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    When Good Deals Go Bad (Part 2)

    January 18th, 2012

    As I laid out in my last post, the hottest business trend of showing deep discounts just leverages the current sale-oriented culture.  While one can find these deals in nearly every email that passes through the inbox, it is not more plainly laid out then with GroupOn where stuff is simply 50% (ish) off all of the time.  Everything they are selling, every day of the week.

    Rather than delve into whether or not GroupOn takes advantages of small businesses, I am going to stay focused on the business concept that drives GroupOn – discounts compel people to buy.  Sometimes they need the item and most of they time they don’t.  The thing is, the deal is just so darn good and the discount so darn large people are left asking themselves “how can I not buy this?”

    The reality, of course, is that we’re still in the early phases of this broad based discount solution and businesses are still trying to figure out if there is a way to effectively use it as a marketing channel.  Regardless of how it turns out, this is clearly a marketing expense and, therefore, will come out of the marketing budget as part of the promotion cost.  Small businesses may not have the data or wherewithal to figure out the true cost, but my guess is that they will find out via word-of-mouth or their own P&L statements, even if they don’t have the gory details.  With this in mind, let’s focus on the major players only for the sake of discussion.

    When a company runs a promotion as significant as a GroupOn, they are surly going to be tracking everything they can to figure out if it was a good deal or not.  Did the promotion drive enough incremental sales to cover, not only the cost paid to GroupOn and the cost of the goods/service provided, but also of the subsidized behavior (people who would have purchased anyway)?  That’s a lot to overcome.  The business benefit, for the moment, is more that it can help make a company look cool and interesting.  It may even draw people back into the brand that have been away for a bit.

    Still, it is all a marketing expense.  It comes from a marketing budget.  And this is what people fail to realize.  A good that is on clearance is discounted because the business needs to move through the inventory and is, therefore, not a marketing expense.  The loss of margin dollars comes out of a different part of the budget.  The consumer is actually getting a deal here because the goods used to be sold at full price.

    This is not the case with a deal like GroupOn (or LivingSocial).  Since these are marketing expenses, the cost of a marketing is built into the cost of the product.  That fact that you, as an individual, get the full price product for 50% off doesn’t change the fact that, in total, it didn’t cost the company anything.  They simply didn’t run a “Buy one get one” promo or a “Gift with purchase” promo.

    What this means for the sustainability of this heavy coupon culture is that it will only continue to work so long as there are enough consumers willing to continue to buy the product without a marketing promotion.  My prediction is not that the discount culture will go away (although I am skeptical of the long-term viability of operations like GroupOn) but that you’ll see the same companies or the same types of companies use that type of promotion and that it will become stale.

    For the moment I, as a consumer, would – and do –  jump on that discount train but my prediction is that it won’t last as it currently exists.  After more and more companies run those type of promotions we’ll start to see clear trends emerge.  As those trends become more solidified even the less advanced businesses will start to see that “business of selling product/service A are never featured” and there will be more whitepaper style publications on the success or failure of the promotions.

    While not as overdone as Black Friday, as Black Friday has a good 20 year head start, I would keep an eye on this.  The simple truth is that a company cannot give away goods at 75% off (50% discount and then 25% to deal provider e.g. GroupOn) and not raise prices.  The promotion is simply too deep and too short lived (versus a longer buy one, get one) to last.  The math doesn’t work.  So get the the deals now, while business still have not “marked ’em up to mark ’em down” and don’t fully understand what the expected cost really will be.

    And remember, the “deals” at Coach Outlets actually have a higher profit margin than the full price regular stores on 5th Ave.

    Did you get a deal recently?

    This has been a Thought From The Cake Scraps.



    When Good Deals Go Bad (Part 1)

    November 22nd, 2011

    As a marketer, I’m acutely aware of the benefits of a well ran promotion.  And as a (top 30 under 30) direct marketer, I know the coupon/promo code is a valuable tool for attribution.  Still, lately I have become frustrated with all of the discounting going on.  I’m going to break this up into at least two parts to make it digestible.

    Case 1: Black Friday

    Remember when Black Friday used to mean something?  Remember when it was a day of unheard of deals, available only that one day?  It was great, wasn’t it?  When it first started in the 1970’s, and really grew in the 1980’s, it was a day of great reveal.  Nobody, it seemed, knew what deals would await them.  Later, websites were created for the sole purpose of revealing the circulars which retailers tried to keep as quiet as they could.  And then, what started out as a heavy shopping day due to most non-retail employees being on vacation, started to creep.

