Category business

A Case for Cause Sponsorships

Cause SponsorshipCause sponsorships and cause marketing, in general, are effective ways to earn trust from consumers and increase the number of loyal customers for the brand.

According to an article in the Houston Chronicle, “Sponsorship is a form of cause marketing that involves donating to an event or organization and receiving public recognition for your contribution, linking your business name to the name of the cause.”

According to the IEG Sponsorship Report, cause sponsorship spending in North America increased to $1.99 billion in 2016, up 3.3% when compared to 2015 totals. Furthermore, they estimate that this number will increase to $2.06 billion in 2017.

While this is only a small fraction (9%) of the total sponsorship dollars spent in North America, it is still a number that should hearten the leaders of the many worthy charitable organizations out there.

Cause Sponsorships Should Remain Strong

The IEG Sponsorship Report warns that the growth in sponsorship spending, in general, could slow given several factors, including “uncertainty over global and local economic conditions in the wake of Brexit, the Trump election and other geopolitical matters, and its impact on marketing spending, including sponsorships and partnerships.”

However, I would argue that other types of sponsorship programs (e.g., sports, entertainment, festivals, fairs, and annual events, etc.) would be negatively impacted first. In fact, cause sponsorships could actually benefit by turbulent economic conditions.

The reasons that I believe this to be true are in line with a discussion of corporate social responsibility (CSR) during the Great Recession.

While cause sponsorships and CSR are not the same thing, they both attempt to improve the bottom line by understanding the bigger picture and improving the lives of their customers and the world, in general.

In an article that focuses on CSR in companies located in our neighbor to the north, the author makes the case that Canadian companies would actually be hurt by cutting funding for CSR programs during an economic downturn.

According to the article, “Heading into the recession, John Quelch, a marketing professor at Harvard Business School, wrote extensively about the risks involved with taking an axe to CSR budgets. Many consumers, he says, have come to differentiate between brands based on the social initiatives they undertake. Moreover, once companies lose their trustworthiness on social responsibility matters, it can be very hard to get it back, warns B.C.-based corporate sustainability consultant Coro Strandberg. “You’ll lose your credibility with your own employees,” she says. “They’ll perceive it as a fad and they won’t be as engaged next time around. Your suppliers won’t believe that you’re committed and neither will your customers. Once you’re in the game, you have to stay in the game.””

The article goes on to highlight that social responsibility initiatives help restore reputations of companies that are battered by tough economic conditions.

Final Thoughts

Again, CSR and cause sponsorships are not the same thing.

However, I believe the argument for CSR in tough economic times can be extended to cause sponsorships, as well.

CSR and cause sponsorships both work to improve the reputation of the brand and thus increase business by focusing on making the world that we live in a better place. (The same could be said of cause marketing in general.)

Since it is an effective business strategy in both good and bad times, I believe that cause sponsorships, cause marketing, and CSR will all continue to get funding from businesses of all sizes.

Again, this is great news for the charitable organizations. It is also great news for the businesses that sponsor the many worthy causes out there.

But, most of all, it is great news for all of us.

As I have mentioned before, good business is good for business.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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Why Customer Experience Is More Important Than Ever Before

Photo credit: Alex Holyoake on Flickr.No matter what product or service you sell, every business is your competition.

While this has always been the case, current trends are forcing companies to face the reality that their customers now have the ability to spend their finite monetary resources in an unlimited number of ways. When they choose to spend their hard-earned dollars on one thing, that money is no longer available to be spent on another product or service.

This means that a company that makes designer clothing not only has to compete with other clothing brands, it is also competing with companies that make smartphones, computers, household supplies, automobiles, and a number of other products that consumers purchase each and every day.

To make matters worse, they also are competing with restaurants, bars, hotels, spas, movie theaters, amusement parks, and a number of other businesses that are selling experiences rather than products. In fact, the statistics show that, in recent years, consumers are more likely to spend their money on these experiences rather than tangible products.

Customer Experience Expectations Have Risen

Your business is not only competing with every other product and service for consumers’ finite monetary resources, your customers are also comparing the interactions they have with your business against every other business that they interact with.

This means that if any business is able to provide a great customer experience, their customers will begin to expect other businesses to do the same, even if they are selling a different product or service.

“Once we experience a standard of excellence, we begin to expect that same standard, circumstances or company policies be damned,” writes Jay Baer in his book, “Hug Your Haters: How to Embrace Complaints and Keep Your Customers.”

