Our initiative today is to recondition these used cars where they can be sold in retail rather than wholesale," Penske says. "It gives us a new customer."

And it results in bigger profits than wholesale yields. On average it costs Penske about $500 to $600 to make cosmetic and safety improvements to used vehicles, Penske says. But the average gross margin per used vehicle sold at retail is $2,043, Penske's earnings report says. Roger Penske says the company makes about $150 on a wholesale sale.

Vince Sheehy, president of Sheehy Auto Stores in Fairfax, Va., also wants to see more retail and less wholesale. He is relaxing his used-car standards to capture more lower-end retail buyers.

"Sometimes you put new tires on a car, and then certain people can't afford the car. So if you can bring the price down by $750, that can bring the sale into play," Sheehy says. "Wholesaling means someone else is going to retail it. We want more of those opportunities, but not anything that gets in the way of our reputation."

Sheehy's used-car sales were up about 5 percent in the first quarter compared with a year ago, and his used-car profitability was up about 10 percent, he says.

Sheehy Auto Stores is ranked No. 31 on the Automotive News list of the top 125 U.S. dealership groups, with total new-vehicle retail sales of 15,669 units in 2011.

Vince Sheehy also is looking to increase trade-ins. Starting earlier this month, he put so-called equity software in each of Sheehy's 15 dealerships.

Kuni Automotive also uses equity software and has spent the past two years using technology to improve vehicle acquisition, COO Joe Herman says. Used-car volume, revenue and gross profits are up significantly, and Kuni is up to 1.13 used vehicles sold for each new one.

In the last 90 days, Herman has added a new procurement specialist position to several stores. That person uses specialized software to seek inventory on online vehicle auctions.

"The dealers that can access inventories with some of those new Web tools can increase the size of their retail business because they can expand their reach beyond their physical location," Herman says.

Kuni Automotive of Vancouver, Wash., is No. 104 on the Automotive News list with retail sales of 6,683 new vehicles in 2011.

At Swope Automotive Group in Louisville, Ky., sales managers "source the service lane" for potential used-car inventory, says Cary Donovan, director of used-vehicle operations.

"You may source the appointments the evening before customers arrive," Donovan says. "You'll know from that particular group if you have a customer who's been in a car for two to three years."

Swope Automotive Group ranks No. 71 on the Automotive News list with 8,784 total new-vehicle retail sales in 2011.

"You've got to fish in some areas we didn't fish in before," Donovan says.

Spend more
Used-vehicle sales continue to be a strength for Asbury Automotive Group.

"Our stores broke all-time first-quarter company records for used retail revenues and unit sales," says Asbury COO Michael Kearney.

Group 1 CEO Earl Hesterberg says he was surprised by the used-vehicle market's strength to start the year. Because December was a great month for new-vehicle sales, Group 1 started January with more good trade-ins on hand.

In the first quarter, Group 1's used-vehicle unit sales soared 24 percent and retail used revenues jumped 28 percent. Gross profit on used vehicles jumped by 26 percent.

And "there's still excellent growth room" going forward, Hesterberg says. "The more trade-ins we get, we can be more competitive and have more attractive merchandise."

Group 1 is retailing all but poor-quality trade-ins.

"Most of the things that go to auction now from our company are really junk," Hesterberg says.

AutoNation Inc. and Sonic Automotive Inc. are focusing on using the increase in new-car sales to boost their used-car inventories and sales with trades as well.

"We know that we do not want to be an auction buyer other than in very select situations," says AutoNation COO Michael Maroone. "We aggressively went after our appraisals and converted almost 50 percent, which is an all-time high for us."

In the past, AutoNation's typical close ratio on trade-ins was in the high 30s, low 40s.

AutoNation retailed 45,500 used vehicles on a same-store basis in the first quarter, up 8 percent. Same-store retail used-vehicle gross profit increased 5 percent.

AutoNation continues to shift used vehicles between stores to find the best market, moving around 13,000 vehicles in the quarter.

Asbury has changed its view of lower-priced used cars.

"We used to avoid anything sub-$10,000," Kearney says. But now Asbury does a significant amount of business in the $8,000 to $12,000 price band, he says. "It gives you opportunity to reach so many more buyers."

Hitting targets
At Sonic, first-quarter used-car revenue rose by 9 percent and gross by 8 percent. Its closing ratio on appraisals was 48 percent. By selling 90 used vehicles per store in March, Sonic also hit a new milestone on its way to the goal of selling 100 used vehicles per store per month. Executives say they believe Sonic can achieve that goal by the end of 2012.

The long-term potential is even greater, Sonic President Scott Smith says. "That's a psychological number," he says. "There's a lot more upside to what we're doing."

Bryan DeBoer is confident Lithia will hit 60 used cars sold per store per month, but he says it won't happen by year end for his company.

