Monday, May 24, 2010

IBM to acquire Sterling Commerce for $1.4B

ARMONK, N.Y. & DALLAS - 24 May 2010: IBM (NYSE: IBM) and AT&T* today announced they have entered into a definitive agreement for IBM to acquire Sterling Commerce from AT&T for approximately $1.4 billion in cash. The acquisition of the Dublin, OH-based company will expand IBM's ability to help organizations create more intelligent and dynamic business networks by simplifying and automating the way they connect and communicate with customers, partners and suppliers both on-premise or through cloud computing delivery models.

Organizations are looking for ways to work more efficiently and profitably within their communities of business partners, customers and suppliers. IBM's products and services complement the world-class business-to-business capabilities of Sterling Commerce and together enable the integration of key business processes through the entire cross-channel solution lifecycle -- from marketing and selling to order management and fulfillment.  These offerings also give clients the flexibility to manage their networks of business partners through public or private cloud computing environments.

Today, more than 18,000 global customers use Sterling Commerce offerings. The company enables more than 1 billion business interactions a year for clients in the financial services, retail, manufacturing, communications and distribution industries.
IBM sees these interactions growing dramatically due to the proliferation of electronic business transactions, from banks exchanging transaction data and manufacturers sourcing raw materials electronically, to retailers automating stock replenishment and managing orders online. Such intelligent transactions, and the software that supports them, help deliver the agility businesses need to be successful.

Sterling Commerce offerings strongly complement IBM's middleware portfolio. By acquiring Sterling Commerce technology and its large trading partner network, IBM anticipates it will be able to deliver powerful new cross-channel solutions to its clients. In addition, Sterling Commerce technology will complement IBM's industry-focused software offerings, enabling the addition of capabilities to IBM's frameworks supporting the retail, manufacturing, communications, health care and banking industries.
"Businesses today are operating in a highly competitive global environment in which lines between actions taking place within and outside an organization's four walls are blurring," said Craig Hayman, general manager, WebSphere, IBM. "This acquisition will give IBM new tools to help clients build dynamic business networks that connect partners, suppliers and clients and deliver a consistent customer experience across channels. In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers."

According to IBM, the combined technologies and expertise of IBM and Sterling Commerce will make business and partner networks smarter and more efficient by enabling integration beyond the enterprise. The company believes that through this acquisition, clients will be able to extend the capabilities of their existing systems using, for example, IBM's rules management, analytics and business process management software. This can enable these organizations to respond more nimbly to sudden business challenges as they happen.

"Sterling Commerce is a solid business that complements IBM's suite of products and services.  Our focus is on developing and providing a world-class portfolio of networking-based solutions and services, including network- and cloud-based data storage and managed hosting, application and computing services," said Ray Wilkins, chief executive officer, AT&T Diversified Businesses. "And AT&T remains committed to its strategic alliance with IBM, our largest customer, to provide a unified set of telecommunications and computing services to multinational corporations across the globe."

"The broad global reach and additional capabilities IBM offers make this acquisition great news for our customers and partners," said Bob Irwin, chief executive officer, Sterling Commerce. "The combination of IBM's products, services and skills with the Sterling Commerce B2B integration and cross-channel capabilities resulting from this acquisition is unparalleled."

Consistent with its software strategy, IBM plans to continue to support Sterling Commerce clients and enhance Sterling Commerce technologies while allowing these organizations to take advantage of the broader IBM portfolio. Following the close of the acquisition, approximately 2,500 Sterling Commerce employees will be integrated into the WebSphere organization within IBM's Software Group.

IBM and AT&T expect the transaction to close in the second half of 2010, subject to regulatory approvals and the satisfaction of other customary closing conditions. AT&T expects to record a one-time pretax gain of approximately $750 million in the quarter in which the transaction closes.

About Sterling Commerce
Sterling Commerce, an AT&T Inc. (NYSE: T) company, helps companies optimize and transform their dynamic business network to accelerate revenues and reduce costs. Sterling Commerce provides cross-channel and B2B solutions for more than 18,000 customers worldwide. More information can be found at www.sterlingcommerce.com.
About AT&T
AT&T Inc. (NYSE: T) is a premier communications holding company. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services in the United States and around the world. With a powerful array of network resources that includes the nation's fastest 3G network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet and voice services. A leader in mobile broadband, AT&T also offers the best wireless coverage worldwide, offering the most wireless phones that work in the most countries.  It also offers advanced TV services under the AT&T U-verse(SM) and AT&T DIRECTV(SM) brands. The company's suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for their leadership in local search and advertising. In 2010, AT&T again ranked among the 50 Most Admired Companies by FORTUNE® magazine.

Friday, May 14, 2010

Next-generation B2B e-Commerce: An Interview with Srini Rangaswamy


I recently had an opportunity to catch up with our lead B2B Product Manager, Srini Rangaswamy. Mr. Rangaswamy is responsible for driving Next-generation B2B e-Commerce and has helped many companies innovate their B2B experiences. I thought it would be worthwhile to pick Srini's brain on the latest trends and topics that are shaping the B2B space


How do you define "Next-generation B2B" and what makes it different from B2B eCommerce as the rest of us know it?

Next-generation B2B e-commerce is about delivering a streamlined, buyer-centric and engaging online experience that enables buyers to efficiently interact and transact with the brand and at the same time allows sellers to reduce administrative costs, increase sales, and improve brand loyalty.