“It doesn’t matter what you and your direct competitors are doing, or prefer to do, in the realm of customer experience,” writes Baer. “The greatest businesses in the world are training your customers on what to expect, and they will eventually demand that you also meet that standard.”

Final Thoughts

Every business is your competition.

With this in mind, businesses of all types need to focus not only on creating and selling a quality product or service, but also on making sure that the buying process is enjoyable and that the experience that customers have after the sale is favorable.

This will not only lead to repeat customers, but can also hopefully turn customers into a brand advocates. And, as we know, this is more important than ever before.

Therfore, it’s not surprising that many businesses already recognize the importance of customer experience. And, even more will be putting more emphasis on customer experience in the not-so-distant future.

Photo credit: Alex Holyoake on Flickr.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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Things to Watch That Will Influence Business – the 2017 Edition

Photo credit: Santiago Medem on Flickr.Welcome to 2017.

As I have done in recent years, my first post of the year will list the things that I am most interested in.

This will not only help me stay focused on the important topics, but also serve to track whether or not I am watching the right things.

This is the list so far [with the year that the items were added]:

1) Rapid Advancements in Technology [2013]

2) Mobile (User Experience and Marketing) [2013]

3) Mobile Payments [2013]

4) Mobile-Influenced Merchandising [2013]

5) Privacy Issues [2013]

6) The Evolution of Marketing and Public Relations [2013]

7) Emerging Markets [2013]

8) The Internet of Things [2014]

9) The Evolution of Retail [2014]

10) Omni-Channel Retail [2014]

11) A Global Marketplace [2014]

12) 3D Printing [2014]

13) Cyberattacks [2014]

14) Ethics [2014]

15) Online Video [2016]

16) RFID, NFC, and Beacons [2016]

17) Augmented Reality (AR) and Virtual Reality (VR) [2016]

18) SEO for the Internet of Things [2016]

19) Experiential Marketing [2016]

20) Wearables [2016]

21) Dynamic Pricing in Brick-and-Mortar Stores [2017*]

22) Machine Learning [2017]

23) Voice-Activated Technology [2017]

24) Business Collaboration with the Competition [2017]

25) The Evolution of Work (Changing Skillsets Required and the Influence on the Economy) [2017]

Final Thoughts

This is the list so far.

Throughout 2017, I plan to blog about each of these topics at least once.

And, when I do, I will link to the topic in the same way that I did for number 21. (I actually added it to the list in May of 2016, but it made the official list this year.

So again, you have my list. Is there anything that you think I should add?

Photo credit: Santiago Medem on Flickr.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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Many Success Stories Actually Are Great Stories

Photo credit: Tom Ipri on Flickr.Throughout history, there have been many products that didn’t survive the Darwinian test.

But, those that have survived have helped launch careers and built companies.

Many of these companies have an interesting story to tell.

For example, did you know that some of the most beloved breakfast cereals can trace their history to the Battle Creek Sanitarium or that a housewife and mother of a seven-month-old child convinced her husband to launch one of the most successful baby food brands in the world? How about the fact that an unusually large order for milkshake-mixers led to the later success of one of the world’s most popular fast food restaurants or that the founder of one of America’s favorite fried chicken restaurants was really a colonel?

These and other stories are documented in the book,Symbols of America: A Lavish Celebration of America’s Best Loved Trademarks and the Products They Symbolize, Their History, Folklore, and Enduring Mystique,” by Hal Morgan.

Dr. John Harvey Kellogg and the Road to Wellville

In the 1890’s, Battle Creek was the headquarters of the Seventh Day Adventist Church. It was from their belief in vegetarianism and healthful eating that led to the inventions of some of world’s favorite breakfast cereals.

During this time, Dr. John Harvey Kellogg, one of the Adventists’ staunchest supporters of healthful eating habits, ran the Battle Creek Sanitarium.

According to Morgan’s book, “Kellogg’s patients at the sanitarium lived on a diet of nuts and grains, often prepared from recipes created in the hospital’s experimental kitchen. Dr. Kellogg’s early food innovations included meat and butter substitutes such as Protose, Nuttose, and Nuttolene, as well as foods that have better stood the test of time, like granola, first made at the sanitarium in 1877. Patients were not allowed to drink tea or coffee, but received instead the home-brewed Caramel Coffee, made from bran, molasses, and burnt bread crusts.”

