As a parent, I’m well aware of this busy part of the year – it’s back to school time for our kids. Retailers are feeling it too since they’re trying to entice shoppers with their Back to School sales. For this year’s Back to School promotion, retailing giant Walmart is catering to our youngsters with virtual worlds and Miley Cyrus, a busy teen celebrity that’s a singer (well, you be the judge of that) and television actress in a show called Hannah Montana.

Miley is selling gear from her show Hannah Montana including a line of clothes and accessories, backpacks, lunch boxes, etc. To promote the gear, Walmart has created a Hannah Montana virtual world where you can design an avatar, or a 3D representation of you, that can dress up in Hannah Montana clothes. Your avatar can also decorate that room with a Hannah Montana bedspread, posters, etc.

Walmart is driving people to the site via a print ad in their weekly circular — the ad contains a link to the virtual world site. They also created a micro-site where you can get Miley (aka Hannah) to call your child and remind them to go back-to-school shopping at Walmart.

So can this promotion be a success for Walmart?

There are indicators that virtual worlds are more than just a game. For starters, virtual world proponents have argued that these environments mimic real life. This argument is backed up by virtual world gamers reporting that they have real-world emotions or ties when they engage in virtual activities, such as a virtual marriage. And beyond emotions, the exposure to a virtual environment has influenced the purchasing decision of online shoppers. In the case of Land’s End, the integration of a virtual dressing room into their eCommerce engine demonstrated a 13% improvement in the shopping cart totals and a 26% increase in online purchases.

So while Walmart’s social media experiment two years ago never did more than generate buzz for the company, their foray into a virtual world with the backing of a teen celebrity has the makings of a successful marking campaign.

According to a recent Wall Street Journal article about the US economy and spending habits, consumers at every rung of the socio-economic ladder are changing their purchasing behaviors. To better deal with rising food and energy costs, consumers are increasingly turning to the web for ways to save both online and offline. To make matters complex, online retailers are accustomed to seeing high visitor falloff or abandonment. In fact, according to Marketing Sherpa shopping cart abandonment rates are normally pegged at almost 60%. This challenge presents the need to better connect the online and offline world.

In one of my recent blog entries, I discussed the online-offline gap and the methodology used to test new techniques to shorten this gap in order to understand consumer behavior. In this blog entry, I present three techniques that can potentially shorten the gap.

Solution #1: Coupons (Online coupons and mobile coupons)

The recent spike in food and energy cost has driven US shoppers to use coupons more frequently. While coupon usage rates vary, the up tick is expect to continue beyond the short term (see article). To better understand consumers, some retailers have offered coupons in exchange for personal information, including an email address. The benefit of this technique is that once a retailer has the email address, they can use their analytics packages to track visitors from an offer in an HTML email to a website. This allows to retailers to identify and track anonymous users on the website.

The new challenge is that retailers are now focusing on introducing coupons in the mobile space. McDonald’s has recently initiated a mobile coupon campaign in Salt Lake City. The campaign provides McDonald’s with aggregate data for respondents, including their phone number, age, gender and zip code). While these may seem to be valueless, a consumer’s mobile number can actually serve as a unique identifier as consumer demand continues to grow (mobile subscriptions have reached a level that’s equivalent to half of the world population).

Solution #2: Click it and Pickup

Some retailers have implemented a purchasing program that allows consumers to place an order online yet pick it up at a nearby store. This feature entices consumers who normally abandon a site due to high shipping costs to complete the purchase (this is one of the top reasons shopping carts are abandoned). The neat thing about this solution is that visitors who are anonymously browsing the website will log in to complete the purchase and retailers can then track their identity.

To implement this feature, retailers need to tie their inventory management system to the web so that employees in the store can prepare the online order for pickup. To accomplish this, retailers need to establish a solid order management process which is actually harder to do than it sounds. Retailers such as Wal-Mart (specifically Sam’s Club) and Best Buy have rolled out these programs only to get spanked due to reports of incomplete orders or items being improperly packaged/prepared for pickup. Other retailers, such as Circuit City, have perfect the process by also attaching a guarantee. The additional benefit of an in-store pick up program is that it further grows sales.