But for many companies B2B e-commerce could simply mean online “order taking” using a web-based catalog। With the next-generation B2B e-commerce strategy these companies can employ retail-like online marketing and brand building techniques to transition their web channel from an “order taking” to “order making” solution।


What trends are shaping Next-generation B2B e-commerce?

Over the last decade, Business-to-Business (B2B) e-commerce has evolved dramatically from basic communication and transaction to the involvement of communities as part of the buying experience। There are three key trends shaping the B2B e-commerce। First, increasingly B2B companies want to deliver B2C-like rich and interactive shopping experience to ease the transition from phone/fax/e-mail to on-line channel.

  • According to the IBM Institute for Business Value 2009 Global CRM Leaders Study, “The path forward – New models for customer-focused leadership”, 47% of business leaders have increased focus on e-commerce and 46% are focused on developing effective digital customer experience.
  • Second, B2B companies are transforming from product-centric to buyer-centric marketing by delivering personalized campaigns and promotions. AMR International study on “Online B2B Marketing in the United States: Assessment and Forecast to 2010” reported that “Annual growth in US B2B online marketing spend is forecast at 8% in 2010 and is set to reach 14% by 2012”.
  • Third, B2B companies are rapidly adopting social media to generate leads and promote brand. Business.com’s 2009 B2B Social Media Benchmarking Study indicates 81% of B2B companies maintain company profiles on social media sites and 75% participate in microblogging.

What B2B Innovations are reshaping the market?

As businesses emerge from the economic downturn, B2B companies are innovating business model to open new channels and reach new markets. A good example of business model innovation is Mazda opening a new revenue stream by selling OEM accessories through dealers. Another example is JCWhitney.com selling automotive parts through marketplace at Sears.com. For strategies and practical guidance on business model innovation, I suggest IBM Institute for Business Value study on “Seizing the advantage: When and how to innovate your business model”


What are some common challenges that companies face as they deploy their B2B strategies?

It really depends on their online business maturity level. Companies that are just starting on the e-commerce journey might find it challenging to transition their customers from traditional phone/fax/e-mail to the online channel. One solution is to provide incentives, discounts, and training to motivate buyers to use online channel. For instance, one of our customers offer $50 discount on every 5th online order which helped to keep the momentum going.

Once the company crosses the online on-boarding phase the challenge would be to increase account penetration via cross/up-sells। The new Precision Marketing capability in WebSphere Commerce v7 will significantly help with this challenge by enabling businesses to build an ongoing dialog with the buyer by following their online behavior and profile information. For example, B2B companies can capitalize on triggers like contract expiry and inventory levels to offer targeted marketing promotions.


So what's in store for us? How has B2B spending weathered the economic downturn and are you seeing signs of recovery?

As the economy shows signs of recovery, B2B companies are investing to acquire new customers and strengthen existing relationship. AMR International study on “Online B2B Marketing in the United States: Assessment and Forecast to 2010” reported that businesses are allocating 38% of marketing budget for online lead generation (versus 34% for online and offline) and 34% for customer retention (versus 28% for online and offline). According to another report released by Outsell, “Spending on digital advertising and marketing will overtake print for the first time this year”। The report, “Marketing and Ad Spending Study 2010: Total US and B2B Advertising,” forecasts that marketers will spend $119.6 billion on digital strategies and $111.5 billion on print, which includes direct mail and newspaper and magazine ads.


So there is clear evidence that B2B companies are investing to take control of their digital future and the next-generation B2B e-commerce strategy is a good first step towards that mission।


For more of Srini's insights, visit his new blog at www.b2bsellside.com

Monday, April 12, 2010

Filling the Social Commerce Void

With over 70% of shoppers consulting ratings and reviews during the shopping process and 1/3 of consumers following retailers on their social networks, there is no disputing the power of social commerce. Yet few companies are capitalizing on these interactions to the fullest extent.

Most companies treat user generated content as a type of product copy – but these companies are missing a key opportunity. Not only are social contributors and active participants important influencers, but they also spend disproportionately more online than their counterparts and openly share valuable information about their preferences. Yet, few companies are acting on this by rewarding these active participants with targeted responses and marketing tactics.

Like most social contributors, I typically write reviews about products that I am the most passionate about (whether it’s from a positive or negative perspective). I recently wrote a review for a trusty cordless drill that I’ve had for several years. Upon submission of my review, the page wasn’t personalized, nothing changed, and I didn’t even receive a thank you response. What was even more annoying was that my review was never posted. Perplexed, I finally sent a note asking the retailer why they had not posted the review – they replied that I had reviewed a previous version of the product. The reality is that the model hadn’t changed in three years and was identical to the current version, which I had stated in my review as well.

Throughout this interaction, the retailer missed out on several opportunities to respond to my moments of truth. First, when I ranked the product 5 stars, they immediately knew I had purchased the product and was pleased with it. Did they offer accessories for that drill machine? No. During that same session, I ended up purchasing a second power tool by the same manufacturer. Upon my next visit had they picked up that I was a brand advocate by recommending products by the same manufacturer? No. Did they in any way capitalize on this brand interaction? Not that I could tell.

This is not an atypical interaction. Most online sellers are thrilled with the value of social commerce for its ability to introduce fresh content that contributes to conversion. But today’s technologies enable you to realize more value from these interactions to deliver a more relevant shopping experience. This enables today’s marketers to act on social participation. For example:
• Segmenting super communicators and brand advocates to properly reward them.
• Proactively responding to antagonists.
• Delivering targeted offers, promotions, and coupons.