While Dr. Kellogg was more interested in promoting healthful eating, it was his brother, W.K. Kellogg, who saw the potential for a new business venture in the foods that were being made at the sanitarium. In particular, he focused on the flaked cereal that they had invented in 1894.

At first, the brothers started selling the cereal as Sanitas corn flakes to patients who had left the sanitarium and wanted to continue the healthy diet prescribed by Dr. Kellogg.

However, in 1903, W.K. Kellogg set out on his own to promote the cereal to a broader market. In the process, he changed the name to Kellogg’s toasted corn flakes and added malt, sugar and salt to improve the flavor—something his brother had opposed as unhealthy.

In 1906 W.K. Kellogg officially opened the Battle Creek Toasted Corn Flake Company. Its name was later changed to The Kellogg Company and the rest is history.

On a side note, after his second nervous breakdown, C.W. Post found himself under the care of Dr. Kellogg at the Battle Creek Sanitarium. It was there that he was inspired to start his own breakfast cereal company, the Postum Cereal Company, now known as Post Holdings. Some of his early products included Postum Cereal beverage and, the better known, Grape Nuts cereal.

In 1993, T.C. Boyle wrote a novel, titled “The Road to Wellville,” that was later adapted into a movie in 1994.

The novel is a historical fictionalization of Dr. John Harvey Kellogg’s work at the Battlecreek Sanitarium.

The Birth of Gerber

Morgan’s book also explains the origins of the Gerber Products Company.

According to Morgan, “It took a mother to come up with the idea for commercially processed baby food—a mother with connections at the Fremont Canning Company, of Fremont, Michigan. Dorothy Gerber was straining peas for her seven-month-old daughter, Sally, one Sunday afternoon in 1927 when she asked her husband why the job couldn’t be done at his canning plant. “To press the point,” she recalled, “I dumped a whole container of peas into a strainer and bowl, placed them in Dan’s lap, and asked him to see how he’d like to do that three times a day, seven days a week.” The following day Dan dutifully asked his father if the baby’s vegetables couldn’t be strained at the cannery. Their tests proved it could be done, and by the fall of 1928 the first Gerber strained baby foods were on the market—carrots, peas, prunes, spinach, and vegetable soup.”

Conclusion

It is important to remember that even the largest brands in the world started out as fledgling companies founded on a hope and a dream.

As shown in the accounts of the origins of Kellogg’s and Post cereals, as well as the Gerber Products Company, many success stories are interesting stories. (Hint: This can be used in your content marketing efforts.)

As for the other two companies that I alluded to earlier, I’m sure that you guessed that I was referring to the McDonald’s and Kentucky Fried Chicken restaurant chains. Their stories might be good topics for future posts.

However, if you don’t want to wait, you might want to pick up a copy of the book. It was published in 1987, but you can still purchase it on Amazon.com. You might also be able to find a copy at your local library.

It’s an interesting read; I’d recommend that you check it out.

Photo credit: Tom Ipri on Flickr.

Note: This post was originally published on HubPages in October of 2012. I removed it from HubPages in November of 2016.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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You Might Not Look at a Mirror the Same Way Again

Photo credit: Mara 1 on Flickr.In the retail environment, it is common to see a mirror or two located near items that are for sale.

However, the reason for the location of these mirrors might not be as obvious as you might expect.

Having a mirror handy will help customers visualize whether or not an item goes with another item or even if the clothes that they try on fit in all the important places.

However, mirrors also serve several other important functions in retail.

Mirrors Make Us Act in a More Socially Desirable Way

In his book, titled “Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing,” Roger Dooley points out that, “When we look in a mirror, our behavior is actually altered – at least for a short period of time.”

“The most venerable piece of mirror-behavior research dates all the way back to the 1970s,” continues Dooley. “Like many experiments in social psychology, the setup was simple: children making their Halloween rounds were told they could take one piece of candy from a large bowl of candy and were then left alone. About 34 percent helped themselves to more than one piece. When a mirror was placed behind the bowl so that the children could see themselves as they took the candy, only 9 percent disobeyed their instructions. The simple addition of the mirror cut the rate of bad behavior by almost three-fourths.”

Dooley continues by pointing out, “And it’s not just kids who respond to seeing themselves. Another experiment showed subjects either a live video of themselves (rather like a mirror except for the image reversal part) or neutral geometric shapes. They were then given a small task that required them to exit the room with a used paper towel. Almost half of the subjects who saw the neutral images littered by dropping the used towel in an empty stairwell, whereas only one quarter of those who saw themselves did so.”

