merchandising

It became hip some years ago to parrot the phrase "half of all marketing is wasted - we just don't know which half." Nobody knows which luminary deserves the credit for this bon mot. And it's a dangerous truism to buy into, for two reasons - it either gives you permission to be sloppy in your marketing, or it enables you to discount marketing's value. Both results are unacceptable.

Of course, if you market purely from gut-instinct (I know what looks good, this feels right to me, blah, blah, blah) then you won't even arrive at a 50% success rate. Marketing deserves careful attention and planning. This starts with strategic development and flows down into brand strategy, which ultimately yields advertising and marketing vehicles and promotions. Assuming you have done this other work already, I'll share an advertising development process I've used for years that works very well. I can't claim to have created it, and it's been used so well over the years that most of the identifying marks have been rubbed off. Some of it I learned from Katie Muldoon, some of it came from Ogilvie's writings, some of it I learned working at Foote, Cone & Belding, and some of it  I've made up along the way.

Step 1: Remember that to establish genuine competitive advantage you have to make an offer that is quantifiable and credible to your customers. So your first step is to gather your facts. You probably won't use all these facts in your marketing vehicle, but gathering them up front will provide incredible insight. Facts include units sold, margin dollars and percent generated, return rates, research statistics, customer feedback, internal feedback, growth rates, competitive data - any data relevant to the product or service you wish to advertise. This data can be gathered for one product or for an overall brand, but advertising that is created outside of an awareness of facts will miss out on important opportunities and will ring hollow to your customers.

Step 2: Decide what you want from your customers. If you can't figure out what you want from them, they aren't going to figure it out for you! State clearly your intentions for this ad. Do you want your customers to:

• Place an order for a specific product

• Place an order for any product from your company

• Remember your brand

• Compare your brand favorably to another brand

• Request additional information

• Something else

The type of vehicle you are producing dictates how many of these intentions you can choose. A trade magazine ad can only choose one effectively. A brochure may choose a few. A catalog can choose more. But even in a catalog, you have to focus on each page and ask what action you intend to motivate with the page. State your expectations clearly, because intention should drive the content and design of the ad.

Step 3: State your offer. Advertising is always telling customers to do something in order to get something. Rembrandt toothpaste tells customers to "buy Rembrandt" to "get white teeth." Avis tells car renters to "rent from Avis" and "stick it to the big guys" (what? Not to rent cars? Absolutely not - you can rent a car from anyone, but only Avis lets you get that frisson of excitement from helping out the underdog). If you want the customer to remember your brand, then you are telling them to "favor our brand" to "get ___________ . . . what?" That is what this step is all about. Once you define intention in the second step, you have to figure out what your offer is and be able to clearly articulate it in this third step. If you don't do this work, all subsequent time developing your marketing piece will be wasted.

Step 4: Describe the customer for this ad. Whether you are targeting a general group of your customers or a very specific segment, develop an image of a representative customer. Demographic labels (woman, age 18-34, single, etc.) are NOT what you are looking for here! Depict the representative customer as if you were creating a personality in a novel - thinking through characteristics such as likes, needs, wants, dislikes, and any other traits that would be relevant to selling to them. It's kind of like going on a blind date. You may be equally attracted to neurosurgeons or personal trainers, but chances are you will relate to each of them a little differently. This is true in your advertising as well.

Step 5: Gather any information that will give you credibility, such as testimonials, write-ups in magazines, or third-party research data. Consumers are risk and change averse and terrified of making foolish decisions. Anything you can share with them that will give them confidence in their decision to buy from you will be highly beneficial.

Step 6: Articulate the benefit to the customer. Sounds simple, but apparently it's not, because so few advertisements do this step well.

Step 7: Anticipate objections. Consider every objection customers could make to the claim you are staking. If you can figure out the obstacles to buying from you, you can take preventative action right in your ad.

These seven steps will give you three benefits.

There you have it - a seven step process for creating better advertising. Whether you create a new ad once a week, once a month, or once a quarter, this process will save you time and give you better results.

And now to replace that terrible 50% aphorism with something more effective. Consider a few creditable statements about marketing instead. David Packard (Hewlett-Packard) once said "Marketing is too important for the marketing department." And Jack Trout said "Financial success is a by-product of great marketing."

How you market determines how your customers respond to you. That's definitely not something to leave to chance.

Once upon a time, there was a new medium called the worldwide web. The people who knew how to use it were the same people who had been using the actually-not-so-new medium for some time – researchers, programmers, and tech geeks. When people who did not fit into those three categories developed interest in the worldwide web, they turned to the programmers and tech geeks who knew how to use it. And thus was born a strange world of websites that had little commercial value, websites that were weak (or downright awful) in their design sensibilities, and websites that failed to connect to the non-virtual brands with which they were associated.

Thankfully another category of folk became interested in the web – graphic designers. They became interested in advance of their usual partners-in-crime, the marketing folk. So the web improved visually, but not operationally. Because we all know what happens when designers design without good marketing direction. The result is usually commercial art that looks pretty, but which has no commercial purpose, is disconnected from the customers (what customers??), and goes off on a brand tangent of its own, thereby reducing overall brand value. But still, the web was at least beginning to look better.

Finally everyone got it together. Marketing departments began to include their web designers instead of relegating them to the IT department. They began to develop marketing strategies that included the channel and integrated it to all of their other marketing efforts. At last the web was being treated as an equal in a company's marketing mix – not better, not worse, and requiring of the full range of marketing resources.

With the mainstreaming of the web came the mainstreaming of tools to use the web. Just about anybody who can use a computer can now go to GoDaddy.com, grab a domain name, and using their super-user-friendly tool called WebSite Tonight develop their own web presence. The result? A bunch of poorly designed websites that do not connect to the rest of the business, fail to support the brand, and have little commercial value.

Don't get me wrong – I am a huge fan of GoDaddy, and I appreciate the service they provide – for everyone from sophisticated web developers to day-old novices. But there is a trap that business owners must avoid, and it is the everybody-must-have-a-website philosophy. A website can be an economic benefit, producing sales and increasing visibility for a business. Or it can be an economic blunder, creating operational demands that cannot be fulfilled, presenting an unflattering face to the public, and distracting you (for hours, days, even weeks) from doing the work that actually produces the revenue and profit of your business.

The problem lies in the temptation to get lost in the selection of colors and color templates, font types, pre-selected layout options, and free clipart. Sound like a problem for novices? Not really. Sophisticated graphic designers fall into the same trap – only they're doing it on $4,000 worth of Adobe software rather than freeware or MS Publisher. It's like running on a treadmill without the benefit of weight loss. You go and go and go and when you're all done you realize that you didn't get anywhere.

So before you sit in front of that user-friendly, anyone-can-do-this template designer for instant websites, do yourself a favor. Ask the following questions first:

1.  What is the purpose of this website? What do I want to accomplish? What do I want my customers to do, or know, when they visit? You should be able to answer this question in a one-sentence statement.

2.  How will I know if I am being successful? Will I measure it in dollars? Leads? "Visits" is not a measure of success, unless you are running a business that generates revenue for click-through advertising. Set a measurement that will satisfy your business goals.

3.  What messages must this website convey to achieve the measure of success I have established? These messages should be written before you do any website design – whether you are doing it yourself, or whether you are paying a designer to put your website together for you. A copywriter can make your messages more succinct and elegant if you wish, but they can't determine what the correct messages are. That's your job.

4.  What does this website need to provide my customers? What will motivate my customers to act in such a way that I am able to achieve the measure-of-success goal?

5.  Which tools, resources, information, and services must you provide to facilitate your customer once they have decided to act? For instance, if you want to motivate customers to purchase a product, have you provided a shopping cart, an easy pay method, and a guarantee to alleviate new-customer doubts? If you have only provided an #800, chances are the customer's motivation will disappear, because you've made it difficult for them to act. If you wish to develop sales leads, and you have motivated the customer to request information, have you developed a system that provides you with immediate notification so you can respond quickly to the customer's request?

6.  Now that you know what you want to accomplish, in both descriptive and measurement terms, ask yourself if you have the skills and knowledge to create the entire website experience, or if you need some assistance or training. Once you identify the aspects that are outside your abilities, you can prudently select the resources you require.

I am fond of the internet as a communication channel, and I believe the web can offer distinct business advantages. But failure to properly assess these six questions has damaged businesses small and large. Today's web development tools put the majority of web development tasks within reach of everyone but the most fearful of computer users. Put these six exercises to work for you first, and you will dramatically improve the odds that your website will deliver results.

(c) 2008. Andrea M. Hill

In the 1980s I cut my Direct Marketing teeth under the tutelage of Hank Johnson and Katie Muldoon, two of the giants of the catalog world. My previous business experience had been entertainment booking and promotion. Marketing in the entertainment world in those days was a rather blunt instrument. It just wasn’t difficult to get someone to a Heart or Prince concert, or to a major Hollywood preview. What I understood about marketing was wining and dining and printing billboards.

We were starting a catalog that sold videos to consumers at a time when consumers didn’t purchase video unless it was a Jane Fonda workout.  Blockbuster still had less than five stores, there was a video rental store on nearly every corner, and people waited in line on Friday afternoons to rent their weekend entertainment and return it by Sunday.

My primary responsibility was merchandising, and as it turned out, I had a lot to learn.

Early on a salesman came asking for me with a suitcase full of samples. He didn’t have an appointment and I didn’t know who he was, so I asked the receptionist to send him away with instructions to call for an appointment. We were one day away from a major print deadline and I was buried in final proofs.

The next thing I knew, my boss came through my office door with the salesman in tow. My boss proceeded to lecture me on the fact that if Lillian Vernon could sit on the back of a donkey cart traveling through China in 1972* to build the world’s most successful direct merchant, I could sure as hell take an uninvited salesperson in and see what he had to say.

Later, after making it through the sales call in spite of my shame and fury, I went to my boss. I was pretty tweaked. He’d embarrassed me. So I asked him, “How am I supposed to get anything done if I have to receive every salesperson who decides to drop by without an appointment?”

To which he replied, “How do you expect to be a successful merchant if you don’t live and breathe with the one goal of finding the most interesting, most relevant, most desirable products for your customers? Nothing else we do matters if we don’t get the products right!”

I had made the mistake of thinking that I knew how to merchandise movies and music just because I knew the output of the movie and music studios better than almost anyone. But understanding a product category – even loving a product category - is not the same as merchandising a product category. Eventually I would learn that being an expert on a product is primarily about the self. Being a merchant is about the customer; her wants, her needs, her expectations, and all the other things in the market that are vying for her attention.

So I became a student of Lillian Vernon. How she analyzed everything she offered for sale and the types of women who bought from her. How she honed her offering over time to thoughtfully satisfy needs her customers didn’t even know they had. How she was always scouting for something her clients hadn’t seen before and could get excited about. How she never sat on products that didn’t sell, but cut her losses and moved on quickly so as not to waste time on merchandise that was diminishing her brand and wasting precious catalog space. How she carefully managed the balance between evergreen products and new products so as never to become stale. How she established powerful relationships with vendors based on mutual trust and respect to ensure she always saw the most exciting products first. Lillian Vernon knew that the only way to keep her customers was to make sure they were excited just thinking about receiving a new catalog in the mail each month.

A recent commenter on one of my blogs noted that many of the companies today cannot change because of their fixed structures. Never mind that failure to change is the same as failure to survive. If a company is passionate about its merchandising; if a company is constantly taking the temperature of its customers and analyzing customer behavior; if a company is always testing new ideas, ditching the weak ones and building on the strong ones, that company can’t help but change. Outstanding merchandising is one of the pillars of business success.

Even Campbell’s Soup has had to constantly change throughout the years to reflect changing consumer tastes and expectations. If a product category as basic as soup must change to stay relevant, how much more important is the constant search for relevance to a company that sells non-essential goods?

Today the company Lillian Vernon has changed hands several times and is no longer what it once was. But Lillian Vernon the merchant, the intrepid explorer for products that would delight her customers and make her money, is still a strong role model for me. I hope she can inspire you too.

*I was never able to verify that Lillian Vernon ever rode a donkey cart in China, though she was one of the first business people to do trade there after Nixon's historic visit.

Distilling customer relationship publishing into one simple blog post

I read dozens of business books and articles every month, and I look for common threads between them. Not surprisingly, I find more common thought than innovative or divergent thought in business theory. In general that’s good, because it means that ideas are being tested for practical application in business settings. But sometimes, the effort to repackage existing ideas as fresh, leads to making simple concepts seem complicated.

One good example of this is found in the literature related to customer relevance, relationship marketing, and customer loyalty. Every B-school has at least one professor publishing on the newest, greatest, latest methods for building customer relationships. Those ideas are then adopted by every POP and CRM software vendor eager to sell customer management tools, repackaged as gotta-have-it-or-risk-your-business enterprise solutions. No wonder business owners are perplexed.

Most of the information and solutions are quite good. Put them all together to gain insight across the spectrum of customer relationship management. The one remaining weakness is that business owners are frequently offered solutions for which they have not yet defined the problems. Problems are defined by asking questions. So let’s start there. The answers to customer relevance are found by asking these simple questions:

1. Why do my customers purchase my products or services?
2. Which features and benefits of my products are meaningful to customers?
3. How do my products stand out in customers' minds?
4. How do my customers use my products?
5. Are any of my customers using my products in a manner that surprises me?
6. What are the biggest hassles my customers encounter when buying from me, and what could I do to eliminate those hassles?
7. Are there any specific barriers to being my customer? If so, how can I remove them?
8. Which of my customers require substantially more or less sales attention than the others? Why? What insights can I glean from this? How can I find/develop more of this type of customer?
9. If my business were shuttered, to whom would it matter, and why? Which of my customers would miss me the most? How long would it take another business to fill the void?
10. If I were just launching my company today, would I sell the same things? What would I do differently?
11. What experience does my customer associate with my products, and how can I create an experience that adds value beyond the inherent value of the product/service?
12. Which methods of communication are most relevant to my customers?
13. How do those methods affect the messages?

Developing the answers to these questions is not difficult. It requires research, compiling existing customer data, and analysis. Some of the answers may require expertise you do not personally possess, but which you can access in your employees or business advisors.

It doesn’t matter if it takes a while to answer these questions – if you didn’t answer them, the time would go by anyway, right? And it doesn’t matter if you don’t know precisely how you will go about answering them, because just knowing they must be answered will lead you to methods for finding the answers. What matters is that you ask the questions, chip away at assembling the data, and start to make better decisions. Because when it comes to relationships, it’s best to work on them a little bit every day.

These questions were first posed in an article written by Andrea Hill in MultiChannel Merchant magazine, May 2008.

© 2009. Andrea M. Hill

Note to my regular readers: My apologies for the long delays between posts! The challenge of keeping my arms around a rapidly growing business seems to push blogging to the bottom of the priority pile too often. I’ll try to be a little more consistent now that my most recent staffing challenges have been addressed. Thanks for sticking with me!

One of the most important things you can do as a product designer is include customer feedback in your business thinking. I’m not talking about customer satisfaction surveys (though those are important too). I’m talking about impressions of your brand and your product. You can solicit that feedback through conversations, questionnaires and surveys, and by sifting through online comments and discussions.

Of course, you must know the difference between your core customers and the rest of the customers! If your core customers come to you because of your design vision, your brilliant use of materials, and your extremely high craftsmanship, then they probably don’t worry so much about your price. So what do you about price complaints? As long as your core customers demonstrate satisfaction with your value, complaints about price go in the interesting-but-not-allowed-to-change-my-strategy pile.  Likewise, if you design using unusual materials or quirky craft methods and you’ve found a client base that loves your approach, then when you get suggestions from customers to make your look more mainstream, you’ll let those comments slide on by.

Once you’ve clarified who your core client is, what types of questions can you ask them? Which questions will elicit the type of feedback that helps you learn more, refine your brand messages, and intensify your customer relationships? Here are a few questions to help you get those creative juices flowing. Once you get the feel for asking customer questions, you’ll come up with plenty more of your own!

The first approach is to ask direct questions. These include:

1. What do you think of our product value?
2. How would you describe our products?
3. Why do you buy our products?
4. What other products would you like to see from us?
5. How do you feel about our product quality?
6. What do you think our brand is about?
7. How would you describe our company?
8. How would you describe our service?
9. How would you describe the personality of our company based on your experiences?

Asking direct questions can yield terrific, specific responses, but you’ll find that only the customers most familiar with and attached to your brand will be giving those answers. If you want to get more insight from the people you want to sell to, but with whom you have not yet formed a strong attachment, you may need to ask questions that provide more guidance and structure. Here are some multiple choice examples to consider.

Product Value

If you had to describe the value of my (products), which phrase below would best describe it? Even if you want to choose more than one, force yourself to choose the best!

1. This (product) makes me feel beautiful
2. This (product) makes me feel unique
3. This (product) makes me feel special
4. This (product) makes me feel virtuous
5. This (product) makes me feel rich
6. (this list can include any adjectives, so fit the adjectives to the likely range of feelings evoked by your product offering)

How would you describe the pricing of my products?

1. Just about right
2. A little high, but worth it
3. A little high, so I have to really think about it
4. High, so I avoid it
5. You could probably charge more and I’d still buy it (don’t be shocked – some customers will actually choose this answer!)

Why do you buy our products? (allow them to choose more than one of these)

1. Actually, I’ve only bought one thing, because it just caught my eye
2. Your product always seems to be in the right place at the right time
3. I like to have more than one item from designers I like
4. Your product just suits my personality
5. Your product suits my style
6. I like the status I get from wearing/buying your product

Company/Brand

How would you describe my brand?

1. I don’t really notice a brand. I just notice the styles
2. Your brand is all over the place - I'm not sure what to think
3. Sometimes I think your brand stands for something, but then it shifts or changes
4. I think your brand is about (fill in the blank here – for whatever your brand REALLY stands for)
5. I think your brand is about (fill in the blank here – something similar to what you want your brand to stand for but not quite right)
6. I think your brand is about (fill in the blank here – something that really isn’t your brand)

How would you describe the personality of our company based on your experiences so far? Choose as many as you think fit.

That’s a lot of questions, right? Now how do you ask them?

Unless you’re buying your customer an expensive meal and you have advance agreement that you will be asking for input about your company, you’re not going to get away with asking these all at once. Rather, look for opportunities to ask them one-at-a-time. You can do this as a social media post, a pop-up on your website, or as a one-question-survey email follow-up to a purchase. And as I mentioned earlier, your social media conversations and comments are a treasure-trove of insights. Comb through them looking specifically for clues to how your customers would answer these questions based on the things they say.

If you are very, very curious about the way your customers view your company and your product offering, you will gain important insights into whether (or not) you are making the impressions you want to make.

At my last company, we invited a strategy consultant to come assist the board with getting a tighter rein on our strategy. We had a board filled with conflicting objectives, and we stood to benefit both from the sound process and the outsider perspective of a good consultant.

Overall, the consultant's process was quite good, and we implemented the process nearly by the (her) book. She hadn't developed anything earthshaking or new. In fact, it was largely text-book strategy set to a rational and clear formula to assist with discipline and retention. This is a good thing. But there was one other aspect of her process that was also text-book that made me uncomfortable, and that's what we're examining today.

She took a traditional b-school marketing approach to customer lifetime value (CLV). That approach says that some customers are simply not as valuable as others, and a business should drop them and focus on the ones that are profitable. Now I'm all for dropping unprofitable customers! But the methodology for defining who those unprofitable customers are is largely incorrect, and leaves a lot of money on the table.

In the case of the consultant, she advised that customers who fit our strategic definitions should get first everything: calls should be routed to answer those customers first, they should receive the direct mail offers, they should receive all available attention. According to the consultant, we could serve the low value customers but only if we didn't spend any additional money or effort to do so.

The traditional b-school approach is called a standard CLV model. It demands that you calculate the net present value of all revenue and marketing dollars over a period of time (usually 1-3 years, but could be as much as decades, depending on the business) for each customer, and only keep the customers who show positive net present value for the marketing investment. Makes sense, right? Frequently, no.

You see, the standard CLV model is just a snapshot in time. There is a cost to acquire a customer, and a cost to maintain a customer. Once the customer is acquired, the maintenance cost can be leveraged over long or short periods of time – it just depends on when you decide to exercise your option to drop them. So at that static moment in which the measurement is made, it may make sense to drop a whole batch of customers, based on anticipation of their behavior in the upcoming time period. But if you run the same projection in a month, or even a week, you could get a different result. I always found the standard CLV model sort of frustrating, because while I felt in my gut that something was wrong with it, I had nothing more substantive to back it up.

Recently I stumbled across a study published in the Journal of Marketing in 2006 that explains the weakness of the standard CLV approach. First, the article confirms that standard CLV models present an overall biased approach. The study authors point out that the standard CLV model assumes that unprofitable customers will continue to be unprofitable. This is true for some presently unprofitable customers, and not for others. Once a customer is cut off, the firm can no longer exercise options to benefit from the opportunity present in that customer, so use of the standard CLV approach actually undermines the opportunity to exercise options in the future. Future options could include offering presently unprofitable customers offers that were not offered previously and which would benefit that group of customers, maintaining service to those unprofitable customers at low cost, and of course, cutting off those customers at a later date.

At the heart of the standard CLV model is the idea that marketing resources are scarce and must be carefully administered. Well, all resources are ultimately scarce, though there is no doubt that marketing resources can be expensive. Because executives have a difficult time measuring and proving how effective their marketing dollars are, it feels better to cut them than to worry about spending indiscriminately.

