Over-reliance on customer feedback is hurting local retailers.

For the past few years I have been trying to unravel the mystery of why so many local retailers are reluctant to embrace new marketing technologies such as email marketing and e-commerce web sites. The explanations I get from various small business consultants and web gurus usually fall along the line of “they are resistant to change,” “they are stuck in the past,” “they’re just old-fashioned.”

Barely hidden behind these comments is a raw contempt that suggests that local retailers deserve to fail because they are so “slow to change”

None of these comments have made sense to me. The independent retailers that I know are smart businessmen and women. They are as aware of the challenges as anyone and eagerly looking for solutions. They are not resistant to change. More often it’s a case of not being sure about which change to embrace and which ones will be worth their investment in time and money.

A few weeks ago I came upon another explanation — one that makes sense to me — about the local retailer’s reluctance to embrace new marketing techniques and technology. Last April the Journal of Retailing published a paper, When Do Relationships Pay Off for Small Retailers? Exploring Targets and Contexts to Understand the Value of Relationship Marketing. The authors are Mavis T. Adjei, David A. Griffith, and Stephanie M. Noble.

Their study of 172 local retailers showed that there was a significant difference in the value of customer relationships depending of the audience (customers and suppliers) and local market conditions (highly competitive and dynamic, high levels of customer change). Retailers in their study had an average of eight employees, $634,000 in annual sales revenue, two locations and 18 years in operation.

As you might expect, in most cases the better the retailer’s relationship with customers, the better the store’s performance. In one situation, however, a strong customer relationship actually had a negative effect on performance.

I know that sounds illogical and counter-intuitive, but the study suggests that retailers can become over-reliant on customer feedback. Having that personal, face-to-face contact gives them a false sense of security that they are “in touch” with the marketplace. With that confidence in their customer relationships, they tend to discount what is taking place outside the store.

As the authors of the study explain it –

Market dynamism resulted in a negative relationship between relationship quality
with customers and market responsiveness. This negative moderation suggests a small retailer’s over-reliance on relationship quality creates an inertia effect, thus when practices are changing relying on quality relationships with customers hinders a retailer’s market responsiveness because they fail to adapt to changing marketing practices in the industry.

Independent retailers have been exhorted to embrace new marketing practices and technologies for years with mixed success. As the study shows, the reluctance to do so is not because retailers are stuck or resistant to change. It is primarily because they believe they are already doing what logic tells them they must do: create excellent customer relationships.

Clearly, that is not enough. Now we see that the next step is to maintain those relationships and to monitor and respond to today’s dynamic retail marketplace.

Retail Equalizer offers independent retailers powerful marketing resource.

At least once a month I read a press release or see a local advertisement asking shoppers to shop local. The basic message is that consumers have a responsibility, if not a duty, to do business with local independent retailers. Within the framework of that basic message are reasons why shopping with local stores makes sense. The owners and employees live in the community, their revenues and profits circulate locally and thereby support other businesses and civic enterprises, and those big bad chain stores are. . .well, big bad chain stores. How could you love or shop with such a soulless entity?

As a marketer, I think the “shop local” campaigns have merit. Why not support your local retailer? Unfortunately, there often are good reasons why consumers don’t shop local — higher prices, poor or inconsistent service quality. inconvenient hours, limited product choices, boring or nonexistent sales promotions.

Slow to adopt the Internet and social media to connect — and stay connected — to customers and prospects, too many retailers rely solely on personal, in-store customer contacts. Those contacts are certainly important, but in today’s digital world, face-to-face personal relationships alone can lead to a false sense of security.

Fortunately for independent retailers, companies like the Retail Equalizer help create a level playing field with the large retail chains by offering custom-designed, permission-based email marketing solutions developed specifically for that market. There are three main objectives to the Retail Equalizer program: increase traffic to the store, build customer loyalty, and increase your revenues per customer.

They custom-design and deliver email promotions to the retailer’s permission-based list of customers and prospects. Working with the retailer’s promotion ideas and specifications, they then design the email campaign. They also manage the client’s email list, send out the emails, monitor and report back the results.

If you are too busy or lack the skills to design your own email marketing campaigns, a company like Retail Equalizer might make sense. For $175 a month, they will create a custom-designed campaign including design and copy and deliver your email to 2,500 customers. Compare that to the cost of using a local ad agency or Internet promotions company and that sounds like a pretty good deal.

