Jon Michaeli’s Blog


Zappos and Amazon still have much to learn

By now most everyone knows Zappos was recently acquired by Amazon for $850+ million. For investors who put in a total of $40+ million and employees, this is a home run. And most folks I know have lauded the company for beating the odds to build the largest and most recognizable online shoe store. Along the way, Zappos’ other successes include fostering a close-knit internal culture, providing superior customer service (including a 365-day return policy), and pioneering a free shipping both directions policy (which is now a standard in the industry, also offered by ShoeBuy, Piperlime and others).

People love Zappos, because 1) in their view, the company has removed much of the hassle in buying online, and 2) unusually friendly call center agents go out of their way to please customers. #2 is indeed unique and refreshing and deserves some praise. But, this is also a backwards way of thinking in that personally, I don’t shop online to talk on the phone (the exception being expensive highly considered purchases). And if I do need to call on more than a rare occasion, it’s a sign that not enough hassle has been removed in #1.

For the most part, I care about great selection and availability (Zappos gets good marks here) and a user-friendly easy-to-navigate site that makes it quick and painless for me to find the shoes (or apparel) that matches my needs and preferences (Zappos.com is a cluttered mess and fails miserably here).

Let’s face it, there’s a big hurdle to buying shoes online to begin with (when I bought shoes on Zappos in the past, I ordered 5+ pairs and kept none), so the site should start off clean and the shopping engine and flows should be as contextual and directed as possible. The more inventory a site has, the more important this is. If companies in industries with tens or hundreds of thousands of options can build scalable solutions (e.g. Kayak in travel and Indeed in job search), so too can an e-tailer like Zappos.

Zappos gets kudos for how it communicates and interacts, whether in the call center or through social media channels like Twitter (@zappos has over 1 million followers), but there are many other dimensions to servicing customers. Zappos, and even its acquirer Amazon, can learn from a company called Forzieri, a much less known Italian clothing and accessory retailer, with a fairly decent website.

I browsed around briefly and added a sweater to my shopping cart. I also found a nice pink button down on sale, however my size was unavailable. But instead of a “Sold Out” message, the site had a button labeled “Check Availability”, which I clicked. I assume this prompted the inventory system to check the warehouse(s) and/or stores. Pretty cool. Far larger retailers don’t integrate their online and offline properties so elegantly. After a few more minutes, I left the site without making a purchase.

Fast forward a few days when I had forgotten about Forzieri. I received a “Courtesy Reminder” advising me that the abandoned item in my shopping cart would be saved for 2 weeks, and if I completed the order in the next 2 days, I could use the private 10% off coupon provided in the email. Brilliant. A super-targeted discount with a clear and time-sensitive call-to-action. I liked the sweater enough to put it in my cart, so perhaps all I needed was a little extra incentive.

This is simple to do in e-commerce. Just deposit a cookie on the user’s machine and have functionality to accept unique coupon codes on your site (most Tier 1 and 2 sites do both of these already). Now you can not only distribute the codes to those who’ve visited and taken a specific action, but also track conversion rates of various offers and optimize.

As for the pink shirt, Forzieri let me know they couldn’t find my size after all. But it didn’t end there. The email included a link to a page where the “newest arrivals” by the same manufacturer were available for viewing and purchase. Sure they were full price, but as these were just added to the selection, they were the latest, most up to date styles. That warrants a premium, right?

What is Twitter’s saturation point?

Want a perfect example of hockey stick growth? Just take a look at Twitter in 2009. Unique visitors have climbed from ~2mm at the end of 2008 to ~10mm by the end of March, 2009. That’s a monthly compounded growth rate of 70%!

Twitter’s base platform is rudimentary at best, which is why 3rd parties have built ad hoc services, such as TweetDeck, TweetVolume and TweetPhoto (the most recent addition) on top of Twitter to help users manage and enrich their posts, organize their streams categorically, integrate with other social networks, and monitor chatter for CRM purposes.

But, as a tool to reach new customer prospects – especially for a bootstrap that cannot afford to hire a team of social media specialists – I cannot help but feel Twitter will soon follow in Facebook’s steps as cluttered, overwhelming, and tough to navigate. Granted there are some key differences. Perhaps two of the most important in Twitter’s favor are 1) The hurdle for participation is extremely low, and 2) Twitter simulates a real-time one-to-many conversation. That said, Facebook has its own strengths (e.g. more of a community feel, more robust in functionality acting as a one-stop destination site). Anyway, try creating an application and/or fan page as a cash-constrained startup on Facebook these days and see how little traction you’ll get without assigning a leading agency and devoting 24/7 to the project.

We’ve seen this before in the digital era. Look no further than email, where it’s now virtually impossible to gain mindshare. Lists quickly get stale, staying whitelisted gets ever more challenging, and standard email open and click thru rates have plummeted to the low single digits. Implement best practices such as list cleansing, personalization, database triggers and contextual targeting, and you’ll do somewhat better, but again there’s an opportunity cost for your effort.