The standard CLV model was developed in response to business culture heavily influenced by activity based costing (ABC). Developed by Robert Kaplan (who also developed the Balanced Scorecard), the method is intended as a tool for understanding product and customer cost and profitability. In a business it is rather simple to directly measure the time it takes to make, QC, pack and ship a widget, the time and cost involved in answering a phone call, the time and cost related to processing invoices, or placing a purchase order, or to hold a meeting. What is difficult to directly attribute is the value of any particular step. We businesspeople don't like ambiguity, so we lean hard on the things that can be carefully measured. Ask an engineer the measurement of one of her activities, and she can provide the answer with a tolerance measured in hundredths. Ask a marketer for a measurement of an activity, and you will get an answer that has a lot of qualifiers in it. So we create models like standard CLV, which gives us the satisfaction of certainty and metrics, and which turns the blind eye of denial on the idea of human psychology and market behavior.

The aforementioned business consultant actually had a reasonable rejoinder to my hesitance about making the less profitable customers wait on hold (in my opinion, a good business doesn't let any of its customers wait on hold). Her process accommodated an eye toward development of lower-value customers.

But in most businesses, there is an ongoing battle between what can be measured in operations – and therefore, cut in costs – and what can be measured in marketing. As we head into a recession in the next 12-24 months, there are some important marketing adjustments businesses must make. Managing a business in recession means feeding the quacking ducks – not cajoling the ducks into a new diet. But that still requires marketing, and marketing will continue to be difficult to measure. For the metrics geeks out there, I strongly recommend the article referenced here. It provides some interesting approaches to offset the inherent bias in standard CLV. Finally, let's all remember that a good handle on human psychology and an intimate sensitivity to and awareness of our customers may cause us to make decisions that the metrics can not assure us will be good decisions. Going with your gut is inadvisable when determining the safety of an electronics device. But it's an essential part of the toolbox when working with motivation and relationships.

Haenlein, M., Kaplan, A.M., & Schoder, D. (2006). Valuing the real option of abandoning unprofitable customers when calculating customer lifetime value. Journal of Marketing, 70, 16.

(c) 2008.  Andrea M. Hill

First of all, thanks to all my email pals who checked in with me to see if I was OK, and more to the point, where was my blog? I'm afraid customer travel/conferences got the best of me and I got behind. I'll get back on track now.

In a presentation earlier this week, I spoke with a jewelry industry group about a cost-tracking strategy. The format of the forum was a lot of fun. It was a panel presentation offering 75 Business Ideas in 75 Minutes. The downside was that if I went over a minute per business idea a normally mannerly fellow named Rich Youmans would honk a loud bicycle horn at me. Though I am not generally very rule-bound, that horn was a true behavior modifier. I knew this concept was hard to describe effectively, and I knew Rich would be holding a bike horn, so I had spent a bit of time prior to the panel getting it down to one paragraph. Now I’d like to give it a little more attention.

Here’s the tip:

Compare your company's cost curve with the industry's price curve. Costs and prices usually decline (looking at inflation-adjusted numbers). By comparing your cost curve with the industry's price curve, you can tell if your costs are declining at the rate necessary for your company to remain competitive. This doesn't mean you have to drop your prices – it just means you've maintained enough operating, supply chain, and management efficiency to do so if challenged. Keep your margin as long as you can, but don't price yourself out of the market simply because you have no other option. If your costs are declining faster than the industry price curve is declining, make sure you understand why! It's not unusual for a company to achieve a competitive advantage that they do not understand, and therefore, do not exploit.

Now that I have more than a minute, let’s break this down a bit:

“Compare your company’s cost curve with the industry’s price curve.” It is next to impossible to learn about competitors’ costs, but it is not hard to watch their selling prices. Anyone can monitor overall price trends in a spreadsheet and create a graph. The best way to do this is to select specific products and group them into product categories. If you and your competitors sell hundreds of products, you may want to monitor key products or products that are representative of groups of products. Conduct a competitor selling price analysis quarterly or twice annually, and plug in the selling price for each of the items you are tracking. Don't get caught up in trying to figure out what price your competitors charge for bulk sales. That information is important for your own sales negotiations. But for this analysis discount strategies lack value and can keep you from achieving your purpose.

Once you have collected competitor selling prices, do the same analysis for your own products, only this time, you're plugging in your product costs (not selling prices). Track only variable costs for this exercise. Yes, marketing, operations, and shipping all play a role in your product cost. But your purpose for doing this project is to see if your cost trends are mirroring industry price trends, to make sure you are managing your variable costs commensurate with the industry. If you are adamant about seeing freight costs, do a separate freight cost analysis rather than combining freight costs with variable product costs. Freight costs follow their own trends and can skew your understanding of your variable cost management. Variable costs include costs of raw materials, direct labor costs, and packaging costs.

Now here comes the hard part. You don't get any gratification out of this exercise unless you 1) go back in time and recreate all the information for previous quarters, or 2) wait until you have collected several quarters of data. Most people opt to start collecting data and do their first trend analysis at some point 1-2 years down the road. For those of you who think "That's crazy, why do it at all then?" . . . hey, the time is going to go by anyway.

To compare your cost trend with the price trend of the industry, calculate the average cost of your products and the average selling price of your competitors' products. If you are tracking a few dozen (or less) directly comparable products, you can compare product to product. What is more likely is that you are tracking generally comparable products. In that case, lump the competitor products and your own products into comparable product categories, then calculate the average for each category. Finally, create charts out of the average selling prices and costs. Your final analysis will look something like this:

What you are measuring is whether or not your cost trend mirrors the industry pricing trend. In the example shown, the trendlines for the baby doll category are roughly equivalent, suggesting that costs are not decreasing at a slower rate than competitive pricing. However, the trendline for the dollhouse category indicates that costs are decreasing disproportionately to competitor selling prices, indicating a need for deeper analysis.

One last possibility, not shown in the graph, is that your costs are declining more rapidly than competitive pricing. This would indicate an opportunity to exploit a competitive advantage through lower pricing, or even better, to rake in additional margin while the getting is good. I would only consider dropping selling prices if the product or product category was one that would lead to considerably greater market share and sales growth on related products for the effort. Too often, companies drop their selling prices and simply shrink revenue as a result.

It is not uncommon to be retained by a company to dig into why they are no longer competitive, and upon doing the analysis, find out that their cost-erosion problem began years ago. This simple method requires a few hours once every quarter or twice a year. When combined with other prudent cost management strategies, it will point out cost erosion rapidly and can set you on a path to correcting problems before they become devastating.

(c) 2008. Andrea M. Hill

I was just on a conference call with three experts in digital design. We are preparing for a panel discussion at the Gold Conference in New York at the end of April (you really should join us! Here’s a link to learn more about the conference). We were discussing the transformative aspect of digital design and manufacture, and whether or not the jewelry industry has actually embraced that yet.

Many of us are talking about the struggles in the jewelry industry.  Here are just a few of the more comprehensive writings on this topic:

• What Will Become of Jewelry Retail Stores? Peter Smith (4/12/2016)
• Everything You Know About Luxury Has Changed. Andrea Hill (5/27/2015)
• The Jewelry Industry and Millennials: What do they want? Rob Bates (5/18/2015)
• Past Time for Change: A Post to the Jewelry Industry. Andrea Hill (6/2/2014)
• You Need to Attract the New Consumer.  Andrea Hill (3/17/2014)

And yet, the store closures (~750 last year) keep happening, specialty retail stores are stagnating, and the industry mood is a bit grim.

Digital Design has Already Transformed Industries

So let’s look at what’s happening elsewhere. One of the guys on my call this morning (Harry Abramson, Direct Dimensions) shared a story about his brother (brother-in-law?) who is in the custom t-shirt business. Whereas at one time, if you wanted a custom t-shirt, you had to produce or select a design, then order and stock it by the dozens in each size and color; today you can order one custom t-shirt at a time with virtually the same delivery time. The individual t-shirt may cost a bit more than the cost of each t-shirt in bulk, but there’s nowhere near the risk or inventory cost associated with the old way of doing things. To a certain extent this type of design customization is available today in jewelry stores using Stuller's Gemvision system.

I experience this in my own business as well. Often I receive calls from people asking if we sell any of my business quotes (the benefits of social media, I guess) on mugs, mousepads, desk art, etc. We can and do, one piece at a time, to order.

In the fashion industry, the CFDA has embarked on a significant mission to study how to remain relevant in the age of fast-fashion. In the “old” way of doing things, the fashion industry produced big shows in the spring and fall, showing fashions that will be available for sale at retail six months later. Today, consumers are snapping up those same design concepts at retail almost as soon as the shows are done. How? Fast fashion operations are producing their own versions of what’s hot during Fashion Week very quickly, delivering to demanding consumers the style concepts they saw almost immediately after they saw them.

Paint manufacturers figured out the benefits of fast, digital design long before the rest of us. Instead of stocking 100 colors of paint, your local hardware store stocks a few base colors, and dozens — even hundreds —of colors, all of which can be mixed on demand for each customer.

Publishing, music, printing, television, automobiles, vacation packages, the list goes on-and-on — all have been transformed by incorporating consumer-driven digital design into the process. And by “consumer-driven” I don’t mean consumers doing the design (though in some cases that has happened). By consumer-driven I mean taking into account the real needs and desires of consumers – expressed and yet-to-be expressed – and designing to meet those needs.

There's a difference between "embracing CAD" and  "using digital design for transformation"

I’ve written and spoken at length about how the industry needs to embrace the digital world and incorporate it comprehensively into the bricks-and-mortar world. This is still true. But internet marketing and selling aren't the only digital transformations we need to embrace. How can we bring to consumers the jewelry designs that turn them on — designs that are extremely well conceived, vibrant, contemporary — at retail? How can we achieve what the luxury automobile manufacturers are doing, bringing forward impeccable design and consumer-focused innovation at lower production and marketing costs than in the past?

The tools are there. CAD, 3D growers and digital manufacturing on the design and inventory production side; and advanced CRM systems on the sales and promotion side. But what we’ve focused on in CAD for the past 10-15 years is just getting people to pick up the tools and learn them.

Now that time has passed. It’s no longer sufficient to use the digital tools available to us to simply do the things we are already doing, only faster and cheaper. We need to be innovating new ways, more ways to apply digital tools in our businesses. We need to be so adept at using the digital tools available to us that we start coming up with big new ideas. It’s time to use the digital tools to transform our businesses and our industry. Either that, or let the new world of design, production, and retailing move on without us.

PS. There is still a very important place for hand craft. There always will be. And there should be more hand craft - not less - in jewelry stores. But hand craft alone will not solve the problems the industry is facing. Digital design must also be a big part of the equation.

I’m giving myself a subscription to Code4 Startup this year. Why? Because I need to learn a new programming language. Of course, I employ excellent programmers, and I don’t need to personally perform any coding for my job. So why am I doing it? For the same reason I learned to make patterns and sew when I ran an apparel company, and why I pursued goldsmith training when I ran a large jewelry manufacturer; because understanding the customer (business customer and end consumer) experience of any business is essential to business success, and I am very curious.

More than 70% of small businesses fail within the first five years, and that staggering statistic owes a lot to the failure to understand what customers need, how they need it, and why they want it. In other words, our economy loses a massive amount of capital due to a dreadful lack of curiosity.

I recently interviewed a fellow who had purchased a Seven Eleven franchise in a hot urban market, only to have the store taken back by Seven Eleven corporate after two years. I certainly felt bad for the guy, but there was no doubt he suffered from a significant customer-awareness failure. His reason for the business failure was that a QuikTrip had opened down the street and the competition killed him. But in that densely populated urban area there was more than enough market share for both businesses. The real reason for the failure was that the QuikTrip was new, bright, clean, and felt better to the shoppers. The Seven Eleven owner had failed to shop the competitor, see the difference through the eyes of his customers, feel the difference for himself, and take the simple – and relatively inexpensive – measures to brighten and freshen up his store.

What can we in the jewelry industry do to vigilantly pursue awareness of what our customers experience relative to our products and services? Fortunately, quite a bit!

The first level of awareness – usage of our own products – the jewelry industry excels at. Designers and manufacturers wear their own jewelry and retail store staff put on goods from the cases each day when they arrive at work.

An area that could benefit from more curiosity, however, is how the consumer feels and what the consumer needs from the buying experience. The last time this aspect of consumer awareness was explored at an industry level was nearly a half century ago when DeBeers initiated the 4Cs movement. For the most part, all jewelry industry consumer awareness training since that time has focused on some derivative of 4Cs knowledge.

But consumers need much more than diamond knowledge when buying fine jewelry. I regularly observe consumers in jewelry retail stores. They tend to be slightly intimidated, they are unable to experience the jewelry without help, and they lack visual cues to help them interpret the different things they are seeing. One of the reasons fashion magazines are so popular with consumers is that the vast majority of women feel insecure about their ability to put together a fashionable outfit without some guidance. That fashion magazine guidance is carried through to the clothing stores with mannequins and posters. In contrast, the jewelry store experience provides static displays of jewelry in a sterile environment. No wonder so many jewelry buyers end up at Macy’s or Kohl’s with all their department-store prowess at merchandising display! If you are in the business of putting jewelry into retail stores, you might want to consider ways to supplement your jewelry with in-case display elements that support the buying decision. Do things that inspire curiosity and engagement in your customers. I know this isn’t easy – retail store display requirements can be pretty rigid – but the manufacturers and designers who find ways to mitigate this problem are most likely to win at the sales register.

Speaking of putting jewelry into jewelry stores, if you are a designer, how much curiosity do you have about what it means to work in the retail store? Have you worked behind a counter? Have you set up and torn down display cases each day? Have you spent hours answering customer questions and helping consumers find meaningful jewelry? Working a trunk show doesn’t count; if you want to build awareness of the retail store staff’s experience, you need to get in there and do it yourself. Ask one of your retail clients to let you shadow their sales staff for a few days. You’ll be surprised at all the important things you learn that will help you do a better job providing marketing collateral, training materials, and display elements to your retail clients. Are you worried that nobody will let you shadow? Well, some won’t. When I first wanted to learn about jewelry retail I had to ask eight or nine different store owners before someone said yes. Just keep asking.

Learning the building blocks of jewelry business is a never-ending pursuit. To date I have learned every aspect of jewelry business from rough diamonds to retail selling. In my consulting role, technology is one of the essential building blocks of all modern business, and JAVA is a technology I haven’t added to my knowledge base. I won’t become a master in it any more than my goldsmith training made me into a master goldsmith. But I will have a clearer understanding of how to deliver the tools my customers need and greater empathy for my employees engaged in delivering it, and that deeper knowledge will continue to distinguish me from my competitors. Now it’s your turn to figure out how to do the same for your business.

At some point we all end up either writing our own marketing or working with someone who is writing our marketing. It’s hard work. If you have a talented copywriter already, you’re probably done reading. For the rest of us, here are some tricks for putting what we want on paper. First, the steps of designing an ad, IN ORDER, are:

1.  Express the idea for the ad in one sentence (if you’re working on a catalog or larger advertising work, the advice is different and not our focus today). Why one sentence? One thought is all you can effectively convey in one ad. Examples include:

• “This ad will generate traffic by promoting our visit-with-the-expert Thursdays.”
• “This ad will generate sales for a specific product.”
• “This ad will engender good will for my business by sharing the results of our community action project.”
• “This ad will generate new service contracts by making people laugh, which shows them how fun we are to work with.”Each example states what you want to accomplish (sales, traffic, good will) and how you expect to accomplish it. You have only a few seconds of your prospect’s attention, so make those seconds work.

2.  Always write copy before designing or selecting visuals. Resist the temptation to do the reverse. Graphics and photos are gratifying. They make us feel as if our ad is coming together, they’re creative, and they’re fun. But graphics are intended to do three things: a) capture the prospect’s attention, b) amplify the message, and c) reduce the number of words required by translating them to a visual medium. If you haven't articulated the message, you can't amplify or refine it.

3. Write, rewrite, and rewrite, the words. Any capable writing teacher will tell you the nature of good writing is re-writing. If the words don’t flow from your pen or your keyboard, it’s not because you can’t write. It’s normal. We’ll come back to this step in a moment.

4. Once the words are written and edited, design the graphics. If you’ve done the hard work, you’re probably in love with your copy. Beware! The role of graphics is to further reduce the need for written or spoken words. If a graphic can convey the ad’s mood or personality better than adjectives, drop the adjectives. If a graphic can clearly and powerfully convey action, you might drop a verb or a directive sentence. If you’re too in love with your words, the graphics won’t be allowed to make their full contribution.

So let’s discuss writing and re-writing. If you’ve expressed your idea in one sentence (Step 1), you’re on your way. I recommend you begin by writing the ad without concern for the number of words, if they are the best words, or if your sentence construction and grammar are correct. Say everything you want to say in the expression of your one idea. Self-editing while writing is a common reason for not being able to write at all, so let yourself go. The editing will come next.

When you have one long, somewhat sloppy, not-quite-publishable thought, stop and get a cup of coffee. Celebrate! This is a big accomplishment.

If you are writing in long-hand, re-write (print not cursive) with enough room between the lines for editing notes and marks. If you are working on the computer, print a double-spaced copy. Editing requires uncluttered thinking. Approach editing with a clean desk and a red pen in hand to prepare your brain for the work you must do. You’ll also need a thesaurus and a dictionary. Now you will take four ‘passes’ through your copy.

Pass one: count your adjectives. I highlight them. Most writers clutter their writing with adjectives, turning a swift run around a smooth track into a jog through soft sand. Eliminate repetitive adjectives. Three adjectives in series are never as powerful as one perfect adjective. Use your thesaurus to develop a list of options and your dictionary to probe precise definitions. Avoid million dollar words. Keep it simple while conveying refined meaning.

Pass two: examine your verbs. Public advertising enemy number one is passive voice. Saying “our business was recognized by the governor for our contributions to state literacy” is passive. Saying “Governor Thomas praised our business for our contribution to state literacy” is active. Purdue’s online writing lab is a good resource for understanding passive and active voice.

Pass three: organization. Make sure your ideas are in the optimal order. Switch the sentences around to smooth flow or escalate energy. An advertisement is an argument for someone’s money. Build your ad as you would build a case, so by the time your prospect arrives at the call for action they’ve been primed to respond.

Pass four: grammar. Do you dread this part? Most people do, because they don’t feel competent. Tackling grammar after the first three passes is surprisingly easy. Read your copy out loud. Your ear will hear grammar and structure problems that your eye did not see. Still uncomfortable? Many online resources can help you. Try the Well Bred Sentence for starters.
If you have followed these steps you are either done with your ad or remarkably close to finishing. Is it perfect? Probably not. But it’s considerably better than it would have been, and you can trump writer’s block when you follow a process.

Advertising is communication. When you want to stop a child from running into a busy street, you instinctively choose abrupt, succinct, loud communication. If you want to convince your spouse to make an expensive but unnecessary purchase, you naturally choose conversational, persuasive communication. You already know how to choose communications styles. Combine the correct communication style with thoughtfully constructed copy that clearly conveys one idea, and your ads will be better than ever.

(c) 2007, Andrea M. Hill

When Jackson Pollack was alive and painting, the art/critic world divided in two camps: those who thought his work was beautiful but couldn’t understand it, and those who thought his work was not art. There wasn’t much room for discussion because nobody could explain, really, why Pollack’s paintings were so noteworthy. How does one argue with “I know what I like when I see it?” Only with “you don’t know diddly.”

In 1975, 19 years after Pollack’s death, Benoit Mandelbrot coined the word fractal, which is an irregular geometric pattern that repeats itself at many degrees of magnification. A snowflake is a fractal – its smallest element is roughly the same shape as the finished snowflake. It turns out that nature’s patterns are largely fractals and that the human eye is finely tuned to fractal patterns. This idea was – and continues to be – tested heavily by Richard Taylor, a physicist at the University of Oregon. In 1995 Taylor produced a painting using wind, rain, and tree limbs, which unexpectedly led to something that looked remarkably like a Pollack painting. Intrigued, he scanned Pollack prints into his computer and analyzed the patterns. It turns out that Pollack was painting within nature’s most common fractal range (this story and much more can be found in Matthew E. May’s In Pursuit of Elegance: Why the Best Ideas Have Something Missing).

It took nearly 40 years for someone to articulate the reason that Pollack’s work is so gripping, but the patterns were there all along.

The Internet presents a similar problem today. It feels like a lot of noise. It’s difficult to sort the valuable information from the muck. At the low end of participation, small business owners and corporate communications staff monitor Internet conversations about their companies, celebrating the endorsements and dreading the oh-so-public complaints. At the broad-sourcing end of the spectrum, companies collect customer feedback on social media sites, ask the masses to participate in product naming and design, and put software development bids out to the public.

What are businesses doing with all that data? Data isn’t information. As a high school debater, I quickly learned that one could find a fact – complete with citations – to support any position one wished to argue. Later I worked with a woman who would regularly mobilize entire corporate departments to make sweeping changes because of a single customer complaint. “Ah,” you say, “but we’re turning that data into information.” But as I’ve mentioned before, if indeed information is power, librarians should be the most powerful people in the world.

Never before have so many conversations taken place in one forum. So much information is startlingly present at our fingertips, and there is significant temptation to read too shallowly, give credence too readily, and draw conclusions too quickly.

