Will online sales benefit from high oil prices?

14 07 2008

The Economist this week (The Economist July 12th 2008 ) reported that driving behaviour had changed as a result of higher fuel prices. Garages report that there has been a 5-10% drop in in fuel sales and this is as a result of fuel prices rising at their highest rate ever in June. The Economist also reports on data from Footfall, a research firm that tracks customer numbers, that indicates visits to out of town shops have fallen and at a higher rate than the drop in visits to town centres.The suggestion is that consumer behaviour is altering as a result of fuel price inflation.

At the same time Internet Retailing, an online retail website, reported increased sales to online grocery websites. Value retailers have experienced growth of between 30 to 40% in the four weeks to June 7th and visitor numbers for both Morrisons and Asda were up by more than 48% for the 3 months March to May 2008.

Meanwhile on June 30th 2008, ASOS, the UK’s largest online retail store attracting over 1 million visitors per week, were reported by Retail Exec, an online publication aimed at Retail Executives, to have achieved a 90% increase in revenues to £81 million and post pre-tax profits of £7.3 million up £3.4 million on last year.

I was asked to contribute to a book recently called “winners and losers in a troubled economy” and to offer my views on whether ‘online’ would be effected by an economic downturn. The answer to me is clear: Not if executives take on board the data available to them about changing consumer behaviour and the benefits the online channel offers. Having done so, they need to determine to make their online property best of breed.

Not everyone will do this of course and it is easy to predict that in 18 months time when the down turn is becoming a recovery there will be a number of high profile casualties that did not make the right investment decisions and were not able to maximise the opportunity that a down turn presented to their business.

We have all learned over the past decade or so, sometimes painfully, that the Internet is not the answer to all of our problems. However, where the case is dropping high street sales due to altering consumer behaviour as a direct result of high fuel prices there does seem to be a strong positive correlation and maybe this time, it is.





Don’t mix friends, family, and business contacts.

3 07 2008

The Daily Telegraph (a UK broad sheet newspaper) recorded a story on 16th June 2008 about a High Court ruling that requires an ex-employee of Hays to hand over his business contacts built up on the social networking website LinkedIn. The story has been picked up in various places including Brand Republic and Computer Weekly but none raise the obvious more expansive question of what does this mean to the rest of us? Computer Weekly does make reference to a legal specialist that advises employers to add clauses to employment contracts and to ask employees to set up business only networks but I think this misses the point.

Social networks are just that - social. The dictionary definition of ’social’ is “living or preferring to live in a community rather than alone.” The networks don’t have boundaries and certainly don’t separate colleagues from friends. In many ways, if they did it would defeat the object. But for many, the level of transparency is unnerving.

I had lunch with a customer recently who talked about her younger sister connecting with her on Facebook. I have a similar scenario where I am connected to my niece and nephew. They have very different interests and circles of friends to me being as they are about 25 years younger but what is my alternative - deny their existence or compartmentalise them?

Only five days earlier (11th June) the Times Online ran a feature that advised people to keep their social and business networks separate. This is an interesting idea and there were various suggestions made by different people - all in recruitment (or Talent Management if there is a difference). One suggested he uses a nickname on Facebook that only his friends know, and uses LinkedIn for business contacts only. I don’t see how this can work. There has to be crossovers and what happens when a family member or close friend is also in business or vice versa? The article finally ends up with a suggestion that soon software will simply track you down by making connections between you, friends and colleagues and bingo - your profiles are connected for all to see.

What this really means is we have to get ready for a time when virtually everything we put up online will be attributable to us. Potential employers will be able to see our connections with dodgy friends and family members and start judging us across a wider set of values. Is this good or bad? I am certain, their will be losers as there always are but I think this is akin to businesses getting used to corporate blogs - which many have yet to do.

There are countless examples of businesses gaining stronger brands as a result of honest information about them going up on blogs. They are measured by how they respond to negative comments about poor performance and people realise that no business is perfect and actually, if you can see them warts and all you tend to trust them more. The same will surely happen to individuals and I think it will be refreshing.

I predict that the transition will be ugly, but when we get there we may see a levelling of the playing field on a scale never seen before.





The Future (of digital, of media, it’s been one of those weeks!)