When I wrote about how
smarter retailers are redefining the customer journey, a common theme had occurred across dozens of interviews. Today’s marketers view every customer interaction as a moment of truth that tells us something about that customer, wherever they are in their journey. As marketers continue to pursue their customer centric strategies, they will increasingly respond in real time to that positive review you just posted embracing the opportunity to further personalize your experience by capturing the valuable information that you shared.

Tuesday, February 16, 2010

Join Kefin Moffit, VP Strategy and Customer Experience and I as we explore the Cross Channel Customer Experience

This week, Kevin Moffitt and I will be exploring the next generation Cross Channel Experience -- moving beyond simple Buy-Online, Pick-up in store to an optimized cross channel experience.

Join us on Infoboom to participate directly: http://theinfoboom.com/pov/expert/why-so-many-have-cross-channel-all-wrong-cross-channel

I will also be posting the transcript and comments in this blog for you to follow.

Kevin Moffitt's Opening Statement:

Why So Many Have Cross-Channel All Wrong
The Internet has rewritten the rules of business. Nowhere is this more apparent – or more dramatic -- than in retail, where consumers are rapidly learning how to play the virtual channel against traditional brick & mortar outlets.
Retailers who hope to succeed online and in-store not only need to serve each channel, but also service consumers across all channels. Like other industries, a crucial element of success lies in creating a single view of the customer.

Signals Crossed
In spite of great advances in multi-channel retailing, there remains a rampant misunderstanding about what it means to deliver a cross-channel experience.
The misconception of what cross-channel really means, coupled with internal business unit silos and lack of organizational alignment, has created a period of relatively slow adoption in the retail industry. In the meantime, customer behaviors are rapidly evolving – and retailers are not keeping pace with customer expectations. Many consumers have become “channel agnostic”, and will follow their individual preferences as they flow through a transaction.

Frustrations & Defections
Consumers already expect the ability to move seamlessly through the channels, and when they can’t, they may become frustrated and defect to competitors who fulfill their expectations. Simpler cross-channel initiatives, such as in-store pick up, still leave many retailers unable to react to this more sophisticated consumer demand.
Although modern retail systems currently capture a tremendous amount of customer data, very few retailers leverage that information to provide the aforementioned single view of the customer across all channels. Having access to customer information, including their preferences, order history, and recent behaviors regardless of where they choose to shop, is the key to developing and demonstrating customer centricity.

What You See Is What You Know
So how can you meet these demands? Cross-channel commerce becomes the imperative. A good cross-channel solution is not just about providing consumers the convenience of buying online and picking up their purchase in-store. The real value is in creating a holistic customer view, access to endless aisles of inventory, and consistent brand, pricing and promotions.

When a retailer combines that focus on customer intelligence with clear and consistent product information, brand experience and price, they’ve begun to execute a true cross-channel strategy.

My Response: I agree with the focus on customer intelligence, but think retailers need to move the customer experience to a single system that leverages common capabilities across multiple channels. (For example: offering a pervasive cart across web, mobile, native apps; consistent marketing and promotions engine; and real time consistency/context regardless of touch point).

Kevin – I agree with your point of view. While most companies deliver some level of multi channel brand experience, the majority still operate their sales channels independently, both from a customer-facing as well as a backend perspective.

This reality fuels one the industry’s costliest issues: cross channel defection. An IBM retail study revealed that almost 50% of shoppers that start the shopping process with one retailer ultimately purchase from another when they switch channels. While cross channel customer intelligence provides a powerful foundation, addressing this issue and responding to channel agnostic consumers requires cross channel optimization strategies instead of simple integration.

Brands should not only look at integrating disparate systems and data, but where possible, consolidate to a single system that leverages common capabilities across multiple channels. For example, offering a pervasive cart across web, mobile, native apps, and in-store, or using a common consistent marketing and promotions engine. This provides the foundation and consistent context as customers jump from one channel or touch point to another.

Thursday, November 12, 2009

WebSphere Commerce 7 is here!

On Friday WebSphere Commerce v7 GAed and we've received some great press. Here are some of the articles below:



InternetRetailer Coverage: IBM's WebSphere Commerce 7 supports mobile and social commerce

With the WebSphere Commerce 7 e-commerce platform IBM Corp. released yesterday, shoppers can use a synchronized shopping cart across conventional and mobile commerce sites, says Errol Denger, director of business and product strategy for WebSphere Commerce. Retailers can coordinate marketing across web sites, mobile phones and social networks, he adds.

“We’re enabling large and small retailers to deliver an optimal branding experience, whether it’s on the web or mobile commerce device,” Denger says. “This is being driven by our clients who are saying they don’t want their mobile commerce channel to be separate.”

The overall idea, he says, is to help retailers connect with customers however shoppers want to buy online. Shoppers with a web-enabled mobile phone, for example, will be able to browse an online store built on WebSphere Commerce 7, conduct side-by-side product comparisons that a retailer makes available, and make an instant online purchase. Delivery can be to the shopper’s home or, if the retailer has integrated its store systems into its e-commerce platform, for pickup at a store. Shoppers would also be able to use their mobile phones to check the availability of desired inventory in the retailer’s nearest store and upload directions before opting for in-store pickup.

WebSphere Commerce 7 also supports new levels of personalized marketing, Denger says. For example, retailers will be able to use it to design merchandising and marketing campaigns that make product offers based on such behavior as the average number of product reviews a shopper is known to post each month. Shoppers who are prolific review writers have been known to spend more online than shoppers who don’t write reviews, Denger notes, making them prime candidates for a retailer’s offers.