No I’m not debating that new Web 2.0 techniques are quickly going the way of their digital predecessors like email and display advertising. But the fact that SPAM and “posers” cannot be eliminated beyond a certain point, the sheer volume of traffic will create tons of competition and “noise.” This is the very reason why I am not a big fan of social media outreach as a standalone strategy, especially for brands at the outset of generating awareness.

I’m far from the first to advocate for integrated marketing, but aside from its value as a multi-touchpoint, consumer life-cycle grounded strategy, I believe it is an effective solution to this problem. There’s no debate that understanding your customers and prospects, finding a way to effectively communicate your value proposition, and stating your goals are a prerequisite. But I believe the next best step is working within an initial budget and ROI goal to develop a “shtick” or hook that is compelling, differentiated, perhaps edgy, but definitely buzzworthy. This offers the best chance of plugging in to the influencer crowd of the social web, and it is in their hands to determine whether your brand is destined for true virality. But, for creative concepts to truly lead to successful execution, I believe the message (focused, simple and consistent) should be distributed across mediums and communication channels, leveraging other digital tactics, grassroots initiatives, and even more traditional methods, including microsites, street/stunt/event marketing, media outreach, and mobile ad campaigns.

Obama needs a marketing campaign

At this point, is a single American adult unaware of how the economy is doing? You’d have to live under a rock somewhere not to be up to date. And it may not even be that easy, as there might be access to a WiFi hotspot under the rock. As always, we have the media to thank for the dreary play-by-play. The news gets worse by the day, and the stock market continues to plunge to new lows.

Then, once every few weeks or so, Barack Obama or one of his cronies addresses Congress or the Nation (formally or informally). They try to inject some hope into an otherwise dismal picture, Americans feel a sense of solidarity for an evening, only to wake up the next morning to the “doom and gloom” all over again. News of the day: Unemployment climbed to 8.1% in February.

Obama has already done far more than his predecessors to stay plugged into public opinion and show he lives in the 21st Century. He very effectively used social media to fuel his Presidential campaign, launched a series of websites, including change.gov and recovery.gov to educate people on the programs his administration is putting to work to stimulate the crippled economy.

Despite it all, Americans want to believe Obama’s intellect and “Dream Team” staff will start turning things around in the second half of this year. Amazingly, Obama’s popularity is the highest it’s been since taking office 6 weeks ago. Are his programs really that great or do his pure intellect and the convincing manner in which he speaks deserve the credit? Are Americans in denial or feeling such a sense of desperation that there’s no alternative but to put all faith and confidence in our fearless leader, else give up hope. Or, should we attribute his favorability to a combination of these factors? No matter what the root cause, there’s no disputing that Obama’s power with the public is unprecedented, at least in my lifetime.

Question: So, what does the government do now? Answer: Launch an Integrated Marketing Campaign.

There’s no disputing that recessionary times are to a large extent, a self-fulfilling prophecy. It starts with bad news: Americans are defaulting on their mortgages and forced to foreclose on their homes. People take notice. Big name banks are incurring billions in losses and taking federal loans to avoid bankruptcy. People begin to realize this isn’t just another hiccup in the nation’s growth trajectory. There are large scale layoffs, and the stock market plunges eroding trillions of dollars in wealth. People worry they too will lose their jobs. The nation’s car manufacturers receive billions in taxpayer bailout dollars to avoid bankruptcy (only to relieve the same scenario months later). FDIC announces by year end they will run out of funds to insure the nation’s banks. People panic! It’s a downward spiral, and the more momentum it gains, the more impossible it is to stop.

If we are to prevent the economy from plummeting even further into recession, there is a window of opportunity right now.  We desperately need some regular encouragement and positivity, proof points that the new government programs and spending are having an impact. I’m thinking case studies of real people and real situations that you and I can identify with. And not stuck on a website that requires people to go surf on their own.  Obama needs to deliver the message to people in their homes, on their PCs, and wherever else he can grab their attention. As an added benefit, the ads can promote the websites where so much useful, yet extremely confusing and constantly changing, information lives. I mean what percentage of folks really have a clue if they qualify for a mortgage refinance at a government subsidized rate?

Some will say I’m crazy – “You think the government should use taxpayer money to buy TV ads?” Well, as a new age marketer, I obviously would recommend a disproportionate share of the spend be on nontraditional forms (e.g. social media, grassroots and viral programs), but yes, I do think broadcast should be part of the campaign. And why not? The government gave billions to GM, and it is still blowing millions and millions of it on the same old ineffective and boring car ads. So, I guess I trust Obama will be far more judicious and creative in how the ad dollars are spent. Also note, I am advocating that a marketing plan should accompany new legislation and spending, and NOT replace it.

And if Obama can be successful in pumping just enough positivity back into our spirits, what has come crashing down can start to recover. It works both ways. If people and companies increase spending even a little and the economic numbers improve slightly, the prevailing opinion will be that we’ve seen the worst. Spending will increase a bit more, and the story continues.

On the other hand, if a vehicle with the power of a multifaceted and influential ad campaign does not materialize in the near future, Obama’s popularity will diminish, the public will lose confidence, and we will be in for a prolonged depression.