Solution #3: Customer Satisfaction Surveys

According to a 2007 consumer behaviors survey by Accenture, the quality of service was the leading reason that customers abandoned a provider (this reason actually outweighed price by 20%). In fact, retailers such as Borders are relying on these surveys to better understand how consumer behavior is driving more sales. These surveys are commonly rolled out on sales receipts; retailers encourage customers to complete these surveys by offering a monetary prize (ranging from $500 to $1,000). While these survey engage the user after the purchase is complete (unlike the two solutions above), consumers can be identified when they provide their personal information to win the prize. By combining the consumer’s purchase history with their attitude (aka satisfaction survey) and their online behavior (website analytics), retailers get a more robust profile of consumers that they want to attract and retain.

More Than Three Solutions

The solutions above are only the tip of the iceberg as far ways that retailers can bridge the gap between the online and offline worlds. In addition to the above solutions, retailers that want to bridge the gap should consider investing in a customer relationship management (CRM) solution. A CRM allows the retailer to store the necessary data on consumers (transactions, attitude, personal info), analyze the information and build customer profiles for targeting.

How do you make a purchase? If you’re anything like me, sometimes you have an idea of what you’re looking for, and other times you’re simply shopping with friends/family for the sheer joy of the experience. This pattern of buying isn’t really much different than it was 10 years ago - you buy what you need, and sometimes you indulge.

What IS different is how we make our final purchases today. The Internet plays a huge role. We’re highly informed consumers, researching our purchases heavily. We review forums, blogs and product reviews, and we comparison shop. Then, we refine our final purchase by locating the best place, on or offline, to make our purchase. More and more frequently, though, these final purchases are occurring online.

But something is still missing from the ecommerce experience.

ENTER SOCIAL COMMERCE

Engauge’s VP of Strategy, Raghu Kakarala, and Andrew Knight, the Director of Ecommerce at Astral Brands (the company behind Aloette cosmetics and Pür Minerals) recently spoke at an event on the topic of “Social Commerce.” I’d like to share some of the great information that came from this presentation, titled “Social Commerce: The Changing Face of Online Shopping.”

It began like this: the Internet has done an excellent job of allowing us to buy online. But in many cases, websites are missing the part that allows you the shop online. Important and powerful emotional motivators are absent - such as being around others while you shop, asking for advice from your friends, seeing your purchases as they are in the real world, and just plain having fun - the SOCIAL elements of shopping.

Engage with Your Audience

In the presentation, Raghu and Andrew each shared trends taking hold in ecommerce that are finally beginning to catering to the way consumers like to shop. Andrew shared how he was able to tap into the power of niche blogs to promote new products from Aloette cosmetics. He went where his audience was - popular cosmetics and beauty blogs with passionate people behind them. He shared Aloette products with them and hoped they would review them. And they did.

Andrew also discussed the tremendous strides reviews have made - such as with NewEgg.com. This little known website has a large an loyal following - raking in $1.9 Billion in online sales in 2007! Not only are they’re sales strong, their service is impecible - 20,000 service reviews equate to a lifetime review score of 9.8! NewEgg capitalized on this popularity by launching a community - Eggxpert (cute right?) that already has 60,000 users and 300,000 posts.

In addition, several brands are now offering Q&A, which allows them to actively respond to customer questions about products. Such as Answers Depot from The Home Depot Canada.

What Does the Future of Social Commerce Look Like?

Raghu discussed powerful new trends taking hold in some industries, which could - and possibly should - represent the future of online shopping. The fashion industry, for example, is an early adopter of many of these trends. Raghu shared several websites that showcase exactly what social commerce is all about.

ShopStyle represents a trend that many brands would be wise to consider. They developed a community that allows people to create “looks” based on their interests or the look of a celebrity. Then, people who like their looks can “follow” them. It’s not unusual for a ShopStyle user to have HUNDREDS of looks and an equal amount of followers.

Simply mouseover an accessory on a user’s “look” and you’ll get a snapshot view of where the product is for sale. Click on it and you’ll be taken there.

Raghu also shared a nifty application called Clavardon that allows for collaborative shopping. Simply, you go to their website, key in the URL of the website where you wish to shop, invite your friends, and you’re there - with a chat window above the webpage that allows you to collaborate on the shopping excursion with the friend or friends of your choice.

GRAVY

Just for gravy, I also wanted to share a website that Raghu covered that highlights the many aspects of Social Commerce. It’s not all about the interaction with others, it’s also about trying to mimic a real-life shopping experience. How many times have you looked online for an article of clothing only to find it, lifeless on the page? Then end up leaving and thinking “I have no idea how that would look on me!”? 