20 06 2008

One week and two conferences on the future of stuff. The first on Wednesday run by eConsultancy and opened with the normally upbeat and insightful Ashley Friedlein with words along the lines of “when I thought about the future of digital and this years conference I realised there wasn’t much to talk about, we haven’t moved on that much and this year is more about execution”. Clearly by this point the audience was beside themselves with excitement and thankful that we had paid the full fee to be there. But as it happened, unusually Ashley was wrong. There was lots going on and whilst an awful lot was about execution the main thrust was about organisations doing things others had not already done.

Thomas Cook in particular, whose presenter Russell Gould delivered his presentation by video due to the imminent birth of his second child, demonstrated just what was possible if you have big ideas and in particular a big budget. Travel of the future is truly a multi-channel world with interactive store fronts, video catalogues and, thank the lord, no more welcome meetings - well video welcome meetings but presumably they come with a fast forward facility.

The panel that followed however seemed to miss the point entirely about the competitive threat the Web2.0 future presents. Prior to this session on travel we had heard, at length (the panel barely had time to go up on stage) about the pressures on the increasingly commoditised insurance business. The pressure is coming from aggregators who add value by offering the consumer choice. The products which are ultimately commodities are price differentiated and it is only the total confusion that consumers have that keeps them loyal. (That isn’t true I just made it up). It may as well be though with the amount of inventive thought flying around the room.

We were told that insurance policies are priced for a 3 to 4 year lifetime value and at the same time that consumers are bored with organising insurance and treat it as an annual chore which they detest. This makes it open season for aggregators as they can at least price check. It surely won’t be long before we sign up with an aggregator for 5 years and they simply provide an annual report of their market sweep and tell us which provider we will be insured with next year? This must be an opportunity for insurance providers also if they can convince their underwriters.

Surely the travel industry is going to suffer from the same problem, as technological differentiation dissapears faster than our holiday money on fuel supplements? All the travel companies tried to make out they differentiate because they sell “an experience”. What they sell is convenience - from a consumer perspective they simply will not care if an aggregator provides that convenience rather than the agent. The game was somewhat given away when one travel agent admitted they sell anothers product because “they can make money out of it”.

As Seth Godin reminds us in his blog this week “there is no such thing as price pressure”. The price you charge is based on the value you offer - as perceived by the user/customer.





EDM2008 Monday 9th June

11 06 2008

I attended EDM08 on Monday which was coincidentally the 8th year the conference had run. It is a fairly small affair with perhaps 100 people (max) but they travelled far and wide to be there and on my table were people from the US, Nordic area and mainland Europe.

EDM stands for European Directories Marketplace and the event is run by Whitaker Associates. It is fair to say I had no idea about how the connection with directories worked before attending but it is of course to do with the delivery of information services and hence this years theme: mobile.

The keynote was delivered by Dr Mike Short Director of R&D at O2 and a man’s whose credentials in mobile are extensive. He is Chairman of the mobile data association (the mda) amongst other things but has spent 20 years in the mobile/telecoms industry. He shared plenty of stats and insight to research that O2 will publish in July both of which I have summarised here in a few bullet points:

  • there were 2.95bn mobile subscribers at June07
  • 3.3bn are forecast by end 2008 (source: The mobile world)
  • There is 115% mobile penetration in the UK which equates to 69 million handsets
  • There were 57 billion sms sent in the UK in 2007
  • 449m picture messages were sent in the UK in 2007
  • 17m accessed the mobile internet in 2007

From O2’s research:

  • Most people would rather leave home without their wallet than their mobile
  • Research that trialled combining mobile with Oyster and Credit card (separately and together) using near field communication technology (NFC) resulted in a greater degree of success when sim and oyster were combined than sim and credit card. It will be interesting to see what conclusions O2 draws from this as it seems to me that it is a moot point. Ultimately won’t they all be combined anyway?

Finally Mike described the phases of mobile, starting at phase one with voice and text, up to present day phase six which is the ‘Content’ phase. Mike believes that phase 7 is the ‘application’ phase.

Following the keynote there were a range of presentations and discussions and I am not going to blog them all. There were some really interesting debates and opinions that I would like to record.