The actual value of all that data, the beneficial information that could be gleaned from it, is presenting itself to a select few individuals and companies who examine the conversations on the Internet in the way Taylor examined Pollack’s paintings.

Perhaps we would all be wise to view the Internet as a new kind of fractal. Step very close and observe only an inch of it. Back across the room and take in again. Business must develop the ability to recognize complex patterns in broad conversations, to comprehend their meaning, and to develop appropriate responses. The value is in the patterns.

People who know to look for the common threads, who have trained themselves to read a little deeper, listen a little harder, who have honed a skill for seeing patterns, these are the people who are figuring out why the Internet is beautiful. Do you know who these people are? Probably not the guy with the degree in statistics or the young lady with a PhD in computer science. Not unless they also spent considerable time learning to interpret literature and poetry, studying art and art history, or have deep knowledge about history, anthropology, or psychology. In this new renaissance that is the Internet, only the richest collaboration of arts and science will yield its ultimate benefit.

Do you know it when you see it? Only time will tell I guess.

© 2010, Andrea M. Hill

I’m a bit of a history buff. I particularly enjoy stories about people who took chances and accepted new ideas, approaches, or technologies despite social pressure to stick with the status quo. Why? Because progress depends on groups of this type or person–risk-takers and visionaries—to propel the rest of us into the future. But just as there must be early adopters to champion new ideas, there always seem to be people who avoid mastering the new ideas for as long as possible.

Don’t Be Left Behind

The internet as a sales and marketing medium has reached critical mass. Consumers across all age groups look to the internet for brand, quality, customer satisfaction, and product information, using every type of device from desktop computers to phones to tablets. Yet I am still frequently asked, “Is it really important for me to have a website?”

And then there’s the question of social media. Only last month I had dinner with a group of jewelry industry leaders where I heard one executive rather forcefully express his opinion that he did not see the value of social media to business, nor did he believe that computers had a significant role to play beyond increasing efficiency and data management.

If you want to increase the value of your business, you must embrace and master internet technology as an important part of your marketing, selling, customer communications, customer service, and brand management strategy.

The Next Wave of Cottage Industry

The publishing and video industries have much to teach small business. Both industries were transformed by big-box retailers—small retailers simply could not compete on inventory or on price. And now, as the behemoths of books and video crumble under their own scale, high-service, high-quality bookstores and video stores are returning to serve discriminating consumers.

But they are not returning in the same configuration as before. New stores offer more knowledgeable customer service, special order services, engaging social media experiences, rich websites to offer a breadth of inventory they cannot afford to carry in the stores, mobile apps to engage with consumers wherever they are, and in-store online technology to supplement the store experience. The stores are staffed with collectors and impassioned readers and film viewers who bring true expertise to their customers.

These changes have created opportunity for independent producers and publishers, who both sell to these more creative independent retailers and sell directly to consumers. Using the same tools, independent producers can now service more dealers and reach more consumers than ever before and sustain those relationships without creating expensive corporate infrastructure to do so.

You Can MustDo This

It’s no longer enough to just have a website. You must have a website that looks and feels current, and offers more than just a few pretty pictures.

About 10 years ago during the first big go-round of website building, many companies got stung by creating websites that were expensive to build—and even more expensive to maintain. Today you have better options. Both technology and the people providing and servicing it have evolved. Here are some tips to help you fully embrace internet marketing technology and all its benefits:

• Unless you can program using HTML, HTML5, CSS or PHP yourself, do not let someone create a static website for you that requires programming language to add content, images, or pages. Today you have an abundance of options for building a CMS (content management system) site, from richly designed Wordpress environments to Joomla, Drupal, Radiant, Silver Stripe, and CMS Made Simple.
• Have a professional website designer design and produce your website using a mainstream CMS tool. Then have her train you how to use the back-end for your day-to-day operations. After that, you need to use your website professional only for more complicated tasks, such as adding new functionality or changing your design on an as-needed basis.
• Yes, you need a Facebook page. If you’re not sure how to set it up yourself, this is a great task for a social-media-savvy college intern. Just getting a page up and running, adding pictures regularly, and beginning to have conversations with your customers is an excellent start.
• If you want to add more exciting options to your Facebook presence, such as integration with your website, catalog pages you can sell from, newsletter signups, promotions, forms, surveys, and campaigns, you may need to hire a professional. But you can add these features to your Facebook page as your customer list builds, so you can be sure to reap the benefits—and have the development pay for itself—as quickly as possible.
• Using a tablet computer, such as an iPad2 or a Droid device, is a fantastic way to show your work without carrying your entire line. But…you need a full catalog of quality images for this to work. You can download images directly to your device or create an online image catalog to which you can easily connect.
• Unless you are a retail store—or are doing a high volume of online sales—you probably don’t need a mobile app right now. But custom mobile apps will be considered as commonly required as websites in a few short years. Right now, spend your time using other companies’ mobile apps and getting comfortable with how the world of mobile marketing works. When the time comes to do it yourself, you’ll know what to expect.

The internet has moved off the dirt roads of its infancy and is now offering a smooth interstate experience at high speeds. If you’re still driving a horse-drawn hay cart and trying to keep up, you’ll not only be left far behind, but also be engulfed in your own dust.

When you run a business, your job is to produce and sell value. It is both as simple and as complicated as that. When I see businesses getting value wrong, I have a physical reaction to it – it’s like watching a starving person eat cardboard. So that’s what we’re going to focus on today: Getting value right. Because if you can do that, you can make money.

Let’s start with a few examples.

Getting Value Wrong

I was recently in a family-owned jewelry store, consulting with them about how to make improvements to their business. Their traffic is down to almost nothing, sales have declined for five years in a row, and the staff morale is abysmal. When I asked the buyer and store owner to explain their merchandising strategy to me, they focused entirely on price. Or, specifically, low prices.

“The big boxes and online retailers are kicking our behinds on jewelry prices,” they said. We’ve done everything we can do to lower our prices, but we just can’t compete at that level. They’re obviously buying a lot better than us.”

Of course, when you drop prices and your traffic drops, the only predictable result is that your revenue goes down. Even if your traffic stays the same, if you drop prices and do nothing to increase the number of purchases, your revenue goes down.

In this store, the merchandise looked very similar to what the merchandise would have looked like 15, 20, even 30 years ago. Lots of classics, lots of bread-and-butter. Nothing new, nothing exciting.

This is a classic example of getting value wrong. The assumption this store owner made was that the only “value” his buyers wanted was low prices. He didn't ask the customers. He was reluctant to invest in new products that are more exciting, fresher, and unlike what is offered at the discount jewelry outlets. Low prices aren’t the only value customers want, and had he discovered a different value proposition to offer, he could actually grow his business. So we’ll work on that now.

Getting Value Right

One of my very first jobs was at a major advertising agency, and I’m pretty sure this was the experience that taught me about value. I was in a meeting with my project team discussing an unhappy customer. The project manager was leading the meeting, and our VP was attending. The project manager kept talking about how to “showcase the numbers.” He spoke of using the most positive data, reflecting the highest possible viewer statistics, and painting the rosiest picture we could to help the customer see how much impact we were having.

The VP – a guy who never spoke very much – finally asked, “What does this customer really want?”

The project manager said, “Great service and great advertising!”

“No,” the VP said. “He wants sales. And all the inflated statistics in the world won’t make sales happen. What we need to do is give him a campaign that drives sales. Then he will be happy.”

It’s easy to get lost in the details of our businesses, but value comes down to a few simple things:

1. Know what your customers actually want and need from you.
2. Give it to them - in the right way and at the right (which isn't necessarily low) price.

Of course, these two concepts are simple, but their execution is not. What people want and how to deliver it can be very nuanced, and it is ever-changing. But if you keep these two points top-of-mind at all times, you will find they guide your work in new – and possibly unexpected – ways.

Shopping on sale in the midst of a recession is akin to indulging in a delicious vice. You know you want to do it, indeed, you’re going to do it. But you also know it’s wrong.

OK, maybe you don’t think that shopping on sale is wrong. But from my perspective, it’s like smoking a cigarette or having an affair. Why? Because every business that drops its prices to get customers in the door is doing so at the expense of their business safety and future. Who among us would decide to go into the sugar, flour, facial tissue, or copy paper business? Yet that’s what we do when we reduce our business premise to offering the best price. Price sensitivity is the nature of a commodity business.

Margin is essential to survival. Without margin you can’t pay the vendors, pay the rent, pay the taxes, pay your employees, or pay yourself. Every sale price you mark comes at the expense of margin. This is not to say that there’s never a good reason to have a sale. To score big wins, business owners must take regular measured risks, and those risks frequently result in excess inventory. Eliminating such inventory while making customers happy is smart, and sales based on those conditions are wise.

But the sale prices we see today are the desperation moves of companies that have run out of ideas for getting customers in the door. Margins are essential to survival. Always.

There are two ways to maintain margin. If a company wishes to compete on price and still maintain margin (note: if a company wishes to compete on price and NOT maintain margin, that company is out of business), it must reduce costs sufficiently to protect margin while reducing the selling price. Make sure you know how to reduce those costs before you reduce the selling price! One of the most common business mistakes is to assume that once a company has additional volume, the costs will come down accordingly. They drop the selling price to build the volume. Voila! They shrink the business. Make sure you have purchase commitments from customers and cost reduction commitments from suppliers prior to making that move. Even if you have figured out a failsafe way to play the price-reduction-with-margins-game, learn what Wal-Mart already knows: cost reduction is ultimately a zero-sum game.

The second way to maintain margin is to (drumroll here) maintain your prices. What? Not reduce them? But everybody’s reducing prices! How are we supposed to compete if we can’t get the customers to consider us because we’re not as cheap as everyone else. 

The only way to maintain prices is to offer something that makes not only your products, but your business, worth more to your customers. The phrase, “you cost more, but you’re worth it” has always been music to my ears. It is the ultimate compliment, an endorsement of a company’s value and a commitment to help the company stay in business.

The biggest impediment to achieving that valuable customer endorsement is the ubiquitous industry trend. Actually, the trends aren’t the problem. If all your competitors get caught up in the trends – and you successfully avoid them – it would be good. For you. Which industry trends are a problem? All of them. Product trends and service trends represent ideas that are being offered simultaneously by everyone in the industry, and when something is offered simultaneously by everybody, it leads to price trends. Instant commoditization.

Bucking industry trends is not easy. It requires an understanding of the concept minimum standard necessary to compete. As each industry develops, standards evolve over time. These standards relate to customer service levels, speed and quality of delivery, and quality of products. Every business must operate at the minimum standard necessary to compete. A good example of this is shipping times. In the early 1980s it was common for direct marketing businesses to offer 6-8 weeks for delivery. Within a few short years, same week delivery was the standard, and any company that could not offer the new standard lost market share. 

Every company must honor its industry’s minimum standards necessary to compete. To buck the trends and maintain margin, it is essential to offer something unique, something beyond the minimum standards. Each business must analyze its strengths, consider unmet or poorly met customer needs, theorize on emerging market conditions, and find a way to set itself apart. At one time, product differentiation was synonymous with corporate differentiation. Today, differentiation depends increasingly upon creative ways of building relationship value with customers.

The biggest danger to a business owner is lack of originality – generally demonstrated by virtue of getting trapped in his or her industry’s trends. Industry trend following simply turns your business into a commodity business. Avoid the trap and maintain your margins. When you do it well, your customers will gladly trade the guilty pleasures of sales prices for a superior offering.

© 2009. Andrea M. Hill

Do you have a wine snob in your life? Everyone should have at least one. Wine snobs are important, because they teach important lessons about perspective, lessons which we all need from time to time. Right now is a good time for some perspective.

My favorite wine snobbism is that of the correct wine glass. Never a rounded rim, which drops the wine dully on the wrong location of your tongue. Large bowls to allow red wines to breathe, narrow flutes to retain the carbonation of a good bubbly, gently tipped out rims to properly deliver a young white to the correct area of the palate. All good advice of course, meant to enhance the bouquet and taste of a fine wine – or even improve the performance of a lesser wine. But a truly obsessed wine-snob-with-a-glass-issue can turn a simple dinner into an embarrassment of instruction if given a poor choice of glass – and woe to the restaurateur (or host) who does not have a better glass to offer. At this point, one would hope the expostulating oenophile would simply accept that the glass is but a delivery device, and that the true value of the wine can be found in the wine itself – even if you’re drinking it from a jelly jar.

Which brings us to social media. Social media is but a delivery device. For only a very few will it prove to be actual content, and most of those people are already in play. For the rest of us, social media is a delivery device. A marketing delivery device.

Back to the wine for a moment. My nephew and his wife are 20-somethings with two small children. They don’t have much money, but they love fine wine. Not long ago my nephew (while handing me a glass of his newest discovery) said, “Every time we have a little extra money we mean to buy good glasses. But then we decide to spend the money on the wine instead.” He said this as an apology, but I acknowledged that his priorities were in the right place. Given a choice between delivery devices and content (assuming the delivery device isn’t required to get at the content) one should choose the content! I would have been concerned had he offered me Boone's Farm in a fine crystal goblet.

So, back to social media. Right now the internet is rife with Boone's Farm in crystal goblets. It takes very little talent or skill to establish a Facebook account or post what you ate for lunch on Twitter. It takes very little time and almost no money to download your Yahoo mail addresses and send an invite to everyone you know on LinkedIn. In fact, not only can your middle-school student do it – they led the way.

But it takes a great deal of thought, planning, and discipline to integrate social media into your online presence in a way that is meaningful to your customers. It takes time to build customer relationships, and it requires sincerity and genuine concern for getting to know them. Beyond social media, it requires discipline to develop a marketing strategy that delivers relevant information in a timely manner to the right customers.

The fact that marketing media options continue to expand is directly related to the evolution of customer experience – not product superiority – as the surest route to competitive advantage. It is exciting to have so many choices, from radio, TV, newspapers, direct marketing, and events, to websites, blogs, video and podcasts, and yes, social media. But your responsibility, oh marketer, is to take great care in defining, refining, and crafting your message, then selecting the medium that is best suited to each message and your overall brand image.

The ideal wine collection includes different types of glasses to accommodate different wines. But where would you rather spend your time – at the wine bar with gleaming glass racks and substandard wine choices, or in the company of a terrific little bottle of Cabernet Franc and four juice glasses?

© 2009. Andrea M. Hill

You'd pretty much have to live in a burrow to have missed that Apple was suing Samsung, or that they won a billion-dollar judgment for their efforts (pending appeal, of course). I have a lot of reservations about our 18th century intellectual property laws and their ability to serve today's technology community well, but that's a subject we won't dig into right now. Rather, this whole experience does offer important insight into the disciplines of innovation and differentiation.

This weekend Cassidy James wrote an excellent article in The Verge on how Google avoided Apple's trade dress in its Android devices (read the article here). What struck me most about the article (other than the fun and well-written history therein) is the important lesson for strategy that serves all of us, whether or not we are interested in technology.

Google is so knowledgeable about Apple's patents that they were able to willfully, creatively, innovatively avoid imitating Apple's products, and in the process, they created interesting, different, highly useful devices for the community of tech users for whom Apple just doesn't do it.

This is what all product developers are challenged to accomplish. To know the competition so well that they know what not to do, and then to bring so much creativity and intelligence to the table that they are able to create something entirely different. Whether your product is a designer good, a service, a retail store experience,  a taste or scent, or a software product, this is the work of differentiation.

Remember - you don't need all the customers, you need the right customers. And genuine innovation is one sure way to reach an audience that is currently not being well-served.

Update 5/6/2015 - you can now download an update of this article and a 24-page tradeshow planner free when you sign up for our email list.

I’ve worked a lot of trade shows. Until 2007, I exhibited at 3-4 major trade events per year for 30 years, most of them for at least a week each. I’ve worked trade shows in the apparel, electronics, publishing, video, and jewelry industries. Since 2007 I’ve worked just as many trade shows, but it’s been on the other side of the exhibit – walking aisles, watching exhibitors, and finding new sources. All that time, measured in foot-years, has given me important insights about what to expect from and how to work a trade show. I teach these concepts a few times a year in seminars, but here are a few of the main take-aways for those of you frantically preparing for the next event.

Is there a Return on Investment for Trade Shows?

Yes, but to be successful you need to understand what trade shows are good at.

Tradeshows are good at providing exhibitors with qualified leads. That is the trade show’s most important function.

The second most important function of trade shows is to create a personal connection between a company and its qualified leads. This personal connection provides a more tangible foundation for marketing and sales follow-up.

The third most important function of trade shows is on-site sales.

That third bullet may surprise you. Most exhibitors measure their trade-show success by at-show sales. Some of you remember to add on immediately-after-the-show sales as a success metric. But trade shows aren’t always a great place to engage in the sales cycle – particularly if your sales cycle requires a certain amount of trust-building, which takes time.

Remember that the primary goal of buyers at trade shows is to take in as much information as they possibly can in a condensed time-frame. The larger the show, the greater the pressure to keep moving. This doesn’t mean you shouldn’t try to make appointments and sit down and write orders. It just means that there is even more value to be had at trade shows if you know how to work them. Here are 10 important pointers for how to get even more out of your trade show experience.

1. Set lead goals and daily targets. You probably already set sales goals, so I don’t need to tell you that. But have you set lead goals? Have you identified how many new potential customers you want to make even brief contact with, contact sufficient to yield their contact information for future marketing efforts? Head into every trade show with a lead goal. Make it a contest among your staff and award a prize to the person who captures the most qualified leads. Have a tracking system in place, and measure your lead-collecting success each day relative to your goal.
   
   
2. Be more focused in your pre-show and at-show promotions. Many companies offer a small gift to everyone who comes by their booth. Consider shifting some of that budget to a special gift available only to your most valuable prospects and buyers. Let them know that you have a gift for them, tell them what it is, and make sure they know they must visit your booth to receive it. Even if you only spend a few minutes with each customer and prospect on your high-value list, those few minutes will reinforce your face, your brand image, and your relationship in that person’s mind.
   
   
3. Be specific in your information gathering. Do you know which customer information helps you most when trying to sell to them later? If you don’t, think about it now! If you’ve taken my strategy course you already know about the Critical Customer Questions that matter to your brand. If you don’t, here’s a quick exercise: Identify the characteristics that are common among your top 20% performing customers. Are they in particular geographic zones? Do they serve particular types of customers? Do they share similar needs? Once you identify those characteristics, frame questions around them. These are the questions you should slip into conversation with your trade show visitors. This will help you separate the cool leads from the hot ones. 
   
   
4. Be interested! Start by asking questions rather than immediately showing your product. Draw customers in by showing interest in them. Not only will you have a greater impact on your visitors, but you will also be able to quickly identify those who are not viable leads.
   
   
5. Be interesting! Unlike other marketing media, trade shows offer you a face-to-face experience with prospects. Learn to use this to your advantage! Consider offering demonstrations, experiences, stories, or other captivating elements that will engage the senses and draw your prospects in. Standing there and smiling is lovely, but rarely sufficient.
   
   
6. Work on your trade show skills. The most successful lead-gatherers at trade shows are the most sophisticated sales people. This doesn’t happen by accident – it takes practice. Prepare in advance the types of open-ended questions most likely to engage a walk-by or to keep a visitor in conversation for a few moments longer. Commit your line details and your prices to memory (make sure your show staff is equally trained). Role-playing builds muscle memory, and you want even your fist hour to be productive. Practice your trade show sales technique with a friend before the show to hit the ground running. Trade show success requires that you be able to gather information quickly and effectively, so do your trade show training.
   
   
7. Master Trade Show Graphics. I walk several jewelry shows each year and every booth features pictures of . . . wait for it . . . jewelry. Well, yes, of course you sell jewelry. You’re at a jewelry show. While some jewelry is clearly more differentiated than others, product pictures alone are insufficient to draw trade show attention. Trade show attendees are notorious for glazing over quickly. Make sure your trade show graphics include a few critical bullet points of information, or a question, or a statement; anything that quickly and clearly spells out your differentiation. Use your booth space as a marketing vehicle, not as a decoration.
   
   
8. Manage your image. Standing, smiling, out front when possible, greeting, and gathering are important trade show behaviors. In all my years of working trade shows from inside the booth I had one rule: No booth staff sits. Ever. Is it difficult? Yes, it’s definitely difficult. Is it worth it? Yes, for both the booth staff and the customers. Trade show days are long and even physically painful. If you have ever sat down at 2:30 in the afternoon – with three-and-a-half hours to go before the end of the day – you know that your energy crashes the moment you sit. This means the rest of the day is even more painful for you, and you lose energetic engagement with the customers during those last hours. You probably spent a lot of money to be at that show. Don’t sit down 20 feet from the finish line.
   
   
9. Have a data plan. You need tools – either at the booth or at your office – for managing the data you gather. Think about them ahead of time. Customer ran out of business cards? Snap a picture of their last one. Snap a picture of a badge and compare it later to the attendee report the show provides. Even better, snap these images in Evernote, where you can also add notes about your conversation or observations. Best – make voice notes in Evernote throughout the day. It’s faster than typing, you can keep your eyes out on the attendees, you’ll have less risk of forgetting an important insight, and you’ll have a treasure-trove of valuable data to mine when you return to your office.
   