The research indicates that seeing their image causes people to think about their behavior and ultimately behave in a more socially desirable way. In fact, influence and persuasion expert Dr. Robert Cialdini suggests that mirrors could be an inexpensive way to cut shoplifting and employee theft.

Mirrors Influence How We Shop

Paco Underhill, founder and CEO of Envirosell, also points out that mirrors are very important selling tools for retailers.

In his book, “Why We Buy: The Science of Shopping—Updated and Revised for the Internet, the Global Consumer, and Beyond,” Underhill points out that, “People slow down when they see reflective surfaces.”

Underhill continues, “Stand and watch what happens at any reflective surface. We preen like chimps, men and women alike. Self interest is a basic part of our species. From shopping to cosmetic surgery, we care about how we look. As we’ve said, mirrors slow shoppers in their tracks, a very good thing for whatever merchandise happens to be in the vicinity. But even around wearable items such as clothing, jewelry and cosmetics, where mirrors are crucial sales tools, stores fail to provide enough of them.”

On the other hand, he warns not to have too many mirrors. As he mentions, “A store shouldn’t feel like a funhouse. At a certain point, all that glass becomes disorienting.”

Conclusion

Mirrors are important sales tools for retailers. Not only do they help people visualize how an item will look on them before they make the purchase, but strategically placed mirrors might also be an effective way to reduce theft by shoppers and employees, alike.

Furthermore, people slow down when they see a reflective surface. Therefore, mirrors can be used by retailers to help call attention to items that are located nearby.

Finally, while many stores don’t provide customers with enough mirrors, providing too many mirrors can also be a problem.

This is something to think about the next time that you are walking through a department store and see your reflection in a strategically placed mirror.

Photo credit: Mara 1 on Flickr.

Note: This post was originally published on HubPages in September of 2012. I removed it from HubPages in November of 2016.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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Some Blog Housecleaning and Blatant Self-Promotion

Photo credit: Christophe BENOIT on Flickr.It has been about a year since I restarted posting content on this blog on a regular basis.

It is therefore a good time to assess what is working and what is not working and make some changes to how I use my time to get my ideas out there.

As we all know, there is only so much time in the day. Therefore, something has to give.

Currently, my time is split between posting here, keeping up with current trends in the marketing, public relations, and retail worlds, training, working, and searching for work.

Lately, I have been thinking about these activities and if they are actually helping me achieve my goals.

Often, if we write down the goals that want to achieve, it makes it more likely that we will accomplish them. That is what this post is intended to do.

Therefore, this post isn’t going to be like the rest of the ones on this blog. I understand that it might not be of interest to everyone. Therefore, it is okay to stop reading. I will see you next week.

For those of you interested in my thought process, I plan to give some quick thoughts on blogging, social media, and where you can find me in other places on the Internet.

The Written Word – HubPages, LinkedIn Pulse, Medium, Guest Blogging, and chadjthiele.com

There have been many articles written that point out that bloggers are getting a lot more views and engagement on posts published on LinkedIn Pulse and Medium.

This has me thinking about where and how I publish.

In the next few weeks, I plan to start publishing articles on LinkedIn Pulse. It seems like this is a great place to reach people when they are thinking about work.

Some bloggers suggest posting the same content on your own blog and on LinkedIn Pulse and Medium.

I haven’t decided if this is the best way to go yet.

This is a question that I plan to ask other bloggers at the Minnesota Blogger Conference at Concordia University in Saint Paul, Minnesota, on October 15, 2016. If you are going to be at the event, feel free to say hello.

I am also thinking about blogging about different topics. This might be how I use Medium. Or I might try some other blogging site.

I had been using HubPages to post non-marketing content. I plan to give that a try again, too.

If I do start to post elsewhere, I will let people know on Twitter and include links to some of the best content on this site.

I am also open to writing guest blog posts. If you need a content writer, let me know.

Social Media – Twitter, Facebook, LinkedIn, Snapchat, Instagram, Pinterest, Etc.

If you follow me on Twitter, you know that I announce new blog posts there.

I haven’t been promoting my blog anywhere else. However, I really should be sharing my post on LinkedIn. It’s on my must-add list.

Facebook would be a good place for non-marketing posts.

Pinterest, maybe.

Also, video is big. I plan to explore that more. I have already started to use Vine for personal posts. However, YouTube might also be in my future.