There was some debate around the importance of mobile compared to pc and James Levey of Amdocs suggested that click through rates online were currently at about 2% on average but that he predicts mobile will achieve 4% click through rates in the near future. In terms of search, mobile search currently represents 2-4% of desktop search globally, where China is an exception with mobile search representing 25%. Google predict that the cross over point where mobile search overtakes desktop will be within 4 years and that not long after mobile search will double desktop search.

To put some more context on this it is worth mentioning stats presented by Russell Buckley of Admob. Admob started business in 2006 and are already the worlds largest mobile ad marketplace. Russell talked briefly about global page views on mobile and which countries had the largest global share. Currently he estimates that there are 3bn page views per month on mobile [correction: which Admob see on their network and on which they serve ads on today]. The largest contributors to that number are:

  • US = 50%
  • India and UK = 10% each (total 20%)
  • South Africa = 5%
  • Indonesia = 5%

Interestingly all the above are in English language!

Other presentations delivered nuggets such as ‘in 10 years you will be able to access the knowledge of humankind from a mobile’ and the fastest growing age of penetration of mobile phones in the UK is 7 to 8 year old’s. All exciting stuff. But then I was blown away by Simon Grice of www.Ideas.org.

Simon rattled off more concepts and ideas in 10 minutes than I have in a decade. The few I caught hold of were “Information is the new pollution”. IN a conference focussing on information services and directories he argued that in the future this will be too much and humans won’t be able to deal with the flow of info. Search will become useless because the range of results will be too difficult to filter. Simon suggests that when people get bogged down with information they ask people they know for advice and in this way sites like Twitter and facebook become the information services networks of the future.

Simon also talked about discovery as opposed to search. Search is fine if you know what you are looking for but what if you don’t? For example your local pub is holding an Italian night. If you don’t search for that you may not find out so you need to be told or have a way to discover it that is not necessarily advertising. Location based services have a role to play but it is not clear what role at this stage.

These ideas are worth exploring further, which is what I intend to do.





NMA 01.05.08: Letter to editor

5 05 2008

This weeks NMA included an editorial by Justin Pearse about how UK Digital Agencies tend to be “domestic and tactically focused”. This, suggests Ian James, head of digital for Barcadi.com, is raising the concern that “clients’ needs are outrunning their agencies capabilities”. Perhaps this is true of digital design and build agencies but it is certainly not true of digital customer experience agencies. Our engagements have covered areas from global customer research to international websites, prototypes, mobile technology and even the tablet PC.

Foviance carried out it’s first international project back in 2001 working with grocery retailer Otto through their partner major FMCG brand owner Proctor and Gamble. Since then we have worked with a variety of major brands including Microsoft, Sony, Nokia, and Dell, and some less well known ones (such as Victor Chandler) on international consultancy engagements from Madrid to Macau.

In many cases, due to both time constraints and local market expertise, major brands are using local agencies for design and build; and so we work closely with these companies to help them to ensure they have the hard facts needed to create a consistent brand experience across multiple markets. We are frequently the only constant in a global project beyond the brand employees and link with our own ‘Foviance alliance partners’ to bring in these large, international engagements. Foviance is not alone in being a customer experience agency that works internationally; many of our competitors also do - either through formal partnerships or relationships built on practical experience.

There are fundamental differences with the way users interact between countries and continents, with variations caused by cultural, social, economic as well as obvious language differences (such as there being no word for “Lucky Dip” in Asia). While it maybe ideal for clients to have a single international digital agency, without the support of traditional advertising or media networks there is no way that UK agencies can develop this expertise without a process of trial and error. International growth is dependent on expertise and experience – and is yet another reason why independent, expert research and consultancy partners will have a major role to play in the continued growth and expansion of the UK’s digital industry.





The global economy

25 04 2008

I attended the Real Business Entrepreneurs summit last week where the focus was on the possibility of recession, when it wasn’t on the the Governments changes to CGT! There were a number of take-aways worth sharing as many people face their first slow-down whilst in employment. Once again the “Born Multi-Channel” generation have something some of us older folk don’t have!

So what should companies do as they head toward the impending doom? Firstly we need to get things in to perspective. This is not a recession it is a slow down. GDP growth in the UK for 2008 is forecast to reduce from 3% to 1.7% according to the CBI with 2009 no better. Also, unlike previous slow downs, what is happening has not been caused by the economic cycle is has been caused by a credit bubble. This is the most concerning aspect in many ways as the outcomes are unknown.

