Archive for May, 2009

Assuaging Guilt As Go To Market Strategy

Sunday, May 24th, 2009

A few years ago, when I’d just moved into a new house in Pune in India, I had to hang several picture frames. Forever guilty of shunning DIY work, I found the leveling and alignment challenges involved in hanging frames to be a convenient excuse to keep postponing this task forever.

Soon afterwards, I came across an interesting product from a company called Ryobi in a FORTUNE magazine’s annual list of most innovative products. Called self-leveling laser, it promised to make it very easy to align and level picture frames. With this product, I felt I could assuage my guilt of shirking from DIY work, and I decided to buy it ASAP. 

Ryobi was unheard of in India, and after doing some research on the Internet, I found out that its products had very limited distribution even in the USA. In fact, Ryobi wasn’t even selling its products on its own website and was diverting interested buyers to Home Depot, which seemed to be only store where Ryobi products were sold. Luckily for me, when I went to the US a few weeks later, I was able to locate a Home Depot store conveniently located a few blocks away from my office in midtown Manhattan and was able to buy this Ryobi product.

Fast forward to the present.

A couple of months ago, I had to drill a few holes on the wall of my house to install a few household items. It proved too hard to do this with a manual drill I had with me. I then tried getting some help from outside, but that turned out to be unsuccessful (for reasons for my failure in summoning external help on this and other occasions, see my blog post Changing Face of DIY Markets). I even thought of buying a new power drill in a bout of DIY passion to do this job by myself, but the innate DIY-shirker in me kicked in and blocked this purchase with lame excuses like (a) it would be too painful to lug around a heavy power drill with a long and unwieldy power cord, and (b) with the vagaries of the power cuts we were subjected to, when would I be able to use it anyway?

Then came along another gem of a product from Ryobi. This time, it was a cordless power drill. From pictures, it looked very compact and, since it used a battery pack, it could be used even during mains outage. At $50, it was also good value for money.  

With no further excuse available, I decided to alleviate my DIY-avoidance guilt by buying this product at the earliest. But, because neither Ryobi nor any other brand of cordless power drills was available locally, I’d to request my sister to pick up a Ryobi in the US and bring it with her during her forthcoming trip to Pune. Luckily, Ryobi products have become widely distributed in the US by now, and my sister was able to buy the cordless power drill easily from Amazon.

I gather from my sister that leading stores in the US – not just Home Depot – have big sections devoted to Ryobi products now. This is a far cry from a few years ago when I could buy the Ryobi self-leveling laser only from Home Depot. 

Given the enhanced market presence and visibility of Ryobi, it’s obvious that lots of people are buying its tools now. While I bought them because they held the promise of alleviating my guilt of avoiding DIY work, it’s hard to tell if this is a common purchase motivator for many others. But it does suggest that assuaging DIY-avoidance and other forms of guilt can turn out to be a powerful go to market strategy for many product categories.

Frictionless Buying

Monday, May 11th, 2009

You’ve done the research and made the comparisons. You’ve selected the product and you’re fired up in anticipation of your purchase. Then, when you reach the store, the salesman tells you he has run out of order forms. I know how deflated you must be feeling for I had exactly this experience when I recently tried to buy a Tata Indicom Plug2Surf USB modem for my notebook PC last week.

A few days ago, I was trying to order a new battery for the inverter at my home (for the uninitiated, an inverter is a UPS-like device that supplies standby power to electrical appliances when the mains are off). My two calls to the supplier’s salesperson did not suffice. I had to call up its owner before I got a response.

Having been in sales and marketing for much of my career, I’m shocked to find salespersons who are indifferent to business handed over to them virtually on a silver platter.

Around two weeks ago, I wanted to send out an email to inform all my contacts about the launch of GTM360, and I decided to subscribe to some email marketing service. I handily located one called Benchmark Email and took up their offer for a free one-month trial subscription. Even though their website clearly stated that my trial permitted me to send 250 emails, I kept getting a message that I could add only 50 email addresses to a list. When I called them for help, I was told by an extremely rude customer support executive that this limit applied only to the trial subscription to prevent spamming. Though this made no sense, I had no choice but to copy the same text five times over and create five lists of fewer than 50 emails each in order to reach out to around 240 contacts. Every time I edited something, I had to repeat it four more times. Then, thanks to a massive bungle at their side which they flatly refused to admit to, I was told to upgrade to a paid subscription if I wanted my 240-odd emails sent out. Not one of the best of ways to acquire new customers, I remarked to myself, but I let it pass. But, even after taking up a paid plan, I noticed that the 50 email limit continued to apply, contrary to what I was told before. When I called them again, the same customer support executive now told me a different story, namely that I should use another method of uploading emails to sidestep this constraint, though there was no mention of this on the website. Turned out that even the trial subscription permitted this alternative method, so my efforts of doing everything five times could have been avoided if only they’d advised me correctly at the time.