    The creep started in a fairly innocent way.  Stores would have day-after-Thanksgiving sales.  And then The sales grew bigger and door-buster sales started to emerge.  Stores needed the foot traffic and they needed people to shop with them before they shopped elsewhere.  Prices, for the moment, could only go so low.  Next, stores started to open earlier.  First it was 6:00, then 5:00, then 4:00.  Once the process started there was no turning back.  The every year the door-busters came earlier until they opened at midnight.  They could go no earlier.  Just kidding.  This year Walmart is opening at 22:00 Thanksgiving night.

    While stores are racing to open earlier than ever, the tentacles of Black Friday started to invade other channels (including Cyber Monday).  Signs, circulars, and emails started proclaiming “Black Friday Like Prices”.  Amazon.com made the whole week a week of deals.  I even saw “Black Friday in July” slogans to tell me just how good of a deal I was getting over the summer.  As Black Friday neared, stores no longer strived to keep things secret.  In fact, they now actively release circulars early and those sites that used to leak the deals are now commercialized versions of their old selves.

    The immediacy of the day has been going downhill for quite some time.  Then, Walmart pulled a game-changing move – again. In 2011 they will not only match competitors Black Friday prices on Black Friday (as they did in 2010) but are offering a price match that “is both forward looking and retroactive”.  Basically, as long as supplies last, you’re good to go all season long.  Talk about a lack of urgency.

    Now, the important thing to keep in mind is that I’m not sure what the alternative is for these stores.  The fact is consumers have a finite amount of money to spend on gifts and if a store doesn’t attract them in and get the consumer to spend at their store, the consumer will just go someplace else.  Ultimately the consumer is the one who decides when enough is enough.

    Will you be heading out at 22:00 on Thanksgiving night to shop?

    This has been a Thought From The Cake Scraps.


    The Hopeful Hunt: CEO’s and Salary

    October 25th, 2011

    Hope.  Of all the things that motivate an individual to act, an action creating hope is one of the most powerful.  Doing something that creates the possibility of a better and brighter future is an amazing draw.  Better yet is when we’re able to partake in an act that has no immediate expense to ourselves and still creates the chance for a more fulfilling future.  When a company is going through the process of finding a new CEO it is hope that prompts them to make offers considered excessive by the general population.  Let’s explore that idea.

    While this post comes fresh off my attendance of eMetrics, it has been on my mind for a while and the conference just reinforced the view I had.  CEOs matter. Leadership matters.  A company lacking leadership will not only flounder with the problems of today but will also be unequipped to deal with the issues of the future.

    For this reason, when deciding on a new leader a company desperately wants to find the right person.  If they believe they have found that person they become willing to do whatever it takes to get them.  They promise “golden parachutes” of benefits to draw these leaders away from their current positions and provide a compensation package even more compelling.

    Hopefully they never have to pay out the parachute.  Hopefully the compensation is small compared to the value created.   Hope. Hope. Hope.  That is all the company has when making that hiring decision.

    Not convinced?  Two words provide the study that makes the point: Steve Jobs.

    The impact of his second stay with Apple cannot be overstated. He took the company where he wanted it to go and made it the company it is today. Could anybody else have done that? Did anybody else have the connections he had? Would they be the same expert salesman?  Did they have the ability to say no to almost everything such that the company could focus on a few things that will change the world?  Many would argue the answer is a clear no.  Steve had the whole package.

    You probably own an Apple product.  Having your life so impacted by an individual, consider, if he were alive today and in “free agency” what would you say is fair pay for him?  I’m sure he had all sorts of golden parachute options baked into his contract.  Stock options, salary, etc.  All of the things typical of the “fat-cats”.  And yet, his leadership changed lives of consumers everywhere and grew Apple to one of the largest companies (by market cap) in the world.  Apple didn’t know that when they signed him on. It was a hope.

    There may have been no better fit for Apple, but I’m certain there are other similar situations every day – companies believing they have found the right leader for their market, for their size, with their location, with their brand, etc.  The company hopes it has hired their own version of Steve Jobs.