In another example, he says, an offer could be triggered by the type of social networking site a shopper was on before arriving at a retail site. If a shopper came from a Facebook or Google search page about Harley-Davidson touring-style motorcycles, for instance, a retailer using WebSphere Commerce 7 could present her with a customized landing page based on the particular interests expressed on that Facebook or Google page.

Although other e-commerce technology companies are integrating mobile commerce into their platforms, IBM stands out with a platform that also strongly integrates with store point-of-sale terminals and kiosks, says Nikki Baird, managing partner with research and advisory firm Retail Systems Research LLC. “When enabling a cross-channel strategy, WebSphere Commerce can now better become a cornerstone in a multi-leg strategy,” she says.

IBM is still in the early stage of cross-channel technology development, the company says. In June it announced a five-year, $100 million research initiative to improve mobile commerce services worldwide. “Advancements in mobile devices are reshaping the way customers interact with brands, expanding beyond mere information exchange to true online commerce,” IBM said in announcing WebSphere Commerce 7. “Increasingly, the beneficiaries of this growth are online retailers.”

Other Coverage:

http://www.siliconvalley.com/search/ci_13767303?nclick_check=1

http://www.v3.co.uk/v3/news/2253062/ibm-talks-mobile-shopping

http://www.siliconindia.com/shownews/IBM_eases_online_shopping_experience-nid-62811.html

http://www.techcrunch.com/2009/11/11/in-time-for-holiday-shopping-season-ibm-upgrades-e-commerce-software-for-retailers/

Wednesday, November 4, 2009

Smarter Retailers are redefining the customer journey

The proliferation of new digital mediums, interaction models, and touch points has transformed and fragmented the customer journey. This creates a new opportunity for innovative marketers and spells disaster for those that are not prepared.

The New Customer Journey

Customers are embarking on a new journey traversing a complex web of new impression and interaction points. This journey begins long before most companies have the opportunity to deliver their carefully crafted brand messages. Brand awareness is now influenced by new impression formats such as heated community discussions while product discovery is driven by affiliate sites and visual shopping engines where shoppers assemble new looks. The actual shopping process now includes powerful new touch points such as mobile which offers instant access to information and transactions that span multiple channels such as buy on mobile pick up at your closest store.

Thus, the traditional marketing funnel and ecommerce as we know it has been eclipsed by this new paradigm -- an extended web of influence that traverses new interaction mediums and is being executed across numerous touch points.

A New Set of Customer Expectations

This customer journey will continue to fragment and evolve continuously raising customer expectations. Jim McCain, CEO of 1-800Flowers.com has embraced this reality and built his business around it. “Customers seem to change every day. It is their expectation set that has changed which is driven by the technology change”. 1-800-Flowers.com aggressive strategy to leverage technology is continuously enhancing the customer experience with innovations such as an optimized mobile purchasing experience, a transactional Facebook store, and cross channel initiatives like their incredibly successful “Spot A Mom” campaign that was simultaneously executed across all of these mediums.

Changing the way we market, build relationships, and deliver brand value

Today’s successful brand experiences don’t happen by accident, they are carefully planned and executed. Moosejaw Mountaineering knows this better than anyone. “Every customer interaction is a planned marketing event specifically timed and focused on building relationships and differentiating the Moosejaw Brand” says Jeffrey Wolfe, Founder of Moosejaw Mountaineering. “Whether they’re interacting with our Facebook page, receiving an SMS, or visiting our website they will experience a carefully orchestrated brand experience”.

Customers now expect a highly personalized, integrated cross channel brand experience that retains context as customers jump across touch points. The next generation ecommerce platform is designed with this in mind. Precision marketing capabilities now enable marketers to establish rich dialogs with shoppers that span multiple channels. Marketers can finally respond to new interaction behaviors such as rewarding shoppers after they have written their fifth review. E-commerce is no longer a web cart and catalog, but instead, a cross channel customer interaction platform that optimizes every brand touch point and cohesively links them together.

As marketers, we must redefine the way we look at traditional ecommerce and marketing. Our marketing strategies must now focus on optimizing every customer interaction across the new fragmented customer journey.

Monday, April 6, 2009

Thriving in Today’s Economy: Online Strategies that are driving real results (Part 1)

The rapidly changing business conditions (and the birth of my daughter) have kept me away from this blog for a while, but I’m now refocusing and want to share what’s on my mind (and everyone else’s minds). Online retailing strategies for today’s economy.

The global economic crisis has driven consumer confidence to new lows. In January, the Consumer Confidence Index fell to 37.7 representing an all-time low since the index's inception in 1967. This has had a huge impact on consumer behavior and spending patterns. Most notably shoppers are turning to the web.

Needless to say, today’s shoppers are price conscious. According to a comscore report, 76% of shoppers said that the web would be either somewhat or a lot more important as a tool for finding pricing info in this challenging period. A similar Q4 Forrester study revealed that 33% of shoppers will do more research online before purchasing and 17% will do more shopping online rather than offline in 2009 .

The growing importance of the Internet means that every retailer who relies on the Internet for sales will face more competition online. Two-thirds of consumers are postponing purchases or buying fewer items overall… so when they are ready to buy, it’s critical to get them to visit and buy on your site.

In this multi part series I will look at core strategies and best practices that are driving real results in today’s economy. We’ll start by examining online marketing strategies and tactics.

