Tenser'sTirades

A Web of Truths

May 31, 2022July 27, 2011 by James Tenser

WATCH OUT, Shopper Marketers! You may find yourselves entangled in a web of truths of your own making.

It all began innocently enough; in 2005 when brand marketing behemoth Procter & Gamble advanced a provocative set of ideas around what it called the first and second moments of truth. Thanks to some savvy and persistent promotion, the terminology caught on fast:

FMOT, the first moment, refers to the brief period when a shopper selects a desired product in the store.
SMOT, the second moment, refers to the at-home consumption experience associated with that product.

Within the then-nascent Shopper Marketing community, this framework was a minor revelation. For brand marketers, FMOT gave credence to the argument that real marketing persuasion needed to be extended from measured media into the shopping environment. The store, it was discovered, shelters a separate marketing reality, where pre-purchase leanings are transformed into final choices.

Shopper Marketing defined a path to purchase that commences with media-induced product awareness and proceeds to interest, formation of intent, and ends with product selection at the shelf, FMOT. Once home, SMOT, or the actual product experience, takes place influencing subsequent decisions.

FMOT/SMOT was a pretty handy framework at first. But the concurrent rise of digital out of home and mobile media conspired to make things a lot more complicated, fast. The path to purchase, it turns out, is littered with hundreds of moments – text messages, in-store video ads, Web search, service encounters, Facebook apps, twitter feeds, QR codes and downloadable coupons, to name a few.

Stuck in the Moments

A few weeks ago the gleefully disruptive folks at Google seized the opportunity to coin a new Moment of Truth and promote it hard. They call it Zero Moment of Truth or ZMOT. Its premise is that interactions with search, Web, social and mobile price and product research media create a third type of online decision-making moment. The concept is a bit self-serving coming from the world’s largest seller of online advertising, but it has attracted much commentary and attention.

Almost immediately, new Moments starting appearing like so many pop-up windows on an e-commerce Web site.

In his post, “What is missing from moments of truth marketing”, blogger Joel Rubinson argues for the existence of “minus one” moments of truth that include such influences as word of mouth, in-store product visibility, and various types of advertising. Most interestingly, he proposes that these -1MOTs may occur in any sequence relative to FMOT and SMOT.

Joel’s point about the non-linear nature of the Moments of Truth is worthy of frequent repetition. Product experience is certainly a web of moments, not a fixed linear sequence. Call it WOT (Web of Truths)?

On the very same day and from an independent thought process, blogger David Berkowitz proposed adding “The Infinite Moment of Truth” to the model, which reflects his excellent observation that consumers may well describe their product and service experiences to others, relaying and amplifying the message beyond the scope and control of the marketer.

Bon MOTs

I applaud David for extending this Shopper Marketing discussion from the path-to-purchase toward the path-to-loyalty. A good thing, really, since the linkages are powerful and real. It made me think about Fred Reicheld’s 2006 book, The Ultimate Question, which proposed that genuine loyalty was best judged by an individual’s likelihood to recommend a product or service to others. Social media can super-charge this potential.

Both bloggers are smart, experienced people I know for some years and their ideas are intelligent and worthy of respect. But I must confess to an impish reaction that led me to ponder: Just how many bon MOTs can one industry handle? ZMOT; FMOT; SMOT; Rubinson’s -1MOT; Berkowitz’s IMOT…

At risk of attracting ridicule, my imp compels me to toss another acronym into the mix: XMOT, the eXtended Moment of Truth. It’s my way of stretching the Web of Truths a bit wider – not quite to infinity, but toward its potential to help us understand the multifaceted tangle of influences each person receives, reflects and responds to in their roles as shoppers, consumers, and friends.

Pay Cycles: When Month Outlasts Money

May 31, 2022July 21, 2011 by James Tenser

I WAS STRUCK to read comments a couple of months ago by Walmart CEO Mike Duke who stated that the chain’s shoppers seemed lately to be running out of money in the waning days of the month. He cited the shrinking size of market baskets as evidence. Tough times leading to tough choices.

Separate recent reports about the worrisome state of our consumer economy observe that budget-conscious shoppers tend lately to purchase smaller package sizes near the end of their pay. This, of course, is a key contributing factor to smaller baskets. William Simon, Walmart U.S. stores chief, made reference to this “paycheck cycle” at a recent analyst meeting.

This morning a report in Bloomberg News described shoppers upping their use of credit cards for purchase of household necessities and gasoline. This is a confounding signal that looks on the surface like a rebound in consumer confidence. In fact, it seems to be concentrated at the end of the calendar month. This may be a sobering sign that many households’ flat and declining paychecks can’t keep pace with price increases.

I’ll leave the economic and social import of this behavioral trend to the true experts. But I would like to offer a few thoughts about the time-based shopper insights that allow analysts to detect and measure the trend. Looking at detailed market basket trends day by day, it seems, can reveal a great deal about short-term household economics.