    But sometimes they fail.  In fact, in a recent article in Forbes, while the readership overwhelmingly voted Steve Jobs the best CEO, the editors disagreed saying he couldn’t do what he did at Apple in other verticals.  If Steve had decided to move on (unlikely) the price another company would have offered could have been astronomical.  Still, there is no guarantee it would have turned out.  He could have failed.  How ridiculous would that pay package look?

    Case study after case study shows that the leader matters.  Picking the wrong one can destroy a company and, with it, the jobs of all those underneath.  When thinking of it in these terms – the fate of shareholders, employees, and customers – through the lens of hope, it is not so difficult to understand why pay has gone so high.  Global competition has increased while the internet has made the cost of making a mistake soar.

    So remember, the next time you hear about how much your company pays your CEO realize they’re looking for their own Steve Jobs.  You probably don’t have all of the details and it could be that CEO’s performance that is keeping you employed at all.

    Then again, they could just be overpaid.  This is simply one take on an alternative point of view.

    So, given his impact and the enormous value he created, could you overpay Steve Jobs if you knew losing him meant throwing away all Apple products (and the $75 Billion in cash Apple has)?

    This has been a Thought From The Cake Scraps.


    How Himpmunk Can Solve the Google + and Facebook Problem

    August 24th, 2011

    Circles are all the rage with Google Plus but, as any usability person will tell you, they are a pain to manage.  That is why the Groups option in Facebook never got much traction.  You have to be dedicated to keeping the lists current and managing the settings on the pages.  Google tried to address this issue by forcing you to add people to a circle, but it is still a pain and still rather confusing.  Facebook just took another stab at it.

    I say just look at how people currently use social services and make a solution that solves this issue.  Hint: it is not this silly all-in-one view that both Facebook and Google Plus have taken.  The answer is right in from of them and the interfaces solution lies with Hipmunk.

    In Hipmunk you can create several searches in a tabbed view while remaining in the same browser tab.  The searches may be similar, but obviously different as well.  The key is that you have a central place to manage multiple threads, each thread in a unique tab.

    When you look at the social landscape there are clear breaks.  Facebook is for family and friends.  Twitter is for the masses.  LinkedIn is for work.  All are social; all are distinct.  The answer is one interface that blends all of it together in a central place with unique tabs.

    Circles and groups fail because you manage where you share it at the end of the sharing process, right before you click share.  Think about how much easier it would be to share to “Google+Professionals”, “Google+Friends”, “Google+World”.  Sure, have the concept of Circles live within this interface.  Make it so you can share on +Friends and add the +Work circle to the “Share With” list.  Have a Limited Profile list etc.  The point is that by creating an interface that makes is unmistakably clear where you are sharing people can effectively manage their online presence.

    Then bring it all together by having a central stream where the content flows into and make it clear (w/ an icon) where the post was originally shared from (+P, +F, +W or something cool).  Or, maybe you don’t need a central stream.  Maybe that’s what people say they want, but they don’t actually want it.  Maybe the solution is that people naturally silo themselves into distinct groups and providing a central tool that allows them to select the silo they wish to view is the answer.

    Google Plus is so close to this with the mandated Circles concept but still falls short.  Get people to a central place to manage these different aspects of their life first (look at the success of TweetDeck).  Then focus on how people would like to see them integrated, if at all.  Right now I see these companies trying to solve for a problem (a central place for everything) which doesn’t seem to have much demand while they ignore that people want – to separate certain aspects of their life into silos.

    Hipmunk has it right – give us tabs.  One place, many views, and a central place to manage to distinct aspects of my social presence.

    Does that sound like something you’d use?

    This has been a thought from The Cake Scraps.


    How Walls Divide Us

    July 12th, 2011

    Walls are amazing things when you think about it.  They are what divides one space from another.  They define boundaries of rooms and space.  And yet, if one takes a moment to think about it, there is not much to a wall.  Just a stretch of material, however thin, spread out across a space.  Walls don’t even have to be solid; some of the most important walls have gaps in them!