   
10. Analyze your leads every night. Do this before you head out for dinner and drinks. Why? Because by tomorrow morning you’ll have forgotten all those conversations. It’s best to do this throughout the day – making notes about people you spoke with, their answers to your questions, and your observations about the interaction. But in addition to real-time note taking (and sometimes we know that’s just impossible), go over your lists of leads each evening and make any additional notes you can remember. You won’t remember everything, but you’ll have a lot better data than if you skipped this step.

When you return home from your trade event, begin the follow-up activity immediately. Sort your leads into ‘hot’, ‘warm’, and ‘cold’ categories. Schedule time in the next week to call the hot leads. Put the cold leads into your marketing database for some priming before you try pursuing those sales more actively.

If you follow these steps, you’ll see your RTS metric (return-on-trade-show) increase dramatically. And that’s good, because after aging eight or nine foot-years in a single week, you deserve the success.

As the jewelry industry heads into its biggest American show of the year, designers are questioning the best way to price their lines. What follows is a reflection on some important considerations when establishing a pricing strategy for a designer jewelry label.

Designer and brand jewelry lines must be very careful to avoid commoditization. Whereas non-differentiated manufacturing concerns price based on the current precious metal market, to do so as a brand or designer will reduce the design aspect of the jewelry to the equivalent of ‘labor’, which can only precipitate a race to the bottom. This is tantamount to saying that two paintings that required 22 hours, oil paints, and 17 brushes to produce hold the same value, though one was painted by Gustav Klimt and the other by a technically competent reproducer of others’ original works.

Designer and brand jewelry executives must consider a number of concerns – some of them conflicting – when establishing pricing strategy. This topic can hardly be covered in the space of a blog, but I will address the high points in the hopes of launching a meaningful discussion within the jewelry design community.

On Avoiding Commoditization

The only defense against price competition is differentiation. Though it is difficult to differentiate on design – and I strongly encourage designers to include elements of differentiation in addition to design – differentiate you must. Let Cindy Edelstein’s be the voice in your head on this point: Cindy preaches that all the designers in an aisle at a tradeshow should be able to commingle their jewelry in the aisle, and she should be able to tell from design characteristics alone to which designer each item belongs. Without a distinctive voice the buyer will ultimately force you to differentiate on price because you will have given them nothing else to work with.

At the risk of seeming like I am downplaying the difficulty of finding good retail accounts, remember that you don’t need all the customers, you need the right customers. A retailer who only focuses on the price of your product based on the metal and gemstone content is not an ideal target. If he can’t see the design value for himself, what is the likelihood he has trained store staff to see and sell design to jewelry consumers? But once you are pulled into the retailer’s non-design-focused pricing strategy, it is nearly impossible to charge the right price when you encounter the right sort of retailer. You will do better working your tail off to find designer-focused retailers than to try to convince generic jewelry retailers to pay the right price. Sound difficult? It most certainly is. But that is the challenge of going into a designer business. If you had decided to be a high-volume producing manufacturing business, your big need would be the capital to invest in the production techniques and technologies necessary to produce in volume. The challenge for a designer business is the creative strategy, brand identity, intensive marketing research and analysis, promotion, and sales activities necessary to find the right customers.

On Variable Costs

You must know your variable costs to protect your margins. Variable costs include the raw materials and labor to produce each piece. Obviously, the first time you produce an item will take longer than subsequent production efforts, so you want base the labor on standard production. Estimating variable costs is, well, a big no-no. If your estimates are off and you negotiate a large order at the wrong price, you may run completely out of cash before you discover your error. Know your exact variable costs.

Metals are the big worry right now. Should you price gold at a $1300 market or $1500? Everyone has heard a horror story of $2000 or worse. Here are a few thoughts to consider when deciding what market to base your pricing strategy on:

• Investment demand for gold continues to hold at fairly high levels, bolstered by concerns about inflation and investor worries about the European economy. On 5/17/10 Kitco projected that gold could go up to $1700 this year, and most forecasts are eyeing the $1350 - $1500 range.
• Johnson Matthey is projecting platinum prices in the $1600 - $2000 range for the balance of the year.
• Silver has been experiencing market resistance in the $19 range, but if it manages to break through that resistance it could track up sharply and take many people by surprise.
• You must be aware of how other designers are pricing their lines. If you are at an $1800 gold market and everyone else is at $1300, you’ll likely be priced out of the market. Watch Cindy Edelstein’s blog this week for her report regarding current designer market bets.

Some will argue that it is better to be safe than sorry, and will price their lines at a specific market and tell retailers that orders will ship at the actual metal market the day of shipment. This may be fine for commodity-level manufacturers and distributors, but I advise against it for designers. As I said before, once you train the retailer to think about your line as a commodity + labor offering, you have thrown your design value out the window. I recommend a harder – but ultimately more sustainable – road for brands and designer lines.

Pricing for Margin and Value

So what’s a non-financial-analyst designer to do? Start by considering what price your target consumer is willing to pay for your line, and what margin your target (i.e., ideal) retailer wants to get. This involves market research. Trade shows are a terrible place to do consumer market research, because you can’t assume your competitors have done their consumer research. Pay attention to what your competitors are doing, but don’t fool yourself into thinking this is a replacement for consumer awareness. Listen to actual consumers, study what they are buying, find comparable items to your designer line, and learn what consumers are willing to support with their debit cards. This is where the real value of social media exists by the way. At any given moment hundreds of thousands of conversations are taking place, and many of those people are talking about what they buy, how much they spent, and where they bought it. These conversations are yours for the eavesdropping. Learn to listen in and you’ll begin to understand what consumers really think.

Once you have a sense of what consumers are willing to pay for jewelry like yours, subtract the target margin of the retailer. Now cost your line at a $1350, $1500, and $1700 gold market. Answer the following questions:

1. Can you meet your financial obligations and generate organic cash flow to cover your growth requirements at each of those margins?
2. If the answer to #1 is ‘no’, do you have outside financing available (already committed) to you?
3. If the answer to #2 is ‘no’, how will you fund the metal purchases, labor, and operational costs necessary to keep filling orders?

To generate organic cash flow, you must have margin. If you give up significant margin, you must generate so much additional volume that you can produce the number of dollars necessary to fund growth. If you can’t support the demand operationally once you get those additional orders – or if the number of dollars you need remains persistently out of reach - you’re out of business. Landing a few choice accounts won’t keep you in business. The key to remaining in business is producing more dollars. So giving up margin to snag a few choice accounts is rarely the road to success.

Look, if you’re going to put yourself out of business anyway, it’s probably worth your time and effort to get on the phone and call every retailer in the country yourself, just to find the 15 or 20 retailers who get it about designer jewelry and understand that it is not a commodity. There are more than 20,000 retail doors in this country, and most of them (sadly) are treating jewelry as a commodity these days. But not all.

Enlightened retailers exist. There are (dare I say it) more than 15 or 20 of them. There are at least several hundred retailers who understand that the key to turning consumers on about jewelry is being turned on about jewelry themselves, and training their sales and purchasing staff to be turned on about jewelry. They are using this advantage (yes, differentiation) to put their retail competition out of business, and because they understand love-of-margin, they are charging the right prices and doing the hard work necessary to find the right customers and encourage those customers to pay those prices.

Does this mean that when you find those retailers you will automatically solve your price problems? No, it doesn’t. You still must have tremendous control over your production, you need to know – not estimate – your variable costs, and you need to do everything in your control to keep your costs down so you can enjoy healthy margins after some reasonable negotiation with your retail partners.

You already know being in business for yourself is hard work. But working this hard for no money? That’s just not worth it. So don’t take your need for margin off the table. Differentiate. Do your variable cost homework. Do your consumer research. Price according to consumer demand and make sure you turn a profit. Strategize, brand, market, promote. Find the right retail partners. Sell your intrinsic value and differentiation (not your materials + labor!).

Make some money. You’re worth it.

(c) 2010. Andrea M. Hill

• Individuality is in, keeping-up-with-the-Joneses is out.
• Environmental stewardship is in, unconscious consumerism is out.
• Social awareness is in, ostentatious wealth is out.
• Thoughtful acquisition is in, conspicuous consumption is out.

No wonder luxury jewelry is having a hard time.

Which isn’t news. We’ve been watching the closures, consolidations, and down-sizings of luxury jewelry stores for years now. But it’s still newsworthy, because luxury jewelry hasn’t carved a new, meaningful path yet, an approach that responds to these changing values which not only refuse to go away, but instead, continue to build momentum.

Hedda Schupak conducted a very important interview in the Centurion Newsletter this week with third-generation "überluxury jeweler” Jonathan Dorfman, who recently closed his ultra-luxury jewelry store in Boston. Everyone in the jewelry industry should read this interview (read it here). The article addresses the issues of changing consumer tastes, social awareness, and values. But it also points to an element that has been masking the true impact of the changes in the US consumer. Societies where ostentatious wealth and social competition still have some oxygen — China, Russia, and oil-rich Arabic nations — are now suffering economically. During the past ten years these populations have bolstered the luxury jewelry market while the American consumer was turning her attention to other things. Now, as this foreign buyer steps away from the cash-register, the dramatic changes in our domestic market are painfully obvious.

The Solution is Already Here

There is a jewelry offering that is highly individualistic, often pays greater attention to sustainability, and delivers an experience of art, hand-craft, and the type of preciousness that is handed from generation to generation. It is designer jewelry, art jewelry, jewelry made by master jewelers in their studios. For the conscientious consumer, the story of fine jewelry made by artisans who still get their hands dirty is a compelling story; a story of skill built over years, a story of craftspeople who opted out of the more typical salaried/hourly path to pursue a life of art and creativity, a story of artists who have a passion to create beautiful, wearable things.  Craftsmanship is in. Stories are in.

Retailers totally focused on selling pearl button earrings, 1.0 tcw white diamond studs, 3-stone rings, and 4Cs-driven engagement rings cannot engage the new consumer. Manufacturers focused on creating the same designs they always have, en masse in China, can’t either. And by new consumer I don’t mean just the Millennials. I also mean the women my age (50s – 60s) who have changed right along with our young adult children, who often look at life very differently than we did when we were first starting out.

The Jewelry is Out There

Of course, artisan/designer jewelry is not new. It’s out there; online, in boutiques, in museum stores and specialty stores . . . . and sometimes, in jewelry stores, though the list of jewelry stores that truly focus on artisan/designer jewelry is small. Everyone in the artisan/designer segment of the jewelry business shares the same list of about 200 stores that truly get how to sell artisan/designer jewelry. There are several thousand more jewelry stores offering personalization of jewelry through customization and/or original design, many of them using CAD. Still, as an industry we are doing a poor job of telling this story to consumers, so unless they stumble into the store or onto the website, they just don’t know how exciting, beautiful, meaningful, and relevant jewelry can be.

Let's Tell the Story of Artisan/Designer Jewelry

The dairy industry suffered badly after the low-fat movement began. Suddenly, dairy was out due to a change in consumer values. The industry realized that it had to respond with a broader message, and they did, with “Milk. It does a body good.”

As an industry, we should shift to talking about jewelry in terms of art. We should be talking about its hand-made aspects, and how exciting it is when we combine the newest technologies (CAD, scanning) with old-world techniques. We should be telling the stories of the people who make and design jewelry.

We must be investing in and committed to sustainability, protecting the environment and the communities dependent on mineral and metal extraction for a living. And then, when this aspect of our industry is authentic, we should be telling that story loud and clear.

Am I suggesting one of the jewelry industry associations or magazines should step up and do this for us? No. I think they can play a role, an important role, but I believe that all of us — retailers, manufacturers, diamantaires, designers, consultants, everyone — need to embrace where consumers are now, get on board, and start telling a different story.

Individuality is in.

Social awareness and environmental stewardship are in.

Thoughtful acquisition is in.

Craftsmanship is in.

Stories are in.

Artisan jewelry is in.

Let’s all get out there and stay relevant.

A few years ago someone wrote an article that proclaimed through its title “PR is Dead!” But businesses that buy into that statement miss out on an exciting world of exposure to their customers – exposure that is generally taken more seriously than a paid advertisement. If you are underestimating, or worse, not even considering, the value of public relations efforts, I encourage you to think again. There are a lot of aspects to a good PR effort, but let’s limit our discussion to the press release – the one PR element most companies at least know about.

It’s hard to make generalities about the cost of advertising, because depending on your market and if you are B-to-C or B-to-B, the costs can be very different. But everyone agrees that advertising can be expensive. A press release is an attempt to get free mentions in the publications in which you might otherwise be advertising. If you have a good handle on who your customers are, what you want from them, and where you should be advertising to find and communicate with them, you have a good handle on where you should send press releases. In most cases, publicity is an important supplement to a paid marketing strategy, but in some cases publicity alone is sufficient, and in every case the balance of publicity to paid advertising could be shifted in favor of more publicity.

You know you have to spend time working with a copywriter and/or graphic designer to put together your ads, and that the quality of your ads determines whether or not people actually read them. The same kind of attention must go into your press releases. Editors of magazines are looking for content of interest and value to their readers. Who would expect them to run a lifeless news blurb of little substance, or a simple product promotion? Writing a good press release involves finding the interesting story (most often the human interest story) about your business or something a member of your business is involved in, and tying it to a news event or other timely public information. The thing most editors want to see in a press release? It’s easy – quotes. People like to read about what other people observe and feel, and quotes provide that.

Even if you are not interested in hiring a professional PR firm (which for small companies can be hard to justify), hiring a professional writer to produce your press releases is something you should consider. When a freelance writer wants to get a writing assignment with a particular magazine, they pitch their idea to the editor. An editor knows right away if the writer has taken the time to understand their publication, the publication’s voice, and the publication’s audience.

The same care and attention must go into press releases. Press releases can be broader in appeal (in terms of voice and style) because they are going to numerous publications. When you send editors material they would never run because it is irrelevant to them, they start ignoring everything else you send. They won’t take the time to rewrite it or even polish it, though they will likely cut it. Be sure it’s well written, and make it easy to cut from the bottom up – because that’s what they’ll do.

Editorial contact information is easier to find and compile than ever before. Most magazines say who their editors are right on their websites. Simple web tools make it possible for you to monitor your own internet mentions without spending $500 - $800/month on clipping services. Very savvy business owners seek opportunities to build relationships and network with the editors of publications of interest to their customers, gaining important insight about the type of content those editors are seeking and their particular business challenges. You’d be surprised how your PR efforts mature once you understand the world from the editor’s perspective.

There’s a lot more to a good public relations effort than press releases, and we can talk about some of those things another time. But for now, consider the interesting things that have happened to you, your employees, your co-workers, and your general business in the past year. What types of stories could you have written, and which publications would have been interested in running them? Which customers would you have reached if that had happened, and would how many customers would have to have responded in order to have justified the time and effort of writing the release?

Publicity is not really free – there is a cost to the effort. But in a world where branding, where telling our stories and connecting to our customers (beyond price, selection and service) is essential, it’s a powerful way of making meaningful contact. And it’s sort of free.

(c) 2008. Andrea M. Hill

I have been following Sony BMG's advertising campaign for the 25th anniversary of the Thriller album with a great deal of interest. I think it's a brilliant marketing effort. In case you've missed it, Sony BMG has melded new marketing media and traditional marketing media to introduce a remake of the highest selling album of all time. The company has a particular challenge in introducing the remake of the album. The average consumer thinks Michael Jackson is a freak at best and a pederast at worst, and Jackson's financial challenges can be credited in part with Americans' faint disgust with him as a human being. The music world still considers Jackson to be a genius, but while they regularly incorporate his work in their own work – either directly or through significant inspiration – that influence is less obvious to the public. So the typical approaches to a 25th anniversary album – a tour, appearances on all the talk shows, etc. – were not an option. So in a brilliant display of their understanding of new media options, the company challenged professional dancers to perform Thriller's zombie dance in public venues from London's Chinatown to Cophenhagen's busiest train terminal. In each case, the audience for the dancers was 100 people or less. But every performance was posted on YouTube, and the videos have been downloaded nearly 1.5 million times so far. Every YouTube viewer of a Thriller promo is also exposed to the Michael Jackson YouTube site, where a promotion of the 25th anniversary album has been viewed over 600,000 times. The story received so much viral play that it was picked up by the New York Times and other major papers. In the first week of release the new album rocketed into the number one spot on Billboard's Top Pop chart and placed in top five or better rankings in music markets around the world.

Marketing continues to change. Today's marketers absolutely must understand not only what these marketing tools are and how to use them, but also the social implications of the new marketing tools. A reflection on the recent history of marketing and its evolution over the past 60 years helps illustrate this point.

Marketers who came of age in the 1940s – 1960s were selling to a very different consumer than are the marketers of today. From a social standpoint, there was little deviation from what was deemed conventional behavior, and deep social conformity led to conformity of taste and product usage. This was reinforced commercially, because product differentiation was expensive to achieve. Individuation of taste and access to unique products was reserved for the wealthy. From the marketer's perspective, the communication venues were limited (though significantly expanded from prior decades). Print, radio, and television were the primary means of reaching consumers, and all three mediums were focused on addressing mass audiences. This led to programming and advertising that was overwhelmingly homogeneous. How were the major social issues of the time influenced by the dramatic rise of the television as a communication medium during those years?

The 1960s-1990s saw dramatic change in cultural and social tastes reflective of the nonconformist predilections of baby boomers. Not surprisingly, direct marketing came of age during this time, bringing to a society that was still treated homogeneously by mass media a refreshing ability to cater to diverse tastes and interests. By the 1980s cable television ushered in the segmentation of America on a large scale, replacing the big three networks (ABC, CBS, NBC) and their virtually indistinguishable programming perspectives with literally hundreds of alternatives – many of them geared to comparatively tiny segments of the population. Cable television was the gateway to today's internet world – a world in which consumers take for granted the expectation that they can control the content they consume. The PC revolution was aided by the launch of Compuserve and AOL, delivering the ability to customize a media content experience. From that point it was a small leap for customers to begin to expect they could also control the marketing messages to which they were exposed.

Today's marketer faces a complex array of marketing choices. Email, wikis, social networking, personalized search, user-generated content, blogs, streaming video, vertical search engines, targeted communities, web enabled phones, location-based services and mobile search, participatory advertising, RSS, and VOIP are all new tools in the marketer's toolbox.

Marketing is simply the business of communication. The proper definition of communication involves two or more parties. Traditional approaches to marketing, limited by the technology and social perspectives of their times, reduced marketing to a one-way method. Today's marketers have the opportunity to embrace genuine communication with their customers. And this opportunity comes with a significant learning curve. But the learning curve is somewhat more than the average marketer may be realizing. Yes, a big part of the learning curve is simply mastering all these new tools – remembering your log-ins for the different services, and figuring out how to use them, which customers are attracted to them, and what purpose they serve. But in fact, those things are the easiest part of the learning equation.

Remember the book – and the saying – the medium is the message? Marshall McLuhan, author of the saying and of the 1964 book of the same name, theorized that every message is not only influenced, but defined, by the medium by which the message is delivered. McLuhan died in 1980, before any of these new digital marketing mediums were possible, let alone conceived of. Yet his work is as relevant today as it was back when he was worried about the ultimate social impact of the television. McLuhan argued that at the intelligent, rational levels of perception, human beings take a message and consider its content carefully. However, at the empirical – experiential – level of consciousness, the medium itself is the message.

As we have discussed numerous other times in these columns, humans are not all that skilled at critical thinking. When you consider this disjunction between intended content and medium, it's not hard to understand why young females suffer from a variety of eating disorders, young males begin to suspect that their role in life is to be sexy and adolescent for ever, or young children find it difficult to differentiate between cartoons and real life. The subtext of every advertisement is at least as powerful – and sometimes more powerful – than the intended content.

Maybe Sony BMG stumbled into this idea through sheer luck, but I prefer to believe they carefully considered all the aspects of this challenging marketing situation. They took the product of a once-great but now sullied star and removed the taint. By highlighting the creativity, gumption, and sheer fun of young people with talent providing impromptu performances in public places, Sony BMG created focus on the music, how it made us feel in 1983 when we first heard it, and how it still makes us feel today.

Marketers today would be well-advised to expand their thinking well beyond the typical questions of features and benefits of products and services. Features and benefits continue to be of significant importance, but they are only the starting point. Marketers must also consider the mediums that are most relevant for the delivery of the message. That evaluation needs to be expanded beyond the questions of who is using this medium and what is the expense of using this medium. The evaluation also needs to include an assessment of how the medium itself influences the message – both from a message efficacy standpoint and from an ethical standpoint.

Sound complicated? No more so than when McLuhan first started publicly exploring these ideas in 1951, in his book The Mechanical Bride. Society may seem more complicated to us now, but it seemed plenty complicated
to those who were our age in the 50s and 60s. And though we may be the first generations to experience the explosion of digital marketing, I daresay the rise of radio and television felt every bit as earth shaking in their time. At the end of the day, marketing is a social effort, informed (hopefully) by history, and both defined by and defining of current cultural norms. When marketing is approached with respect for all the disciplines involved – analytics, verbal and graphic arts, psychology, sociology, and ethics – it can be a resoundingly satisfying career choice.

(c) 2008. Andrea M. Hill

OK, apparently me as a "very busy business woman" is the same thing as "me as a very bad blogger." I keep trying to figure out ways to reclaim time for my blogging, but as you can see from the date on my last post, I've not been terribly successful!

So I'll try something new. I dole out answers and advice to my customers all day long - via email, chat, social media, phone - however the questions come in. It might be useful to share some of this information with the rest of you. So when I get asked a question that might have benefits for others, I'll just stick the question and the answer in here and see if it helps. It's worth a try, right?