Not Card-Sharp? Then Be a Basket Case
This is interesting because we hear a different tune about insights from the many advocates of frequent shopper programs, a.k.a., loyalty cards. The detailed segmentation data these programs can deliver offer a wealth of target marketing opportunities for retailers and their suppliers, along with behavioral insights so detailed and profound that we don’t always know how to apply them in practice.

This is very cool stuff and it is credited with upping sales and profits at some pretty sharp retailers, like Kroger. Card-linked data allows marketers to put together a picture of a whole customer relationship over time, evaluate it, and group customers into target-able groups. Walmart and the so-called “dollar” stores, however, do not go in for those card marketing schemes. They stick deliberately to their EDLP guns instead, and resign themselves to data-poverty.

Or so it may seem. Actually, there is a great deal that may be learned just by looking at basket trends, especially at those retailers who enjoy very large footprints and shopper penetration. Card-free chains like Walmart, Publix and Dollar General can track the transaction logs by day and by local geography to extract very meaningful insights. Even if the shoppers are not individually identified, their collective behavior reveals much about pay cycle trends on a store-by-store basis.

Here is where even “data impoverished” retailers can find basis for some global and targeted merchandising tactics. Carrying sufficient smaller pack sizes in key categories every day is one obvious response Walmart says it has pursued. Sales and events may be scheduled to coincide with payday for local large employers. Managers’ specials may be timed to hit key mid-month and end-of-month dates.

Well there you have it. It’s still a share-of-wallet game, even when wallets are growing slimmer. Walmart knows, there’s much of tactical value embedded within store transaction-logs, even where there’s no loyalty data in sight. It’s not just dollar size of baskets that may influence action, it’s also item counts, categories included/avoided, package sizes and purchase influences from outside factors.

When the month runs long, wise retailers jump on their cycles.

The Epsilon Imperative

May 31, 2022April 7, 2011 by James Tenser

IN WHAT SOME observers say was the largest breach of consumer data in history, this week servers at Epsilon Interactive, a database services company based in Irving, TX, were compromised by hackers, exposing the names and email addresses of millions of American consumers to the spam-o-sphere.

Within hours, alerts hit my personal inbox from Kroger, Target, Walgreen and HiltonHHonors informing me that they had been struck and that one of my addresses was now in the wild. Why did these gigantic companies have my email address stored in Epsilon servers? Simple. I am enrolled in their frequent shopper programs. And until now, Epsilon was as reputable and secure a place as you could get to host your customer data.

Which partly explains why the 50 or so huge retail and consumer-facing companies whose customer email lists were exposed by this attack include the likes of Best Buy, HSN, CapitalOne, Citigroup, JPMorgan Chase, Marriott and TiVo. These companies depend on email communications for the inexpensive delivery of relevant messaging and offers to their customers. Now each of them has been forced to warn their customers about the potential for spam and phishing attacks. By email.

The implications of this are quite chilling, and should give pause to every Chief Marketing Officer and Chief Customer Officer charged with the custody of shopper relationships and brand equity. Shareholders had better pay attention too. This, my friends, is your first early warning. I call it the Epsilon Imperative.

First, the good news
It could have been worse. While the data quantities are vast, and the affected brands are iconic, at least the damage was limited to names and email addresses, we are told. Wholesale identity theft does not appear to be a great direct risk, although enterprising list dealers and data miners will be tempted to merge the email address tables with other lists, thus creating more complete profiles for future exploitation.

And the email notices I received came fairly promptly. Well, one from McKinsey Quarterly arrived within hours of the media alert on Saturday. Walgreen and Fry’s (Kroger) got their notices to us later the same day. Hilton and Target waited until after the weekend. (OK, timings of the last two are really not that impressive, come to think of it.)

The positive take-away is that most of the frequent shopper/guest list owners exhibited some consciousness of responsibility for the incident, even though it was caused by an outside criminal act against a third-party service bureau (Epsilon). They acted promptly, recognizing that shoppers and guests must be made to feel that the brands have their best interests at heart. Failure to inform would be a lapse of good faith.

Why marketers should care
While preserving public confidence and brand equity are major concerns, this is only one factor for top retail and hospitality executives. Another, less-understood implication is legal regulatory exposure. This is an area that evolved rapidly following the notorious TJX data breech of 2005, which exposed 46 million credit card numbers but did not come to light until 2007.

California led the pack with the first security breech notification legislation in 2008. But the model for this legislation came not surprisingly in the state of Massachusetts, where TJX is headquartered. At least 46 other states followed with their own versions.

The Massachusetts General Law titled, “Standards for Protection of Personal Information of Residents of the Commonwealth” (Chapter 93H), defines a comprehensive set of data security obligations on businesses, including the development and maintenance of a “comprehensive written information security program.” Deadline for compliance with this law was Mar. 1, 2010.

Several legal scholars have observed that the Massachusetts law would apply to every company who has even one list member residing within the state. It also sets the best practice standard for written information security programs. Since modern ecommerce is “borderless,” many companies will be subject to such oversight in every state.