"We believe the market is there right now; it's really a matter of our stores being able to find those vehicles and then attracting the customers to gain awareness that we are a broader used-car dealer," DeBoer says. "We'll get there, probably sooner than later."

(Source: Automotive News, 04/30/12) 

Sales Tip: Helping Your Client Look Good

 Make your client look like a rock star to his/her boss. Think about it. Who doesn't need some good press these days?

One of the best ways for you to do this is to proactively go to your client with ideas and resources. By the way, ideas and resources shouldn't always require payment. This is one of the many ways you and I provide this thing everyone keeps regurgitating called "value."

Now, if you are amongst the clueless who think everyone is already doing this, then make it a habit of asking this question in your Needs Analysis: "When was the last time your sales rep came to you (proactively) with an idea?" Get ready for a head tilt as they try to remember.

One way you stay fresh with ideas is to carve out weekly thinking time to, well, think about your client's business.

Tip: Regard this thinking time like you would any other appointment in that once you set it, you keep it!

Pampering Yourself Is Newly Back in Fashion

If American consumers seem to be carrying less stress in their shoulders, it could be because they're buying more back rubs and beauty treatments. 

Sales of personal-care services, including at spas, salons and weight-loss clubs, rose nearly 5% in 2011 from a year earlier, according to data from Sageworks, a financial-information company. And sales in the sector were more profitable, generating net profit margins of 9% last year, more than double the rate before and during the 2008 recession, Sageworks said. 

"Consumers appear to be going to the salon more often and spending more when they do," says Sageworks analyst Greg Mulholland. "They're more comfortable spending money on themselves."

So-called prestige beauty products sold primarily by department stores saw an 11% spike to $9.5 billion last year, according to a study released last month by The NPD Group, a market-research firm. All the top brands had sales exceeding prerecession levels, it said.

Although many consumers remain antsy about spending, "in the 15 years that NPD has been tracking the prestige-beauty industry, we have never seen growth like this," says Karen Grant, vice president at NPD Group. 

High-end products account for about a third of the total $33 billion market for cosmetics and beauty products, according to the U.S. Commerce Department.

"During the recession women spent more on their kids but not on themselves," says independent retail analyst Jeff Green.

"Strangely, they do appear to be getting more massages and weekly manicures," he says.

Massage Envy, a salon with 772 outlets across the country, says it added 134 franchises to its chain from January to April, a 60% jump on the 84 outlets added during 2011. "We had a record-setting number of franchise agreements in April alone," says Lori Merrall, the company's national director of franchise sales. Three-quarters of the new stores were opened by existing franchises, she says, reflecting an increase in demand.

Some experts wonder whether such strong discretionary spending can last.

Robert Brusca, chief economist at Fact & Opinion Economics, says a personal consumption growth rate of 3% or more is unlikely to be sustainable throughout 2012, which doesn't bode well for retail sales.

Still, he says: "People typically spend for two reasons. They're either very confident or, if they get into debt, very desperate. This is a sign of the consumer becoming more confident."

(Source: The Wall Street Journal, 05/03/12) 

Harley's Sales Gains Reflect a Focus on the Retail Experience

It's spring, and that means while some people are disrobing to worship the sun, others are donning their riding gear and rolling their motorcycles out of the garage.

It also means that people who have always toyed with the idea of buying a first bike, or getting a new one, are heading to motorcycle dealerships to ogle and maybe buy. 

Motorcycle prospects, like car shoppers, study the products online before going to retail. But the similarity ends there, says Fran O'Hagan, president and CEO of Pacific Grove, Calif.-based auto market research firm Pied Piper Management Co., LLC.

"In the car industry, unless a dealership is really terrible, how good or bad the dealer is hasn't got that much to do with how many cars you sell," he says. "But the same is absolutely not true for motorcycles. For motorcycles, what the dealership does translates directly into how successful they are."

Harley-Davidson has proven that in recent years, with big sales gains paralleling a huge focus on retail experience. According to Pied Piper's yearly Prospect Satisfaction Index for the U.S. motorcycle business, Harley-Davidson is number one at retail. In the study, conducted between July 2011 and April 2012 using 1,653 hired "mystery shoppers," BMW and Ducati finished in a tie for second, followed by Triumph and the Victory and Indian brands from Polaris Industries, in a three-way tie for fourth.

The firm said Harley-Davidson dealerships led all brands in 16 different sales activities such as offering test rides, obtaining contact information and asking for the sale. Twelve different brands led at least one sales process category: Ducati, Husqvarna and Triumph dealerships were twice as likely to offer a brochure to shoppers than dealerships selling Suzuki, Honda or Kawasaki. Similarly, Harley-Davidson, BMW and Ducati dealerships were twice as likely to ask for contact information than dealerships selling Husqvarna, MV Augusta or Moto Guzzi.