With the backdrop of uncertainty companies should focus on the following areas and opportunities:

  • Focus on profits and cash: no big surprises there but some companies have been known to increase rather than reduce gearing which increases the likelihood of failure particularly with interest rates unstable and the Libor rate high.
  • Competitive strategy: competitors who are more leveraged will struggle. You need to consider your price policy for commodity products so that they generate either profits or market share or both.
  • Recruitment: there is an opportunity to convert owner/managers of competitors to employees.
  • M&A: look for M&A opportunities in related but recession hit sectors. Also for early stage companies that may be short of cash and therefore cheaper.

As Gus Hedges of Drop the Dead Donkey fame would say “problems are the pregnant mother of opportunity” and this is true of the situation we are entering. Keeping the balance between inward and outward focus correct is probably the biggest challenge owners face.





Usability vs. Creativity

8 04 2008

Last night I read an article about poetry - not a subject I can claim to have very muck knowledge of at all. It described the creative process and referred specifically to the the structure of a sonnet. A sonnet is a poem that follows strict rules on length and specific structure. By the thirteenth century, a sonnet had come to signify a poem of fourteen lines that follows a strict rhyme scheme. This structure did not inhibit the creativity of the poet, it merely provided a framework within which to operate.

In fact some of the most famous works that even un-poetic people like me are aware of are sonnets. Shakespeare’s sonnet 18 that begins “Shall I compare thee to a summer’s day?” is perhaps the most famous but there are many others. To me all these seem incredibly creative despite the rigid framework within which they have to operate.

As I work in an online business that focuses on usability I found the analogy irresistible. A myth (or at least what I believe to be a myth) exists that says usability consultants and/or usability practices stifle designers creativity. I have felt for a long time that this simply cannot be the case and that the creative people that I have met deal with far bigger issues through technology, brand and proposition than usability could ever create. Perhaps by comparing the restrictions web designers face with those of the poet we can understand that true creativity deals with the barriers that are present and finds a way to overcome them.





It’s not about the technology

2 04 2008

Carrying on the theme of Ken Robinson’s excellent book “Out of our minds - learning to be creative” a colleague sent me a link to an interview with Gartner Researcher Tom Austin who talks about the evolution of technologists. It is bang on and explains the reality of what Ken Robinson believes that the needs of business are changing and education is not necessarily keeping pace. The interview talks about technology leadership roles becoming the domain of social anthropologists, and not just them. As the less traditionally referred to ‘academic’ subjects are required more, our view of intelligence and educational needs will have to evolve. The trouble is Governments move more slowly and they set educational strategy.





Out of our [Digital] minds

28 03 2008

I had the privilege of attending a talk by Sir Ken Robinson in January where he discussed the ideas iterated in his book “Out of our minds” about how creativity is stifled by the environment we grow up in. These ideas got me thinking about the ‘born digital generation’ and whether we could find the creativity intrinsic to digital sector today educated out of us as we develop rules and ideas about right and wrong.

To illustrate his point Sir Ken described a set of statistics about how creativity was educated out of children. 98% of children aged 2 and 3 could be considered genius level in creativity terms but by the time these children are teenagers that percentage has dropped to low teens. He explained that we are taught to think in a certain way and another great example he used concerned our senses. He asked the audience how many senses we had and got the traditional answer of 5 plus one special sense (sight, smell, touch, taste, sound and intuition). He went on to explain that this definition or our senses has only been around for a couple of hundred years and over time everyone has come to believe it as true. What about your sense of temperature or space he asked. What indeed.

Right now the digital evolution is in full swing. But we are no longer pioneers without boundaries, trying to find out what works and what doesn’t. We have already created rules and lessons that we will pass on to others and that have become the conventional wisdom of digital. In usability the 3 click rule is regularly spouted at me and perhaps with good reason as in many contexts more than 3 clicks creates a poor experience. But it is not right for everyone and every context and so in some cases the experience is diminished. So how do we stop ourselves from learning the rules and wisdom that will suppress our creativity and more importantly do we want to?