This means that any company with a direct marketing or frequent shopper list that fails to prepare and maintain a private data response plan may be exposed to dozens of lawsuits imposed by state attorneys general. Legal fees and fines can spiral out of hand, and the secondary damage to brand reputation may be multiplied along with it. It seems that loyalty programs just got harder to operate.

Protect your shoppers – and your brand
What can a responsible marketing executive do to protect customers and company from the cascade of negative consequences that may result from the inevitable data breech? Maintaining state-of-the-art data security measures and the comprehensive written information security program are certainly essential. CIOs worldwide work feverishly at data security, but it’s up to the CMO and CCO to protect brand and customer equity by ensuring that sound response plans and practices are put into place.

A great many consumer-facing businesses consider loyalty and relevance-based marketing to be essential competitive activities. Shoppers and consumers have come to expect the personalized services and rewards promised by these programs. Firms depend on their customer databases to deliver crucial insights that enable efficient and well-targeted marketing programs.

In light of the Epsilon event however, retail and hospitality CMOs and CCOs now face a new imperative. They must confront new questions like:

How is the consumer’s perception of our brand affected now that their information has been violated?
Is the value of our brand and customer equity negatively affected by a data breech? How bad is the damage?
Are we prepared to demonstrate our diligence to our customers and card holders by mobilizing rapid notification and protective actions?
What compensation can we provide to the consumer for their discomfort, angst, worry?
Can our forthright response turn a data breech into a service recovery opportunity so that we gain trust, not lose it?

In today’s world, the relevant question regarding data breeches is not “If?” but “When?” Set against the emerging legal backdrop of state and foreign regulations, this means loyalty and direct marketers must maintain a dynamic preparedness and response plan that can be instantly triggered in the event of a negative event. This is a capability few companies have today, but one that all should acquire.

Social Media? – Nah, It’s Personal

May 31, 2022January 25, 2011 by James Tenser

ALL THE RECENT chatter about “social media for business” is driving me around the bend.

For some time now, I’ve been searching for a terminology that would rescue us from imprecision and allow a meaningful business conversation to take place around the impact of smart phones within the retail environment.

At the National Retail Federation Conference and Expo two weeks ago in New York, the presentations and pitches frequently turned to the impact of social and mobile media, and I kept cringing every time I heard it. Here’s why it bugs me so much:

When new business phenomena have arisen in retail marketing, sloppy terminology frequently led to poor initial understanding of the business opportunity. Often it is due to a choice of words laden with confusing prior connotation – or the absence of a suitable term.

We sometimes used “consumer” and “shopper” interchangeably; now we distinguish between those two customer roles. We spoke of “manufacturers” or “vendors” before the term “brand marketer” was introduced in the mid-90s. A deficient thought vocabulary renders some concepts virtually unthinkable.

In Your Facebook

Today, most of the marketers and solution vendors obsessed with “social media” are in fact formulating new ways of delivering one-on-one messages to targeted shoppers and attempting to influence what they do and say on social networking sites. It’s undeniable that one particular application – Facebook – happens to be used heavily for social play and sharing of consumer lore. Marketers are dazzled by the massive “audience” it has accumulated and are salivating to exploit the opportunity. How fortunate for Facebook investors.

But setting up corporate pages on Facebook or Twitter does not a strategy make. Indeed the existence of these pages implies a broadcast mentality – from us to them. Despite the open visibility of customer comments on the wall, there seems to be relatively little interaction between consumers on these pages. Old comments get quickly buried behind newer ones, and only our social media hired guns bother to track and analyze them – in reports calculated to justify their existence.

Regardless of the channel, shopping is primarily about each individual’s personal success – get the best deals; satisfy my needs most efficiently; manage my budget; impress my friends; etc. When a shopper turns to his or her personal mobile device to access tools to enhance in-store success, it’s a very personal action motivated by very understandable self-interest.

Getting Personal

I submit that when it comes to tapping shoppers via those pocket two-way radiowave computers we call smartphones, there’s very little “social” about it. It’s not social – it’s personal.

If we conceive of the mobile device as a personalized channel for interaction between retailers or brands with individual shoppers or consumers, then we would do well to set aside the imprecise term “social media” and start talking shop. These new media are personal media. Much of what happens on them may be social in nature, but everything that happens on them is personal.

The personal mobile device is taking shape as a personal nexus, where online, in-store, social, and commercial communications converge in unique combinations tailored by and for each individual. Each of us shifts roles at will, according to our objectives of the moment – searcher, receiver, reporter, sender, aggregator, re-transmitter, gatekeeper, purchaser, advisor.

Businesses that hope to play effectively in this incredibly fluid and fast-changing media environment had best get their minds around the personal nature of the shopper experience using mobile devices. When we discuss our strategy for personal media, the marketing mindset shifts in what I think is a constructive direction. Better decisions and practices must surely follow.

As for me, I have nothing against online friendships; but when it comes to business you may count me as anti-social. My reasons? Well, they’re personal.