If you have a business question you want answered - something you think others would benefit from as well, what the heck - just send me an email This email address is being protected from spambots. You need JavaScript enabled to view it. I'll answer - even if you're not a StrategyWerx client. If it gets too crazy, I'll let you know. But let's try this for a while. It might be fun.

In the middle of the 20^th century, marketing and advertising were easy. Three major television networks directed us to a handful of brand choices at the grocery store, and big box retailers were decades away. Simplicity ruled. Simplicity of communication channels. Simplicity of product choice.

Today market advisors encourage companies to actively engage the newest forms of communication, because the old forms of communication no longer suffice. New social media demands that we all say something to our customers in order to stay relevant and top-of-mind. So small-to-midsize business executives that still can’t figure out how to operate their computers without calling the IT department for their own personal MacGyver are now trying to figure out how to make friends on Facebook, tweet on Twitter, and add their work history on LinkedIn. I suspect that many of them – unless they pay someone to monitor their social networking for them – end up with 14 friends on Facebook and a profile on Twitter that looks like 150 following, 72 followers and 4 posts. Big corporate executives don’t even struggle with this step. They assign the marketing department to set up accounts on all these services. But they fail to share strategy goals in a meaningful way, so the marketing department approaches social media as another form of advertising. And the tweet goes on. 

There is something significantly different about marketing now than marketing 40 years ago – something beyond the plethora of channel and brand choices. Back then, we all watched the same primetime television shows, during which we were told which products we could and should trust when cleaning, feeding, and caring for our families. Our social relationships were fairly fixed. We generally lived near not only our families, but also the people we went to high school and grade school with. We worked with the same people for 15, 20, 30 years. Why does that matter? Because what we bought, used, and displayed had influence on our friends, neighbors, and family – they knew us enough to trust us.

So when Donna Reed told you to eat Campbell’s Soup, it came, not from the star of a reality show you may never have watched, but from the personality of a home-town girl you had grown to love after watching her movies and television shows. When your father said “we don’t buy Cadillacs, we buy Fords,” that statement informed your personal identity. And when the sugar your neighbor lent you was G&H, you realized that it would be important to lend the same thing back when she asked.

In other words, we had inferred relationships with the products we purchased because we had relationships with the people who sold them to us.

But even as the iconoclast Marshall McLuhan tried to warn us about how media would ultimately shape our understanding of the world and indeed, the world itself, the economics of globalization were creating confusion between the concepts of comparative advantage and competitive advantage, and the result was an explosion of just-like-me products and undifferentiated services. Unable to sell any inherent value, marketing became about selling. This was when SPAM actually began.

Marshall McLuhan’s argument went beyond how media was changing the world. He demonstrated that the decentralization of modern living would ultimately thrust human experience back to the life of the tribe.

Our customers no longer trust marketing, which they perceive to be synonymous with advertising. It’s not. But as we stretched our understanding of business communications to encompass progressively more media channels, we thinned its content to a mere schmear of superficiality. Nearly all modern advertising presents product, price and place, with a superficial nod to style, design, or sex appeal. None of which contribute to relationships. 

Without the support of wild growth based on expansion, we must return to offering things of inherent, comparative value. Relationships are once again essential to business success. Relationships within the business, and relationships with the customers, vendors, and communities the business depends on. But has our understanding of relationship become superficial as well? Is paying on time a good relationship, or just a component of a good relationship? Is delivering on time at the promised price a relationship, or a common courtesy? Is giving the customer in-depth product information a relationship, or a savvy business move?

Each industry, community, and business must manifest this concept in different ways. Before I offer specific suggestions for marketing through business relationships, I’d like you to have a chance to consider these ideas for yourself. I hope you’ll join me tomorrow for Part II of this discussion. 

© 2009. Andrea M. Hill

Note: This is the second entry in a 2-part series. You may want to read them in order for the sake of clarity.

What things of inherent, comparative value do you sell? If you’re 20^th Century Fox that’s easy – you have Slumdog Millionaire. But for most businesses, highlighting a certain thing requires significant narrowing of focus, to a specific design sensibility, an extremely low price point, or something that is nano instead of micro. And unless you’ve figured out how to hermetically seal that product in patents, you won’t be able to claim such tenuous value for long.

The corporate approach to value has become a competition for eye-level shelf space (whose eye-level, one wonders), end caps, brand associations (ad dollars), celebrity endorsements (steroids anyone?), sex appeal and its ugly step-sister snob appeal, and market lockout (Gannett). The problem with these approaches is that there is nothing valuable about them. They are all superficial attempts to secure a place in a buyer’s mind and heart.

Superficial beings don’t recognize that others do not love them, because they are so busy loving themselves. They eventually look around in their dwelling-space, find it empty, and wonder when everyone left. This is the plight of most business – a plight that finds many scrambling in desperation to the one measure that remains. . . a lower price.

Are all business people foolish? No. We are victims of recent and overwhelming success. Though we cannot do justice to a post WWII cultural and economic overview in two paragraphs, I’ll try to briefly illustrate the trajectory that delivered us here.

First consider the dramatic cultural impact of the evolution of the media we depend upon to deliver nearly all our marketing. What did Marshall McLuhan mean when he said (in 1960) that the new world of media would return man to the experience of the tribe? He was drawing a distinction between literate man, educated and informed in the era of books, and a new tribal man, educated and informed in the era of media. Literate man, in McLuhan’s view, was an isolated being, experiencing new meaning and ideas in private, one line at a time. Books are a form of private imagery. In contrast, the explosion of new media would cause world populations to experience new meaning and ideas at the same time. McLuhan called it tribal, because tribes do their sense-making collectively, publicly. He defined media as corporate imagery, meaning it is for public consumption. Previously, the only imagery consumed publicly, en masse, was liturgical in nature. McLuhan was warning us that media was becoming the new forum from which people would seek meaning. 

Now consider dramatic shifts in economic production. Before the 20^th century, the comparative abilities of regions and nations were fairly static. Isolationism was the most common trade theory (i.e., stout protection of comparative advantage), and the United States took advantage of it to build the world’s strongest economy. The (primarily Western) age of making and selling products of convenience to classes lower than the uppermost had begun. But after two world wars and a devastating international depression we found ourselves faced with a world in crisis. It was in our national interest to help rebuild devastated economies, to sell our goods to their people, and ultimately, to reduce prices for our own citizens. As we transferred technology to other countries, the comparative abilities of regions and nations changed dramatically. Combine new international competitiveness with our own accelerated technology development curve, improved infrastructure leading to superior transportation systems, and a wildly reproductive media market insatiable for advertising, and it is not surprising that we have an explosion of products and services that cannot be differentiated from one another except by price.

What happens when the social structure of the nuclear family (opposite of tribal man) and its insularity (including the comfort of knowing what to buy and from whom) loses some of its influence? What happens when this cultural shift occurs simultaneously with an explosion of products and services? What happens when these things occur alongside the serial introduction of new technology media – so much media that we can watch multiple cable channels while internet surfing and texting our friends, receiving advertisements on all of them? When happens when populations begin to look to commercial enterprises for meaning and do not find it?

We tune out. 

This is the challenge facing the modern marketer. The challenge to do something other than advertise. The challenge to do something other than reduce the price, show more skin, or try to figure out a way to be heard amidst the sounds of marketing bombardment. It is the challenge to be relevant and to relate. 

Understanding how to market to our customers – existing and prospective –begins with the etymology of the words relevant and relate. Relevant comes from medieval Latin to raise, or to lift up. Relate hearkens to early Latin, meaning to carry or to translate.

At one time simply buying a Cadillac raised up one’s perception of their own status – in both their eyes and in the eyes of their neighbor. Using Donna Reed as a spokesperson helped to translate Campbell’s Soup from an inferior – because store-bought – version of something your mother should cook to the trusted and delicious soup your mother was cooking. And the implied social pressure of which brand of sugar your neighbor buys no longer carries over as a suggestion for your own purchasing behavior.

One more semantic sidebar. The word market comes from the word trade, when trade literally meant to do so, to barter one thing of value for another.

Simple exchanges of cash for product are increasingly about price. That may be fine for Wal-Mart, but the rest of us need margins. If all products are similar, what nuance will you offer that increases value? What can you do to raise up, carry, and translate for your customer – to offer in trade beyond the item? Let’s look at it through the use of examples.

One corporate marketing campaign that did this well was Sony’s 2008 promotion for the 25^th anniversary version of Michael Jackson’s Thriller. They hired dance troupes around the world to stage impromptu, public performances of the Thriller music video dance. This created instant communities of people sharing a surprising experience of public art. They filmed each performance and put them on YouTube. At this point they were reaching out to two different tribes in highly relevant ways. People my age lived the novelty and drama that was Thriller all over again – carrying us back to our 1982 selves for a moment. Much younger people experienced Thriller in their own medium and performed by people their own age, translating the experience from one generation to the next.

Recent decades of presidential politics had turned off swathes of voters as political persuasion was reduced to the level of a sales pitch. President Obama rode to the White House on the tails of an electorate that had been electrified. By what? By being invited to participate. His campaign was a miracle of modern marketing. He organized a community, primarily using new media. He traded – for votes – the promise of involvement (raise up), a commitment to carry issues of importance to the national stage, and an ability to translate generalized angst into clear talking points.

Good marketing doesn’t require million dollar budgets or a national stage.

Gary Dawson owns Goldworks Jewelry Art Studio in downtown Eugene, Oregon. He has been in business for over 25 years, and is currently having a fantastic growth year in spite of the recession. Part of his current marketing strategy is to offer a monthly wine & cheese evening for his customers. He organizes a segment of his customer base into a group of people with common interests in jewelry and wine. He invites local wineries to do a wine tasting and he provides the food, the gathering place, and the atmosphere. Gary has created a trade environment where his customers make new acquaintances (tribe/community) and obtain new knowledge and experiences (raising up). The wineries contribute wine for the tasting, but benefit from the wine sales and future customers (carry/translate).

Ganoksin and the Orchid Forum – the brainchild of Hanuman and Charles Lewton-Brain – is another jewelry industry example of new marketing. An internet forum, their marketing premise is to actually be a community – a tribe of jewelry artists. They exist solely to educate their community. Contrast this with other social media venues where jewelers gather – like Twitter or Facebook. Those environments offer a gathering place, but Ganoksin turns its content into a searchable jewelry-making encyclopedia shared by all. Member organizations who sell to jewelers have the opportunity to use Ganoksin in a new marketing way – or in the old way. They can buy an advertising banner and be done with it. Or, they can buy an advertising banner and participate in the Orchid forums, answering the questions for which they have expert answers to provide value to their customers. 

To manifest your marketing is to make your unique offering of value obvious to your customers. Sony did it by showing that their value wasn’t just Michael Jackson or Thriller, it was art, entertainment and nostalgia. President Obama did it by moving the presidential conversation away from the dead ideas of conservative and liberal (yes these are dead ideas) and into value concepts like participation, health care, the environment, and opportunity. Gary Dawson does it by serving up new friendships, knowledge, and community-focused business growth. Orchid does it by investing in the intellectual capital of an industry. All these winners offer products and services remarkably similar to their competitors. But it’s the rare 25^th anniversary rerelease of an album that reaches #2 in the US charts and certifies gold in 11 countries.

To raise. To lift up. To carry. To translate. To recognize the importance of community, and seek meaningful ways to organize customers – by which I mean meaningful to them. To use new media adroitly, as it befits your value proposition. These are the challenges - and opportunities - facing today’s marketer.

© 2009. Andrea M. Hill

Social media monitoring tools bump up your marketing strategy and planning

Nearly all marketing strategy today includes a significant presence in social media. Many people think the most exciting thing about social media is that it's free. A) it's not, and B), that's not even the most exciting part.

What's truly exciting about social media is how much you can learn about your customers and potential customers. Social media activity is by no means an indication that someone will buy from you, but we are beginning to understand that different types of social media engagement offer varying forms of value to a business. Social media engagement can enable your customers to influence other new prospects for you, it can help you foster an online relationship that leads to a purchasing relationship, and it can keep you top-of-mind for additional purchases and visits.

Yesterday we were evaluating the questions that must be asked and answered before you can create an effective marketing strategy. Today, let's look at some of my favorite tools for tracking and analyzing social media engagement. This will give you additional insight necessary to creating a powerful marketing strategy.

How did they find you and how engaged are they?

If you're not asking customers how they heard about you, you are missing an excellent opportunity to refine your marketing. Always ask, and keep records.  Social media monitoring tools add depth to this knowledge. Using them, you can assess how engaged your customers are with your brand, how often you are mentioned, and what is being said. This type of oversight in the social media world will help you refine your marketing activities and quickly resolve any negative comments. My favorite tools for online brand monitoring include:

• Google Alerts. This is the easiest and most common form of brand monitoring. Put in your brand name and any other well-known terms associated with your company, and get feedback every time those terms show up in the web.
• Hoot Suite. If you use this as your social media dashboard you get a lot of great features, but one of the features I like most is that you can add a keyword tracking column. This gives you a real-time stream anytime someone mentions your brand in your social media space. Seesmic does this as well, but I really prefer Hoot Suite.
• Social Mention. You can set up alerts to notify you when blogs, comments, images, basically anything on other social media sites mention your name, or a product, or any keyword you want to track.
• TwentyFeet. This aggregates your activity from multiple social media platforms so you can analyze which activities work the best for you. Using insights from TwentyFeet, you can decide which activities to do more of . . . and less of . . . in the year to come.
• Klout. Klout gives you an influence score based on your social media activity. It not only scores you, it also enables you to look at your influences and who you influence. Knowing this will help you refine your social media program. Other tools that do this are HowSociable and Kred.
• PeerIndex. This helps you identify who your online brand advocates are. Once you know that, you can get more creative in reaching out to them - giving them more to advocate with and about.
• Brand Monitor. This helps you focus on conversations that are relevant to you so you can participate.

Does this seem like a lot of monitoring? Of course it is; constant monitoring is an essential element of a successful marketing strategy. You can use an RSS feed reader to aggregate all of your social media engines, to make it easier to keep track, but the truth is it does take some effort and you should spend time every week analyzing your online engagement and tweaking it.

Your Marketing Strategy Will Be as Good as Your Insights

The best time to create your marketing strategy for the following year is in September and October,  so the marketing plans can be included in the company budgets. But invariably I get a dozen or more frantic calls in December from companies that want to make marketing plans in a hurry. I don't judge - I can procrastinate with the best of them.

Rather, my concern is that most of these professionals want to decide what to do without first analyzing what they have done. Failure to analyze past marketing data will lead to weak marketing decisions in the future.

For today, let's look at the following questions and how to answer them:

Who is buying your stuff, how often do they buy it, and how much do they spend?

If you don't understand your current buyer behavior you can't determine how to improve it. The issue I see most is that customers do not return for repeat purchase. If you spend your time and money finding customers but never see them after the initial purchase, your marketing strategy is pouring money down the drain.  You can't guess at this number - you have to do the math.

• Figure out how many customers from 2011 bought from you again in 2012. How many times did they buy in 2012?
• Figure out how many new customers bought from you in 2012.
• Figure out how many bought 1X, 2X, 3 or more times.
• See if you can determine any important differences between the 1X and the 2-3X (this is in a year, not in a lifetime) purchasers. Look for similarities/differences in gender, income bracket, zip code, types of things they purchase - examine every clue at your disposal to come up with patterns.
• Try to determine why the 1X purchasers did not come back (a phone call to ask why is a really direct way to do this, and is often quite well received if it's framed as an I want to improve my business call and not a sales call).

Next, figure out the average transaction size of your customers. This is a simple number:  Total revenue over a specific period of time divided by the total purchases. The lower that number is, the harder you'll have to work to make a profit.  Now break it down further: What is the average transaction size of 1X customers versus 2X and 3X?

Once you have asked and answered these questions you'll be armed with a lot of new insights, insights that are valuable to creating a strong marketing strategy for the year to come.

You know the saying No Pain, No Gain, but here's a little different way to look at it.  I have been reviewing/refining 2014 sales & marketing strategy for several clients yesterday and today, and the pain or gain aspect of market planning is really resonating with me right now.

One thing we understand about selling (and therefore, marketing) is that every purchase someone makes is either to eliminate a pain or to create a gain. If you can resonate with the potential buyers' emotions associated with either eliminating pain or experiencing gain  (or both) you can use that in your marketing messages, images, and strategies.

The way to figure out what pain you can eliminate is to ask. Just ask your customers for the list of things they are frustrated with relative to what you have to sell. Then figure out a way to express what you have to sell as a solution to a pain.

The gain aspect can be a bit more challenging to define. For many purchases, the gain is simply that it makes the buyer feel better. Savvy marketers dig in and try to understand why and how the product makes them feel better. They also look for ways to make the experience of buying the product feel like a gain - not just the purchased item itself. When selling business-to-business the gain is often outside the actual product. The gain may be in the services, brand cache, terms, or other support you can provide.

What pain are you alleviating, or what gain are you providing, with the product you sell? Think about it for your business!

When you're seated at a restaurant, hungry, enthusiastic about eating, you don't turn away the wait staff, right? You might ask for a few minutes to decide, but you don't put them off indefinitely.

When you go to the salon for a haircut or a blow-out, and they call your
name, you don't tell them to wait a while so you can finish a few tasks on your phone, do you?

When your pipes have burst and you've been waiting for the plumber for 36 hours, and he finally shows up at the door, do you send him away because you were just getting ready to serve dinner? No. You welcome him in.

Know Your Needs

Of course each of these examples is obvious. When we have a strong need, we don't ignore, put off, or avoid the provider of the goods or services who will fulfill that need. We schedule the time, we keep the appointment, or we clear the schedule to make sure these needs are met.

By definition, a retailer is a merchant who sells goods at retail.  Unless that retailer makes all the goods he sells, he needs to acquire them from somewhere. One can not merchandise with nothing, right? Of course, the retailer also must have someone to sell those goods to; the consumer. What I have observed is that most retailers in the jewelry specialty retail space are far more focused on who they sell the goods to than on from whom they acquire goods, and this leads to a serious lack of balance in the business.

The partnership between retailer and manufacturer/designer/distributor is one of the most important partnerships a retailer can have. Together the retailer and supplier create opportunities for the retailer to merchandise goods that consumers want to buy. Furthermore, the retailer should always be cultivating relationships and opportunities to learn about new, different, unique goods, because that is how the retailer can differentiate himself from other retailers and create ongoing excitement for his customers.

In too many situations, the retailer views the supplier as a nuisance, an interruption, or even an adversary, and not as the partner the supplier can and should be. There is a tendency to think in terms of "managing" vendor relationships and not "cultivating" vendor relationships.  But the best retailers - the most effective merchants with the most devoted clientele and the strongest growth trajectories - are building strong vendor relationships with current suppliers and actively seeking new vendors. When a vendor shows up unannounced, these successful retailers take at least a few minutes to see what is on offer. The small risk is wasting the 10 minutes it takes to recognize the products don't fit with the retailer's Merchandising Point of View. The huge risk is missing out on a merchandise opportunity that could have been dynamite.

Weak retailers feel relieved when merchandise sells, simply glad that it is gone. Successful retailers remain in contact with their vendors, placing immediate reorders to replace sold goods, but also responding to inquiries about current inventory positions and collaborating with their vendor partners to keep the merchandise offering fresh and balanced.

We all understand that the designers and manufacturers of jewelry need the retailers to carry the lion's share of the consumer sales. But I'm not sure we're all as clear that the retailers need the vendors just as much.  When the vendor relationship is undervalued, the result is the same as sending the waiter away instead of ordering, sitting in the waiting room of the salon instead of heading to the stylist's station, or sending the plumber away when he finally arrives.

Take a moment to evaluate your relationships with your vendors. If they are not as strong as they could be, invest in them personally or - if they're not the right partners to work with - find vendors with whom you can have a more productive, more profitable relationship. Stronger vendor relationships will help you meet the product needs of your business. This is vital, because those needs are very real and will ultimately determine your success.

Where costs + branding effort = margins

The zeitgeist issue of the week is pricing strategy, and how to price products for acceptance in the market. This is an issue all my clients confront. For software clients, pricing strategy differs depending on the platform of the offering (packaged software versus downloadable media). For publishing clients, digital publishing has turned all content delivery theory on its head. And for jewelry clients, there is a constant struggle between the inherent value of the materials (gold, diamonds) and the artistry with which those materials are assembled.

In fact, pricing strategy is the bane of most entrepreneurs. It's never just about how much things cost. It's much more about how much added value is perceived through your offering, and the values of the buyer/company perceiving your products' value.

Here are a few important concepts relative to pricing:

1. How you market and brand will largely determine how much you can get for your products. I know products that get 20X markup and others that struggle with 2X, and the only significant difference between the two extremes is the brand perception of the lines and the people to whom they market. Brand perception is in the presentation you make, the story it comes with, and the confidence with which you pitch the price.

2. Buyers who perceive your product is a commodity will never step up to a higher price point. The person who buys gold jewelry after looking at the day's gold market, the car buyer who could care less about the model they purchase "as long as it runs," and the ambivalent software buyer who believes all software is created by $1/day Chinese programmers will simply not see value in a more expensive alternative. You simply can't change the mindset.  So unless you are equipped like Wal-Mart to strip all possible costs out of your production and pay yourself and your workers nothing or next-to-nothing, don't go after commodity buyers. It's not worth it.