  • Marketing is a science. First look at your marketing and merchandising strategy. Does your organization treat it as a measurable science or a loose process? If you don’t already use analytics, it’s time to explore analytics packages and apply scientific rigor to every measurable campaign, promotion, process, and marketing element. Our customers have seen huge impacts from subtle changes such as colors, button placements, and verbiage. If you have a few ideas, use multivariate testing and marketing experimentation technologies to find the best option.
  • Reevaluate the 4ps. As consumer attitudes change in lieu of their economic situation, determine if you’re offering the right values, products, and services for today’s market.
  • Pricing. This is obvious, but examine your pricing strategies and integrate with shopping engines. According to Magid Abraham, ComScore’s founder and CEO, consumers are using shopping engines and the web as their primary comparison shopping tools. Abraham shared data from an April survey of 1,000 U.S. comScore panelists, and found that some 76% said that the Web would be either "somewhat" or "a lot" more important as a tool for finding pricing info in the coming months. Ensure that your pricing is still relevant and consider creative pricing/packaging strategies such as bundles (especially those with high margin accessories) or low cost leaders.
  • Refocus on Segmentation. First focus on your most loyal customers and segments (if the 80-20 rule impacts your business, you need to be very targeted with your marketing efforts). At the same time, create targeted offers and messages for those segments that may take some extra prodding.
  • Is your site social? The majority of online consumers rely on consumer driven content such as ratings, reviews, and community information to guide their purchase decisions. In fact, the Trust in Advertising survey of 26,000+ found that Consumer Recommendations are the most credible form of advertising. [More stats here]. If you don’t already use consumer content, now is the time to consider it. If you are using consumer driven content, now is the time to optimize it. Can your shoppers browse by top ranked products? Are you leveraging customer quotes in your copy? Have you incorporated rankings into search
  • Content is [still] king. Create compelling and attractive content that engages consumers to interactive with your site. Don’t simply rely on manufacturer copy: spice it up, add video and user uploaded pictures. Provide adequate supporting information to help educate the consumer and convert the sale.
  • Coupons. Digital coupons are becoming more popular with price conscious consumers. According to comScore Media Metrix, traffic to coupon sites and saving sites increased 33 percent in 2008 from the previous year. The ecoupon category grew 11 percent to 24.5 million visitors during the month, as each of the top five sites in the category experienced double-digit gains.

In my next posting, we’ll look at market expansion and revenue diversification strategies that wadd economic resilience and growth to your business

Monday, July 28, 2008

Luxury Retailers: Stay Chic, but Sell Cross-Channel

Drew Wofford is the Lead Product Manager responsible for WebSphere Commerce In-Store Solutions. He has over 30 years of retail experience and recently spoke at the Luxury Interactive Conference in New York. I have invited Drew to share his insights on luxury retailing:

Luxury Retailers: Stay Chic, but Sell Cross-Channel

By Drew Wofford

No other segment in retail places a higher value on service, quality, brand integrity, and most importantly, the customer, than the luxury and premium brand segments. While mainstream retail today is working overtime, trying to get a "single view of the customer," trying to personalize the shopping experience, and implementing various forms of customer relationship management, this segment has never done anything but that. They have always placed the customer first, by knowing the customer’s preferences and habits and exceptional service; it is the core of their business strategy. And that, in fact, sets up the basic challenge luxury and premium brand retailers face with e-commerce. They have struggled to see how they could continue to provide that same level of service in what they have seen as a far less personal channel.

Imram Amed, the founder and CEO of Byesse Group Ltd., has been quoted as saying that customers in the luxury segment are already making their buying decisions on the web – already using e-commerce sites to augment their buying experience. But most executives of luxury goods believe that from the retailers’ perspective – the jury is still out on e-commerce. The problem is – and really, more importantly, the opportunity is – the jury is NOT out from the customers’ perspective. Customers have already embraced the web and the e-commerce channel; it is now time for luxury retailers to embrace the web, and even more importantly, a cross-channel shopping experience.

Earlier this year Forrester Research surveyed 178 retailers in the luxury retail segment around the world, asking a number of questions about how they view e-commerce within their segment and how they believe their customers view it. 32% of the Luxury retailers said that the web does not fit their brand or sales strategies, and 26% said that customers would not use the web to buy their products. By in large, most luxury retailers have a web presence – over 90% said they have a site. Yet only 32% actually sell or transact business on those sites. At the same time, the same retailers responded that they believe 22% of their revenue will come from an electronic channel in 2012, and over 40% believe that the majority of their revenue will come from e-commerce within the next 10 years. To reach growth goals, Luxury retailers will need to make significant investments in building e-commerce solutions, starting now. Further, research conducted by Luxury Institute researchers’ Doug Harrison and Jim Taylor, shows that today’s customers in this segment spend an average of 14 hours per week surfing the web; that over 88% use the web to research in support of buying decisions, and over 50% buy through e-commerce sites. Many luxury customers today are hard working, highly successful executives working in the world of global business. Only 6% of luxury retail customers have inherited wealth. Increasingly, the luxury customer values the shopping experience, convenience and service – just as the 19,600 mainstream shoppers indicated in the IBM Institute of Business Value’s customer advocacy 2007 survey. To paraphrase that famous dialogue between authors Ernest Hemingway and F. Scott Fitzgerald, the rich as NO different from other shoppers, except for having significantly more discretionary income to spend.