    No matter what kind of wall it is, walls are all around us.  It seems like every day you hear a speech about people that want to break down walls or you read an article about walls people have built up.  Sometimes people want to build up one wall while taking another down.  Regardless of the direction the wall is going, I feel like they are always applied to large issues.  That the election of a non-white president was breaking down racial walls.  That politicians need to tear down walls and work across the aisle.  The problem is that these are Great Wall size issues and, while important and worthy of discussion, are not the things you and I probably deal with on a daily basis.  Instead, I urge you to think about the smaller walls you might erect, perhaps without even thinking about it.  Walls that are mere inches or fractions of inches in thickness rather than several feet or yards wide.

    These small walls can have a profound impact on interactions –  just think of a bathroom with no walls for the stalls.  Small walls can make all the difference – both for better and for worse.  For example, not including certain functional areas, individuals, or groups on the distribution of a memo or report can build a wall.  Withholding information can create a wall.  Not giving the full context of an email string when talking about the end result can build a wall.  Not taking the time to make a quick fix for somebody can build a wall.  You get the idea.

    The beauty and the burden of all of this is that the choices are all yours.  You decide how to interact with people and how to treat people.  You decide if you are going to pause a moment to see if everybody is on board or if you are just going to keep talking.  The largest walls start small and then layers are added over time.  Be careful about how you create your walls.  Relationships are what makes things work or not work. Connections make business happen.

    Are you building walls?

    This has been a Thought From The Cake Scraps.


    Did Twitter Kill Traditional News?

    May 4th, 2011

    Given that the raid on Osama Bin Laden was Tweeted as it happened it would be tempting to say that newspapers are dead.  Had the announcement from President Obama happened any later perhaps the headlines for the next day would have missed the announcement completely.  I could almost see the “Dewey Defeats Truman” moment happening all over again.  Twitter supporters will further fuel for the Twitter fire by pointing out that the information was first leaked via Twitter.

    The problem with saying that Twitter has replaced traditional media is that it overlooks a few critical factors.   One factor is that the Twitter-sphere makes mistakes.  Things that are not true can grow quickly – such as when Rep. Giffords was reported dead.  You may point out that news organizations also get stories incorrect, and you would be right, but a story published online can be updated and corrected so that when people go there they see the more up to date information.  No such function exists for Tweets.

    Additionally, we have to make sure that we are differentiating between the spread of a news item and the creation of that news item.  A story may get legs on Twitter but the story may not have broken by Twitter.  Even when no link is provided back to the original article many news related Tweets are probably inspired by some traditional media content.

    Finally, there are some straight up problems with Twitter as a news source.  When there are 3,000 tweets per second flowing in on a topic I would assert that gaining useful information is quite difficult.  For instance if I told you that Osama Bin Laden was killed and that you had 5 minutes to get me details on it using only Twitter you would be helpless.  There is no organization to the content.  It is Finnegan’s Wake, present day.

    In a similar vein, Twitter does not provide a forum to go into any detail on a topic.  Sure, there are many items in which 140 characters will be more than enough, but there are also a large number of stories that need a bit more than that – say a paragraph – or even a lot more than that – a full article detailing the timeline of the raid.

    No, Twitter will never kill real journalism.  It will aid in the sharing of articles, but that just helps traditional news outlets.  Sure, the face of news will change.  The tools of the trade will change.  The way news is distributed will change.  Twitter is just a tool and at the end of the day I think people find the old adage holds true and one does well to heed it: Knowledge is power.  People will keep reading past 140.

    Has Twitter killed traditional news for you?

    This has been a Thought From The Cake Scraps.


    The 8 of 10 Paradox

    March 31st, 2011

    An eight – above average but falling short of the best. This is what I find when I ask people about their Excel skills.  In fact I would wager that this is what most people would say about their skills with any tool provided one thing.  The sole criteria for being an 8 is that they have used the tool enough such that their usage would be self-defined as frequent or occasionally (as opposed to used once or once a year).  The problem is, of course, that we don’t live in Lake Wobegon.  But if you ask people, person after person will tell you an 8.

    I am not immune to this.  In fact, I claim to be an 8 of 10 in the business non-statistical application of Excel.  To me this means that I am not responsible for knowing the advanced mathematical and statistical formulas used in Excel, nor do I know how to write advanced VBA code from scratch.  What it does mean is that I know my way around PivotTables (and getpivot – both syntax options), am well versed in formatting data/graphs, can use a variety of text formulas (len, mid, right, left, proper, etc.), lookup formulas (vlookup, hlookup, index, etc.) and other advanced worksheet formulas (indirect, match, find, search, sumif, etc.), know how to create a dynamic named range, write basic VBA code, and create basic custom number formats (including if/then logic).