I have also been thinking about ways to promote the blog on Snapchat, but it doesn’t seem like the right place unless I add more networking into the mix.

Networking in the Twin Cities and Beyond

Great segue, right?

Anyway, I plan to start attending more networking events in the Twin Cities.

In 2011 and 2012, I was attending events hosted by the Minnesota Chapter of the American Marketing Association (MNAMA) and the Minnesota Interactive Marketing Association (MIMA).

I plan to start attending some of their events again.

I also plan to explore other events in the area, too.

If you have any suggestions, please let me know.

Final Thoughts

We are all overloaded with information.

Whether at work or in our personal lives, finding the right way to reach people is a must.

With all the rapid changes in the world, we need to constantly adjust what we do. What works today might not work next year or even next week.

That said, I am going to end this post by asking you to connect with me on social media and continue the discussion there. (See the links in the sidebar.)

And, if you know of anyone looking for a marketer with experience and training in mobile marketing, content marketing, social media marketing, email marketing, market research, project management, inbound sales, and community outreach, feel free to have them contact me. I am actively looking for a marketing job in the Twin Cities.

Thank you again for your time.

Chad Thiele

 

Photo credit: Christophe BENOIT on Flickr.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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A New Study Finds That Improving Customer Satisfaction Really Is Good for Business

Photo credit: Iman Mosaad on Flickr.For years, marketing consultants have said that improving customer satisfaction is the key to success.

However, while most business leaders would agree that customer satisfaction should be a top priority, many executives have only given it lip service.

A new study from researchers from Michigan might change this, as they found that purchasing stock from companies with high customer satisfaction levels proves to be a good investment strategy.

These findings should be good news for everyone involved.

But, in the long run, the most notable winners could be consumers.

Higher Customer Satisfaction Indirectly Leads to Higher Stock Prices

As reported in a Science Daily article, a group of researchers from Michigan have found a link between customer satisfaction levels and higher stock prices.

According to the article, “Using 15 years of audited returns, researchers from Michigan State University and University of Michigan found creating a stock portfolio based on customer satisfaction data achieves cumulative returns of 518 percent.”

“This compares with a 31 percent increase for the commonly used Standard & Poor’s 500 Index in the same time period,” the article continues. “On an annual basis, the customer satisfaction portfolio outperformed the S&P 500 in 14 out of 15 years.”

The findings suggest that customer satisfaction is more important than many people think it is.

The researchers also warn, however, that there no direct correlation between customer satisfaction and stock prices.

According to an article published in the Journal of Marketing, “We also find that the effect of customer satisfaction on stock price is, at least in part, channeled via earnings surprises. Consistent with theory, customer satisfaction also has an effect on earnings themselves.”

In other words, increased customer satisfaction levels help businesses earn more money and higher than expected revenues help boost stock prices. Thus, customer satisfaction indirectly influences stock prices.

Final Thoughts

The reality of today’s world is that businesses often try to meet short-term goals in order to please investors.

In recent years, marketing consultants have been beating the drum for the idea that providing a great customer experience is key to a company’s long-term success.

What this research proves is that all the talk of pleasing the customer is more than high-minded rhetoric.

It is one of the keys to success.

Now that we have the research to show that improving customer satisfaction can help companies outperform their earnings estimates and thus help improve the stock valuation, the job of convincing top executives might have just gotten a little easier.

And, this is good news for everyone involved.

Photo credit: Iman Mosaad on Flickr.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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In Retail, the Best Price Is Not Always the Lowest

Photo credit: William Murphy on Flickr.Whether in a brick-and-mortar retail store or on a retailer’s website, the price charged for the products or services sold will have an effect on sales.

However, sometimes the retailer with the lowest price around won’t have the highest conversion rates.

This post is intended to highlight some of the ways that price influences purchase decisions in the real world.

Prospect Theory

If you took an introduction to economics class in college, you are probably familiar with the law of supply and demand. It basically asserts that, if everything else remains the same, as the price of a product decreases, the demand for the product will generally increase.

However, in the real world, this relationship does not always prove to be true.

The reason for this can be explained by a theory developed by Dr. Daniel Kahneman and Dr. Amos Tversky.

According to Wikipedia, “Prospect Theory is a behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known. The theory states that people make decisions based on the potential value of losses and gains rather than the final outcome, and that people evaluate these losses and gains using certain heuristics. The model is descriptive: it tries to model real-life choices, rather than optimal decisions, as normative models do.”