Some Luxury retailers are in fact embracing the web and many are deploying exciting and compelling sites. For example, Bergdorf Goodman, a leading luxury Department Store in New York City has created a merchandise search page that reflects their store layout. They assume that shoppers on their e-commerce site know the store layout, and where to find merchandise in the store, so their website reflects the same navigation. And Godiva, the luxury retailer of gourmet chocolate is supporting mobile commerce - and we all know, any problem can be made better with chocolate. You can now buy Godiva chocolates from your mobile phone! Why? Well, I can personally imagine sitting in a taxi, on the way to the airport, and realizing it’s my anniversary or a family birthday. I would value being able to quickly send a gift using my mobile device. As well, WebSphere Commerce® powers all luxury retail sites such as Hermes, Coach, and Maui Jim, as well as premium sites such as Sony Electronics.

To allow modern day shoppers to choose how, when, and where to shop, more of the Luxury retail segment needs to embrace selling across channels - especially leveraging the e-commerce channel, via mobile and web touch points. When luxury goods customers in New York, needs to provide a gift for an associate in Tokyo, and the retailer transacts business from London, there is no channel more appropriate, more convenient, and in fact, more service focused than the web. Capture the opportunity!

Wednesday, May 7, 2008

Turbulence is the new constant: Expect and embrace change

IBM just released a sneak peak of the 2008 CEO study based on 1,130 interviews with CEOs of leading companies around the world. The goal of the study is to understand what’s on CEO’s minds, where they are investing, and what the enterprise of the future will look like. This global survey provides invaluable insight market that we can draw some strong conclusions from.

The common theme is that turbulence is the new constant. Coping with change is nothing new. What's different is the head-spinning rate of change today and the fact that it's coming from so many different quarters. In 2004, CEOs worried about market factors. In 2008, while the market still dominates the agenda, executives now face additional socioeconomic, geopolitical and environmental challenges including people skills, technology advances and environmental concerns.

48% of survey respondents indicate that market factors have had the most significant impact to their organization. CEOs around the world realize that the key to success in these rapidly changing markets is to listen to and collaborate with their customers. “These new—and existing consumers—are more demanding and knowledgeable than ever. With the billion-user Internet, customers can broadcast their opinions about a product. They can link up with like-minded consumer groups and sway public opinion, not to mention company behavior.”

This is the intersection of customer centric commerce and corporate strategy. The web provides ample opportunity to solicit customer input and even amplify and extend that input. I was first a bit skeptical when read Kelly Mooney’s book The OPEN Brand. Let me clarify this… I’m a huge fan of Kelly’s and firmly believe in the power of active participation and the “iCitizen”. The piece that I was skeptical about was the depth that companies would invite customers into the design and branding processes. I didn’t think today’s brand managers would evolve into brand shepherds enabling customers to define the brand experience. This skepticism was fueled by companies’ resistance to change, lack of executive support, and the inability to put the systems and processes in place to embrace today’s customers. The CEO study proved me wrong.

The only way this will happen is top-down. The key takeaway from the CEO study is that customer centric strategies are recognized as critical to success and are being driven from the top. This promises many new innovations in customer centric strategies and an accelerated innovation of the way brands evolve and present themselves. I look forward to receiving my hard copy of the study once available later this month (
register here for your own copy)

Wednesday, April 30, 2008

The impact of softening economic conditions to online retailing and e-commerce.

The economy and looming recession have become the number one strategic issue for 2008 being discussed from the boardroom through every level of operations. This blog entry will explore the impact to online retailing and e-commerce and the best way to respond.

After a healthy 2007, which grew online revenues at 19%
, the question is how will softening economic conditions impact 2008 online revenue? According to Piper Jaffray’s 1Q08 e-commerce survey, low levels of consumer confidence and sluggish retail sales have already impacted consumer spending: 36% of respondents indicated that they are worse off financially today vs. a year ago, 23% indicated they are better off, and 41% indicated their financial condition was the same. Looking forward, 21% of respondents indicated that they expect their financial condition to worsen over the next year, 38% expect their financial situation to improve, and 42% expect their financial condition to remain the same.

But will this impact online spending and what does that mean to us? In every type of economy there is opportunity. Early stats are indicating that online channels are the shining star in a challenging economic environment. In fact, many consumers are planning to shop more online.

According to Hitwise
traffic to retail sites this year through the first week in March is up year over year growing from 16% to as high as 24%. Amazon, the No. 1 Internet Retailer and key indicator reported a Q1 net sales increase of 37% to $4.13 billion from $3.02 billion which CEO Jeff Bezos attributes to their low prices.

The online shopping channel offers several key advantages in a down economy such as convenience (time is money!), saving money on gas, finding lower prices on the web, and using the web for comparison shopping.

Strategies for increasing sales in this environment include:

  • Understand your customers’ mindset and how economic news will impact them. Capitalize on their emotions and behaviors by emphasizing promotions such as free shipping or discounts to attract new customers.
  • Utilize creative and targeted marketing tactics. A great example is the Sears Stretch Your Check campaign offering an additional 10% gift card when you apply your stimulus check to a Sears brands.
  • Take advantage of the weak dollar to extend your international sales. The dollar is trading at an all time low representing a great opportunity to open up International shipping.
  • Use the web as a catalyst for change to quickly modify your assortment in response to shifting buying patterns.
  • Since the economic situation will impact each segment differently, now is the time to use even more targeted marketing and promotions to better reach your segments with the right products, offers, and messages.

Tuesday, February 5, 2008

Why advocacy matters: An interview with Maureen Stancik Boyce

The IBM Institute for Business Value recently conducted an extensive study analyzing the business impact of customer centric retailing strategies and their ability to create customer advocates. Almost 20,000 shoppers were surveyed to determine if being customer focused can drive financial benefits.