    I know that I have shortcomings as well.  I don’t have the syntax for custom number formats memorized, array formulas still take a bit to figure out (and I don’t often think to use them), my VBA skills could use some polish, there are a bunch of keyboard shortcuts I don’t have memorized, and I don’t use many advanced Excel Add-Ins that turn it up another notch.  I’m sure there are others, but the point is that I know I have room for improvement and see examples of really talented individuals when I read blogs or when I am searching for an answer to an issue.

    The point is that I feel like I am a well informed 8.  I am not saying I am an 8 because it just feels right.  I’m saying I’m an 8 because I put in time to learn what I don’t know.  I have been in rooms where I’m not the best, but clearly quite a bit more advanced than a large percentage of the room. And yes, I would wager money that I am not so smart that I can escape the unknown unknowns.  So I am an 8 and I know it for a fact.

    And hence the 8 of 10 Paradox.  Or, rather, the Downing Effect wherein “people with a below average IQ to overestimate their IQ, and of people with an above average IQ to underestimate their IQ” and “the ability to accurately estimate others’ IQ [is] proportional to one’s own IQ”.  Applied more broadly it is called the Dunning-Kruger Effect.

    So remember, as you go through life, people will always be comparing themselves to others.  Knowing your results in comparison to the average just makes us feel better.  But there will be times when there is not quick test score to compare; no easy benchmark to measure against.  There will only be an opinion.  At that moment you should really stop, be honest with yourself, and consider which side of the Dunning-Kruger effect you are on.

    I give this post an 8/10.  What would you give it?

    This has been a Thought From The Cake Scraps.


    Small Things Yield Big Rewards

    January 18th, 2011

    I once read in a book that an individual is less likely to sue a doctor if the individual likes the doctor. That makes sense, as people give a larger amount of room for error, in general, for people they like compared to people they do not like.  The element that makes this possible is trust.  One trusts a doctor that they like whereas if one does not like a doctor they are more likely to be skeptical of answers, treatments, and suggestions.

    The one thing that I feel like people fail to realize is what builds this sense of trust, in particular in the work environment.  Building that trust with people is a critical life skill because you can more often pick your friends than you can pick your coworkers or clients.  And this is not about a fake trust or a fake relationship.  This skill is about truly adding value to a conversation, project, or company.  When a person can do that out of genuine interest for the people they are interacting with they ensure that their friends, not coworkers, are there when they slip up.

    So how does one build that trust?  The answer is that the biggest differences between people are the smallest of things.  This is because it is the smallest of things that can really make a difference.  They all add up and most people only pay attention to the overall feeling of ‘nice’ or ‘not nice’, not realizing or even being able to articulate why they feel that way (“he’s just a good guy”).  The memory that most demonstrates this and sticks in my mind was right after I got my new (used) car.  I was pumped.  It was my first ‘nice’ car; a slight splurge because I enjoy driving.  I couldn’t wait to take my coworkers for a ride in it.  I tried to think of what they would notice first.  The all-wheel drive?  The jump from the twin turbo engine? The leather seats?  Any of the obvious ‘nice’ things?  But then my friend got in the car and started fidgeting around with stuff.  Pressing buttons and testing the hanger-hooks and handles above the door.

    I thought to myself “What is he doing?  Look at all the obvious nice stuff!”  And then he looked at me with this smile and said “the buttons have that satisfying click when you press them and your door handles have an elegant slow-retract to them.  Nice.”  Now, he was being a bit sarcastic with his remark, but it stuck with me.  Those are the sorts of things that, while largely ‘unnecessary’ are the exact things that make the car ‘nice’.  The engine, leather seats, nice rims…these are all things that could be put on or in virtually any car without thought.  But the satisfying, tactile *click* when I press a button or the softness of the cup holder opening up.  These are things that are small, one could say insignificant, but simultaneously the fine touches that truly make the car ‘nice’.  Things that are not obvious, not hard, but take a definite thought to put them in place

    Likewise, it is the small things that make the person, even in the business world.