Without too much complication, Martin + Osa have managed to give you an idea. If you “Shop by Outfit” models actually WEARING the article of clothing turn into video, moving and turning, to give you an idea of how the outfit will sit on the body, how the fabrics lay together, etc.

(Click the image to see what it looks like in motion) 

Now, if they could only find models who don’t look so hungry, we’d really be onto something!

I shop at Gap, Old Navy and Banana Republic (clearance items). 95% of my wardrobe is stamped with one of these three tags. Having said that, I had never shopped online for the clothing because it just never suited me for some reason - maybe because I hated the idea of paying for shipping. (The irony now is that shipping may cost less than the gasoline I’d use to get to a retail location!)

Recently, I tried ordering jeans recently at Gap online only to find that they were out of stock. Along with an apology, I got what they call an “Options Card” that can be used across all the brands. Then, I got an email announcing that they had free shipping and a single shopping cart for all four of their brands - Gap, Old Navy, Banana Republic and Piperlime.

So I click through and find this clean, simple site navigation that gives me easy access across all of their online stores. I cruised through the Gap store and found nothing. Click the next tab and I was in Old Navy. Click the next tab and I was in Banana Republic. No mall cruising, no shopping bags. ONE shopping cart, ONE checkout with my Options Card and FREE shipping.

Long story short - I could handle this kind of shopping again in the future; it works for me and it’s convenient.

And for those of you too young to remember, the title of this post was a reference to an old Gap jingle that continues to reside in the recesses of my brain. If you remember it, now it’s stuck in your head, too. Talk about sticky branding.

(Bridging the online and offline worlds. Get it?)

As digital technologists, we work to identify simple solutions to (sometimes) complex business problems. And one of the most challenging business problems is connecting the web to the offline world.

In our daily job, we follow a straight forward (and rather scientific) process to solve these kinds of problems:

• Identify the problem
• Propose potential solutions (hopefully there’s more than one!)
• Identify ways of measuring the impact of solution
• Implement a solution
• Track the effect of the solution for a set period of time
• Review the effect and refine (as necessary)

As you can see, the process is obviously simple which is great! But there’s the unfortunate hurdle of testing our solution. You see, we need a controlled environment to make sense of the results. And when it comes to the online/offline problem, the environment is NOT controlled and this makes our experiment rather complex.

How is that so?

Let’s take the idea of trying to improve the user experience on eCommerce websites (NOTE: this scenario was actually a topic of conversation at the latest AiMA event). If we wanted to measure the impact of changes to our shopping cart, we would deal with the following scenarios:

• The user may need to temporarily leave the site. In this scenario, a user that’s looking to purchase a high definition (HD) television from Best Buy may start at the website but then swing over to an advice site such as Engadget to review the latest offerings before returning to the Best Buy website. In this scenario, we could determine that the user left our site but the Engadget destination would be invisible.
• The user may use an offline environment to complete the task. In this scenario, a user may come to BestBuy.com to look up the price of the HD television but, because of security concerns, physically go to the store to complete purchase.

In the two scenarios above, we could measure user paths, entries and exits but we would only get a partial view into the complete picture (IOW, maybe the user is not quite ready to make that purchasing decision). Clearly, we need a way to bridge the online environment with the offline world. But how are we going to accomplish this?

Well, there are several (semi-elegant) ways to connect these two environments but you’ll have to wait to Part II for these solutions.

Happy thinking!

Reading the financial sections these days will make you aware of the potential economic downturn (example: AT&T seeing softness in consumer spending). So if you’re contemplating whether you should establish (or grow) an online marketing budget, please allow me to suggest that your monies should be hoarded until the economic “haze” clears because nothing is better than watching your competitors take market share. In times like these, it is clearly important to be more focused and strategic with your online marketing efforts.

If you sell your products offline, it is time to think about:

• Setting up a shopping cart to allow buyers to learn more and directly order your products.

• Accepting payments online to speed up the collection process and improve your cash flow.

• Using a Customer Relationship Management (CRM) system to collect leads or other customer communication and efficiently route them within the organization.

Because eCommerce is a highly matured area on the web, there are actually several affordable/inexpensive solutions that can be easily implemented, and these are great especially if you’re just starting out. But as your business grows, your needs will likely change so you’ll want to give slight consideration to solutions that have more features, can be tailored to your organization or can scale to support more employees (aka users). These solutions will likely require more effort to implement.

If you’re already selling your products online, it is time to add more sophistication to your existing system(s). So, it is time to think about:

• Integrating a Product Review System into your Shopping Cart to enable buyers to better understand the quality of the product.

