Naughty Customers

Okay, so a senior AE walks into my office today and tells me that… “I have a customer who says “xyz” company is giving him a significant discount on a few ads because he’s an anchor account and does a lot of business with them…..Should we give him a discount too?” Little does this customer know that us publishers know each-other pretty darn well. As a matter of fact, the company he’s referring to is a company I worked at for several years and and I just so happen to know their policies very well. Knowing their CEO, I know for a fact that this customer was full of baloney.

So, why am I talking about this? Here is why……Contrary to popular belief, the customer is not always right. I urge all of you to take the word of any customer just looking for a discount with big grain of salt. We do not allow for discounts on our products. We do not discriminate and give ANY and I mean ANY company who claims they are an “anchor” account discounts ( they should be charged more )

Discounts are given by organizations who sell products way over price. Freebies…….You’ll never find em’ here!

The jist of the story is if you ever encounter a service provider willing to discount a product so quickly, just know that you are not the only one getting a discount and there are probably other customers getting a much better discount than you are. Be happy and respectful when that AE tells you “NO!” to rate cuts or requested discounts. It means they have a great product. Our products are the best. Sorry Pal, no discounts today.

What’s up Viacom? Drop the lawsuit!

I’m sure you’ve all heard by now that Viacom is suing Google for almost $1 billion over copyright infringements for unauthorized use of its programming on YouTube. Viacom broadcasts stations such as: MTV, Nickelodeon and Comedy Central. They are a publicly traded company worth billions of dollars whose networks reach millions of people world wide. I’ve always been a big fan of many of their stations and I’ve also admired their innovations in media and marketing; Until now.

Web 2.0 is all about user generated content, viral marketing, accepting the things we can not change, and taking the advice of the Internet ( users, customers, advertisers, employees) to build and innovate new products. YouTube is so successful because it gives users the ability to share their views, politics, or themselves anytime and anywhere. User generated content has successfully challenged traditional media and empowered the average “Joe” with the ability to share information with a world wide community. It took years for record labels to admit defeat by the peer networks ( they also spent billions of wasted dollars in legal fees). In reality, it’s not about defeat…It’s not about win or lose. Do you want to know the real issue?

Here it is: Business changes. Economies change. Consumers change. Technology empowers the change. It makes no sense to fight economic change. The most successful way to thrive in a challenging and ever changing world is to adapt. Adapt new business models and services that complement the change. There are millions of users out there who would love nothing more than to see MTV work with YouTube…Viacom, I have a question for you….If you suspect that so many users ( and I say users because this is not YouTube or Google’s fault!) are uploading “unauthorized” clips of your shows, don’t you think there is a ripe opportunity to partner with YouTube and reward your advertisers with additional viewers and response? Well, clearly not ( and I apologize for answering the question for you). You see, all you are going to do is the following:

• Waste millions of dollars on legal fees
• Inflate the cost of advertising on your network and Google’s network
• Piss off the internet community and anyone who understands the future of the web
• Attempt to enact crazy legislation that will never be passed.
• Waste the time of every judge, lawyer ( well, maybe not lawyers…They’ll love the billing), clerk, executive and employee, user, advertiser and contractor involved.

Come on now! Hey Sumner Redstone: Is this all your doing? I sure hope not. If so, man, what a foolish move. A great poet once said that “Conversation is like circles; It always comes back to where it started” I think we all should take the advice of Mr. Hemingway here. Drop the damn suit and get back to business.

Diamonds Are a Girl’s Best Friend

Guess what’s selling on ecommerce sites? Yep, you’ve got it, with Christmas and Valentine’s just behind us, studies show that men are buying their wives and girlfriends diamonds online.

Online jewelry sales in the U.S. reached a hefty $2.45 billion in 2006, which is nearly a 20 percent jump from 2005. Before getting too excited, you should know that this is a mere 3.9 percent of total jewelry industry sales, which amounted to $63 billion in 2006.

However, it tells you that diamonds are very saleable online. Not so in the early days of ecommerce. In fact, way back then, Internet analysts thought jewelry would be a hard row to hoe online. What happened instead is that online buyers are getting more and more confident about buying online, and when it comes to jewelry, shoppers currently buy a greater range of jewelry merchandise than books and CDs, which dominated Internet sales in earlier days. And jewelry buyers spend a lot more per purchase online.

My brother-in-law bought my sister one of those Journey diamond pendants from Blue Nile for Christmas, and then turned around and got her a Channel-Set diamond band for Valentine’s. He’s a busy guy and doesn’t have time to go to the store. Like so many other Internet shoppers, he knows diamonds can be bought from a reputable online jewelry store, and he chose one that provides easy returns and free FedEx delivery.

Online Jewelry Sales Are Widespread

Based on the typical growth rate normally associated with a maturing market, online jewelry sales are now widespread. At the current growth rate, online sales will represent over 8 percent of the industry total by 2010, which will represent more than a 100 percent increase from the 3.9 total jewelry sales in 2006.
Diamond sales — especially diamond engagement rings — have an impact on jewelry sales because they are high-ticket items. Diamonds account for about half of the average specialty jeweler’s sales. Blue Nile, the largest online jeweler in the U.S., sells about 90 percent diamonds. The company’s 2006 sales totaled $252 million. It also sells more engagement rings than the average specialty jeweler (over twice as many). That’s surprising because the average price of a ring from Blue Nile is $5,700, compared to the $2,750 average for most specialty jewelers.
Online jewelry sales went over the top in Q4 2006. The online jewelry sales growth rate outperformed all other retail categories during the 2006 holiday season compared to the year before. Growth rates for U.S. retail ecommerce holiday sales by category are shown below (from comScore Networks 2006).

• Jewelry and watches 67%
• Video games 64%
• Video game consoles/accessories 63%
• Event tickets 55%
• Consumer electronics 39%
• Toys 35%
• Sports and fitness 32%
• Apparel and accessories 30%

Preparing for the 2007 Holiday Season

If you’re an online jewelry merchant, now is the time to prepare for the 2007 holiday season. Consider what promotions to run. Free shipping is a favorite motivator for customers as is a good return policy. For instance, I buy all my shoes from a site that has an unbelievable return policy. You never pay shipping, even on your returns. And I get good prices, too. Think customer loyalty.

Customer attitude studies about free shipping indicate that sites with unconditional free shipping get higher consumer attitude scores than those without free shipping or restricted free shipping. While it doesn’t make sense that a customer buying a $3000 engagement ring would balk at paying for shipping, Blue Nile’s free FedEx shipping is definitely a factor driving its success.

Jewelry retailers may want to rethink their promotions for the coming holiday season, perhaps testing different strategies ahead of time to see what motivates customers most.