Lairig Marketing

Foursquare: Four Whom & Four What?

We've sat on this one for a few weeks. Admittedly we are stumped by this whole foursquare thing.

It only makes sense if you use the lens of (A) loyalty and (B) narcissism.

On the one hand, letting customers tell a retailer, "Hey, I'm here for the tenth time this month!", is an interesting way to alert businesses that can't otherwise track individual patrons they should be recognizing such loyalty.

On the other hand, that each notification should be sent to the world seems dopey, and the fact that (a reported) 20 million people would sign up to do it is frightening. This takes the famous "I'm having a ham sandwich!" tweet to the next annoying level – “…at Joe’s Ham Shop!” BFD squared.

As for the narcissism baked into foursquare, we know from our previous post the future supply of self-lovers is near infinite.

But what exactly are marketers being counseled to do with/on foursquare? Here, finally, is the story that made our heads spin.

“During late March 2011, Walgreens awarded foursquare check-ins with 15% off eligible items and 20% off Walgreens-branded products.”

In addition:

“Walgreens…is running the first nationwide coupon on the foursquare mobile app. Walgreens patrons who record check-ins at the brand's 8,000-plus stores via their smartphones get a scannable digital code redeemable in store for 50% off Arizona Ice Tea.”

Then the requisite marketing speak:

"We're using mobile technology and social media to better engage Walgreens customers, to give them convenient channels to interact with us and to deliver products, services and savings they truly value, " said a Walgreens Marketing Hack.

Hilarious, isn’t it? Walgreens customers already chose their “convenient channel” – by entering the store. You don’t need coupons for people who ALREADY shop with you, driving down your margins in the process. You need coupons to drive the people who AREN’T shopping with you.

And to prove targeting and segmentation have no home in social media, who says ALL Walgreens customers like and want (a) canned ice tea from (b) Arizona?

Nothing new here that you couldn’t do offline. Executed against the wrong target. With zero personalization. And no way to measure ROI.

Foursquares for four round holes.

Gen Y Gets A Bad Report Card

We don’t put much stake in the free flow of generational studies – Boomer this, Gen X that. Too broad-based to serve any useful purpose to a company’s marketing strategies.

But they can get readers’ blood boiling fast, leading to inter-generational bashing that’s fun to watch.

Much has been made already of a study released in mid-March by three poindexters, one nugget of which found that Millenials/Gen Y couldn’t care less about “Green” (which means that our “green is gone” call is, once again, right on).

But there is much more in the longitudinal study of millions of 18-year-olds than the lazy bloggers and journalists are letting on, probably because they didn’t go read the full analysis.

We tracked the study down (“Generational Differences in Young Adults; 1966-2009”) in the Journal of Personality and Social Psychology, slogging through stuff ike this: “In regression equations, the linear term was larger than the quadratic term for all items except…”

Here’s what we could extract, using normal English.

Look Out For The Narcs !
“…life goals related to narcissism are higher among Millenials than they were among Boomers.” The authors did note that this was a trend Gen X started, but as lazy as they are, couldn’t take it to the hol’ nubba lebel that Gen Y has.

There’s No “U” In Community
“…the overall trend in life goals between the Boomers and the Millenials is toward less community feeling…”

Political Catatonia
“All of the items measuring civic engagement…were lower among Millenials than among Boomers at the same age…”

As reinforcement, the authors debunk the theory that voter turnout among youth was accelerated by the 2008 Presidential election by noting Pew data that show turnout in 2009 and 2010 was pitiful.

Go Green = No Green
“Three times as many Millenials than Boomers said they made no effort at all to help the environment…”

It would be fun to blame all this on Facebook. But the latter is a symptom, not a cause. Still, we believe it provides an indicator on where our society – and our future consumers – goes from here.

Up next? Gen Z, born after 2000. How will they do?

To answer that, we have come up with the Lairig Marketing “Future Social Graph.” The FSG uses an inverse relationship between Facebook’s stock price and Gen Z’s ethos. To wit: if FB goes up, Gen Z will look more and more like Gen Y.

A new kind of see saw.

Facebook IPO – It’s Pretty Obscure

We’ve not read Facebook’s S-1, but doubt very much that it would address this basic question – how many of the fundamental rules of marketing are Zuckerberg and Co. going to completely rewrite before next month’s IPO?

Since Facebook has most of the online marbles – i.e., daily users – marketers are falling right into line, regardless of the frantic changes being mandated these past couple of months. Here is a great illustration from Hy-Vee, the popular Midwest grocer.

“A Hy-Vee store [in Iowa]…used social media today to promote ‘mystery sale’ prices that will be available only on its Facebook page…‘These prices are so astonishing we can't print them!’…‘an added bonus of being our Facebook fans [sic] is that we will be posting the great prices for this ad on Facebook.’ ”

Beyond the observation that grammar still isn’t teached in Iowa – what kind of segmentation scheme is this?!? Targeting customers based on media channel went out of style a little after the Mad Men era.