As several experts have pointed out, this plays out each and every day in the retail world.

Consumers Will Pay Full Price for Some Brands

As you know, there are a few brands that have established enough brand equity that people are willing to pay higher prices for the products and services that they sell.

Often this means that retailers can sell these products to customers at full price.

And, in some cases, even the sale prices for these items are higher than the full price of some of the less expensive alternatives.

As I will explain later in the post, these products are extremely important to retailers for many reasons.

The Power of a Sale

In his New York Times bestselling book, titled “Contagious: Why Things Catch On,” Dr. Jonah Berger mentions an experiment conducted by Dr. Eric Anderson and Dr. Duncan Simister.

As explained in the book, Dr. Anderson and Dr. Simister partnered with a company that sends clothing catalogs to people all over the United States.

To test the power of a sale, they send two versions of the catalog to people all over the country.

In one version, they listed a specific product at full price and in the other they said the product was part of the “Pre-Season SALE.”

However, in reality, the price was exactly same in both versions of the catalog.

The only difference was that in one version it was listed as a sale price and in the other it was not.

In the end, they found that just by saying the product was on sale increased sales by more than 50 percent!

The Size of the Discount Matters

In “Contagious: Why Things Catch On,” Dr. Berger uses an example of two stores selling the same grill to illustrate how the size of the discount can be more important than the final price that the item is sold for.

As he explains, the store in scenario A lists the original price of the grill as $350, but sells it at a sale price of $250.

On the other hand, the store in scenario B lists the same grill at an original price of $255, but sells it at a sale price of $240.

When Dr. Berger asked 100 different people to evaluate each scenario, he found that 75 percent of people who were given scenario A said that they would purchase the grill, but only 22 percent of people given scenario B would make the purchase.

In scenario A, the sale price is $100 less than the original price. In scenario B, the sale price is only $15 less than the original.

However, remember that in each case the grill is exactly the same, but the final price in the second scenario is actually less than the first.

In this case, it was the size of the discount, not the actual final price that got people to say that they would make a purchase!

How the Discount Is Stated Matters (The Rule of 100)

In the book, Dr. Berger also highlights the fact that the original price will determine whether to list a sale in terms of a percentage off or an actual dollar value.

“Researchers find that whether a discount seems larger as money or percentage off depends on the original price,” writes Dr. Berger. “For low-priced products, like books or groceries, price reductions seem more significant when they are framed in percentage terms. Twenty percent off that $25 shirt seems like a better deal than $5 off. For high-priced products, however, the opposite is true. For things like laptops or other big-ticket items, framing price reductions in dollar terms (rather than percentage terms) makes them seem like a better offer. The laptop seems like a better deal when it is $200 off rather than 10 percent off.”

Dr. Berger goes on to explain that a good rule to follow is that if the product’s price is less than $100, then a percentage discount seems like a better deal. On the other hand, if the price of the product is more than $100, a discount expressed in the number of dollars off is a better way to go.

Full-Priced Items Can Make Other Products Sell Faster

Remember those full-priced items that I mentioned earlier in the post.

The fact that a store sells them can actually help increase the sales of the mid-range items that it sells.

In “Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing,” Roger Dooley highlights the fact that selling high-end items increases the likelihood that people will buy products that are considered the next best option.

As Dooley points out, “A Standford University experiment had a group of consumers choose between two cameras, one more full-featured than the other. A second group chose from a selection of three cameras, which had the other two cameras plus one even higher-end model.”

“The first group split their purchase about 50/50 between the two models,” writes Dooley. “But, in the second group, fewer of the cheapest unit sold while more of the second camera sold. Adding the very expensive model made the second camera look like a reasonable compromise.”

Therefore, adding high-end items that sell at full-price can be a good choice for retailers. If the full-price items sell… great. But, if not, they might help increase the sales of the mid-level products sold at the retail store.

Keep in mind, this only works if customers see all the options available to them.

Therefore, it is not surprising that in many brick-and-mortar retail stores, people have to walk past the really high-priced items to get to the other options available to them. This makes the other items seem like a bargain in comparison.

A similar thing could be done on a website by listing other options available when customers search for specific products. The great part of an online store is that retailers can easily do A/B tests to see what website design converts the best.

Final Thoughts

In his book, Dr. Berger explains how the price of products and services influence sales. His book includes an explanation of Prospect Theory and how it can be used to explain why the store that sells a product at the lowest price doesn’t always sell it at a higher rate than other retailers in the area.