3. Buyers often purchase goods not according to their desires but according to their risk tolerance. In the case of retailers (if you are wholesaling your product), this also translates into the type of clientele they have cultivated as a result. Whatever you do, do not let the cost-conscious, risk-averse clients influence your pricing strategy. They are not capable of perceiving the product at its ideal value. Make sure that your pricing strategy is related to the proper target customer and not to the convenient customer.

4. Only reduce your asking price if you firmly believe you have pursued the ideal customer as hard as you can and that dropping your price is your only option. It's not just a matter of whether or not you can make enough on a lower markup. The question is, do you want to run a business where you settle for just making enough. You can bring your prices down, but it is extremely different to bring them back up again. So be sure if you reduce your prices that it's for the right reasons.

5. Which competitive products are you comparing yourself to? Be sure to compare your offering to high end comparable producers to see the relative prices.  If you find you are priced higher than your high end competition, then the prices probably should be adjusted. If that is the case, then I suggest making a new price list/catalog rather than offering discounts to those who have complained you are high. This way you can explain your ability to do so by explaining that better volumes and efficiency are giving you margin benefits that you are passing along to them, but you hold your ability to sell off your price sheets without discounting. However, if you find you are priced comparably and you are experiencing price resistance, my guess is that you haven't pursued the right clients hard enough.

Ultimately, selling and promoting are the key to having high margins; selling to the right retailers who service the right consumers and promoting your brand in such a way that your perceived value is very high. If all is well on the selling and promotion front, pricing sort of falls in line (assuming your production/acquisition costs aren't out of control). There's no doubt that we live in a world where we can get much of what we want for practically nothing. But the consumers you are targeting are aware that they get what they pay for. So tell them that story, and help them make choices they feel good about.

One of my retail clients was just pitched by a local marketing firm on paying for text marketing services. For $1,000/year, the retailer can send unlimited text messages to their consumers. My client wanted to know if it was worth the money.

Here's how I responded:

Regarding text marketing, the jury is still out. While mobile marketing is definitely where marketing is going, I do not believe that text marketing will be how mobile marketing ultimately evolves. Research indicates that youth users of mobile are as offended by text ads as their parents are by getting telemarketing calls at the dinner table. Youth text users view text the way their parents view phone conversations. So text marketing is a good way to alienate the youth crowd.  While their parents aren't quite as offended by text messages (which isn't to say that they aren't offended - they just aren't AS offended), they are also much less likely to use text messaging than their kids.

When does text marketing work? When it comes from within the community - to tell their peers to gather for events, parties, etc. Mass texting is happening, but in a social context rather than a marketing context.

I know the agency said the text users would be "opt in," but part of the problem with building an opt-in text list is all the people you irritate while sending out texts to them to see if they want to opt in! I haven't seen any case studies yet to indicate that text marketing is actually yielding strong sales for any given retailer. All we have at the moment is a lot of testing.

Your reach as a local brand would be better focused on building social media relationships, doing opt-in email messages to people who have provided their email address to you in the first place, and hosting lots of events and other reasons to come into the store. I think it is more likely that a mobile app is in your future than that we want to do text marketing a'la telemarketing.

or Inventory, Brazil Nuts, and Bottom Feeders . . .

My favorite afternoon snack is mixed nuts and seeds. There’s a special mix I buy that is perfect except . . . it contains Brazil nuts. I really don’t like Brazil nuts.

The good news is that my wife loves them. So every two or three weeks I bring her a canister containing all the remaining Brazil nuts. In fact, she likes them so much that I suggested that we buy a bag of Brazil nuts so she wouldn't have to wait for my leftovers. Interestingly, she declined.

Who is Your Brazil Nut Eater?

There are a lot of business management myths in the jewelry industry (a lot. A ridiculous lot). The one I’m tackling today is the one that says Designers Should Never Be on Sale.

Jewelry Lore has it that if you make high-end jewelry you should never be on sale, and that if you’re an eponymous designer, you should definitely never be on sale. But the truth is more nuanced than that.

On the one hand, the only reason people pay high prices (which ideally deliver high margins) is because your jewelry seems worth it. That is a troublesome phrase, worth it. It begs to be followed with the next two words, to whom. And the answer to to whom is what you need to get at.

But first, let’s do a quiz (answers follow. Do try not to cheat). Respond to each of these statements with True or False:

1. If you acquire a buyer on sale, they will always expect to buy on sale.
2. If you have regularly scheduled sales, people will wait for those sales to buy.
3. You should never advertise a sale online or anywhere outside the store.
4. You should never let retailers mark down your designs.
5. You should never put your own work on sale.

Now let’s see how you did.

1. If you acquire a buyer on sale, they will always expect to buy on sale.

This statement is mostly true. There are some fundamental differences between full-price and on-sale buyers, and the point of first brand encounter seems to be a meaningful in terms of how they buy going forward. What do I mean by that? Well, most of us are wired to look at certain products in certain ways. For example, I don’t buy used cars, but I would certainly buy a used boat. I don’t wait for technology or shoes to go on sale, but I do wait for home goods and kitchen items to go on sale.

It’s a myth that people are either “on-sale” buyers or “full-price” buyers. While there are definitely people at both ends of the spectrum, most of us fall somewhere in-between, and we’re product-dependent at that.

So let’s talk jewelry. Some folks are on-sale jewelry buyers; some are opportunistic, grabbing sales when they can but not waiting for a sale if they can’t; and some folks are full-price jewelry buyers. When you acquire a new customer with an on-sale item, their long-term response has more to do with their individual behavior related sale prices and jewelry than the fact that you were on sale when you found them.

So why is this statement mostly true? Because of this one detail: Our first impression of a brand not only sets our perception of the brand itself, it also sets our value thermometer. So the risk of acquiring a customer on sale is that you might establish a value perception for your jewelry that is lower than the regular price of your jewelry.

So what do you do about this? First, be prudent about where you advertise and market being on sale. For example, if your core customer is a Town & Country reader who has proven to be a full-priced buyer, don’t advertise your sales in Town & Country. Sure, you can tell your current customers about your sale items, but use a different medium — like email — to share the information. That way you don’t risk attracting new, potentially full-price buyers, and turning them into on-sale buyers.

On the other hand, if you’ve tried a different magazine and failed to find the right kind of new customers with it, but did find a few customers for your lowest priced items, perhaps you should advertise your sale in that magazine. At that point you’re not looking for a new full-price buyer: You’re looking for a Brazil Nut eater.

2. If you have regularly scheduled sales, people will wait for those sales to buy.

OK, this is a bit of a trick question. Your Brazil nut eaters will wait for sales, because that’s the only way they’re going to buy your jewelry. Your full-price buyer will buy whenever she is moved to. She’ll definitely take advantage of a sale when she can, but won’t wait for a sale if there’s something she needs or wants.

It’s your indifferent buyers that will learn to wait for sales. So the big question here is, how many indifferent buyers do you have?

If you have a strong core of brand loyalists willing to buy at full-prices, then you can probably get away with having a regular sale once or twice a year. But if your following is mostly indifferent, then having regular sales could lead to a very negative selling cycle in which everyone waits for your annual or biannual sale and your margins go down the drain.

The most important thing is to know your customer. You must understand when she buys, why she buys, and what motivates her to buy. In the meantime, while you’re learning all this, you may want to schedule sporadic sales. When you offer an occasional spur-of-the-moment sale, a just-because-we-thought-of-it sale, or isn’t-it-a-beautiful-weekend sale, you teach your customers that sales aren’t something they can count on. Again — this doesn’t change the behavior of your Brazil Nut eaters (let’s start calling them BNEs, shall we?) or your full-price buyers. It does, however, hedge against your indifferent buyers swinging the overall business into a sale-only mode.

3. You should never advertise a sale online or anywhere outside the store.

This is true only if you’re a designer/brand and you’ve committed to your retailers that you will not ever put your own products on sale. Otherwise, it’s false, but with caveats.

If you do both wholesale and retail sales of your line, then you must be very thoughtful of your retailers when you go on sale. I don’t recommend ever putting current designs on sale on your own site if you still have them out in the stores.

However, if you have a lot of dead inventory collecting dust at your retailers, and if you offer a 2::1 or 3::1 buyback of inventory (which you should), then you can certainly pull back that dead inventory and put it on sale. Sigh. More caveats now follow.

If your new work looks so much like your previous work that consumers won’t know the difference, then the retailers may still hate you for going on sale with your old work. If you and I were chatting right now, this would lead us into an in-depth discussion of the strategies involved in collection development. But since I’m writing a blog and not a novel, we’re not going down that path at this time. Suffice it to say that it’s on you to make sure that consumers can see a clear difference between work that is no longer available at retail and the new, presumably more desirable work currently available.

So. If your collections are truly distinct, then by all means – host a when they’re gone they’re gone sale and let scarcity drive interest. Heck, you probably won’t even have to mark your prices down very far.

For the rest of the answer to this question, go back and review my answer to Question #1.

4. You should never let retailers mark down your designs.

Definitely false. In fact, retail is the very best place to eliminate unsold goods. Think about all the luxury shopping you’ve done. Isn’t there a sale rack in every Neiman Marcus, Saks, and upscale shoe department? Even Mercedes and BMW clear out year-end models to make room for new models. Cruise lines go on sale during the slow season. Every single industry – excluding only the very highest of high end – needs its BNEs. Smart retailers cultivate this subgroup of customers in order to move out old inventory to make way for new. If you don’t have smart retailers doing this work already, then you probably have retailers who are refusing to buy now because they’re still sitting on your old styles (and everyone else’s).

By the way - every bit of advice I’ve given so far also applies to retailers. What you don’t want is a retailer who is constantly on sale, living on the knife-edge of margin and bringing your brand value down with them. You also don’t want retailers who run sloppy businesses and therefore must go on sale regularly to get a little cash flowing. But savvy retailers who know how to bring in inventory and sell it quickly to their full-price buyers, who cultivate more full-price buyers than indifferent buyers, and who actively cultivate the right amount of BNEs so they can quickly sell out their slow-moving stock on sale — these are excellent partners to have.

5. You should never put your own work on sale

This is mostly true. But perhaps not for the reason you think.

Not all your work is going to sell through. It’s. Just. Not. If you have a healthy retail distribution network selling stocked goods, you are going to create products that don’t sell through. If you’re doing your job right, you are cultivating relationships with retailers who know what they’re doing. The reason you give a wholesale price to a retailer is because you expect them to do the retail job. The whole retail job. That means marketing, smart buying, selling, and eliminating styles that don’t sell — and in the process making enough cash to do it all again. Yes, you should support the tail end of that effort with rational buy-back programs, but the retailer should be doing the bulk of the work. Otherwise they are not worth the full wholesale discount.

Yes, the retailer has taken a risk in terms of real-estate and built-in traffic, but if that’s all they’re bringing to the table, you need to figure out if that’s enough.

OK, so back to the point. The reason you should aim to never have to put your own work on sale is that your retailers should be eliminating those dead products for you, and you should be controlling your production sufficiently that the goods you bring back in a buy-back can be circulated to other retailers who can still move it (that means staying on top of your buy-backs!).

The fact that it’s taken me 1,786 words to get to this point bolsters the notion that the question of “to be on sale or not to be on sale” is a loaded one. But there’s one thing you can count on to be absolutely true.

Unless you only make one-of-a-kind, pre-paid, custom-ordered jewelry, you will always have some inventory that needs to be eliminated. Putting inventory on sale is a tried-and-true solution to this problem. That’s why you must study and perfect the art of the sale for your own business.

I was working with a client yesterday and she expressed a fear that is common to many people these days. This woman is extremely intelligent, highly successful, and well disciplined, yet she has the fear of being professionally and technically left behind.

It’s a reasonable fear. The world is changing quickly, driven largely by the pace of technology innovation. Twenty years ago everyone was aware that computers were changing the face of business, but the general perception was that computers were the domain of ‘computer people.’ 15 years ago business sociologists were telling us that the big chasm between Baby Boomers and Generation Y would be a difference in work ethic. Today it is apparent that Boomers are alienated by technology that their Gen Y counterparts take for granted.

Emerging manufacturing technology highlights the insufficiency of tool and die skills without computer aided design skills. Marketers who can’t navigate high end software and challenging database environments fall behind. Warehouse workers interact at a high level with automation tools such as mini-computers strapped to their wrists. Artists and craftspeople must master the demands of having their own websites – or at least be capable of providing direction to a website developer and manager. And the business executive who can’t independently navigate the myriad of internet and wireless protocols can get shut out of their business for days on end (or drive some poor IT support person crazy at all hours).

The challenges go beyond computerized workstations. Defined benefits and company-provided pension plans have given way to individual structuring of retirement strategies – leading to a requirement that all individuals understand markets and economics and investment strategies – which themselves  become more complex every year. Competition is constantly changing as the barriers to entry for new business continue to shrink. Even our communication is evolving rapidly as language becomes more technical.

Some people have opted out of the whole problem by declining to develop computer or technical skills. I don’t consider this an option. Anyone reading this blog would agree that the inability to read or write is a guarantee of economic deprivation. I believe computer illiteracy will contribute to a similar result in the near future (and to a certain extent, already is). If you moved to a non-English speaking country, you could not expect to gain successful employment or integrate into society without speaking the language. In the case of computers and technology, the other language has moved here, and everyone must be proficient. When a normally intelligent person “can’t” learn a new skill, resistance – not aptitude – is generally the culprit. Ending residual computer resistance will open the door to new competencies quickly for most people.

But what about my client, the very smart executive who is worried about keeping up? In her case, we discussed what she is afraid of keeping up with or in. She has broad business responsibilities, but they are not all-encompassing. So we made a list of the general areas of knowledge in which she can’t afford to fall behind, and then we identified a few key resources to help her stay on top of her game. After evaluating the field of possibilities, she decided she will need to incorporate two new monthly magazines, one weekly magazine, and 4-6 training classes (online or live) each year to sufficiently supplement her knowledge. In addition, she will enhance her project and decision-making work by including more research, particularly research of a peer-reviewed or academic nature. I could almost see her cortisol levels drop as she realized she could design a strategy for staying ahead of her game.

For anyone who plans to work past the age of 60, making a plan for staying au courant in the important developments of their chosen profession is a wise move. The knowledge that sort of stumbles onto us is a gift from the universe. But the knowledge we planfully acquire is an important gift we give ourselves.

(c) 2007, Andrea M. Hill

(with a big bow to Marshall McLuhan)

When you were a mere toddler, it's likely you took boxes, pots and pans and turned them into toys. In grade school, we took plastic sheeting and turned it into sleds on the perfect snow of Hospital Hill. In high school we turned Chevys into love machines, and I furnished my first apartment with crates and boards transformed into tables and shelves.

We humans are geniuses at repurposing. We take a thing and apply it for the purpose that we require of it, even if that is not the purpose for which it was intended. And we come up with some pretty terrific solutions.

But sometimes, we repurpose something accidentally. We actually think we are using it correctly, when in fact, our failure to understand its essential purpose means that we are under-utilizing it.

This is what has happened with websites. Here are a few examples:

The company that spends $40,000 on a custom website design to have a look that is unlike anyone else's.  Only to have to redesign the website from scratch two or three years later because the look is no longer current.

The small business owner who puts off his website design for months on end, because he has a "look" in his head and he's determined to achieve it. In the meantime, his online business suffers due to outdated technology and appearance.

The woman who loves minimalism - in her home, in her office, in her wardrobe - and insists that the website for her business mimic the same minimalism in its design - even though her business demands that a lot of information be shared.

What thinker/philosopher Marshall McLuhan taught us nearly 40 years ago was that we must employ each medium in a manner consistent with its inherent qualities and the way people use it. His point was that you couldn't separate the message from the medium (i.e., the medium is the message). Take billboards (please).  A billboard is designed to be read while driving by at 55+  mph.  You could certainly write a novel on one, but nobody would be able to read it. To use a billboard well, you have to think about what the user is doing when they encounter the medium (driving), whether or not the viewer can react instantly to the information (yes if it's to get off at the next exit, not as likely if it's to make an appointment), and what the user most appreciates in the billboard medium (tidbits of entertainment that can be fully digested in milliseconds). The physical reality of the billboard and the experience of the people viewing it are an essential part of the message itself. To use a billboard well, the message must be crafted in very specific ways.

The same thing is true of radio. Unless you have your own radio program, your options for reaching a radio audience consist of 15-, 30-, and 45-second spots. The medium requires that the message be fully understood without the use of visuals. The medium requires very tight writing. If the radio station is a music/entertainment station, the message has a better chance of being heard if it is itself entertaining. If the station is information-based, then an information-based message is likely to be effective. As with the billboard, the medium of radio plays a fundamental role in its message.

The concept of the website was developed by graphic designers excited about wireframes and by business visionaries excited about possibilities. And rightly so. But now it's time for us to be more thoughtful about the medium and how it interplays with the message.

Every type of website you can imagine - from a film studio to an accounting firm, from a music label to an online store - must provide content to its users. This is what people want from a website. They don't expect the website to give them a reflexology session, they don't expect it to repair their car, or test them for strep. Content. Information.

The information can come in the form of video, articles, infographics, pictures, social media streams. blogs, podcasts, and online flipbooks. Many of those content types are highly visual in nature. But here's where business owners often get off track - the website itself isn't a work of visual art. In fact, most websites - given what they need to accomplish - don't need to be very artful at all. They are containers for a broad range of content - content the consumers of your products and services want to access in order to cultivate the desire they need to make the decision to buy.  And when the container gets in the way - either by being too much the center of attention or by taking too long to achieve - it undermines the real purpose of the website.

Think about it in terms of a retail store. A store is a physical reality, a room or a series of rooms in an architectural structure. The structure itself needs to accommodate the store - space for safes with floors strong enough to hold them, space for displays and consumer floor traffic, counters, cabinets, offices, and bathrooms. Some physical spaces are very elaborate and some are plain, but at the end of the day they are just physical spaces with conduits, plumbing, drywall, and flooring.

What ultimately makes the space is the information you put inside it. The information includes display cases, the products within display cases, the colors of the paint,  light fixtures, lounge furniture, publications on display, signage, scents, sounds, and tactical experiences. The most magnificent architecture in the world won't compensate for poorly planned information inside the store.

The information in your website includes products, expanded information about products, company information, fonts, feeds from related content, embedded videos and graphics, interactive/social content, wish lists, ask-an-expert forums, and the shopping experience. The fanciest wire-frame design and most pricey website graphics in the world will not compensate for poorly planned - or missing - information.

Unlike real estate, the architecture of web design is changing rapidly. The conventions that looked good four years ago look stale today.  The designs that look appealing today will be out-of-date again soon. And though most of us know it's too expensive to give our real estate a face lift every other year, the stakes for not maintaining a contemporary look on a website are high.

Is there a solution? Yes, there is. It's to stop spending all this money on custom websites! I imagine a lot of graphic designers are cursing me right now, but as far as small business owners are concerned, custom websites are a waste of money - and they are not necessary. You can create a website in Magento, Joomla, Drupal, or Wordpress with complete confidence that the underlying technology will continue to evolve. That means you don't have to invest in that evolution (though I strongly recommend providing some financial support to the open source community you commit to).

But what about the design? you ask. First, remember that design means a lot of things. The beauty of the design of each of these open source web platforms is the functionality, the ease with which you can integrate them with extra functionality, their tight integration with databases, and their constant evolution. And yes, design also means the look of the user interface.

If you take an open source program like Magento, Joomla, Drupal, or Wordpress, then pay a designer to create a custom front-end design for it, you are still throwing money out the window. Why? Because the next time you want to update your look, you will have to pay for additional custom design. The next time your core software takes a technological leap (which is happening every few years), you will have to pay for more custom design.  The next time website styles change (which is happening every other year), you will have to pay for additional custom design.

Instead, use a design template made by a company who is making its money developing templates. Not just any template. Don't buy any one-hit wonders. Buy the template from a company like Infortis or Yoothemes, a company that is dedicated to updating its templates and keeping them relevant and functioning with the current technology. A company that is staying on top of - or even setting the trend for - what is hot in website design. Then pay a website expert to tweak and tune that template to match the colors, fonts, and essential feeling of your brand.

Now it's the designer end of my customer base that's in a dead faint. "But I make beautiful jewelry! My website has to convey my design ethos!" one says. "I am known in the fashion world as a fashion adviser. My site has to convey my fashion sense!" But is that true?

When you advertise in a magazine, does your ad pop up in 3D to show your design ethos? Or do you simply choose colors and a layout that express your brand in a consistent manner? Because print ads are terrible at being anything but one-dimensional, though they are terrific at showing a photograph of amazing design.

When you run a radio spot, does your spot appear to be adorned in fashionable clothing? Or do you simply choose words and music that express your brand in a consistent manner? Because radio is absolutely awful at showing anything visual, but it can do a terrific job of conveying a message.

When we expect any medium to achieve things for which it wasn't designed -or that the cost of achieving isn't worth - the medium, and therefore the message, is undermined.

If you look at some of the most powerful, profitable websites, you will see that the design isn't particularly noteworthy. Amazon isn't that great to look at, but it is the king of all content providers. Lands End's design elements begin and end with simple navy blue elements, but they sure do sell a lot of clothing and home goods. The website for the Art Institute of Chicago has exceedingly basic design elements, but the website performs beautifully and looks beautiful because they use images to convey the mood.  There is nothing designerly or artiste about Jeff Koons' website, but it does a terrific job of sharing information about his body of work.