You can learn more about them here.

Social media and email marketing compliment each other.

Back in October after reading a Wall Street Journal story about the demise of email, I asked the following:

Is the growing popularity of social networking sites like Facebook and Twitter slowly killing off email as an effective marketing tool?

“Death of email” articles like the one from the Journal assume that two methods of communication cannot coexist, each having a unique role to play. For decades now, television and radio have managed to survive — and even compliment each other — even though many media experts believed that TV would kill off the radio box. Likewise, the Internet was supposed to kill off everything — but it hasn’t (though I know some magazine and newspaper publishers who believe the Net gave them two shots in the hat).

Email and social media both have a specific utility. One does certain things better than the other — and that utility can and will change over time. Right now email works best for longer messages, communicating with more personalized, targeted audiences, and adding embedded content. Social networking offers greater immediacy, ease of use, a sense of personal empowerment, and potentially higher levels of frequency.

Email and social networking sites are used in different ways and communicate different kinds of information. One easily compliments the other. Like many of you, I tweet, participate on social networking sites, and send out and receive tons of email.  (I also blog, manage several web sites, and participate in various forums, but that’s another story!)  I don’t see the two as competing for my attention. I use them in the way that I need to and choose my tool according to the task I have in mind.

We’re also finding out that heavy social media users are also above-average users of email play. A Nielsen report back in September showed that social media use did not decrease email usage but actually increased it.

Says Nielsen’s Jon Gibs –

It’s perfectly logical that as people make connections though social media, they maintain those connections outside of the specific platform and may extend those connections to email, a phone conversation or even in-person meetings.

For marketers who worry that social media are making their email programs obsolete, nothing can be further from the truth. The strategy, as always, is to use media that mirror your target audience’s media behavior. In many cases, that means developing your presence in social networks and having a robust email marketing program.

Email and social networking: can’t we all just get along?

We all know about Twitter and its phenomenal growth during the past year. Last night I read a post about Facebook’s share of social networking traffic jumping from 20% to 59%, leading the vast migration to social networking sites, or what I like to call the “Famous for 15 Minutes. . .Or Less” web sites.

Then, today, comes this article from the Wall Street Journal about the demise of email and a follow-up piece from OnlineMediaDaily suggesting that email might still have a role to play in the way that people communicate.

All this makes me wonder if the growing popularity of social networking sites like Facebook and Twitter are slowly killing off email as an effective marketing tool?

It’s important to put the email versus social networking contest into perspective. As the WSJ itself points out, email continues to grow, as does social networking, albeit at a faster rate:

In August 2009, 276.9 million people used email across the U.S., several European countries, Australia and Brazil, according to Nielsen Co., up 21% from 229.2 million in August 2008. But the number of users on social-networking and other community sites jumped 31% to 301.5 million people.

The problem with the Journal’s “death of email” article is the assumption that two methods of communication cannot coexist, each having a unique role to play. For decades now, television and radio have managed to survive — and even compliment each other — even though many media experts believed that TV would kill off the radio box. Likewise, the Internet was supposed to kill off everything — but it hasn’t (though I know some magazine and newspaper publishers who believe the Net gave them two shots in the hat).

Email and social media both have a specific utility. One does certain things better than the other — and that utility can and will change over time. Right now email works best for longer messages, communicating with more personalized, targeted audiences, and adding embedded content. Social networking offers greater immediacy, ease of use, a sense of personal empowerment, and potentially higher levels of frequency.

Email and social networking sites are used in different ways and communicate different kinds of information. One easily compliments the other. Like many of you, I tweet, participate on social networking sites, and send out and receive tons of email.  (I also blog, manage several web sites, and participate in various forums, but that’s another story!)  I don’t see the two as competing for my attention. I use them in the way that I need to and choose my tool according to the task I have in mind.

Given the increase in email use by 20% in the past year, I think we can safely say it is not going away. What does alarm me, however, is the attitude within some companies that social networking is somehow evil and should be ignored by employees and the marketing department.

Ignoring 300 million users on social networking sites? Unless you’re selling cruise missiles to the Pentagon and don’t care about consumers, that’s more than a little short-sighted.