Roger Dooley’s book also highlights how price can influence sales in several different ways.

Both books offer lessons that retailers can use both in their brick-and-mortar stores and online.

In the end, it is important to keep in mind that people don’t always act the way that we would predict that they would.

Therefore, we need to test different options in an effort to find the underlying reasons why people do or do not buy products.

This will allow retailers to modify the shopping environment in an effort to increase the number of conversions and ultimately improve the bottom line.

Photo credit: William Murphy on Flickr.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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HubSpot Training Teaches That There’s More to Email Marketing Than Just Clicking Send

Photo credit: Kyle James on Flickr.If you are like me, your email inbox is filled with so many emails that every once in a while you need to set aside some time to the hit the delete button without even bothering to read most of them.

Given all the competition for a person’s attention, it would be easy to think that email marketing is a waste of time.

However, that couldn’t be further from the truth.

As I pointed out in a post last October, a study from Econsultancy found that email marketing was rated as providing good or excellent ROI by agency marketers more often than any other channel, and only organic search was rated as providing good or excellent ROI by more client-side marketers.

However, when Econsultancy asked companies to rate the overall performance of their email marketing campaigns, most said they performed good (37%) or average (44%). In fact, only 4% rated the performance of their email marketing campaigns as excellent.

Clearly there is room for improvement.

HubSpot’s Email Marketing Certification

Although I have been involved in email marketing campaigns in the past, email marketing wasn’t really my specialty.

However, given the fact that 2.6 billion consumers worldwide use email, I understand its importance, particularly for those businesses that are trying to reach consumers on their smartphones.

Therefore, when HubSpot created their Email Marketing Certification, I jumped at the chance to take advantage of the free training that they were offering.

And, I am glad that I did.

According to the HubSpot website, “This advanced email marketing training course will teach you how lifecycle marketing, segmentation, email design, deliverability, analytics and optimization come together to create an email marketing strategy that grows your business, and your career.”

Throughout the training, I was constantly reminded of the fact that marketers today have access to a lot of data that can be used to improve the way that they communicate with customers and prospects.

However, data without the training to know what it is telling you is pretty much worthless.

This certification helps you gain valuable insight from the data and provides you with the background to start creating email marketing campaigns that your current and potential customers will actually open.

Final Thoughts

If done correctly, email marketing can be a very valuable way to communicate with consumers.

In fact, many companies report that email marketing is one of the most effective tools that they have.

However, many companies also think that there is room for improvement.

This is why I jumped at the chance to complete the email marketing certification training that HubSpot offers via the HubSpot Academy.

Overall, I found the email marketing training to be well worth my time and effort.

I should point out that I wasn’t paid to write this and I am not a HubSpot employee or customer.

However, I am a fan of the company and the free information, advice, and training that they offer.

I also believe that when a company does something good for others, people should be made aware of it.

I also want to point out that this wasn’t the first HubSpot certification that I have earned and it definitely won’t be the last.

For more information about the free marketing and sales training that they provide, visit academy.hubspot.com.

Photo credit: Kyle James on Flickr.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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Macy’s Is Moving Toward the Future of Retail With RFID and Artificial Intelligence

Photo credit: Warren B. on Flickr.Macy’s is once again leading the charge into the future of retail.

Earlier this year, Macy’s announced that it was expanding its use of item-level RFID technology to increase the accuracy of its inventory management system, thus making it easier for the retailer to sell more items both in its brick-and-mortar stores and online.

Recently, Macy’s announced that it is also experimenting with Artificial Intelligence (AI) in an online mobile web tool.

At first glance, these two initiatives seem unrelated.

However, if you look at them more closely, Macy’s is laying the groundwork for something much bigger.

Using AI to Help Choose the Right Outfit

Several news articles explain how Macy’s has started experimenting with AI.

While the retailer most likely has a long-term vision, it looks like the it is starting out with few expectations and is willing to let customers guide their future decisions.

As an article in the Washington Post points out, “Macy’s announced Wednesday that it has teamed up with IBM Watson to use artificial intelligence as a customer service tool in 10 of its stores.  The retailer dubbed the pilot program “Macy’s On Call,” and it will allow customers to type in questions on their phones and receive answers. Unlike some chatbots that can only regurgitate preprogrammed responses based on keywords, IBM Watson will learn over time to give better answers that are customized to individual stores.”

The article states that the retailer is expecting customers to ask where specific merchandise is located, where to find the restrooms, and other similar questions.