The underlying promise -and therefore, the message - of websites is content, experience, information, engagement. To sacrifice any of those things for an idea of the prettiest, funkiest, coolest, or most luxurious graphic design is to undermine the medium. To pay $50,000 for a look when you could have spent far far less and put the rest of the budget into content development is to undermine both the medium and your business. And to spend precious marketing dollars on elements that don't ultimately bring value to your business or meaning to your message is unwise.

Learn to use each medium for the purpose it serves best. Use the print medium to engage the visual senses and convey color and richness in a way that cheap monitors cannot. Use video, film, and television to tell big stories. Use billboards and social media to deliver snackable content. Use radio to speak directly to your customers and engage the sense of hearing. And use your websites as a container for all those exciting elements - and more. More information, more detail, more engagement, more content. Stop trying to make the body into a dress. After all, in the case of the website, it's what's inside that counts.

(minor updates for changing technology on July 22, 2023)

It's easy to feel overwhelmed by all the things we're supposed to be doing on social media . . . TikTok, Instagram, Facebook, blogging, landing pages . . . Threads? . . . who has time to run a business, right?

No doubt Social Media has an important place in at the table of marketing disciplines. But it's just one chair. If you are feeling burdened by your lack of a TikTok presence or the fact that you can't figure out what to blog or tweet about, consider:

• If your company sells to businesses but needs a direct brand awareness with consumers, then Facebook, Instagram and TikTok should be part of your marketing efforts.
• If your company sells to businesses and has something very meaningful to teach or share that your potential business customers want to learn and that something makes it more likely those prospects will call you to do business, then you should  blog.
• If your company sells to businesses and you have something so compelling to say about that business that your potential customers are likely to flag it so as never to miss it, then you should consider leveraging the power of LinkedIn to reach business owners and professionals.

Every business needs a business legitimizing website. It's no longer an option. But what you do with that website must be determined by your business objectives.

Remember a time when different jewelry producers could place their collections in retail stores, and rely on retail stores to bring in traffic? The numbers game back then was one of local customers. Retailers who were on a busy street, in a mall with good traffic, or who had achieved destination retailer status could bring in the numbers.

So what happens when the foot traffic isn’t there and most malls are ghosts of their former selves?

The destination retailer route is still alive and well, and retailers who do a good job promoting themselves to an ample consumer population – either by being located in an area with sufficient population density or by being savvy online retailers – are still a good bet. Unfortunately, that retailer is the exception in the specialty jewelry retailer world at this time. It could change, but if it’s going to, it needs to happen quickly.

That leaves designers with the option of selling direct, and the numbers game becomes an entirely different animal. Let’s look at two different types of numbers games:

The All-in-One Numbers Game

If you’re a company like Stuller or Rio Grande, you stock 30,000 – 35,000 different products from hundreds of different vendors. The mere fact that they do this means that a relatively small population – people who make jewelry – will end up at their doorstep for the things they can’t find from smaller wholesalers in their local market. The numbers game they are playing is basically a product numbers game, and they compete for the same roughly 20,000 – 30,000 customers. One can make a nice business out of that.

But what if you’re a designer that carries 50 – 200 products, or a retailer who carries 500 – 1,800 products? Without “superstore” status, what do you have to offer? Even if you sell your products in a dense population area, you can’t be sure you’ll sell those products in sufficient quantities to make a profit. Not when you’re competing with other people who do the same thing you do all over the country and even around the world.

No, your numbers game becomes the consumer numbers game, and for that you need the internet.

The Find-the-Consumers-and-Help-Them-Find-You Numbers Game

How many sales would you need each year to create the profits you want? 300? 3,000? There are probably 300-3,000 people who would be willing to buy your products at your prices, but you have to find them and you have to make it easy for them to find you. To do this, you must learn how to do digital marketing.

Are you excited about your 1,800 Twitter followers? You probably need closer to 20,000 to generate meaningful web traffic. And your 3,000 Facebook followers? You’ll need to at least triple that. Social Media is about far more than talking to an audience and hoping they talk back. It’s about finding new prospects, of the right attributes to ensure interest in your products, in significant enough numbers to generate sales traffic.

Do you make prudent use of the social media advertising opportunities available to you? Do you know when to boost a post, how to target your potential audience, how to write compelling headlines and which images to show? Social media advertising is not an art nor a hobby – it’s a discipline with plenty of data behind it. It should be approached with the same seriousness and intention that you use when buying television or radio time.

Are you sending email to your customer base? Weekly? Sending a quarterly email is entirely insufficient to generate the kind of top-of-mind awareness your business requires. And how many new email addresses are you adding to your email list? If you’re only collecting the email addresses of people who actually purchase, you’re missing an entire prospecting universe. Your digital marketing strategy must include active pursuit of the email addresses of people likely to be interested in buying from you. Your email marketing strategy should feel like a serial novel, thoughtfully telling the story of your brand through a selection of product offers, interesting information, events, reflections, and images.

Do you have a website that not only tells your story, but actively lists all your products and provides excellent descriptions of each product – complete with the search terms consumers are likely to use when looking for something just like that? Search is one of the most compelling ways to find consumers today, and maximizing the value of your website and product descriptions can bring you consumers you would never have known to target. Once the searching consumer finds your product, does your website inspire the confidence needed to make an online purchase?

These are just some of the things your business must do well in order to find the 300 – 3,000 consumers who will buy your goods this year, and next, and the one after. And here’s the good news: digital marketing isn’t rocket science. You can learn it yourself, or you can hire someone to do it for you. Either way, you need to find those consumers. And you need to help them find you.

Well, that’s about enough of the proverbial ‘long winter’s nap’ I guess. I hope everyone has had lovely holidays, solstice, or whatever it is you observe as the longest night of the year passes and we begin a new season filled with potential.

With the holiday sales past and our new year’s resolutions already becoming a dusty memory, it’s a good time to think about what we’re going to do better in our businesses in 2008 than we did in 2007. Maybe it’s a progression of something we’ve already started, and maybe we’re looking for something new. I’d like you to take another look at your branding. But let’s start with a little science.

P. Read Montague, a neuroscientist affiliated with a number of well-known universities, did his own Pepsi challenge using functional magnetic resonance imaging (fMRI) – which is imaging technology that is used to view the structure of the brain and measure responses relative to physical changes within the brain.

The first test was a standard blind taste test, and in Montague’s experience the test participants were nearly equally split between Coke and Pepsi. The fMRI measurement demonstrated that the areas of the brain associated with pleasure and satisfaction activated during the actual tasting. Not surprising.

Then Montague did a second round of tests with the same group of participants, this time telling each of them the brand name of the product they were tasting. Not only were the pleasure and satisfaction regions of the brain activated, but this time the regions associated with memory (medial prefrontal cortex and hippocampus) were also stimulated. Montague’s conclusion was that “this showed that the brand alone has value in the brain system, above and beyond the desire for the contents of the can.”

Gone are the days when a company could build a brand around things like good service, fast shipping, low prices, high quality, or good selection. Those things are now the minimum standard necessary to compete. In 1984 we decided to raise the barrier to entry for new competitors in direct marketing by committing to ship our products in two days. Now any direct marketer who knows what they’re doing gets over 99% of their products out same day. There’s very little room for improvement in customer expectations in this arena. Products have become so inexpensive that luxury has become hard to define, leaving little room for improvement in the price arena.

Coke and Pepsi have invested many decades each in creating that reaction in the medial prefrontal cortex and hippocampus. There is an entire generation that “would like to teach the world to sing, in perfect harmony.” We buy vintage-looking coke bottles at a premium price each holiday season to remind us of buying cokes in the old-fashioned soda-dispensors that moved the bottles along by their necks. The next generation had their Michael J. Fox Diet Pepsi ads. In fact, each generation has been given their sports stars, pop stars and movie stars drinking Coke or Pepsi. At the same time, millions in the US have memories associated with one soda or the other, and both have become a symbol of American pop culture to people around the world. And we’re not talking about brand recognition at the expense of profitability here. Though both companies have had their down years, they have continuously reinvented themselves to find new profit zones. But they have a solid brand foundation of warm & fuzzy brain reactions to the mere mention of their names.

Could they create the kind of brand recognition they enjoy today if they had to start today?

Well, that’s the question the rest of us have to answer. What are we doing to create reactions not only in the area of the consumer brain that registers the features and benefits of the specific product we sell, but also in the area of the consumer brain that says “ah yes! I remember them!” Remember, it can’t be low price, high quality, good service, or good selection. These days the consumer brain only registers those companies that don’t live up to those expectations.

There may be some tougher economic times ahead, but consumers will continue to buy products and services, and some companies will do better than others. If you are in a business that has clear competitors (which most businesses do), and if you can’t claim proprietary technology or intellectual property that prevents others from crowding your market space (which most businesses can’t), then you will have to establish a clear brand image.

There was a time when the sheer growth of the middle class meant that gaining market share was enough to guarantee profitability for the companies that entered early enough and aggressively enough to claim it. Think Coke and Pepsi. But times have changed and plain volume is just as likely to be a liability as a profit-ability. So what will you do to make yourself stand out – to the group of customers that is most likely to pay you well for what it is you have to offer (because without that group of customers, all the branding in the world won’t matter)? Make that hippocampus work for you, or you’ll be just another simple pleasure and satisfaction reaction.

(c) 2008, Andrea M. Hill

“Being able to do something online that you can’t do in any other way is important . . . That’s because the web is a pain to use today! We’ve all experienced the modem hangups and the browsers crash — there are all sorts of inconveniences: websites are slow, modem speeds are slow. So if you’re going to get people to use a website in today’s environment, you have to offer them overwhelming compensation for this primitive infant technology. And I would claim that that compensation must be so strong that it’s basically the same as saying, you can only do things online today that simply can’t be done any other way.”  Jeff Bezos

Website Innovation Goes Beyond the Technology

This quote is from an interview Jeff Bezos did in 1998. I remember reading it at the time and trying to wrap my mind around how I could take advantage of the internet in the business I was then running. It seemed clear to me in 1998 that even though we could use the internet to take orders and ship goods (the business was a jewelry industry distributor), using the internet as a simple replacement for phone or fax orders was not going to take sufficient advantage of the emerging technology. Back then, we didn’t even have the computer systems necessary to facilitate significant use of the internet. We didn’t have fast bandwidth to the building. We didn’t have employees who could type fast enough (or in some cases spell well enough) to manage online orders in the absolutely superb way they handled phone orders. We needed all the building blocks and had to build them fast.

So much has changed since then. Today, 70% of internet use takes place on a pocket-sized device with 4G or 5G. Still . . . if you take away the modems and terribly slow internet speeds of 1998, what Jeff Bezos said back then is still highly relevant: Every website must present a compelling reason to use it.  And yet, most businesses in 2021 are still not providing a meaningful, differentiated, online experience. That’s what website innovation is all about.

In 1964, communications theorist Marshall McLuhan said, “The medium is the message.” Back then, he was focused on the communication medium of television, and how television was changing not only the way households received information, but the culture itself. But he could have easily been speaking about every communication revolution since then: cable tv, digital distribution of music, video games, then online games, social media, the internet. Each new form of communication brought with it new opportunities for communication, new ways of achieving objectives, and new cultural implications.

Business websites are also a communication medium, capable of changing the way customers interact with, experience, and feel about a business. But instead of using all that potential, most business owners have attended to only the most superficial aspects of offering a website.

• The standard page format of websites has barely changed since 1999: Home, About, Services, Contact, Shop. . . maybe News.
• Many retail websites feature pictures and in-store videos to show the website visitor what it would look like if they paid a physical visit. Some go so far as to spend tens of thousands of dollars producing virtual tours, à la real estate agent home videos.
• Product selection on retail websites is often limited to images and iframes provided by suppliers, or which come as part of an industry platform environment.
• B2B websites are even further behind, failing to put full product offerings online or offer the specific services (and price levels) their customers expect to access when meeting up at a trade show or picking up the phone.

Website visitors do not expect the website to replicate your store, are not motivated by seeing all the same products on your website that they find on every other website, and they certainly do not want to purchase your building. Much of what businesses are doing with their websites is missing the point — and the potential — entirely.

That's because most of the work of creating an effective business website isn’t about building the website at all. Effective websites are borne out of the work that comes before they are built.

The Pandemic Effect

Business as we know it has changed forever. Online shopping and buying trends that were happening prior to the pandemic have been dramatically accelerated – economists and social scientists have estimated that we experienced five years of technological evolution in the eight-month period of March - October of 2020. When physical restrictions are lifted, we will not go back to the old ways of working, shopping, buying, interacting with brands, collaborating with known suppliers, or finding new suppliers.

In many ways, this is excellent news. By 2019, most businesses had become mired in price competition. Too much corporate energy was being focused on driving prices down to satisfy price sensitive B2B and B2C customers. But chasing prices is a zero-sum game, forcing companies to offshore work, lay off employees, pile more work on the employees they have left, and ultimately, reduce quality.

Price sensitivity is not going away, but there is another truth here to which most business owners pay insufficient attention: You don’t need all the customers. You just need the right customers. Your value offering can be . . . must be . . . about more than price. Click to Tweet And your website, which will remain a central part of your communications strategy from this point forward, must communicate your value offering in more than just words. Your website must communicate your value offering through experience and benefits.

The Cost of Pricing

Ah, now you're thinking, "But price does matter! People bring up pricing all the time!" Sure they do. So let's break that down. When does price matter most? Two scenarios come to mind:

• Price matters when selling to highly price-sensitive consumers.
• Price matters when there is no other point of differentiation between products.

If you are a grocer in a food desert, God bless you and this article probably is not for you. For everyone else, if you are feeling the squeeze of price competition, it is probably because you have not done the work to differentiate your business from your competitors. Sure, there will always be customers (or potential customers) who complain your price is too high. But if you peer beneath the surface, you will quickly realize that those customers are not your ideal customers. Unless you are interested in competing solely on the basis of price, and are prepared to do all the operational improvements necessary to still make a profit while selling at the lowest price, you shouldn't be competing on price at all.

Doing the Work of Website Innovation

You can't produce a website that delivers an ideal experience to your target customer if you haven't defined your strategy. You must be able to articulate who you are, what you do that makes you different, and why you matter to your target customer. It is a big topic, but for a quick overview of what’s involved, here is a 17-minute podcast and transcript.

How you apply your business strategy to website innovation should ultimately be as unique as your strategy itself. Let’s look at a few examples to illustrate the potential.

An Online Retailer’s Website Innovation

This example involves a jewelry designer who sells to both boutiques (B2B) and consumers (B2C). Her product is fine jewelry, so it's expensive. She produces two collections for boutique distribution, for which she stocks small inventories and has the capability to produce reorders quickly. For consumer direct sales she only offers one-of-a-kind and custom. A big part of her brand value is her aesthetic – people come to her for her design. But her customers return because of her commitment to developing and nurturing relationships, and because she has an uncanny ability to help her customers articulate their ideas and desires and then realize those ideas in physical jewelry form. Finally, this designer has the exquisite ability to help a customer give herself permission to spend money on herself.

A Shopify style, put-a-product-in-the-cart-and-ship-it website will never be able to deliver on this value proposition.

To start, her website needed both a consumer front end and a gated B2B back end.

One-of-a-kind products that are ready to ship can be ordered as is or can be adjusted according to the client’s wishes. From within those product listings, it is easy to book a quick video chat or send an email or text message.

The collections available only through boutiques are also available for browsing, with easy links and directions to the retailers that carry them. She uses these pages to explain why she makes some products available only through retailers, and why she thinks it is important to protect and buffer her retail partners. This transparency builds trust and respect for her business principles.

All her product pages are peppered with links to articles with images and commentary about what she is creating and why. This invites her website visitors into her design process in a way that is unique to an online experience. When a customer visits the physical shop, she can experience the design process in a way that is intimately about herself. Visitors to the website can experience the design process in a way that is more intimately about the designer. Both are excellent experiences, and each is designed to work most effectively relative to the benefits and drawbacks of its respective channel.

The site pays extensive attention to the experience of creating custom design, with obvious and easy options to launch or schedule a phone or video call throughout the site. She toyed initially with trying to figure out how to create a ring builder, a website convention showing all the possible components and iterations of a design. But she ultimately decided against it, because dragging a graphic around to make a new graphic could not possibly replicate the rich experience of letting a talented designer guide one through the creative process.

Her B2B clients can log in to a secure back end, where they can see their negotiated prices and order products. They can place a purchase order or credit card order immediately, or schedule or launch a video or phone call to speak with the designer. B2B clients can also see past orders, track order progress, and see shipping details.

This website does not require expensive software or management. The technology is fairly basic. Superficially it may even seem like a lot of other websites. But by approaching her website through the lens of her strategy and value offering, this designer went beyond setting up a website and deep into website innovation.

Website Innovation for B2B

Let’s look at the website of a company that distributes instrument and music supplies to music stores and schools. They manufacture some of their supplies at their northern European production facility and distribute thousands of supplies from other manufacturers. Not only are they faced with a shrinking market, but their suppliers can also take advantage of the same internet technology to cut them out as the middleman.

To shake themselves out of survival mode and actually start growing again, they did a strategic overhaul in the years before Covid-19 came calling. During that process, they recommitted to the idea that their deep knowledge in all things music supplies was just as important as the products they sold. They decided to stop worrying about how much cheaper their clients could find things on Amazon, eBay, CDiscount, and Otto, and instead focus on how much their customers trusted them to not only sell the best products, but to help them select the right products.

They knew all their products had to be available for shopping and comparison, and that their business systems had to be upgraded to support that. Their systems overhaul made it possible to manage all their products in only one system and make those products sellable both through their traditional office support and on the website without any extra administration. The systems update also made it possible to show each customer their negotiated prices automatically and made it easy for customers to check on order history and statuses.

Implementing an Inventory Control System

But the big work of website innovation involved answering these questions:

• What are the things we already do really well – the things that gained us trust and respect from our customers?
• When we update our website, how might a website underperform on those important things due to the insufficiencies of a website compared to a phone call or a meeting?
• What can our website do to mitigate those shortcomings and offer something new and better, ideally in ways that a phone call or meeting could not do?

The answers to these questions clarified that their website needed to provide all the information, training, recommendations, and knowledge that their customer service team had been providing all along. The solution was to create a wiki-like information architecture using tagging and categories to make it easy and intuitive for customers to learn about any product, find other products like it, compare products, and do deep-dives into product features, functions, and benefits.

Because so many of their clients are music teachers, they had always offered proforma quotes and provided an extensive form library to assist teachers with budget requests. They turned these forms into an on-demand, easy-to-use, interactive, system. They are currently in the process of refining that system so they can more closely collaborate with individual schools relative to budgets for music supplies.

The website also makes it easy to jump on a phone or video consult, which blurs the line between online and in-real-life interactions, builds trust, and increases close rates. For this company, website innovation was about making sure the online experience was the best possible experience of their company by mitigating the downsides of the channel and playing up its potential.

What Will Your Website Innovation Involve?

You, too, can use your website as a strategic extension of your brand value. Customers are not looking for thousands of products on one site, without curation or context. Sure, they want to be able to buy things, but it is easier than ever to find things and buy them. In fact, consumers are currently overwhelmed by choice, much of it meaningless. 

No, if you want to stand out online, you must identify your target audience and do the brand-relevant things that matter to them (or that will appeal to the right subset of new visitors). The technology is available, and it is affordable. What is generally missing is thoughtful analysis, planning, and imagination. Once you do that work, new answers will occur to you that simply had not occurred before.

So stop. Before you jump into Wix (or Weebly, or Square, or Shopify) and start dragging and dropping your way to a same-as-everyone-else website, do the work. The thinking work of website innovation.

If you want to stand out online, you must identify your target audience and do the brand-relevant things that matter to them. Anything less is just a waste of website space. Click to Tweet

I’m not a consumer jewelry blogger, but this is something I wish every consumer jewelry buyer would know. It’s about how (great it is) to buy designer jewelry.

When you buy designer jewelry, your jewelry has a back story

Nearly every piece of jewelry I own came from a designer. As I write this blog, I am wearing raw diamond floret earrings and a raw diamond tennis bracelet from Todd Reed, a ring from Bree Richey on my left hand, a ring from Elizabeth Garvin and another from Jennifer Dawes on my right hand. I have lovely little button earrings from Robin and Remy Rotenier. I nearly always wear a bracelet from Walt Adler and another from a craftsman in Mexico whose name I have long forgotten but whose face I will always remember. My favorite brooch is a mokume-gane gem from Jim Binnion and Steve Midgett (yep! both of them).  Someday I will own a heart pendant from Rhyme & Reason. Something from Mark Schneider’s color collection. A mother's cuff from Erica Courtney. A Padparadscha anything from Omi Prive. Anything from Suzy Landa (preferably green or purple), hoop earrings from Pamela Froman, something nouveau vintage from Just Jules, Diana Widman’s Night Sky pendant, and a piece from ZAIKEN’s Throwing Stones collection.  (I have not received compensation from any of these designers for mention in this blog).

What don’t I own? A single white diamond ring. No diamond studs. I don’t own any Cartier or Tiffanys. I don't buy jewelry for the sparkle, the status, the vault value, or even the fashion. I love the sculptural quality of jewelry, the gemstones (all of them), the art. In this way, I am representative of the type of women who buy designer jewelry – or women who would buy designer jewelry if they knew what was available to them. There are many of us.