Does Hy-Vee know who these Facebook “fans” are – really? Using crude overall demographics courtesy of Checkfacebook.com, we estimate that, at best, half of Hy-Vee’s customers belong to the social network. Of those, only half use the site daily. Roughly 60% of those are women. One-half of that group are in the “sweet spot” age range between 25 and 54.

That leaves Hy-Vee’s Facebook-only promo with coverage of just 7.5% of its customer base. Of whom the grocer has absolutely no idea what proportion behaves in a high-value manner. And of whom it won’t know anything about changes in individual shopping behavior at the end of each day.

All Hy-Vee will know is if its Facebook tactic can (a) increase aggregate sales (at a reduced profit margin!) and (b) increase more Facebook “fans.” BFD.

Brands on Facebook seem to be going to the woodshed willingly. The recent Timeline reset appears to be in direct conflict with networking fundamentals. For example, here is a quote from a Gen Y “guru” in relation to Macy’s evolving social media strategy (from MediaPost):

“ ‘The Gen Y mindset involves looking for a different kind of shopping experience,’ Dan Schawbel, of Millennial Branding, tells Marketing Daily. ‘They are looking for something modern, so Macy’s history isn’t that interesting to them.’ ”

Well, howdy-f&ckin-doodie. Macy’s history = Macy’s Facebook Timeline. Not interesting. Waste of space.

The capstone to all this mishegas is Facebook’s “Reach Generator,” too complicated to explain in this venue, but can be thought of as “ransom.”

An IPO can do wonders when a company is looking to maximize revenue opportunities. Facebook will generate a lot of “likes” among those who have the guts to get in (and out) in the first 30 days post-IPO.

Everyone else, Facebook marketers included, should plan on losing some Face.

Digital Coupons – A Rich Story

In a post about coupons way back in September, 2010, Lairig Marketing opined that we were at a tipping point of sorts – near fatigue with chits for price-offs and percent-offs drowning consumers. Mobile and social media (another new social term = “social couponing”…ugh) have accelerated the onslaught.

We noted that coupon use was slowing throughout 2010, odd given the economic times. But once again, marketers were biting the big hand that feeds. Lairig Marketing thus predicted:

“…come next April or so, we won’t be talking so much about coupons. We’ll be onto the next generation of whatever it is that social media marketers want to bring us.”

As is typical, we were a bit early with the call. But here we are in 2012, looking back now on 2011 coupon-industry data. Guess what?

“Food marketers drastically cut their use of coupons last year [2011], issuing 13.1% fewer coupons than they did in the prior year…reports NCH Marketing Services, a Valassis-owned company.”

One reason marketers cut back on coupons is that consumers are redeeming more of them – 12% more in value year over year. Devoid of strategy, couponing is expensive for marketers. Just ask any Groupon merchant-customer.

But you wouldn’t know a “reset” of coupon tactics was underway from Coupons.com, which has every reason in the world to publish research touting the benefits of couponing. And it has come up with research so feeble, we are awarding Coupons.com with our first “Research Hall of Sham” designation for 2012. (Shame on GfK's researchers for adding their good name to this one.)

“A soon to be released study from Coupons.com, in conjunction with GfK Knowledge Networks…shows that digital coupon users shop more frequently and spend significantly more during each trip than the average U.S. consumer.”

STOP! Said before, said again – anything “digital” implies “better off” consumers who can afford smartphones and tablets, and thus buy more of anything.

To wit: later in its press release, Coupons.com says that “Users of digital coupons have higher household incomes and are better educated…”

Good research would have analyzed spending level on similar items, rather than the whole shopping basket.

Coupons.com's research should come with a big coupon. Hardcopy or digital.

PerkStreet Rewrites The Laws Of Perks

One of the simplest marketing segmentation schemes uses the notion of customer value. For businesses that sell off-the-shelf goods or services to a lot of people, and can identify buyers by name during every transaction, dividing the customer base into three or so different levels of annual sales (or profits) can help prioritize marketing spending.

Most companies that do this find the top-most layer is disproportionately small, and tends to follow Pareto’s 20/80 rule – 20% of your customers deliver 80% of your sales. Inversely, at the bottom you see a whole raft of customers who don’t contribute a whole hell of a lot to your business.

Yet too many marketers treat all customers the same, with the same level of effort. This is particularly common among newer companies, who believe their best use of resources is to “scale up” the business.

Case in point, PerkStreet Financial, featured in a small story in the Saturday New York Times business section. The article seemed to want to throw one more credit/debit card company under the proverbial bus, by exposing PerkStreet’s recent halving of its rebate award (from 2% to 1%) for its debit card users.