There is a certain comfort in arriving at a website and finding a nice neat inverted ‘L’ navigation system so why change? Take a look at a couple of websites revealed by Josh Spear (www.joshspear.com) creative genius and all round good guy. In many ways neither is what I would prefer to use but it is impossible not to admire the creativity and engagement factor. The first is Section Seven’s web site http://www.sectionseven.com/. It takes a while to load so be patient but once in the navigation pulls you in. The second is by a Japanese building design firm http://www.sekisuiheim.com/desio-ae/ and gives you the ability to pick up a character and drop them in to the design. Both provide a unique experience and take risks; and both were designed some time ago.

I am firmly in the ‘we must challenge conventional wisdom’ camp. If you believe, as I do, that what offers competitive advantage is becoming harder and harder to define you may too have come to the conclusion that differentiation will ultimately come down to emotional and experiential components. We have to be different therefore and we also have to take time and put effort in to creating an experience commensurate with our brand which is also meaningful at an emotional level to our customers.

Having to be creative and being able to are poles apart. Taking design risks with multi-million pound budgets has never been a recipe for guaranteed promotion and it is the perceived risk that creates the boundary. A good proportion of budget holders want safe investments; websites, iDTV and mobile applications that perform, not that go against conventional wisdom. Relying on proven techniques therefore is comforting and creativity is contained within the graphic design. However it is possible to be creative with the experience design by using research to minimise the risk.

Already new technological developments that enable multivariate testing have provided a means by which literally thousands (even millions) of options can be researched to find the optimum combination. The approach is somewhat restricted to design elements rather than full scale navigation models but the metaphor can be stretched. It has provided an economical model for being creative with content elements without the associated project risk that makes people nervous.

As research methods continue to develop in sophistication they will increasingly provide answers that reduce the risk associated with trying out new ideas. Maybe this is one way that we can avoid the learning and conventional wisdom that restricts creativity and actually create experiences that are truly differentiating. Maybe we will even come to think of the digital experience as a new sense.





Winners and Losers in a troubled economy

10 03 2008

I recently wrote the following piece for my friend Richard Sedley’s book “Winners and Losers in a Troubled Economy”. You read more about the project at Richard’s blog.

Winners cover

Survival: your customers have got to want you too

There are many strategies that get discussed when recession looms with maximising revenue and minimising cost high on anyone’s list. My preferred strategy is to use the opportunity to get as close to your customers as it is possible to; and to love them in unmistakable ways. I have many reasons for favouring this approach and not least because it is hard for anyone (that may hold a budget in or outside my organisation) to argue against investing time and money in “shoring up” client relationships. But chief among them is that I believe customers have got to want you to survive the recession and they are more likely to do so if they like, or even better, love your brand and all that it represents.

The arrival of the internet itself has been akin to a recession for many organisations with market changing dynamics being caused by dot com start ups. In my opinion many more of them are better equipped to survive and grow this time round than they were back in the 90’s. The digital media properties they have created have the ability to connect them with their customers in more meaningful ways than ever before if they can learn how to.

Let us assume that getting the key processes in your digital property to work (i.e. be usable) is a table stake. This isn’t the case everywhere but it should be, given that the supply chain inefficiencies that hid usability issues in the past have almost been eradicated. This won’t make anyone love you but it will stop them disliking you. If you have not yet fixed the basic usability of your property spend whatever budget you have to do so or your survival cannot be guaranteed.

What you are left with are the small differences. The ones that shout out “we thought about you and we made it work like this, feel like that, make your life better in this way”. These come from more creative experience design, facilitated by greater knowledge of the customer through increased research.

Recession often sees research budgets cut but I don’t think this will happen to digital research budgets. Unlike the offline world the research carried out online has a direct and measurable impact on bottom line and can get you closer to your clients and allow you to create an experience they will love you for. The next step is to make sure that the experience you deliver is consistent across all your touch points online and off. But that I fear is for another recession.

Practical tip

Don’t try to be all things to all men/women. I meet countless organisations that literally have no idea who their target audience is. They are trying to create a digital experience that appeals to everyone and in the process are delighting absolutely no one. If there is one piece of advice that I can offer it is to identify who your target clients are, to research with them, and to create great experiences that they value in meaningful ways.