Pied Piper reported that the entire industry improved, with 80% of the individual sales process factors improving on average. This year versus last, salespeople were 14% more likely to provide compelling reasons to buy from their dealership; 13% more likely to ask for the sale; and 11% more likely to provide compelling reasons to buy now. Only 3 of 16 motorcycle brands failed to achieve higher scores in the latest study versus last year's. But O'Hagan points out that because of the fact that Harley-Davidson has the preponderance of U.S. motorcycle share, the industry-wide improvement inordinately reflects Harley's own improvements.

O'Hagan also says the brands with the biggest improvements in retail satisfaction in the Pied Piper study are also the ones that have most-improved sales performance in recent years. "If you look at market share gain and loss today versus three years ago, Ducati, Triumph, Indian and BMW have all improved, and Harley-Davidson has kept its share."

In the study, Honda, Yamaha, Kawasaki and Suzuki fell below the industry average for prospect satisfaction, although all but Suzuki improved. One might argue that the Japanese brands are hindered by multi-brand dealerships, making it harder for them to have a distinct retail presence, but O'Hagan says that's not really the issue. "Five years ago, Ducati had a forgettable presence and the fault of that lay with Ducati, not the dealers," he says. "Over several years they fixed their problems and the dealers came on and improved the way they sold. And Ducati is mostly in dualed (multi brand) dealerships."

O'Hagan also points out that the top-scoring retail brands also make a big commitment to their brand presence at shows. "In December, I went to the Long Beach Motorcycle Show, which is a big deal on the West Coast. If you were a layperson wandering around there, you would come to the conclusion that the big, heavy-hitter brands were Victory, Triumph, Ducati, Harley-Davidson and BMW. I found that striking."

By contrast, he says, Japanese brands have traditionally focused on their product lines as brands. "They have pretty comfortably focused only on product, for years. But I would say that if you talk to people who work for them today, they know what's up."

(Source: Marketing Daily, 05/07/12) 

Too Many Brands Stuck on Media Part of Social Media

"How do I think about reach and frequency in social media?"

"How do I use social media to get my brand's message out?" 

Clients have asked me questions like these on a number of occasions over the past couple of years. If they are more sophisticated than most, their questions may be along the lines of "How do I use social media as part of an integrated communications plan?" or "How do I assess the ROI of social media compared with other media?" 

I always get an uncomfortable feeling when I'm asked these questions. 

Too many marketers still don't get what is different about social media. There are two words in "social media," but too many people are hearing just the "media" half. 

In the media world (including both traditional and digital non-social media), there is an audience that is essentially passive, receiving an advertising message that has been delivered to them. While people may grumble about the incredible number of ads directed toward them over the course of a day, they generally recognize that this is part of the price they pay for viewing content of interest. 

Despite tremendous effort and expense on the part of media and media-research agencies over many years, it is difficult to predict which ads will "work" in this cluttered environment and whether the audience will "hear" what we want them to about our brands. 

In the social world, there is no audience; it is people talking to each other. That is what makes it "social" rather than media as we are used to thinking of it. It is inherently active, and when the topic of conversation among people is brands, it gives consumers control of what the brands are about. 

Because of the lack of control in the social world, "getting your message out" in social media is an inherently flawed notion. 

That is also why "counting eyeballs" that have seen something in social media about a given brand and trying to equate that with views in traditional media is an inherently flawed exercise. 

Putting the emphasis on the word "social" means focusing instead on the nature of the brand conversations taking place and how to influence (not control) them. 

If we can liberate ourselves from the "media mindset" and adopt a more "social mindset," we will then be able to make significant progress in understanding how to engage, how to take part in the brand conversations going on around us, and how to build relationships in this new world. It is clear, though, that we are still in the early stages of sorting this all through, and there is much to learn. 

When jumping into social media, brands need to keep in mind that people will not be receptive to the old paradigm of "push the message." 

TNS conducts an annual survey of consumers around the world to try to understand how people live online. The latest Digital Life survey shows some sobering yet encouraging insights as to how people view brand interactions in the social-media world:

• Sixty percent of U.S. consumers who use social networks say that they are a place where they don't want to be bothered by companies or organizations.
• At the same time, 45% say that social networks are a good place to find out about brands -- but 50% say that even a single negative review on a social-media site can affect their brand decisions.
• Most people who join brand communities will do so for mercenary reasons (65% say they do so to get coupons), but many also do so to express their passion for a brand (45%).
• Most of those who write about brands on social media say they do so to praise brands (61%), but nearly as many say they write about brands to express negative feelings (45%).

These data would suggest that brands have opportunities to find creative ways in social media to build stronger relationships, but there is risk too, as they need to overcome many people's wariness. 

As everyone rushes to develop a Facebook strategy, social media represents a double-edged sword for marketers as they seek to build their brands. 

Approaching it with a media mind-set may well turn off many people; letting "social be social" will be a better path to growth. The choice is ours. 

(Source: Larry Friedman, Ph.D., Chief Research Officer at TNS, appearing in Advertising Age, 05/06/12)