“PerkStreet has rolled back that 2% rebate it gave to anyone who maintained a $5,000 average balance in one of the checking accounts it offers…I was particularly interested in how the chief executive, Dan O’Malley, would explain all of this.”

The writer then unknowingly exposes O’Malley’s lack of marketing savvy.

“As nice as the 2% offer appears, less than 10% of his customers were qualifying for it. ‘I can’t feel good about advertising my primary benefit of the product as something that nobody gets.’ “

Um, that’s because you are treating everyone the same.

Right in front of our eyes is a Pareto-like example. Ten percent of PerkStreet’s customers are at the $5000 balance level, and we’d guess that makes them the most profitable to PerkStreet. But now they lose out, because O’Malley is worried about “massing up” the other 90%.

“…[O’Malley] said, it was purely the desire to give more to more people, even it meant giving a whole lot less to many of the people who were drawn to his company in the first place.”

Classic. A focus on more customers, not more revenues.

Vilfredo Pareto must be spinning in his grave.

ADT – Secure With Its Split Personality

Segmentation and targeting, as we have probably said here too many times before, are vastly underplayed marketing components. As hard as it is to find good examples of the basics, it’s nearly miraculous to find a company that takes targeting up a notch. Or two.

We think we found one. In a boring industry, in the supposedly dead medium of TV.

ADT is the top dog in the strangely underpenetrated home (and business) security industry. For years it has run familiar TV ads, with shadowy figures lurking among the bushes, window glass breaking, the patented burglar’s gloved hand reaching for the doorknob, and the wailing of sirens.

The current TV campaign for ADT takes a different, um, take. You can view them on ADT’s YouTube channel here. Out with the shock and awe. In with flock and awwwwwww.

And, to get back to the essence of this post, not one but TWO very different consumer segments targeted – in ONE 30-second TV spot (which we are told is also dead, but we digress…).

Open with a husband and wife, sitting with their young daughter – i.e., the flock – outside their home (symbolic).
“When we were looking at home security companies, it was all about reputation – who could we trust?”

Cut to a young couple, inside their home, in a room with various strategically placed consumer electronics (including a basic fan – again, symbolic).
“For us, it was all about technology – we want the latest, most cutting-edge stuff.”

Here we are, just eight seconds in, and the dual targets – which represent probably 80% of the prospects for home security – have been set up perfectly.

A quick skim of ADT’s main features and benefits that address both couples' needs, and then back to each family, who tip their hat to the other segment.

First family – “So it turns out they’re big on technology too.”
Second family – “All I know is we really trust ADT.”
There is your awwwwwww.

AND STILL 5 SECONDS TO GO!! Enough time to drop in a local offer.

ADT needed to take this step for two reasons:

• The cable companies are coming after this space in a hurry


• ADT will soon split off from Tyco and be its own little company

When it does the latter, expect to see it added to the Lairig Marketing Index.

Hopefully, this “tech” company will securely reward our trust.

The Craft Beer Trend Has Already Been Canned !

The worst keep secrets in marketing are in the U.S. beer industry:

• American brewers are owned by foreigners
• Foreign beers are brewed in America
• Traditional beer brands are losing sales
• Craft beer sales are growing exponentially

Into this world of obvious, a “brewing” trend with a not-so-obvious outcome. A recent Denver Post article indicates that the idea of selling craft beer in cans – yes, in cans – might catch on.

To craft beer gourmands, this is sacrilege. But the brewers will tell these prigs that they aren’t the target.

The initial craft craze was actually years ago, on premise. The next obvious target was at-home drinkers, who wanted a package that evoked a more upscale environment (akin to a brew pub). Hence, bottles.

Would you next try and sell cans to that group? Foolhardy. Let’s look at two remaining segments, instead.

1) Beer drinkers who swear by cans, and swear at craft beer drinkers. They seem to love sub-par brews, and really really bad beer advertising. Target them with craft beer in a can? Fuhgeddaboudit.

2) Beer drinkers who find cans way more convenient at home, tailgating, picnics, etc. AND have tried an occasional craft beer at a bar. Because they don’t ever see craft in a can at retail, they go for Swill Light. Target this segment? Youbetcha.

Gaining consensus on targeting at such a high level is a critical step in marketing strategy, so simplistic that it is often overlooked. Message dilution and media waste result when brand managers haven’t made it clear who the target is.

Nine times out of ten, a nonstrategic marketer would go after Group #1 above, purely because it is such a large segment. But Group #2, although harder to find, is much more likely to be convinced to give “craft in a can” a try.

The bad news in all of this? We have many more years of really sh*tty “Group #1” beer advertising ahead of us.

Can Family Dollar Keep Dollar Family ?

It’s “Recession Week” at Lairig Marketing (if you haven’t noticed already). Today we look at one of the big benefactors of our third-world economy, and the big bet it has made on the future.