    • If someone starts a thought and gets cut off by another, remember and ask what they were going to say
    • Listen for bits of personal details during a conversation and remember to follow up on it later
    • Set up a .cal list in Outlook for your company holidays (google it) and send it out to your coworkers
    • Make sure to have lunch with different groups of people to learn more about them
    • Sort the pages that are sitting on the printer
    • Make the coffee when the pot is about empty, even if you didn’t have any
    • Have that homemade treat if the person doesn’t often bring treats in
    • Stop by and thank that person for bringing it in, even if it was not homemade
    • Pass along an article you read to show that you’re thinking beyond your own position
    • Ask about a specific item in a person’s desk/cube/office (you’d be surprised how little people do this)
    • Say that you will get back to a person, even if you don’t have the time to fully answer now

    This is just a short list of small things one could do at the office.  They are all small, but they all take effort.  And don’t be fooled, they take lots of effort to do all of these things all of the time.  But as my dad likes to say “the only difference between work and play is your definition.”  So work to redefine your view and these small things that take lots of effort will become natural and maybe the next time you sit down in someone’s new car you’ll notice the satisfying *click* their buttons make.

    Do you take time to do the small things?

    This has been a Thought From The Cake Scraps.


    New Amazon “Add To Cart” Being Tested

    September 30th, 2010

    I am pretty excited today because I am in a test group of the new Amazon.com “Add to Cart” process.  Instead of serving up a new page they are doing an overlay of the page you are on, a much better experience in my opinion.  As a web analyst I can’t help but wonder what sort of impact this is having on their conversion metrics.

    It is clear they are testing it because a search on twitter for “Amazon new add” yielded only a few results, but it looks like more are coming in.  They must be opening up the gates a little bit since launching it a few days ago.  Perhaps as early as 9/26 for some users.  New stuff on one of the biggest e-commerce sites on the Internet is fun stuff!  We’ll know how it is working for them based on if they roll it out to everybody over the next few days  or weeks.  This would be key to have up before the holiday shopping season kicks into full gear.

    As a side note (as you can tell from the image), I can’t wait for Gary Vaynerchuk’s new book – The Thank You Economy.

    Do you have the new “Add to Cart”?

    This has been a Thought From The Cake Scraps.


    Compounding Mistakes

    September 8th, 2010

    As I was driving home from work the other day the only thing that I could think about was how horrible the lights were timed.  I had noticed it before, and I knew it was annoying, but up until today I had never actually thought about how truly wasteful poor timing on traffic lights is.  As I sat at one red light after another I continued thinking about how poorly timed lights really are a big deal.  Like many things, at first pass it seems like a very silly thing to think about but after thinking on it one comes to realize just how impactful correct traffic light timing is.

    There is the clear waste of time.  This is the one that most people think of as the jump from one red light to another.  The second things many people say is that it wastes gas.  A person might even say it wastes the blacktop as the stopping of large vehicles actually gradually creates ruts and bumps from the tires breaking against the blacktop.  All of these are correct, and were the first things that came to my mind.  But at about the 5th red light I began to realize something else was at play.

    I realized that as I got more and more red lights in a row I was getting more and more frustrated.  Frustrated drivers are much worse for gas mileage than calm drivers.  I can imagine that many other drivers are just as frustrated.  All of that causes a more dangerous overall driving situation for everybody in addition to the additional wear and tear on a car from fast starts and abrupt stops.  Of course it is easy to say that a person should just not drive worse, but that indeed ignores the reality of the condition that we are dealing with humans and emotions must be taken into account when assessing the impact of actions.

    So what we have is one mistake (poor traffic light timing) that leads to other mistakes (poor driving) that then take a situation from frustrating to downright dangerous.  One could even say that yet another mistake that is then made is that people want to occupy all of this down time which leads them to text, surf the radio, or look for a song on their music device.  Again, all of this just adds to the danger of the situation.

    The simple moral is that, as often as you can, you should try to find the source of the problem and start there.  A ban on texting in that stretch won’t solve the issue.  Playing happy music won’t solve the issue.  Only looking at the real problem can the issue be fully addressed.  Addressing the source of the problem solves all of the downstream problems.  This is obvious, but I think it is good to have a reminder every now and again to keep it fresh in your mind.

    Do you let the traffic get to you?

    This has been a Thought From The Cake Scraps.