However, customers inevitably will ask tougher questions than that.

And, if the AI works as some people hope, the app will give the retailer a way to offer customers a recommendation engine that will help them make purchase decisions and offer additional product suggestions in the same way that Amazon already does.

In fact, other retailers have already started to use AI in this way.

“Macy’s is not the only retailer that is experimenting with some use of artificial intelligence,” Sarah Halzack points out in the Washington Post article. “IBM Watson has already dabbled in using its tools to power other shopping experiences such as a collaboration with outdoor apparel brand North Face on a website that helps shoppers find the right jacket. Users can type in natural-language answers to a host of questions, including “Where and when will you be using this jacket?” and “What activity will you be doing?” Based on the customer’s answers, IBM Watson will serve up some suggested outerwear.”

The Importance of an Accurate Inventory Management System

As I mentioned earlier, in January Macy’s announced its “Pick to the Last Unit” program for fulfillment of customer purchases.

This initiative uses item-level RFID technology to ensure that the retailer’s inventory is extremely accurate.

While the store hasn’t suggested that the new AI fueled “Macy’s on Call” mobile web tool will be tied to the inventory management system, this would be the logical next step.

If combined, sometime in the not so distant future when a customer asks to receive style advice using the new mobile web tool, he or she would not only receive recommendations based on the items that the retailer has for sale, but would also get information about whether or not the products are available at a particular location, at a nearby Macy’s, or if they are only available online.

These are things that sales associates can usually provide. However, when this information is provided to customers on their smartphone, it could save them a lot of time and lead to increased customer satisfaction and more sales.

And, given the fact that the mobile web tool could be used anywhere, this could be another way for Macy’s to capture sales that might end up going to a competitor.

Again, as far as I know, Macy’s hasn’t announced that the mobile web tool will be able to provide this sort of information. However, they already do offer customers the option to buy some items online or in app, and pick up them up in store.

While integrating the inventory management system with the AI mobile web tool might not seem like a big deal, I think a seemless integration of the possible AI recommendations and the ability to tell customers exactly where to find the items it recommends is extremely important.

Hopefully, this is something that Macy’s is planning. I also hope other retailers try similar things.

AI Won’t Replace the Store Associate

Some people wonder why Macy’s is investing in AI when they could have their store associates answer these questions.

And, the reality is that they already do.

However, as studies have shown, many people would prefer to look the information up on their smartphone rather than interact with a sales associate.

This doesn’t mean that the smartphone will replace all store associates, as some people still prefer to have a one-on-one interaction with a real human being. (Note: There is a grocery store in Sweden that has eliminated the need for customer service staff. However, this probably won’t be a common practice for the foreseeable future.)

Furthermore, having sales staff on the sales floor not only helps the store provide better customer service, but they also help decrease theft at the store.

That said, the real reason that Macy’s is experimenting with AI probably has to do with choice.

As Jeff Hasen, founder of Gotta Mobilize, often points out, giving customers the ability to shop and find information in the way that they want to is extremely important.

Final Thoughts

AI won’t replace the store associate.

What it will do is provide customers who want to find information on their smartphones the ability to do so.

And, choice is good.

Therefore, Macy’s is smart to experiment with AI.

In the beginning, there is a good chance that it will be a little bit clunky. However, if the AI learns as experts say it will, the app will get better and more useful as time goes on.

As I also pointed out, the fact that Macy’s has already improved the accuracy of its inventory management system is important.

After all, what good are product recommendations if customer are disappointed each time they go to the specific department to find the item that was suggested only to find that it is out of stock.

Keep in mind, although several articles have suggested it, it is not clear if Macy’s plans to use AI in the specific way that I am suggesting. However, other retailers have started to experiment with AI in this way, and it would be the logical next step in an effort to compete with competitors both large and small, including Amazon.

If you look at it closely, Macy’s is slowly adding new uses of technology in an effort to help improve the shopping experience it offers its customers.

Each new improvement that the retailer makes brings us closer to a retail shopping experience that would have been considered science fiction only a few years ago.

Photo credit: Warren B. on Flickr.

Chad Thiele

Marketing analyst and strategist, content curator, applied sociologist, proud UW-Madison alumnus, and an Auburn-trained mobile marketer. My goal is to help businesses identify trends that will help them achieve their marketing objectives and business goals. I'm currently looking for my next career challenge. Please feel free to contact me anytime at: chadjthiele@gmail.com.

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