Family Dollar is exactly what it sounds like. Closing in on 7000 stores nationwide, it provides “value priced” food and household necessities to a core consumer it describes as: a female head of household in her mid-40’s making less than $40,000 per year.

The ideal target for a craptastic economy, it would seem. But if you look at the history of Family Dollar’s comparable-store sales, you’ll note something interesting. The growth in comps doesn’t really kick in until a year after the recession begins.

More interesting is how comps have continued to surge all the way through 2011. Which means, of course, there are more people being welcomed into the lower income bracket. Yet, Family Dollar management sees something else.

“While our core customer continues to account for about two-thirds of sales, we are seeing a more middle-income customer shopping more often at Family Dollar.”

Welcome to the other side of the tracks, Mr. & Mrs. Middle Class. This is how we do it.

Family Dollar is now on a capex binge, renovating almost 1000 of its stores and opening new ones at a clip of about one per day. It has decided to change the product “P,” not the promotion “P.” Family Dollar is still a “coupons and circulars” operation.

This has made Family Dollar investors, including a couple of activist ones, nervous. They would prefer to see capital used to boost profit margins. But these seem capped, and management must turn this into a volume operation. Hence, the store expansion.

As the U.S. economy continues to churn out millions more lower-middle-class families, Family Dollar will collide with its larger competitor, Dollar General (who is pursuing a similar expansion strategy), but also the likes of CVS, Walgreens, Walmart and Target, the latter one featured in our post about the small-format store trend.

Who would have thunk. The new sweet spot for mass retail isn’t the consumer who makes $100,000 per year. It’s the one that makes $100,000 in two years.

Target The Rich And Go Broke

Whether or not the U.S. economy falls back into an official recession is moot. No jobs, no housing solution, and no corporate investment make a toxic stew.

A volatile stock market will do nothing to ease jitters or provide hope to consumers. One wonders why a French Revolution isn’t underway in America (although a small one is underway in England – go figure). Yet somehow the proverbial “we” keep chugging along.

Some hypothesize that the rich are keeping us afloat. Which leads to some awful marketing advice, which you will see more of as things deteriorate in the fall – i.e., re-target your business, products, and marketing toward the affluent (a marketing euphemism for “filthy rich people”).

The rich, of course, have most of everything. A tiny percentage of people who have all the savings, income, houses, cars, jets, etc. Which means they do all of the spending.

Funny thing: that is true during good economic times too. So why don’t you target the affluent then?

Pundits are already trying to make hay out of July’s retail comp sales: Saks up 16%, Neiman Marcus up 8%, Nordstrom up 7%. Rich people!

Don’t be blindsided.

The International Council of Shopping Centers reports sales up nearly 5% over last year (when things were arguably better).

Here’s the kicker: Disney just reported quarterly theme park revenue up 12% over last year. TWELVE PERCENT. If you’ve been to Disney World, you know the affluent don’t set foot there.

If you don’t already target the affluent, then stick with the rest of us. Build something of value, and we will come.

Klout: Beating Up On Marketing Fundamentals

Uh oh, loyal readers might be thinking. Didn’t Lairig Marketing already do a three-part series on influencers and influencer marketing back in March? Yes, but as always, we were early. Now that the topic has reached the pages of The New York Times, it’s time for a quick revisit.

In March, we mentioned a company called Topsy, who measures influence by the quantity of your Twitter activity. (Which means if you are not on Twitter you have zero influence in this world). We also noted Topsy’s $15 million in VC funding, a sure bubble sign. Since the recent Times article didn’t mention Topsy, we’ll assume its executives took the money and ran.

The Times did mention Klout, one of a handful of companies assigning everyone an influence grade or score. How? Just like Topsy. Signs of another “coupon revolution.”

Since we are in “Summer Shorts,” we can only bang on Klout in two areas.

Oxymoron = General Influencer
What is missing in Klout’s swing is the basis for influence. What does it mean to have 65 trillion followers? If I am an advertiser looking for influencers on outdoor grilling, I will be better off with a barbeque guy who has just 65 followers.

No one – Klout, Topsy, or Flopsy – can figure out content and context. It would take a manual effort that no one can fathom investing in. Which leaves us with a laughable measure of influence.

The Worst Influencer Tool = Free
The New York Times article referenced a marketing gimmick Virgin America used to “tap” Klout’s expertise. It gave away round-trip tickets to the supposed top scorers. I will pause and let you digest that for a moment.

Talk about completely upside down. You give stuff away to your average customers, to try and get them to spend more. Imagine Ashton Kutcher tweeting about how excellent his FREE trip on Virgin was. Duh.

This influencer scoring will go on for another year or so, until the next mouse trap is concocted. As always, our advice is to ignore it all, and focus on the traditional, boring marketing fundamentals.

Start with your best customers. You’ve already influenced them.