We already know that 79% of customers will commit to a deeper relationship with a brand after a satisfying experience, but how do we create customer advocates that consistently spend more and have a meaningful financial impact? Do customer centric strategies create advocates? To find out these answers and learn more about customer advocacy I recently interviewed Maureen Stancik Boyce Associate Partner of the Institute for Business Value and the team leader on this study.

Errol: Welcome and thank you for joining us today. Let me start by asking what exactly an advocate is.

MSB: An Advocate is a customer who 1) recommends their retailer to others 2) would stay with their primary retailer if another competitor opened and was equally convenient and had similar prices and 3) purchase more product if their primary retailer started carrying new items which the customer currently has to buy elsewhere. In short , the three criteria are 1) likelihood to recommend, 2) Staying rate and 3) Purchase intent

Errol: Well, based on that response I think we'd like all our customers to be advocates. What is the financial impact of creating advocates?

MSB: Advocates have a bigger basket size than Antagonists, spend a greater share of that wallet with their primary retailer, and are more likely to increase spending over time than Antagonists. Put together with the staying rate - a longer customer life time, and you get far more valuable customers.

Errol: So how do retailers turn their customers into advocates and what characteristics of the shopping experience drive advocacy?

MSB: (note this is the cross segment answer) Our studies across five different retailer segments, which surveyed nearly 20,000 US consumers found that the Store Experience and Convenience were the top two most important factors. Each retail segment varied slightly, though.

Errol: Many of our readers are primarily focused on the online channel. How do we drive advocacy online?

MSB: For online retailers, consumers told us it was Convenience ie "Online retailer makes it easy to shop" and Customer Service ie "Happy with service from online store employees" that were the top 2 most important attributes. Store Experience, and Assortment came in as the third and fourth most important attributes. We were a bit surprised that Store Experience was that high for online retail; the exact wording consumers rated was "My online retailer is pleasant and enjoyable to shop." We are guessing this includes hassle free logistics, a pleasant interface, logical flow of website, few screens, etc.

Errol: Can you give us an example of a retailer who has successfully turned their shoppers into advocates?

MSB: Barnes and Noble.com actually had the most Advocates of the online retailers with survey data, even more than Amazon. They've made huge advances in the last few years, with big investments in their web presence and triple digit growth over the last year. Focusing more on serving their customer online, as well as in the store, is starting to pay off.

Errol: Maureen, thank you for your time and we look forward to having you join us again in the future.

Join
IBM's webcast on February 19th at 2 ET as we take a deeper look at "Why Advocacy Matters to Online Retailers" and explore actionable strategies to turn your shoppers into advocates.

Thursday, January 17, 2008

What exactly is Customer Centric Commerce?

Over the past several months I have had many conversations about customer centricity and there appears to be a lot of confusion about exactly what we mean by “customer centric commerce” and why it’s important. So this month, I wanted to clarify my position. Customer centricity is about placing the customer and their needs at the center of the experience. In retailing and commerce terms, this means architecting the entire experience from the customer’s perspective in, and being able to adapt each interaction to the specific shopping occasion.

Customer Centric Commerce translates into different strategies and capabilities depending on the retail segment. At Staples, customer centricity is about being easy to do business with, while at Bass Pro Shops it's about becoming a rich destination featuring an active community.

Creating a customer centric experience begins by understanding and capturing the customers’ needs and preferences. To make this actionable, many retailers translate these needs into personas. This is often more effective than simple segmentation since it enables retailers to tailor the experience to the specific shopping occasion. For example, when buying a printer, the consumer might fit into the “Randy Researcher” persona where the primary need is access to comprehensive product information and high value solutions. But when he returns to buy ink he falls into the “Bill the bargain-hunter” persona who’s priority is to find the best deal quickly.

Customer centric commerce strategies provide powerful foundations for cross-channel retailing. Simple integration is no longer adequate. As customers seamlessly traverse channels, the experience must be optimized for the specific touchpoint and where they are on their path to purchase. As the customer progresses through the interaction, retailers are able to use cross-channel marketing techniques to “listen and respond” to the customer’s needs at each touchpoint and progressive phase of the interaction. Marketing flows and processes must be orchestrated across channels taking customer preferences into account. For example, if a customer has chosen to buy online pick up in store, it is important to pick cross-sells that are personalized for that specific shopper and buying occasion.

Studies have shown that Customer Centric Commerce strategies create advocates. Advocates spend 30% more annually (average basket size) and spend 25% more with their preferred retailer. (Source: IBV Study) Another important benefit is that by understanding the full context of the interaction, retailers are able to deliver a complete solution frequently selling additional high margin offerings such as services or warrantees.
Customer centric strategies must be embraced and understood at all levels of the enterprise; they impact organizational structure, solution strategies, and all levels of execution. Over the next few weeks we’ll take a much closer look at how leading retailers are deploying customer centric strategies and what you can do to become more customer centric.

Tuesday, December 11, 2007

Social Commerce Interview with Sam Decker, CMO of Bazaarvoice

As part of our series on social commerce and consumer advocacy, I was fortunate to catch up with Sam Decker, Chief Marketing Officer at Bazaarvoice. Bazaarvoice is a leader in social commerce and they are once again proving themselves this holiday season. On Cyber Monday they served up 71 million reviews at a peak of 1,400 reviews per second, and in the last 30 days, their systems have seen 7.4 billion hits delivering 40 terabytes of traffic.

So lets pick Sam’s brain on the latest trends in social commerce.

There is a lot of activity in the social commerce and consumer driven content space. What is Bazaarvoice's philosophy on consumer driven content and what makes you different?