• Launching an targeted email program that delivers personalized email messages based on a user’s shopping habits, interests or even language preferences (FYI: the next wave of consumers in the US speak/read Spanish).

• Promoting your product offerings within a local search portal or even a mapping service (like Google Maps) to drive more local awareness.

In essence, now is time to get going but not without a strategy. It is simple to go from point A to point B, but only with a strategy can you move forward in a direct line.

RELATED LINKS:

• Hosted Shopping Cart (Ecommerce Web Site by Network Solutions)
• Shopping Cart Software (LaGarde’s Storefront)
• Hosted CRM Solution (SalesForce)
• Google Coupons System

It’s been almost a month since Raghu Kakarala and I discussed widgets together at a Lunch seminar, and there’s been enough interesting news since then that it warranted an update on this topic. The take-away points were: widgets are here to stay (in other words: not a fad), they can be either extraordinarily interactive or simple (so build one if you haven’t yet). and widget distribution is key (because it will extend the footprint of your website’s reach).

Now that you’re all caught up, here’s your widget update for December:

Widget vs. Gadget Debate

We found it interesting that widgets go by various names. For instance, Yahoo and Apple use the term ‘widgets’ whereas Google’s iGoogle and Microsoft’s Live Spaces use the term ‘gadgets.’ According to Widgets Lab, the distinction between widgets and gadgets is that gadgets live in a specialized web environment (also referred to as an ecosystem). Unfortunately, Google has recently made their gadgets interchangeable between the web and the desktop sidebar so this naming convention will likely go by the way side.

Monetization of Widgets Debate

As widgets have become increasingly popular, technology pundits have challenged the widget community to show them that widgets have real monetary value. News broke last week that GoodWidgets, a widget company that offers a slideshow widget, is up for sale for $10k. While this is “small potatoes” in comparison to other widget makers like Slide (Slide is Pitching For A $200 Million Valuation. Or Not.), it demonstrates that widgets are evolving into a “product” that can be sold. This comes on the heels of news that Clearspring has rolled out an ad network for widgets which lets users monetize their widget traffic. So while we’ve still got a long way to go, there’s at least monetization momentum.

e-Commerce Widgets Become More Seamless

In our presentation, we talked about eBay’s listings widget that could feature items from eBay stores. The idea was that famous listings can garner more attention. In other words, now your blog post on the recent Britney Spears Birthday Bash could include the listing for the half-eaten chocolate cake from the party. Well, it seems that PayPal is taking that same concept a step further by offering a PayPal storefront widget with a shopping cart. So now blog owners can create a store, add merchandise that’s relevant to their posting, and post the store to their blog. The neat thing about this concept is that only the financial portion of the transaction has to be completed on the PayPal site.

Again, it is another step for widgets becoming more useful and a part of the mainstream web.

I came across a recent American Marketing Association consumer survey. In a press release issued in conjunction with the survey, AMA’s CMO, Nancy Costopulos, says “more Americans are taking their holiday shopping to social networks instead of the mall…”

Now, as marketers, we’re intimately aware of the impact social media has on consumer (and even business) behaviors. For instance, we already have an idea of how product ratings and reviews can influence online purchases.

This AMA survey sharpens the picture we had in our mind of how companies can leverage social media to inform consumer buying decisions - particularly during the holiday season. Check out this chart, which highlights Prospective Holiday Use of Social Networking Sites:

This chart shows us in black and white (and purple and red) that - if the service were available - almost half (47%) of all respondents said they would go to a social-networking site to download coupons or search for gift ideas. And nearly as many (45%) would use a social-networking site to find out about upcoming sales in stores or discounts on products.

This makes sense. But, why social networking sites and not just the company’s website or email newsletters, where sales and offers already exist?

I wrote a while back about Industry Specific Social Networks. Vertical social sites such as these are strong indicators of what this survey is referring to. People want to leverage their social networks - where people of like interests already congregate - to inform their buying decisions. Social influence and personal opinion is highly valuable.

For an example: On the advice of Shelfari, (who commented on my industry-specific blog post) I installed their facebook widget/application.

(A ’shelf’ in my Shelfari widget. Of COURSE there’s a children’s book.)

What makes this such a good example is not just that I have this shelf, or that people can see what I read; but that my ratings and reviews of them might influence others to purchase these books. For example, my co-worker Travis Bailey also has a ’shelf’ on facebook … and I do look at his book selections and reviews. (BTW - the application, which is very well designed - does allow you to link to Amazon.com to purchase the books you’re interested in.)

