Monthly Archives: February 2019

Will electronic payments and selfish humans eliminate small retail businesses?

21 Thursday Feb 2019

Posted by in Advertising, Digital marketing, Marketing, retail

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If you’re like most of the population dear reader, you’re probably using less cash these days to pay for goods at your local retail stores. I certainly am. Apparently here in Oz, we’re one of the highest per capita users of electronic “tap n go” payments. Cash is declining rapidly.

This is causing problems for local retail stores, particularly those for which a website is not essential for business – dry cleaners, cafes, bakers, butchers, clothing stores and the like.

Now before the trolls attack me for claiming a retail store doesn’t need a website, what I’m saying is that online sales are not a major part of the revenue for these businesses. If they have one, it’s purpose is more for customer service, providing information and in some cases selling products.

These businesses make most of their money from passing foot traffic, not from customers driving from distant suburbs to buy their wares, or ordering goods remotely. I’m not going to order a coffee online and have it delivered by a bloke on a bike. I’ll go to the café and sit there to enjoy my cuppa and company.

I’ve owned and worked in a local family supermarket (many years ago) and a travel agency (only a couple of years ago), so have some hands-on experience. I’ve even been robbed of our weekly cash takings, which is not a nice experience.

One reason small business owners work the long hours they do – both at the store and after hours with stock and bookkeeping – is the undeclared cash they take from the business. Quite simply, if small business owners had to declare all their income, they might as well get a job working for someone else, as they lose too much in company and personal tax. The hourly rate of return is just not worth the effort. The less tangible reason for owning a small business is the “joy” of being your own boss.

One of my mates is the son of Greek migrants who moved to Australia after WW11. They fled the oppression of post-war Europe and opened one of the first espresso coffee shops in Sydney. My mate said his parents didn’t trust banks after their experiences back in the old country. When he was growing up, he thought everybody was like his family – when they wanted cash, they went to the garbage bags stored in the roof cavity of their home. That’s where his parents stored the financial takings from their café in which they worked 7 days a week.

Am going shopping will just get some cash from the roof…

I’ve recently been talking with retailers about the cash, or should that be, cashless issue. Another mate of mine owns a surf clothing store and is about to close its doors. He has spent a lifetime of more than 50 years in the rag trade. He said the reason for shutting up shop is threefold. It’s a perfect storm – lower cash income, online discounting and human nature.

The human nature is interesting. He said it is astonishing the number of people who use the store as a catalogue, trying on clothes, then photographing them and going online to buy them cheaper. Just confirms the old adage that people only care about one thing – themselves. This is why those two words “You” and “FREE” are still the most powerful words you can use in marketing communications.

I’ll see if I can buy this online – bugger the shopkeeper…

He is smart – he owns his building. So he has an asset he can sell or rent for income. But as he said, “every retailer used to carry a wad of cash in their pocket. Suppliers would always offer deals for cash, particularly if they wanted to offload remainder or excess stock. This made it easy for the retailer to make a decent profit on those goods, or throw in a bonus to loyal customers.”

His store has a website, but it is not as good as it could be and like all retail websites, is not cheap to update and maintain. Yes, it generates additional revenue, but it also adds costs that didn’t exist previously in the P & L. It doesn’t pay for itself. So the more his business has moved to cashless payments, the less it is worth to him.

I suspect this small business closure trend will continue and the side effect will be the loss of convenience stores and other local retailers. Either that, or we will accept paying more for goods. Recent research revealed that humans pay more per item and spend more frequently when they use electronic payment devices, than when they use cash. Apparently we value cash more.

By nature, humans are lazy creatures – we prefer the path of least resistance. If the easiest way to buy something is to do so electronically with a swipe or tap, we will do it that way. Nothing new here:

Interestingly, a café I frequent in Brisbane still offers a discount for cash payment, while many restaurants in Chinatown only take cash. To save my teenagers carting cash around (and losing it) they now carry debit cards. My bride and I control the amount on the cards. My teens use them in the school canteen, or when out with friends at the beach, mall or movies.

But now one of the most frequent requests I get, both verbally and by text message is, “how much do I have on my card?” These “notifications” force me to check the accounts and top-up as required. And you guessed it, my teens relish the habit of “tap n go” and are spending more using these cards than if we restricted them to cash-only. Not sure I’ve done the right thing here?

Have to go now – need to top-up my daughter’s card so she can buy something like sushi rolls for lunch. It’s a long way from my once-a-fortnight vanilla slice treat when I was in high school…

Mmmmm, vanilla slice…

How digital marketers destroyed one of the most profitable media channels…

19 Tuesday Feb 2019

Posted by in B2B Marketing, Content Marketing, Digital, Digital marketing, Direct Marketing, Email marketing, Marketing, Marketing Automation, Sales, Social Media, social selling

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As many of you will know, one of the major weaknesses of digital marketers is their lack of knowledge of marketing history.