'Art' and 'Decorations' are Different Buying Experiences

Buying designer jewelry is not, should not be, like buying generic jewelry. What is generic jewelry? Any piece of fine jewelry that was designed for mass appeal. Does saying it’s generic mean it’s not beautiful? Not at all. I can see the beauty in a perfectly manicured lawn, even if it is similar to the other perfectly manicured lawns down the same stretch of manicured road. I just don’t want that for my own yard. My yard was designed, layer upon delicious layer, to make a statement (entirely different blog here – but you get my point). Does this make me a better customer or a more desirable customer for jewelry? Not at all. But it does make me - and women like me - a different kind of customer, and one that is not currently very well served.

Buying designer jewelry is about buying art you get to wear. What do you do when you buy art? You look for something that speaks to you. You look for something that pulls a feeling out of you that you weren’t feeling before you looked at it. You look for art that you know you’ll be happy to sit and stare at for hours and years on end. You don’t buy art to match the paint and furniture in the room – for the right piece of art you design the room around it. Good art grows old with you.

Great art doesn’t have to be expensive. Would I be giddy with excitement to own an original Rothco? Absolutely. But there is a painting in my living room painted by an artist named James R Gros. He is not famous and the painting cost me less than $200. But it’s one of the most expressive pieces I own. I never get tired of studying it, and everyone who visits our home at some point wants to talk about it.

Too many people do not know the joy of seeking and acquiring art – which is not a money thing, it’s an awareness thing. You can teach a child to buy meaningful art on her allowance.

So when I look for jewelry, I want it to have artistic merit. I want it to have been conceived of and created as part of a thought process about beauty, and craftsmanship, and precious materials. I want to know that whenever I wear it, I will see it, and when I see it, it will mean something to me.

That’s the first thing I wish every consumer knew about designer jewelry. That it’s buying art. When you take a person by the hand and show them the sheer delight and wonder of buying art, the experience can be transformative. I want consumers to have that experience with designer jewelry.

There's Another Opportunity Beyond Custom

 The other thing I wish consumers knew about buying designer jewelry is the difference between buying custom/bespoke and buying a designer commission. If a consumer has an idea for a piece of jewelry he wants to make, and he primarily needs a pair of hands to help him execute it; or if he wants a design that is very traditional but using some of his own elements, that’s what I refer to as custom or bespoke. There's no criticism in this – it's an essential service and can be a terrific experience. But that’s not the same as buying designer commissioned jewelry.

Just as you wouldn’t go to Klimt, hand him a photograph, and tell him to paint your portrait precisely as seen in the photo, I personally wouldn’t go to a jewelry designer and tell him what to make. A big part of the value of buying jewelry from a designer is the designer’s point of view. It's not that the customer has no input. Most designers who will do individual pieces have a discussion or series of discussions with the client first. They talk about gemstones, which ones the client likes most, and why. They ask about how the client wears jewelry, why they wear it, and how it makes them feel. As a client myself, I have loved those conversations. But once you find a jewelry designer who clearly has beautiful images in his head and the ability to turn those ideas into real objects, much of the joy in wearing the finished piece is turning the designer loose and seeing how that designer transforms your conversations about intangible things into a physical work of art.

Of course, not everyone who calls himself a designer is actually a designer. There is ample room for argument here, but generally someone who is truly a designer will have a clear point of view, a body of work that expresses that point of view, and a recognizable evolution in their thought process over time.

I have this imaginary scene in my head where a consumer walks into ABC Jewelry Store with her grandmother’s rings and says, “I’d like to turn these diamonds and rubies into something I can wear and love.” And the jeweler, who is very talented at the bench, asks “Do you know what you want?” The consumer says, “No, I really don’t, but I appreciate beauty, and I want something that is a bit unusual but which will keep me visually engaged for the next 30 years.”

And the jeweler thinks, “I’m really good at making jewelry – the best – but I don’t have an artistic point of view and what I make is pretty traditional looking. Since this consumer doesn’t want to direct this effort and she wants something different, perhaps I’ll teach her how to buy art!” Then he says to his new customer, “Let’s have some fun. I’m going to introduce you to some different types of designer jewelry – designers who will also do commission work. We’re going to see what you like and learn a bit together. Then, let’s pick someone for you to work with, and let them create a piece of art just for you, something that you will always treasure and be proud of.”

Shoot, I get goosebumps just thinking about it.

Is this experience for everyone? Of course not. But for some, the right guidance from the beginning would turn buying designer jewelry into an obsession for them, something to look forward to once a year, or once every few years.

So these are the things I wish consumers knew. I wish more people were able to have the ultimate experience of buying designer jewelry. Because my new ring designed by Jennifer Dawes just arrived today. I’m utterly conscious that I'm wearing it. It brought tears to my eyes when I opened it. And I know that if more consumers felt like I do right now after acquiring a new piece of jewelry, they’d want fine jewelry more often.

Nobody walks into a Walmart and thinks she is in Target. She may be looking for the same brand of paper towel or hair color, but she knows which mass merchant's store she's in the second those sliding doors glide open. You might think this is about layout and lighting (and it is), but mostly it's about Merchandise Point of View.

If you were blindfolded and led into a Yonkers, deep between the clothing racks, once you took off the blindfold you may not know immediately where you were, but you would definitely know that you weren't in Neiman Marcus.  The two department stores have a very different Merchandise Point of View.

Both Radio Shack and Best Buy sell computer cables, but despite certain product similarities, the Merchandise Point of View is decidedly different.

Behind every successful retailer is a clearly defined Merchandise Point of View. Struggling retailers may struggle for many reasons, but nearly all of them have failed to define their Merchandising Point of View.

So what is a Merchandising Point of View?

Your Merchandising Point of View is your declaration of identity to the world of consumers, it is what your store is all about, it screams come in if you like these things and move along if you value those other things because that's just not what we're into here. A Merchandising Point of View both includes and excludes - because you don't need every customer to be successful. You just need the right customers.

The Merchandising Point of View often starts with what the owner of the retail store loves and values, but if it doesn't expand quickly to determine which customers those things matter to and whether or not there are enough of those customers, the  Merchandise Point of View is not sustainable.

Strong merchants (retailers) define their best customers - they know what their customers wear, how their customers spend their time, how their customers spend their money, how they align themselves within society, and what matters to them. Strong retailers know how to keep their customers engaged, and they do this with many elements, including excellent sales staff, desirable environment, promotion and marketing. But the most powerful way to keep customers engaged is to keep bringing them new and interesting products that appeal to them. The best way to do this is through a crystal clear Merchandise Point of View.

So how do you develop a Merchandise Point of View? You ask and answer these questions:

1. Which customers do we want?
2. Which types of products matter to the customers we want?
3. How do I want my customers to feel when they walk into my store?
4. Which adjectives do I want customers to associate with my store?
5. What is the unique story or experience of our store, and how do we express it - through words, colors, lighting, communications, customer relationships, design features . . .

Once you ask and answer those questions, you can select merchandise that not only fits with but also advances your store's unique story. This marriage of merchandise, experience, and physical (or graphical) space is the Merchandise Point of View, and like all marriages, it requires constant nurturing and attention to blossom and to be sustained.

What's your Merchandise Point of View? If you can't answer this question, it's time to get cracking! The profession of retailing changes daily, and you can't afford to get even one step behind.

Directing the creation of an advertisement, web page, or direct mail promotion can cause the most stalwart small business owner to develop indigestion. As challenging as it may be to determine where, when and how much to promote, that effort pales in comparison to designing or directing the design of the promotion.

The most common complaint of business owners is that the graphic designer or copywriter does not fully understand the product or service or cannot convey the message in a meaningful way to the prospective customers. This problem is complicated by the fact that most business owners are not trained art directors or advertising designers. Soon the designer begins grumbling about insufficient design direction and the business owner begins grumbling about mounting costs and missed deadlines.

Sometimes the business owner decides to just do it herself.  But when an amateur positions herself in front of a blank screen to design a page or write compelling copy, the result is like Novocain to the brain. So many decisions must be made, including colors, shapes, positions, photographs, fonts, headlines, and body copy. Some small business owners decide not to advertise rather than put an unflattering promotion before the public.

Promotional design does not have to be so difficult. The problem with most efforts is that the design process is the middle of an effort that has a clear beginning – a beginning most business owners do not understand or complete. This is the equivalent of building the first floor of a house before digging the basement and pouring the foundation. Advertising and promotional dollars are generally best spent promoting a brand or a business over single product promotions. The most important thing a business owner can do to ensure quality promotions is to develop descriptions for the following eight characteristics:

1. Competitive environment. This important overview identifies the competition and discusses how your business differentiates itself from its competitors, including what competitive advantage you enjoy and plan to exploit.

2. Target audience. A detailed description of the most likely customers for the product or service being offered. This should include information regarding who the prospects are currently purchasing from and all customer needs, habits, and behaviors that must be satisfied.

3. Core values. When a business understands the values it stands for it can consistently convey those values through copy, graphics, and service policies. Much as mature individuals prioritize and demonstrate consistency of behavior based on sound value systems, business benefits from the same consistency.

4. Most important message. Based on a sound understanding of the core values, distill those values into a statement that conveys the reality of the business and explains why the business exists.

5. Brand personality. Very few people beyond the age of eight establish meaningful relationships with objects, and a business is an object. If your business were a person, who would that person be? Describe that person as if they were a character in a novel. Hint: it's not necessarily you.

6. Voice, tone and image. Building on the work in #5, decide how this person speaks, what types of words they use, and what type of image they convey to others. The work of #5 and #6 is the process of anthropomorphizing your brand.

7. Reasons to act or believe. This is the list of emotional and rational reasons for prospective customers to act on or believe in your offer. For example, a rational reason to buy a new dress is because I need a new dress for my office party. An emotional reason to buy a new dress is because it will make me look beautiful. Customers require both rational and emotional reasons to act.

8. Sensory and emotional triggers. Though this section may seem silly, it is both a great deal of fun and a big help to the person designing and writing your promotion. Consider the colors, textures, aromas, sounds, visual imagery, and tastes you would like customers to associate with your offer. Once you have developed a cogent list, make sure the elements work harmoniously together. For instance, does your offering taste more like grape juice or single malt scotch? If single malt scotch is the answer, but the smell you associate it with is cotton candy, does that make sense?

Once these eight issues have been addressed, all that remains for each subsequent promotion is to draft a succinct statement about what the promotion is expected to achieve. This statement should include goals regarding customer perception, sales, and lead generation.

From a promotional design standpoint, the process of developing these eight elements will make the job of developing logos, selecting headlines, writing meaningful copy, and choosing colors and fonts significantly easier for whoever designs the advertising promotion. From a customer standpoint, the resulting consistency will contribute to an enhanced understanding of your brand that will lead to repeat business and customer loyalty.

(c) 2008. Andrea M. Hill

When Will We Start Treating Lab-Grown Diamonds Like a Product Instead of Like an Intruder?

The jewelry industry continues to take polarized positions on lab-grown. It seems like every time we've grown past this debate, another social media group comes to virtual blows over the topic. I'm not surprised - it was the same conversation when Chatham first started offering lab-grown emeralds and rubies. But it's not useful. Not to us, not to our customers.

You don't see grocery stories saying, "we won't carry organic/gluten-free/paleo/pick-a-theme" groceries because they interfere with our other grocery sales. They evaluate consumer interest and potential demand, and offer choices. Fashion has done this with alternative fabrics. Car companies had a harder time doing it with alternative fuels, but that's largely because of the expense of tooling up to produce new equipment coupled with wanting government assistance to do so.

When it comes to lab-grown diamonds, we get all tied up in our shoestrings with our own preferences, fears, and perceptions, and in the process lose sight of the customers.

In the most recent social media post and following thread, I saw all the same black-or-white arguments. Diamond mining concerns are doing great! So much change! Mined diamonds are terrible, so much abuse. Lab-grown diamonds are not ecologically friendly - so much electricity! Lab-grown diamond producers are abusive, they're all in (pick a country). None of these tropes serve the industry, our businesses, or our customers. But if we're going to have honest conversations and learn from each other, we need to get comfortable with shades of gray - because that's all there are right now.

Shades of Gray Shadow Both Mined and Lab-Grown
The social and ecological issues are very challenging to sort. Tens of millions of artisanal miners around the world rely on mining to feed their families. Anything we do in the mining sector must be done not only with regard for their health and safety while mining — but also with regard to their health if they cannot mine. In that regard, the pandemic is causing horrific food insecurity around the world.

Want to help support artisanal miners suffering from food security caused by the pandemic?

On the other hand, diamonds do not "do good" yet. Not by a long shot. They are "doing better," and better is a good direction to go in. So we must keep applying pressure on the mined diamond front.

But let's never demean progress. The natural diamond sector was pretty bad for a long time, they've made progress, and if we treat progress as an all-or-nothing proposition, it tends to stop. We don't want that.

So, are lab-grown diamonds a more or less ethical solution? Like natural diamonds, it all depends. If you're talking about factories abusing their labor, then no. But just because a factory is in China doesn't mean it's abusive. I spend a lot of time in manufacturing facilities around the world, and I've seen rotten treatment of employees everywhere — including in the United States — and excellent treatment of employees everywhere — including in China.

Are lab-grown diamonds more or less ecologically sound? Again, it depends. I know of growers working to use the most responsible power generation possible, and some that don't care about that at all. Until lab-grown producers start disclosing some of those details, it's just impossible to know.

But, if you have a customer who has a really hard time with the concept of digging and blowing holes in the earth, then lab-grown may be the flavor of "responsible" she's looking for. I don't agree with making green statements that can't be validated, but I'm uncomfortable with blanket statements that lab-grown producers are all disruptable too.

Which Holds Its Value Better (Hint: It's a Red Herring)

Do lab-grown diamonds hold their value for the future? That's a laugh — a discussion we shouldn't even be having. Not because lab-grown will or won't hold their value for the future — nobody knows that yet! It's a laugh, because mined diamonds don't hold their value. We should never treat diamonds of any sort as if they are a financial instrument. A very small number of collectors in the ultra-rare mined color diamond sector do use diamonds as a financial investment, but that's it. We should never make any promises or inferences to customers about the future value of a diamond.

Should you Sell Lab-Grown Diamonds?

So - should you or should you not sell lab-grown? Well, you could base that on your own preferences, fears, and biases, but I'll suggest that's a terrible business approach. You should make every business decision based on your businesses core values (which are different than biases), and on the desires and interests of your customers. It won't be the same answer for everyone, nor should it be. If analyze this question with intellectual rigor, self-awareness, and deep interest in your customers, you'll have the right answer - and nobody else can tell you otherwise.

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Several recent studies are practically shouting at the jewelry industry to reevaluate our behavior and prepare for the future. We've relied on Baby Boomers to buy our luxury goods for so long, we've practically forgotten that they would eventually age out of the major acquisition stage of their lives (which, admittedly in the case of the Baby Boomers, was enormous and economy-building).

What are the Studies and What are they Saying?

The first study, by McKinsey & Company (A Multifaceted Future: The Jewelry Industry in 2020), essentially predicted that the jewelry industry would continue to consolidate and would start to mirror the changes in the apparel industry, which means more intense brand focus and a blurring of fine and fashion. Stores with a single strong brand identity and focus will be the clear winners. This points to younger buyers, who are more into the experience of a specific brand than the experience of encountering many high-end brands in one location. The department store jewelry experience will wane and the Todd Reed Studio store in Boulder, the Alexis Bittar Studio  stores in New York, Los Angeles, San Francisco and Chicago, or the Greenlake Jewelry Works experience in Seattle will rise.

The second study, by Unity Marketing and summarized in this article on Rapaport's Diamonds.net, says that we are at at tipping point in branding and marketing. The study asserts that older consumers - long depended upon for their brand-buying habits - have reduced their spending, and that luxury marketers need to adjust their marketing, branding, and channel behaviors to appeal to the younger buyers taking their place.

So what does this mean? Several things.

1. Respect the new consumer. Some things never change. Just as the parents of Baby Boomers were mystified by their children and found them to be disrespectful, responsibility-averse, and entitled, the Baby Boomers are laying the same labels on the next generations. If you're stuck in this rut, dig on out, because the labels are more a product of Baby Boomer age than of younger generation reality.

2. Learn about the new consumer.

1. Millenials are more informed than any prior consumer generation, which means they have done their research before they come to the sale, and they know a lot - perhaps more than most sales people - when they arrive.
2. They care less about social conventions than any prior generation - which means that they don't buy for status. If they want something, it's to satisfy themselves only, which means everything they buy is far more personal. "But wait!" you say. "They run everything by their friends first. Isn't that status seeking?"  Actually, it's not. It's collaboration. This is the most collaborative generation we've ever met, and their opinions matter to one another. They share, borrow, rent, and trade as a way to spread the enjoyment and the wealth.
3. They pride themselves on doing more with less. They search for the right deal, the right product, the right timing, the right experience. This is true in their jobs and it's true in their purchasing behavior. This generation has been labeled entitled, but that's not accurate. They just don't settle.
4. They value experiences. This is the first generation that will blow an entire paycheck on a meal and then live on Ramen for the rest of the month. It's not about the food, it's about the experience, and they don't want to wait until they are retired to have experiences.
5. This generation isn't waiting for luxuries. But their acquisition of luxuries isn't systematic, and it doesn't follow the same life patterns (school, marriage, children, luxury acquisition) as their parents did. If they want something now, they find a way to acquire it now. But see the four points above regarding what motivates them and how they buy it.
6. This one should go without saying, but remember that this generation doesn't perceive any difference between internet marketing and billboards - it's all communications to them. The time to perceive a difference between traditional marketing and new/internet marketing is over.  Similarly, whether a store is online or brick-and-mortar, it's all shopping to them. Sales and marketing channels are forever changed, and you need to be out in front of that.

Now What?

I have a few ideas for you, but first, I want you to go back to the previous section of this article, and read each bullet again. After each bullet, ask yourself, "how does my product offering, my brand, my store look to the new consumer in light of this piece of information?" Try to see it through the new consumer's eyes, because that young person is your next patron.

Now let's start with the basics.

Mobile computing. If your store/brand/offering isn't readily available to the new consumer on her mobile device, there's a good chance she won't see you at all. This next generation of shoppers does most of her computing right on her phone or tablet. If your website doesn't automatically reformat itself to be mobile friendly on any device, this new consumer will quickly dismiss you as out-of-touch and a waste of time.

Your Brand Experience. The new consumer mingles entertainment with shopping. Entertainment can be a variety of things, from educational and informative to interactive. Your store, your website, your social media presence, your radio ads, your magazine ads - all of these methods of communication must present a single, clear brand message that engages the new consumer's interest and emotions.

Unfortunately, there is no pat answer to how to do this. In fact, pat is the antithesis of the new consumer. To define your brand experience, you must dig deep into your identity, purpose, and meaning as a brand. Figure out what it is about you that consumers identify with - and what you want them to identify with. You won't appeal to all consumers, and that's the point. You don't need all the consumers - you just need the right consumers. Figure out who they are, and how to communicate with them, and you will discover which brand experience is resonant. This work can only be done by you. It can be guided by someone who knows how to do such work, but you are essential to it - it can't be provided to you.

Your Sales Organization. The new consumer is coming to the sales cycle late. What does this mean? It means that in the past we were able to guide the consumer through the sales cycle but those days are gone.. Before the internet and the uber-informed new consumer, most pre-purchase research was done in the store, aided by a skilled salesperson who was the expert in the product area. Today, consumers conduct significant research online prior to entering a store. They have already availed themselves of product reviews, user comments, technical reviews, design critiques, and alternative purchase options before they approach your sales organization.

At one time, a salesperson asking the question "How may I help you?" was making a an offer of help that was likely needed. Today those words are simply an annoying form of hello.  The only way to impress the new consumer with your sales organization is to be even more informed than them - and that requires work, and energy, and curiosity.

Your sales organization must have insight, knowledge, and stories that the consumer can't find anywhere else. The help the new consumer wants is not small talk and it's not a pitch - it's genuine assistance, even when that means getting out of their way. To the extent your sales staff is a contiguous, meaningful, seamless part of the overall brand experience, the new consumer will accept and welcome their assistance.

Retail is Evolving

A new retail experience is coming, one that combines the best of ecommerce with the best of bricks-and-mortar. It's the next logical thing. Ecommerce has taught mighty retailers like Amazon more about their customers than any other retailer has ever known about its customers before, and this information has been used brilliantly to tailor offerings, engage visitors, and close sales. We are rapidly approaching a time when consumers don't know retail without ecommerce as one of the options, and along the way consumer expectations of both are going to both evolve and blend.

If you're not heavily engaged in—invested in—ecommerce, you won't be part of witnessing first-hand what it means to serve customers in that way, and you won't have the necessary insights to take your business to the next level . . . whatever that may be. So be sure to include ecommerce as part of your business model now, doing your best to offer your products and services digitally and learning everything you can.

Keep Your Business Fresh

It's always a brand new world, whether we are talking about generational shifts in consumer behaviors, or technology change, or just next season's colors. The stakes may seem particularly high to you right now, as you take steps to ensure your business is not left behind, but in fact, the stakes have always been high. Static businesses do not thrive, and they never have.

The recent studies about changing consumer behavior are a boon to us, because they force us to stop and think about the business we need to be to stay relevant and profitable. Embrace the change! There's more where that came from.