Hope you’re getting my drift. Let me just give one more example.

After reading about Mom’s Kitchen, a lunch / dinner delivery service in Pune, which is the city in India where I live, I was keen on trying it out. Their website conveniently offered a free trial. When I landed on that page, instead of converting my lead to a deal, it completely put me off with an inane and unfriendly registration-required message. I gave up right then and sent out a friendly email to the owners of the company giving them suggestions on how they can coax the required information from their visitors and convert them to customers without making them abandon their transaction. I especially like the way websites like FixYa and ClearTrip do this.

These are all examples of friction in the buying process. I braved the friction and completed my purchase in three out of the four cases above. In other words, I demonstrated a 25% “abandonment” rate.

However, web-based businesses may not be so lucky with their average visitor profile.

According to SeeWhy, a leading abandonment tracking firm, “website abandonment is a persistent problem affecting every website, losing you valuable opportunities. Up to 70% of shopping carts, registrations, quotes and online forms are abandoned before they complete.” (italics mine)

When faced with such data, I’ve noticed two types of responses from e-tailers, B2B marketers and other website owners.

Some of them immediately realize how badly abandonment affects their revenues and brand image, and want to do something to reduce it.

Others hide their head in the sand like the proverbial ostrich. If they fail in discounting the abandonment data completely, they tend to dismiss visitors to their websites as not being Internet-savvy enough to buy online. Well, with such a condescending view, one wonders for whom they created their websites in the first place. Did they expect their company’s techies, webmasters and web designers to generate enough transaction volumes for their businesses?

While security concerns, freight costs and unstable websites have traditionally been seen as the culprits, the above examples show that there are many other sources of friction in a buying process. Some of them are admittedly related to human aspects. But, to overcome many others and provide a frictionless buying experience, web-based companies can implement registration-free websites, focused landing pages and microsites, abandonment re-marketing and other next generation solutions in order to drastically reduce website abandonment and significantly boost conversion rates from leads to deals.

Credit Rating Agencies & The Financial Meltdown

Monday, May 4th, 2009

In this subprime mortgage caused financial meltdown, public opinion accuses some players of abject greed and others of downright fraud. But incompetence is a charge perhaps reserved only for credit rating agencies.

The aspiring homeowner could buy a bigger house with the larger mortgage he got from his bank.

Mortgage brokers and bankers could meet their sales quotas faster – and earn larger bonuses – by making larger mortgages that had the blessings of their companies.

Investment bankers and other financial intermediaries were not straying from their duties when they packaged and sold heaps of mortgage-based securities that were rated AAA (the highest rating for debt instruments) by reputed credit agencies.

But, when it comes to credit rating agencies like Standard & Poor, Moody’s and Fitch, it’s a completely different story. They were required to have the competence to analyze the assets underlying the securities they rated. These assets had danger signs all over them – some mortgages were for amounts too high to be justified by the homeowner’s income, others were made to NINJAs (people with No Income No Jobs or Assets) or without any documentation. What led them to give AAA ratings when they should have put large ‘Buyer Beware’ stickers on such securities? If not sheer incompetence, was it corruptness, as some have accused?

Harold “Terry” McGraw III, fourth generation McGraw family member and CEO for over a decade of McGraw Hill Corporation (of which Standard & Poor is a division), was recently pleased to learn that his company’s global headquarters skyscraper figured on New York City’s tourist map when he heard the guide announce that their double-decker tourist bus was approaching the landmark. He was however taken aback by the guide’s announcement, “alas not a single McGraw is alive today”.

McGraw III should be thankful that his virtual incognito status is perhaps what came between him and the pitchfork of public ire for the alleged incompetence and corruptness of S&P under his charge. Maybe the folks at AIG who nearly got lynched on the streets of Manhattan have a few lessons to learn from him on how to stay low profile?