We defined our mission as “Social Commerce”, as opposed to “Social Shopping”, “Social Networking”, or “Social Media”…or simply user generated content. “Social Commerce” underscores our philosophy that customer-to-customer interactions are relevant to businesses only if they drive measurable sales impact. There are three principles core to making social commerce work:

First, social participation – and the resulting user generated content – is created by a minority of customers. This participation should be designed to create content and assets that help your future customers. So for any functionality that creates user generated content, it must produce content that directly enhances shopping activities and the commerce experience.

Second, these interactions, and access to the content should be in line with the purchase path on a site. That is true for Ratings and Reviews and our Ask & Answer solution.

And third, customer created content is a digital marketing asset that can accelerate sales beyond your web site. We develop best practices, partner integrations, data flexibility to enable customer-centric mutli-channel marketing.

That makes a lot of sense. Are there other social commerce capabilities that retailers will want to consider as well?

The key to embracing social commerce is to be open. Open data, open culture, open technology. We’ve developed APIs and feeds that enable retailers to leverage the data in multiple ways. Some of this we power for them. For example, we syndicate reviews from retailers to top 25 shopping comparison engines to drive branding, links and natural search impact. We launched a “ShareThis” functionality, enabling customers to post reviews and products to social networks. From here we are exploring ways to use the customer voice to enable relevant advertising, integration with forums, and profile enhancements. We’re on a learning journey!

That's an interesting perspective, I had never thought of syndicating consumer content beyond the retailer's website. How will this change the online retailing industry?

For retailers to expand the ROI driven from the many forms of social interaction and content, we will see a trend of opening up content to be absorbed by new channels. The online travel industry and Amazon have a head start in this trend. We’ve started to do that with our clients, syndicating to portals.

The purchase process of the future will become a more complex ecosystem of touch points and interactions, mostly occurring outside a retailer’s web site. The retailer’s opportunity to influence within this ecosystem is dependent on its interoperability of product and social content with external applications. The whole point behind RSS, APIs, XML feeds, and other data sharing technologies is that they allow consumers to customize and personalize their online experience. I expect that aggregator interfaces (iGoogle, MyYahoo, web browsers, social networks) will enable commerce from within a customizable interface that represents a mosaic of the consumer’s favorite brands and products. As more consumers purchase through these interfaces, more marketers will win the case to open up and de-centralize their data. In turn, the sharing of this data will drive more external innovation and value consumers and retailers.

How does this decentralization of data impact other retailing functions or touchpoints?

Retailers who are evolving their social commerce strategy are leveraging customer created content to power multiple marketing vehicles. We see it improve the marketing effectiveness in RSS feeds, catalogs, email, kiosks, advertising, and other marketing tactics. According to Jupiter and Forrester, more than 70% of online shoppers seek out reviews online. So it stands to reason that the usefulness and persuasiveness of customer-created content makes other marketing more relevant, credible and authentic.

In addition, we see increasing use of our workbench reports, analytics and key alerts. What this means is that multiple functions in retailers are using the data from the customer voice to impact day to day decision. Retailers thought reviews were a great conversion tactic, and it is in spades…but it has evolved into a customer-centric culture changer! That has far reaching implications and impact.

Finally, the industry is watching Google. What are your thoughts about Google's OpenSocial initiative and how will Bazaarvoice respond?

OpenSocial will fuel this learning journey we are all on. It gives developers more reason to innovate – which some would call destructive innovation, because the majority of innovations will not meet a viable business model.

Our part in this is to provide the flexibility, expertise and capabilities to fuel this innovation. We welcome developers to invent new functionality that leverages user generated content. We will provide the hooks, APIs and feeds on behalf of our clients to enable them to find solutions achieve the promise of “Commerce” in “Social Commerce”.

Wednesday, November 14, 2007

Social network pumps up average order and conversion

As we continue exploring how retailers are harnessing the power of social networking I thought this article published by Internet Retailer provided a timely perspective on Bodybuilding.com’s social network BodySpace:

More e-retailers are checking out social networking as a way to enhance their site experience, improve brand awareness, increase traffic and, ultimately, boost sales. At Bodybuilding.com, customers are checking out each other via the health and fitness merchant’s social network, BodySpace, where users can post photos of themselves, describe their workout goals and blog about their progress.

Bodybuilding.com did not take a wait-and-see approach to social networking. It dove in a little over a year ago with BodySpace, amassing 117,000 active users since, and now is reporting positive results.

“There is no doubt our community and social networking offerings are making a big difference for sales and conversion,” says Ryan DeLuca, CEO. “Since we added BodySpace, our average order size is up nearly $10 to $92.41, and our conversion rate is 8%, up from 7% a year ago. That one percentage point is huge.”

In addition to BodySpace, Bodybuilding.com offers 20,000 pages of content from experts and consumers, an online forum where more than 800,000 fitness buffs have posted 19 million messages over the past five years (making it the 34th biggest online forum on the web as measured by forum tracker Big Boards), 24 educational online video series, and functionality that enables a user to create his own blog.
Bodybuilding.com LLC, No. 152 in the
Internet Retailer Top 500 Guide, reached sales of $65 million in 2006. Based in part on enthusiasm for the site’s social and community features, DeLuca is projecting $90 million in sales this year and $122 million next year.

“We are building something that is not just based on making money,” he adds. “Everything we add to our site is based on helping visitors reach their goals. Helping our visitors stick to their programs and reach their goals will ultimately lead to much higher revenue, a much more valuable brand based on emotional connections, and more profitability based on increased customer loyalty.”