Pay attention during next year’s holiday season. I predict an increase in the amount of holiday purchases stemming from social websites.

The music world has always been a tough gig, but it just got tougher! In recent news, it has become clear that Vivendi is utterly pissed upset with Apple. Vivendi seems to be fighting Apple’s iPod + iTunes services with two approaches in order to reduce apple’s music download dominant share.

It started this summer when NBC Universal yanked their Fall shows from iTunes because Apple rightfully refused to charge $5 per TV episode (NBC Universal is 20% owned by Vivendi). In the end, NBC Universal moved their Fall season shows to Unbox Service from Amazon, which allows Tivo subscribers to download shows onto their Tivo digital video recorder (in my opinion a bad move!). Fast-forward to today, Universal Music Group (UMG) which is 100% subsidiary of Vivendi has decided to challenge Apple in creating their own music service.

While details of the emerging music service are in flux (currently covered by BusinessWeek), it appears that UMG is testing out two models:

Challenge the iPod Player

Provide an all-you-can-eat subscription service that’s FREE with the purchase of select devices. The thought is that hardware manufacturers will subsidize the subscription fee. Of course, the idea is to the subscription with Zune, the ailing media player from Microsoft.

Challenge the iTunes Store

Distribute music that’s playable on any devices via outlets such as Walmart, Google and Best Buy. The idea is to challenge Apple, which only offers a limited number of DRM free songs through the iTunes store.

Additional Challenges for UMG

While the fight between Universal Music Group and Apple is just starting, UMG is also facing challenges on a second front — their signed artists. In recent news, both Radiohead and Madonna have independently decided to leave their music labels making insiders wonder whether distributors are even necessary in this age of the internet.

Clearly, this is not a good time to get into the music world as things are only getting uglier.

Many user experience professionals shy away from marketing.  In many ways, who can blame them?  We’ve observed customers ignore banner ads, watched pop-up ads annoy and confuse customers, and read rants by usability pioneers about the evil that ads wield on web design.  We have seen attempts at applying a traditional “broadcast” model of marketing fail in interactive mediums.

But good marketing is more than ads—a whole lot more. Several concepts in marketing jive quite well with user experience.

Integrated Marketing Communications

Relationship Marketing

Customer Relationship Management

The Good: The Communication Experience Is the Marketing
By emphasizing consistency, customization, and credibility, these concepts echo a few characteristics of what I’ve described as customer-centered communication.  

These concepts additionally

• Lead us to view a customer’s interaction with a brand holistically instead of isolated in certain channels.
• Challenge us to effectively apply customer data such as demographics and buying history to improve communications.
• Encourage us to think about building long-term relationships with customers.

The Potentially Bad: User Experience Opportunities
The potentially bad side of these concepts is, of course, their execution. (Remember those banner ads.)  Here are a few ways user experience professionals can help avoid the bad.

Don’t Interrupt Me: Placement and Content 
Because user experience professionals understand how and why customers actually use the channels, we know when and where marketing communication is most appropriate.  We also can inform its content.

Example: A well-placed, relevant, and undisruptive BP banner ad on CNN.com that engaged even a skeptic like me. It shares a similar topic with the article, visually stands out on the simple page, and expands instead of taking the user away from the page.

Don’t Just Tell Me—Show Me
Telling is reporting that you hiked 25 miles on the Appalachian Trail last weekend.  Showing is describing the weather, the scenery, the sounds, the animals you encountered, the soreness in your muscles.  Telling makes you aware of what happened. Showing engages you in the experience. I think showing is critical to making brand attributes clear and to developing trusting, long-term relationships with customers.  User experience professionals can help brands “show” in interactive mediums.

Example: Betty Crocker has been demonstrating brand attributes such as practical, friendly cooking expertise since the 1920s through recipes, cooking tips, cooking shows, promotions for discounted cookware, and more. (Below is a 1951 print ad with tips and a recipe.) These efforts continue successfully today on the Betty Crocker website and its RSS feeds.

Help Me Help Myself: Applying Customer Data
User experience professionals can make the most of customer data across customer self-service channels and applications such as store kiosks, web applications, automated phone systems, and more. We know how to leverage that data to make self-service customized and therefore more valuable and easier to use. 

Quiet the Noise: Optimizing for Specific Channels
Of course, we can make marketing communications highly usable and accessible in specific channels.