They naively assumed that just because a technology was new, all previous technology was useless, all existing media channels no longer worked, proven techniques suddenly failed, and human DNA changed forever. So they ignored everything that had worked pre-internet.

The nature of technology is to constantly evolve. Experienced marketers have lived through a constant stream of technical innovations – in television, radio, outdoor, mail, print, sponsorship and of course online. So for most, the digital channels just offered additional media options for marketing purposes.

One of the most profitable channels – for both the media owner and marketers – was the humble mailing list. Mailing lists existed for every consumer and B2B category. You could rent them or create your own and reach every person on the list. Many list owners rented their lists both for profit and to keep the list current.

But then the marketing toddlers in their digital nappies arrived. When they realised the power of direct marketing via email, they really went to town – spamming, abusing privacy, ignoring unsubscribe requests and generally operating without any ethics. They were so appallingly bad at the use of email lists, governments around the world were forced to take action to stop them.

In countries across the globe new laws banning spam, banning the sending of unsolicited emails, and protecting the privacy of consumers, were legislated. These were the direct result of digital marketers abusing their privilege – to communicate directly with consumers.

The backwash from these bans was devastating. Here’s why:

The new privacy and opt-in laws, spilled into the databases of mailing list owners, not just email list owners. These new laws meant once-compliant mailing list owners had to comply with laws designed for email list owners.

So, if you owned a list and it contained contacts from more than one country, you now had to comply with multiple privacy and spam laws. The cost of this compliance became prohibitive. When coupled with the reduction in subscribers to printed magazines, the cost versus revenue for list ownership and maintenance became unsustainable. The penalties for non-compliance were too high and not worth the risk of human error.

For the uninitiated, prior to these new laws, any marketer could rent a mailing list and send direct mail for business purposes. Let’s say for example, you wanted to reach IT professionals. You didn’t have to advertise and hope you reached them. You could rent a list and mail them anything from a letter to a white paper, even include an involvement device. Then you managed responses and followed-up the non-responses by phone.

Here’s one of the world’s most successful B2B campaigns from a pre-internet age. It paid for itself within 4 hours of delivery.

But that simple way of doing business has been severely damaged. Thanks to the spam and privacy laws, there are way fewer lists available to rent – particularly in niche markets.

Now B2B marketing for example, has become much more complicated and open to abuse. It is reflected in the growth of the fake influencers and fake thought leaders. Instead of renting a list or building one, marketers are being told they have to do social selling. As against anti-social selling? What sales process isn’t social?

Here, according to the digital marketing experts, is what you have to do today to reach a B2B prospect.

  1. Connect to as many executives as possible on LinkedIn or other social channels.
  2. Pay a third party, usually in a third-world country, to create a white paper, or ‘content’ for you to send to every contact you have, via the social channels.
  3. Don’t use proven sales techniques in your messaging, as selling is evil.
  4. Just hope the contact has nothing better to do but read your content and love it so much they contact you.
  5. To convince your connection your ‘content’ is worth consuming, call it “thought leadership” and call yourself “an influencer” – for no reason other than to big yourself up in your own eyes and hopefully fool some poor sucker that you know what you’re talking about.
  6. When your social selling fails to work, use the KPI of “thought leadership” and “content marketing” to fool your boss that things are OK. One way to do this is to send your boss all your content when you send it to your connections.

This process takes way longer and costs much more than simply mailing your prospects and customers with relevant information and reasons to respond (known as selling). But hey, it has digital buzzwords attached to it so it must be worth destroying a profitable media channel.

I’m not saying that contacting people on LinkedIn and gradually converting them to a customer doesn’t work. Though most social sellers don’t practice what they preach. Instead, they connect and start flogging their wares immediately, without any credibility, using puff-words like “awesome”, “killer”, “secrets”, and “mind-blowing” in their message.

Here’s an example of one I received this week from a person who asked to join my network, I didn’t invite him. It arrived courtesy of marketing automation: “…5 killer LinkedIn tactics we used to generate 50 appointments and 13 closed deals in 2 months” I have no idea why he thinks I’m a prospect, these killer tactics are the last thing I need to grow a business. The message has zero credibility.

Interestingly, many of the thought leaders on social selling have never used direct mail, so they have no credibility when claiming social selling is the solution. You can prove it too – do a split run test. You might be surprised at the results.

In my experience, using mail supported by the digital channels will get the best result – but I’m only speaking from experience. Given current marketers don’t care about marketing history aka “experience” the message will probably fall on deaf ears.

Blatant Plug…

If you live in Brisbane and want to know how to make your mail work in a digital world, here’s a blatant plug. Join Steve Harrison, the man Campaign magazine described as “The greatest Direct Mail creative of his generation“. He’s won more Cannes Lion awards for direct mail than anyone else. You’ll learn how to do award-winning, effective direct mail at this event on 11th March 2019:

www.creativemail.com.au